Sunday, April 3, 2016

The blessed assumption

"There is no point in arguing over a model's assumptions until one is clear on what questions it will be used to answer."
- Robert E. Lucas, Jr., in On the Mechanics of Economic Development

You need to consider a model's assumptions in the design stage. Even I know that. Lucas seems to be saying Wait till the model is done to question the assumptions. That's no good.


My Lucas quote is from an old paper on growth theory, from the 1980s. I got the link from Roger Farmer, along with one to a Paul Romer paper from the 1990s. Old stuff.

Evidently the argument continues. In August of last year David Glasner gave us Romer v. Lucas. Glasner writes:
A couple of months ago, Paul Romer created a stir by publishing a paper in the American Economic Review “Mathiness in the Theory of Economic Growth,” an attack on two papers, one by McGrattan and Prescott and the other by Lucas and Moll on aspects of growth theory. He accused the authors of those papers of using mathematical modeling as a cover behind which to hide assumptions guaranteeing results by which the authors could promote their research agendas.
Oh, this is such fun.

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