Archive for December 21st, 2015

How economic uncertainty promotes reforms..

December 21, 2015

Well uncertainty has its virtues as well. Most politicians are seen to usher changes when times are tough and highly uncertain. This actually has become pretty much the wisdom in India. You have to wait for things to become really bad before changes start to happen. And most of the times, the changes are really simple but are pushed as big bang, that one ends up tearing his/her hair.

Alessandra Bonfiglioli and Gino Gancia have a piece on the topic:

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Economics and Fun..

December 21, 2015

Pramit Bhattacharya of Mint has a piece saying who says economists can’t have fun.  He cites several papers where the idea has been to be whacky.

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Big Boss and Game Theory..

December 21, 2015

Hansika Kapoor and Anirudh Tagat of Monk Prayogshala (do check this interesting place) have this interesting piece. Given the social dynamics in the Bog Boss is a great place to use game theory and other human behaviour tactics. We should be having such articles every year with a new Bog Boss season giving you ideas on what each player is thinking and broad strategies used by him/her.

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Economists inconsistency on expectations over Fed decisions..

December 21, 2015

A nice post on how the big guys just changed their views over Fed policy despite lack of any evidence.

The hawkish swing is dramatic. In April 40% of respondents thought the Fed should wait for core inflation to rise. In December, even though core inflation had not risen at all, only 19% didn’t think the Fed should raise immediately. What’s going on?

Much of macro does not make sense. One just goes with the times..

Relationship between economic inequality and democratic changes is far more complex than research shows..

December 21, 2015

Alexander Krauss writes on the topic:

The existing literature is laden with contradictory hypotheses and findings that suggest this potential relationship can be positive or negative, stronger or weaker, differentiated or non-existent and can vary across and within countries and time periods. However, fundamental methodological and empirical limitations of analysis do not allow us to make such claims robustly, to some extent because the process of democratisation and changes in levels of equality are highly nuanced, idiosyncratic and heterogeneous and thus difficult to capture econometrically. Some of the most prominent authors in this literature claim that high levels of inequality decrease the likelihood of democratisation, and they also talk about “causal effects” and “the impact of democracy” on outcomes. Such conclusions presuppose a number of very demanding assumptions and requisite premises that cannot be rigorously met.

In fact, thousands of academic papers analyse the potential relationship between political variables like democracy and economic variables like inequality by gathering their data, selecting their methods and then going forward with their analysis, interpreting their findings and potentially informing policy, with many other steps along the way that involve making important implicit methodological assumptions. My recent paper1 instead goes backwards to analyse whether the data and methods that are applied by the leading authors in this literature are able to produce the robust results that they claim. It emphasises that how we as researchers generate our correlational (or ‘causal’) claims cannot be viewed independently from how we make everyday, typically unreflective decisions, such as what we decide to analyse, how we construct our variables, how we collect and use our data, which methods we choose to apply, how we interpret our statistical results, and so forth.

Many a times just a narrative account which sums up all the arguments for and against is more useful than the several empirical jazzes which goes around. But you can no more publish anything narrative, so the game continues..


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