Back to blogging (and my word to my friends at YKB research)
I was traveling for the past three days, and I haven’t had time to blog. But I am now at the Istanbul Ataturk Airport, waiting for my flight to the Turkish hinterland and enjoying my last frappuccino, at least for a while. I don’t have time for a full-pledged post, but I’ll just write something short, which should get me warmed up after my three-day absence from blogging.
Bearing in mind that your inference is only on the evidence available and is thus inconclusive, choice of methodology is of pivotal importance nevertheless. When inferences based on different methodologies are in conflict, the jury cannot be out forever. May the better one, the one that utilizes the properly specified methodology, survive, and naturally the inference pertaining to it. The problem at hand in the specific Turkey case seems to be the following: We make almost unending objections to rival camp’s methodologies and receive no counter objections in return. Instead, it boils down to a “well, that is your conclusion and this is mine and neither is conclusive” approach, and that does not sell in economics. The fact that you are entitled ex-ante to any opinion you wish to subscribe to does not mean you have infinite degrees of freedom in choosing methodologies that will tell whether your ‘opinion’ will pass the test of time as data pile up.
Anyway, what they are saying makes perfect sense from a bird’s eye view. But complications arise once you go into the details. For example, it is not easy to reach a definite conclusion on most matters in Economics. It sure doesn’t sell in academic economics, but I know so many papers, some even by the same author (check out the excellent Hep B papers by Emily Oster, for example) , that reach contradictory conclusions.
But the YKB team is right in asking for criticism or feedback on their methodologies, as they have provided their detailed criticism of the methodologies of the overheating camp. Since other banks economists, who are their true counterparts, are unable or unwilling to give them feedback, your friendly neighborhood economist is taking charge. I am giving my word that I will provide them as much feedback as I can from now on, time-permitting and provided they don’t exhaust my knowledge of econometrics:) I have a backlog of posts, but as soon as I finish them, I want to give them some feedback on their no-overheating methodology, probably early next week….
2 Responses to “Back to blogging (and my word to my friends at YKB research)”
Speaking of YKB Research, their latest weekly has a very good first chapter, its well-written and out of ordinary. We hardly see such pieces in macro reports.
I don't know if we are talking about the same report, but the one I got yesterday was also talking about Zafer Caglayan's speech (as in my yesterday's Daily News column). They were making my inflation differentials point as well as a couple of additional points….