The Problem With Econometrics

Following up my last post I thought I’d expand on my problem with econometrics. Essentially the core problem with econometrics is that it is heavily dependent on its assumptions and can be easily twisted to say whatever its designer wants it to. Continue reading “The Problem With Econometrics”

The Emperor’s New Econometric Model

Once upon a time some men decided to play a con trick on the Emperor. So they told the emperor that in exchange for only a mildly exorbitant fee they would produce the greatest econometric model in the world (after all you can’t spell econometric without con or tric). The Emperor agreed but instead of creating an econometric model, the consters merely covered pages and pages with random letters and obscure symbols. Eventually the conmen decided to present their model to one of the Emperor’s advisors. They told him that it was an econometric model of such complexity that only the wise could understand it, to the uneducated it looked like random symbols. The advisor who knew little economics, pretended to read it before agreeing with the conmen about its sophistication. Continue reading “The Emperor’s New Econometric Model”