09 December, 2007


I posted about Mankiw's height tax earlier. Here is more:

The Times also quotes a critic:
Peter Diamond, an economist at M.I.T., says the paper’s basic mistake is the notion “that if you can draw a silly inference from an approach, then that discredits a model.” He comments: “I think there is probably no model that passes that test."
I wonder what Peter's alternative approach is. If economic theorists are allowed to embrace inferences from a model that they like and cavalierly reject those that they consider "silly," what is the point of theory? That discretion gives the theorist the freedom to always confirm his priors.

I think Mankiw is pretty much right on here.

Ricardo Hausmann, posting on Dani Rodrik's blog, has a slightly different take on trade.

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