The observant reader will notice that you have allowed for less than twelve.

But while we wait for that, could you perhaps enlighten us as to whether you believe that the figure would be materially different if all the relevant data had been included, and the data to which you object been excluded? Because if that is not the case, then the substance of the diary stands, irrespective of a single sentence having to be reworded or the graph updated.

Oh and while you are here anyway, I'd like to hear your reasons, if any, for not including cross-terms for Eurozone membership in your specification?

For that matter, would you like to justify your assertion that bondholders have price-setting power against a sovereign with its own housebroken central bank?

Those strike me as rather more central to your argument than whether you use 2011 or 2012 data.

- Jake

Friends come and go. Enemies accumulate.

- Jake

Friends come and go. Enemies accumulate.

But you did use 2012 numbers for your table anyway.  So that is this, quod licet jovi non licet bovi?

Note that these observations were not used in the preceding empirical analysis

And that was acceptable to the referee, exactly why?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

A correction, retraction or apology? What for?

My graph is a plot of table 3.2 of your paper. So that seems to fit the description that I'm plotting your data. In fact, the most recent data points in your sample -those that could, by the way, be seen as the most relevant to a paper pretending to give some insight into the future.
That you then decide not to use them in a regression that should not have been produced at all is neither here nor there. It would raise strong suspicions as to the motives for leaving those data points out, except that the conclusion is not supported by the 2008-11 sample either.

We're not at analytical stage yet with that. Practical assessment suggested that having your own currency was very important. You suggested as much but still included euro countries despite claiming that you had restricted the data to countries that had their own currency.
Then, moving on to the graphical assessment, it is good practice not to confuse stage effects from stratification ones. So, a time series that shows that things change after 2008 (and that's not passing a debt threshold since it does for countries with a rather low debt too), and a scatterplot with a single point per country, which will always be, unless there is a pressing reason to do otherwise, the most recent, with the obvious previously (at the practical stage) identified stratification is in order.

Yet, despite having highlighted it when wrongly claiming that you had only taken data from countries with their own currency, and while having the data right there, you don't do this simple stratification. In a way nevermind: any experienced data analyst will guess that there are two populations from just a passing glance at such a graph. But that's the thing: no regression should be attempted in that situation. Not on the whole data sample anyway.

Then, there is the little rule of not using a model outside of its scope, so using a correlation (probably not causation, the cause is far more probably to be found in current account imbalances) derived purely from euro countries to make policies recommendations in the USA is, as Eurogreen noted, to be avoided.

As for your implied assertion that my post does not follow the scientific process, well, I don't feel I'd need to defend that at all. It was posted on my blog, and cross-posted here. Neither is a noted scientific publication. I have never, in fact, published in a scientific journal. So, no, this did not have to follow this process, although posting anything where people like JakeS or Migeru are lurking involves some of the strictest kind of peer review -and it happens in public, as you can see.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi