Sunday, May 23, 2010

David Barker comments on the growth path of GDP

He writes:

I just did a quick Chow test to see if there is a structural break in per capita GDP growth between 1935 and 2009 and there is not.

This is just a growth over time model (log GDP on time), and I also checked consumption and disposable income. If I did it right, there are no breaks - not even close. So you are right about Wallison, but one can't draw the opposite conclusion either.

I think in general it is difficult to draw casual inferences about macroeconomic data. More specifically, I agree with David that there is not sufficient statistical evidence to ascribe a cause to the relatively weak performance in growth after 1980. I do think rampant deregulation of financial institutions has been on net harmful (we seem to have financial crises more frequently now), but we haven't sufficient numbers of data points to establish that fact scientifically.

But it is also true that what Wallison wrote is demonstrably false. Life was not barren in the pre-Reagan years, and it has not been the land of milk-and-honey since. The evidence, limited thought it may be, is consistent with the idea that the New Deal was a good thing. On the other hand, Wallison wears very nice suits.

13 comments:

Richard H. Serlin said...

I've wanted to comment on that Barker comment too (but as usual oh so busy). Quickly, you of course have to be careful about interpreting statistics. The Chow test assumes an underlying distribution that has a lot longer tails than are reasonable to assume here.

And, very importantly, the evidence for Democratic administrations (or a lot more left than today's Republicans) and economics is far more extensive and strong than just the time series dots. There's a lot of logic and other evidence that goes with it. If I might illustrate this point with a fable:

Three economists are hiking, a high level thinking one, named Paul Klugman, an overly literal, mechanical thinking one named Chi Cago, and some other dude named Fred. They get hungry. So Fred eats a berry from a bush. He immediately keels over and dies. Then, Chi Cago grabs a berry. Paul Klugman says, stop don’t eat that, but Chi says why not, the berry that killed Fred was only a sample of one. You can’t tell anything from a sample of one.

The moral: You should consider far more about your conclusions to the real world than just the formal information in your model. You can construct completely solid logic chains with additional information about the real world both formal and informal, logic chains that are anchored to much more realistic, or less strong assumptions.

ParkPlace said...

a lack of evidence for a statistical break in economic growth, combined with clear evidence of growing income inequality, seems to indicate that under Reaganomics we have sacrificed equality without gains in total wealth. Holding equality constant, almost everyone would prefer more growth. Holding growth constant, many people would prefer more equality. It seems logical that the pre-1980 social contract would be preferable.

Jaypee Greens said...

I am totally agreed with you..for more information related to new residential projects you can contact on- http://jaypeeprojects.blogspot.com/

David Barker said...

Look at log real per capita consumption since 1933 - is it really possible to believe elections matter for macroeconomic outcomes?

Differences between the parties are greatly exaggerated. One wants high tax rates with loopholes, the other wants low rates. One wants lots of captured regulators, the other wants incompentent regulators who are fewer in number. It really makes no difference which we choose.

The U.S. Gini coefficient has risen fairly steadily since it was first reported in 1967. Larger forces than politics are at work. We can observe, but we cannot control these forces.

aiya said...

Office 2010
Microsoft Office 2010
Microsoft word
Office 2007
Microsoft Office
Microsoft Office 2007
Office 2007 key
Office 2007 download
Office 2007 Professional
Outlook 2010
Microsoft outlook
Microsoft outlook 2010
Windows 7

led said...

Christian Louboutin Tall Boots
Christian Louboutin Wedges
Christian Louboutin Pumps
Christian Louboutin Sandals
Jimmy Choo Shoes
Moncler Kid's Jackets
Moncler clothing wholesale
Wholesale Moncler Jackets
discount Moncler Jackets
http://www.shopmoncler.hk/moncler-jackets
http://www.utsource.net/BUK444-500B.html
http://www.utsource.net/MG50Q6ES41.html
http://www.utsource.net/UM150CDY-10.html
http://www.utsource.net/MP7002.html
http://www.utsource.net/TMS320F2812PGFA.html
http://www.utsource.net/CEM3374.html
http://www.utsource.net/2sj74.html

Farrah said...

What a wonderful piece of information Admiring the time and effort you put into your blog and detailed information you offer! I will bookmark your blog and have my children check up here often. Thumbs up...

4d ultrasounds

Anna said...

I love this post! Thank you for the nice information on non-touch screen handset. This is definitely good...

doctor ratings and reviews | find doctor list | doctor reviews by patients

Ojanx said...

Iklan Baris Gratis
Peluang Bisnis
Bisnis Pulsa
Pasang Iklan Baris
Iklan Gratis

talha said...

Hi! This is my first visit to your blog! We are a team of volunteers and new initiatives in the same niche. Blog gave us useful information to work. You have done an amazing job!
laptop screen fix

sam said...

You got a very helpful weblog I've been right here reading through for about an hour or so. I'm the beginner as well as your achievement is extremely a lot a good motivation personally. xbox repair shops

Umair Ahmed said...

TXM!!
Thank you for for sharing so great thing to us. I definitely enjoying every little bit of it I have you bookmarked to check out new stuff you post nice post, thanks for sharing.

Umair Ahmed said...

Need For Speed Most Wanted
Your blog article is very interesting and fantastic, at the same time the blog theme is unique and perfect, great job.