Monday, August 8, 2016

IMF Economist Slams Piketty's Inequality Claims

This is interesting.

A study released this week by the International Monetary Fund suggests that French economist Thomas Piketty's book, "Capital in the Twenty-First Century," on inequality "provides no formal empirical testing" for the claims it makes about how capital accumulation influences income.

I am not a big fan of empirical testing it is an incorrect methodology to employ in the science of economics, but  Piketty has no problem with empirical testing, so this IMF report is an attack from within the framework he employs.

Piketty's magum tale on the widening gap between the wealthy and the poor, was the subject of widespread left-wing mainstream acclaim when it was released about two years ago.

However, a 27-page working paper authored by IMF economist Carlos Góes undermined Piketty's central thesis about how income is distributed in societies. Góes dismissed much of Piketty's work on the relationship between wealth accumulation and poverty as "conjectures" with little empirical basis.

The IMF's Goes described the publication as "rich in data" and "interesting," yet ultimately flawed, taking aim at Piketty's assumptions about the relationship between capital and national income.

The book "while rich in data…provides no formal empirical testing for these conjectures," Goes wrote, citing his own econometric models that sought to verify Piketty's claims. "In fact, there is little more than some apparent correlations the reader can eyeball in charts containing very aggregated multi-decennial averages."

Góes data tested one of Piketty's central arguments—that inequality would increase in the future—and found it wanting. Goes added that he found "no empirical evidence that the dynamics move in the way Piketty suggests."

Capital in the Twenty-First Century continues to hold a relatively high-ranking (2,331) on Amazon's  book rank list

For many more problems with Piketty see here.


(via CNBC)

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