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Abstract:
Economists sometimes interpret the failure of a significance test to disconfirm a hypothesis as evidence that this hypothesis is valid. Six examples of this are cited from recent journals. But this is a misinterpretation of what significance tests show. While in general it is correct that every failure to disconfirm a hypothesis adds to its credibility, the term "disconfirm" is defined differently for this purpose than it is in the context of significance tests.

Significance Tests, T Values, T Coefficients, Confirmation

Abstract:
This contribution to a Festschrift for Warren Samuels argues that in giving policy advice economists should seek diversification and consider the probability of error, and also the loss function and risk aversion. And since advocacy of a theory is in a relevant way like a policy decision, the same applies to theories. If this means employing contradictory theories, then that is consistent with rational behavior. In choosing a methodology, too, a sharp dichotomy of right and wrong is not useful, as the example of new classical reductionism illustrates. Similarly, there is a role for probabilistic pluralism in making value judgments.

Abstract:
The standard loss function counts both positive and negative deviations from the output and inflation targets as losses. But if the sample period is long enough, then output growth in excess of the target, and often also inflation rates that are below target, should be counted as gains instead of losses.

Loss Functions, Policy Evaluation

Abstract:
This paper traces the effects of an appreciation of the deutsche mark with the help of a computable general equilibrium model under alternative structural policy scenarios. In the first scenario, characterized by severe structural rigidities, the contractionary effects of exchange rate appreciation dominate the expansionary effects so that GDP and employment fall and the external surplus declines only little. In the alternative (and polar opposite) case of free movement of goods, services, and factors, the expansionary effects of the appreciation become more prominent as supply and demand respond much more readily to the relative price changes.

Abstract:
No abstract available.

Abstract:
Approximately one-half of California`s Unified School Districts give teachers a choice of receiving their annual salaries in 10 or 12 monthly payments. Intertemporal utility maximization à la Irving Fisher suggests that they should choose 10 payments and earn interest on their savings. But about 50% of the teachers choose 12 installments, even though when summed over a reasonable period the forgone interest can be considerable. This behavior can be explained by the cost of exercising self-control and by Laibson`s model of hyperbolic discounting. A survey of teachers supports this interpretation. (JEL D91, D12)

Abstract:
How can one tell whether academic research influences macroeconomic policy? One possibility is to look at government documents that set forth macro policy. This paper looks for such traces in U.S., European and Japanese documents. Because of ease of access it focuses on U.S. documents. Numerous traces of academic research can be found. But the road from government documents to policy is a precarious one; references and allusions to academic literature may merely be rationalizations for policies adopted for other reasons. Similarly, governments may use the results of academic research without this showing up in government documents.

Abstract:
The principle that theories should be tested by the accuracy of their predictions but not by the realism of their assumptions needs to be qualified. As a practical matter we often need to evaluate the applicability of theories to cases for which they have not been tested by their predictions. Here we rely on the fact that theories are applicable only within a specific domain. In determining whether a specific case, for which no direct tests are available is within the theory's domain, we look primarily at whether the assumptions of the theory are as applicable to it as they are to the cases for which the theory has been successfully tested.

Abstract:
Many of Boettke's criticisms of formalist economics are justified. However, he defines it so broadly that it becomes practically synonymous with mainstream economics. Yet he blames it for the specific sins of formalist economics more narrowly defined. And since he treats Austrian economics as the only viable alternative to mainstream economics he incorrectly awards victory to Austrian economics. It has some valuable ideas to contribute to mainstream economics, but is not a good replacement for it, since it has serious deficiencies.

Abstract:
Before condemning data mining one should distinguish between objective and biased data mining. The former is commendable. Even biased data mining is appropriate when used to illustrate and not to test hypotheses. In the context of testing, the problem with biased data mining arises not from the fitting of many regression, but from inadequate reporting of results. The trend towards reporting the results of more alternative specifications, and thus addressing the fragility problem, should be encouraged. To do that, the incentives that economists face should be changed.

Abstract:
In 1956 when Friedman published his "The Quantity Theory of Money: A Restatement" he faced a daunting task because of the widespread hostility to the quantity theory. This paper looks at the rhetoric (in the non-pejorative sense of the term) that he used to overcome this obstacle, and at some of the characteristics of the essay that contribute to its persuasiveness.

Abstract:
Why was the Fed so inflationary in 1965-79? No single explanation suffices. Forecast errors and poor operating procedures played at most a minor role. Unwillingness to accept greater interest-rate variation and cognitive errors played a greater role. Political pressures also played a role, but, given its desired policy the Fed was not greatly constrained by them. Wage and price controls played an uncertain role. The most important factor was the prevailing intellectual atmosphere with its de-emphasis on the costs of inflation, its faith in the viability of an inflation/ unemployment trade-off and concern with cost-push elements.

Abstract:
This paper reviews and appraises the debate about whether the central bank should pursue counter-cyclical policy or generate a stable monetary growth rate. It focuses on whether the participants have followed the rules of "good conversation," and concludes that they have not. Monetarists have over-stated their case, and their opponents have, in large part, just ignored salient points that the monetarists have raised. All the same, the debate has advanced economics to some extent. To support these conclusions the literature generated by this debate is discussed in some detail.

Abstract:
The widespread belief that monetarism has failed is open to question. Certain strong monetarist positions have been damaged by unfolding events, but more moderate propositions live on in current "Keynesian" consensus.