chamley@bu.edu 

"Science" 

NYT, April 27, 2013.

"At the end of November [2012], the universities unveiled their final report at a joint news conference:... the report stated, his peers, journal editors and reviewers of the field’s top journals were to blame for letting him get away with it. The committees identified several practices as “sloppy science” — misuse of statistics, ignoring of data that do not conform to a desired hypothesis and the pursuit of a compelling story no matter how scientifically unsupported it may be."

“There are scarce resources, you need grants, you need money, there is competition,” he said. “Normal people go to the edge to get that money. Science is of course about discovery, about digging to discover the truth. But it is also communication, persuasion, marketing. I am a salesman. I am on the road. People are on the road with their talk. With the same talk. It’s like a circus.” He named *** and *** . “They give a talk in Berlin, two days later they give the same talk in Amsterdam, then they go to London. They are traveling salesmen selling their story.”

“I said — you know what, I am going to create the data set,” he told me... He viewed himself as giving his audience what they craved: “structure, simplicity, a beautiful story.” 

Growth and the public debt 

(April 19, 2013)

There has been some controversy on a relation between the level of the public debt and the growth rate of GDP, especially after the paper by Reinhart and Rogoff where they applied their method of "spreadsheet history". What is the mechanism? Is this economics? England began the industrial revolution when its level of taxation increased by an order of magnitude and its public debt reached  the highest level in its entire history, more than 250 percent of GDP. Too far in the past to be relevant today? The alleged bankruptcies of Castile in the 16th century were not too distant in their previous book. Pollin-Ash-Herndon have shown that the spreadsheet history has been subject to computational error, and that its conclusions depend on the inclusion or exclusion of a few data points. But the debate should be elsewhere. 

A bubble, before our own eyes, right now

(April 3, 2013)

• Here, price increase has been about the same as for the company of John Law (before the crash): chart!
• The Winklevoss twins of the "The Social Network" are back. (BTW, Larry Summers, president of Harvard at the time, had a good line in that movie, vintage LS).