Re: Son of unit roots -Reply -Reply

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Holly Chair of Excellence in Political Economy
"      University of Tennessee, Knoxville, Tn. 37996-0550
Ah! My! if onCly CI researchers were as noble as Bill Nitchell who avoid talkin
g about their results as revealing any "discovery or truth" . Bill says lets se
parate theory from practice and the practitioners admit that "any econometric
analysis would [not] suggest the praxis is 100 per cent". But then Bill that
impliess that it could be zero%! Where beteeen zero and 100% would you put it?
And on what statistical significance test would you rest your quantitative
estimate of praxis?
What you seem to be disagreeing with me is not on "basic substance" but whether
the "praxis" is relevant for the underlying economy.
  Laura was correct in worrying about whether the axioms underlying

stochastic theory are "reasonable" for economic time series. Is the economic
universe is a state of statistical control necessary for applying
"classical statistical theory"? "plausibility" like beauty is in the eyes
of the beholder. But my gosh Monetarism is also "plausbile". And Lucas would
argue that Rational expectations" is a plausible (and the only scientific)
way (and ingenious as well) of organizing the way the analyst thinks
about economic processes. Yet Lucas in his 1981 JEL response to Tobin
admits that rational expectations models are "patently false".
    The axioms underlying classical economics (like those underlying
stochastic processes) seem reasonable to those who believe. And for these
classical believers "the insights are ingeneious". No one who has ever
debated with Milton Friedman or Bob Lucas can deny that they always
qualify their results by avioding "talking about discovery or truth, [rather]
emphasises adequacy and tntativeness". But when the relevance to the real world
of the characteristics of their axiomatic system is questioned, they do
not claim their axioms are relevant-- rather they fall back on either
the "as if" lets pretend the world worked like this; or the hard-headed
(physics envy of the hard sciences) science cloak that all good (i.e,
hard science)  can only be done with such axioms. This gives it a n
apparent "plausibility that other approaches do not have, and does provide
researchers with a meaning to a steady state". (Never mind that a steady state
is a state that does not exist in any real world economy; this nonexistent stea
dy state can apparently generate data in a nonstationary world that makes
"intuitive sense" . As Tug McGraw (a famous baseball player for those Ozzies
who do not know him) once said "You got to believe".

Have a good day! Paul
email address: PB108928@xxxxxxxxxxxxxx
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