A new issue of Econ Journal Watch

The link is here, the contents include:

A Unit Root in Postwar U.S. Real GDP Still Cannot Be Rejected, and Yes, It Matters: David Cushman examines whether shocks are transitory, permanent, or some of each.

The political ideology of Industrial Relations: Using three metrics, Mitchell Langbert shows the left orientation of the field.

Eli Heckscher’s Ideological Migration Toward Market Liberalism: Benny Carlson explores the intellectual evolution of a great Swedish economist.

Glimpses of Adam Smith: Excerpts from the biography by Ian Simpson Ross.


Classical Liberalism in Econ, by Country: Authors from around the world tell us about their country’s culture of political economy, in particular the vitality of liberalism in the original political sense, historically and currently, with special attention to professional economics as practiced in academia, think tanks, and intellectual networks.

New contributions:

Young Back Choi and Yong Yoon:
Liberalism in Korea

Pavel Kuchař:
Liberalism in Mexican Economic Thought, Past and Present

(All of the papers from this symposium, which has carried across multiple issues of EJW, are collected at this page.)

EJW Audio

David Cushman on Transitory and Permanent Shocks to GDP

Hugo Faria on Venezuela and Liberalism


Man, someone should tell Daniel Klein that EJW no longer legally exists within the Atlas Economic Research Foundation, since that foundation is now called the Atlas Network - https://www.atlasnetwork.org/about.

And what an interesting network it is, too - https://en.wikipedia.org/wiki/Atlas_Network , so dedicated to spreading money around in the pursuit of what it defines as the public good.

what"s good for General Motors...

On the Cushman paper, " David Cushman examines whether shocks are transitory, permanent, or some of each. "

I'm calling B.S. From the Abstract, Cushman says: "In particular, one should allow for both permanent and transitory shocks, and a bivariate vector error correction model with a specific identification of transitory and permanent shocks is clearly best of several unit root models examined."

Translation: Cushman arbitrarily assigns some shocks as "permanent" and other shocks as "transient" to fit the data. For example, the S&L Crisis of the 1980s did not produce a recession in the USA, while the Oil Crisis of 1973 and the Housing / Financial Crisis of 2008 did and also reduced the historic trend line for growth. If you say the former is 'transient' and the latter are 'permanent', it fits the data nicely but it's ad hoc reasoning.

Can one really resolve this debate with data fitting? I think all of this line of work has gone to the point of being data dredging. You can come up with stationary models that refute the unit root null and others that dont.

One thing you don't need a time series analysis for---something like a thermonuclear war will produce a non transitory shock to the gdp.

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