Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
I had a fun experience at work the other week. I went over some macroeconomic forecasts in preparation for a project, and then told my boss "this bullshit is fit only to make astrology look respectable by comparison." His response was "let's keep them on the table, I'll look them over."

So we come to our weekly meeting, and he asks me if I have understood why the trends go up in the forecast when they are consistently down in the historicals. Because he finds that strange. I tell him that they are up in the forecast because they are down in the historicals. The logic being that the economy cannot indefinitely depart from the long-run trend, so whenever it has departed from trend, the best guess for next year is that it will be closer to the long-run trend.

His response was along the lines of "but that's silly." I told him that yes, yes it is. But that is how these forecasts are made - it's a fundamental property of the statistical models in use. "By our guys down in forecasting?" he asked. To which I answered "by everyone. World Bank, IMF, Treasuries all over the world, Central banks, etc., etc."

The forecasts in question did not end up featuring in the final product.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 8th, 2014 at 11:25:06 AM EST
Unless your boss has no statistics background I am surprised that he did not learn about 'reversion to the mean'. And if equilibrium means anything it should imply reversion to the mean. Glad to see you are having fun in your job. It is always good to enjoy one's work and having a good boss is important.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 8th, 2014 at 12:45:15 PM EST
[ Parent ]
Perhaps his boss has too much of a stats background and knows that "regression to the mean" works only if the mean was honestly and accurately established and the inputs have not changed since then.  Otherwise there is no way of telling where you're headed other than to a new mean.
by rifek on Sun Feb 9th, 2014 at 06:53:51 PM EST
[ Parent ]
Prognosis economic growth in Greece:

(source)

Prognosis economic growth in Netherlands:

(source)

Note: red line is what has happened in the above graph. The Netherlands Bureau for Economic Policy Analysis had it wrong 14 times in the past 3 years.

by Bjinse on Sat Feb 8th, 2014 at 01:02:09 PM EST
[ Parent ]
Andw when the Netherlands lost its AAA, Dieselbomb came out and said that was just an encouragement to double down on austerity.

When in a hole, keep digging!

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Feb 9th, 2014 at 04:08:09 AM EST
[ Parent ]
just heard her give a speech at guildhall, london.

she said some good things, but i didn't find her very convincing.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Feb 8th, 2014 at 02:11:01 PM EST
[ Parent ]
Her, who?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Feb 9th, 2014 at 04:06:49 AM EST
[ Parent ]
sorry, lagarde

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Sun Feb 9th, 2014 at 05:24:36 AM EST
[ Parent ]

Display:

Occasional Series