Tuesday, August 24, 2010

When Krugman and Mankiw Agree...

....you know it has to be bad economics.

At his blog, Greg Mankiw displays a Paul Krugman chart that breaks my first rule of economic data: you need to be able to understand in terms of human action the cause and effect elements of a chart.

The Mankiw Indicator is all about bad empirical application (that is no proper foundation in human actio), where I can think of at least 100 ways the supposed formula can break down in a way that would produce huge outliers.

1 comment:

  1. First time I have read Krugman where the comments are argumentative about his thinking. Maybe the lefties are starting to realize the dangers of fantastical economics.