A few links
February 4, 2013, 10:53 am
Filed under: Uncategorized

Mark Thoma on stimulus,

The stimulus was too small, didn’t last long enough, but even so, compared to the correct baseline…the empirical evidence points to effectiveness. […]  the correct question is not “why haven’t we recovered yet,” it’s “where would we be without the stimulus package,” and the evidence sugests we’d be worse off.

Emph. mine. This is a fascinating use of ’empirical evidence’, which appears to mean ‘in Mark Thoma’s imagination’. It turns out that if you (empirically) use Mark Thoma’s Imagination to compare our reality to an alternative-universe in which less/no stimulus was done (i.e. ‘the correct baseline’), our reality comes out on top. It just doesn’t get more ’empirical’ than that folks. Economics!

A great, dry takedown of Steven Chu. RTWT.

How a hedge fund makes money off Dodd-Frank. Thank goodness for reform!

3 Comments so far
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Economists seem to be wholly mystified by the difference between models and experiments. Here’s how it usually goes:

Economist: The stimulus helped the economy
Normal Person: How do you know? We have no idea what would have happened without the stimulus.
Economist: Well, here’s a graph with a forecast, so QED.

Comment by Matt

In selling the stimulus, economists provided graphs of unemployment with and without stimulus. We did the stimulus. Actual unemployment results look probably even worse than the ‘without stimulus’ prediction line. Why should we trust those guys again?

Comment by Jehu

It is the best of all possible worlds.

From the book:

Master Pangloss taught the metaphysico-theologo-cosmolonigology. He could prove admirably that there is no effect without a cause, and in this best of all possible worlds the baron’s castle was the most magnificent of all castles, and my lady the best of all possible baronesses.

“It is demonstrable,” said he, “that things cannot be otherwise than they are; for as all things have been created for some end, they must necessarily be created for the best end. Observe, for instance, the nose is formed for spectacles; therefore we wear spectacles. The legs are visibly designed for stockings; accordingly we wear stockings. Stones were made to be hewn and to construct castles; therefore my lord has a magnificent castle; for the greatest baron in the province ought to be the best lodged. Swine were intended to be eaten; therefore we eat pork all year round. And they who assert that everything is right, do not express themselves correctly; they should say that everything is best.”

Comment by Voltaire Candide

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