April Fool's Day Comes Early This Year and Lasts a Long Time: Economics Edition
Scott Sumner.... 'Simon Wren-Lewis also gets the GDP growth data wrong, in a way that makes austerity look worse'.... Sumner is not using ‘wrong’ and ‘claim’ in their ordinary sense.... What he means is that by choosing to use the (correct) annual data, I’m (accidentally, deliberately?) hiding something important. He then quotes two figures that supposedly prove his case. No analysis, no graphs....
It gets worse. Tyler Cowen quotes... with approval, I guess because the guy shares the faith. Now do you really want to follow those whose macroeconomics is so faith-based that they do not even need to check the numbers? Do you want to follow someone who says (earlier in the post) 'it would be useful to do a more systematic study of fiscal austerity'. What about the many studies that have already been done (e.g. here, here or here). Do they not count because they generally find that fiscal policy can matter a lot, and so fail to accord with the faith?
I mean the overall shape of events across many countries and multiple years.... You can, if you like, argue that it’s a spurious correlation.... But surely the raw observations are consistent with the view that in depressed economies, cutting government spending hurts growth.... One form of argument that is really illegitimate is to comb through the data, pick out outliers, and claiming that the existence of these outliers--because stuff does, in fact, happen--disproves Keynesian logic. Unfortunately, you see a lot of that, including from economists who really should know better.
