Friday, May 28, 2010

The new econometrics

Lalonde (1986) destroyed the old micro-econometrics as thoroughly as Lucas (1976) destroyed the old macro-econometrics, though it was a more nihilistic destruction (``it just ain't working'') and not a sweet idea as in the Lucas critique. In recent years, these ideas have gained ground, including a symposium in the Journal of Economic Perspectives. Falkenblog has a pithy line: if your result shows up only via coefficient t-stats in 2-stage least squares, but not a graph, it isn't there. As someone who did home-brewn matching back in 1995, I feel pleased about my instincts.

4 comments:

  1. I am an IT professional with lots of interest in economics.
    I am not familiar with Lalonde or his work related to micro-eco. I don't see any info about him in wikipedia either.
    Can you pl. provide some inputs.I am curious to know what exactly are the ideas in micro that he destroyed

    thanks

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  2. Surely, there has been some uneasy apprehension about Econometrics as such but it should be pointed out that this is not the fault of Econometric Models per se, but the devil of data that is used for the model. Very often data is error prone and/or is biased resulting in unreliable results from most sophisticated, awe-inspiring models.
    It is unfortunate that most models do not even suggest the range of data to be used for the sophisticated parameters of the models.
    Whenever, I inquired about probable numerical values for the parameters of a model, I was greeted with stony silence, which is worse than a rebuttal!

    ReplyDelete
  3. r, Do see the link to the Journal of Economic Perspectives that I have supplied in the blog post.

    ReplyDelete

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