Re: Nobel Science
From: Stephen Cullenberg (stephen.cullenberg@UCR.EDU)
Date: Wed Oct 13 2004 - 14:08:09 EDT
Prescott's argument is that during the 1930s that labor market
institutions and industrial policy lowered normal market hours in the
U.S. He cites Cole and Ohanian who report that market hours
declined 21 percent between 1929 1nd 1939. He then clams that
(neoclassical, SC) growth theory predicts the behavior of investment and
employment that occurred in the 1930s. He admits that growth theory
does not explain why normal market hours fell so much during the 1930s in
the U.S. Nor does he report direct evidence how this happens (he
argues by analogy to France and Spain today). But, because the fact
that labor market hours fell and this is consistent with the prediction
of lower investment and output, then as he puts it "My view is that
the explanation of why market hours changed is the explanation of the
Doesn't his argument take the logical form of:
If A (decline in labor market hours), then B (decline in investment and
Observe B (decline in investment and output), and then infer A (decline
in labor market hours).
Does affirming the consequent now qualify as Nobel Science?
At 07:58 PM 10/11/2004 -0400, you wrote:
On Mon, 11 Oct 2004, Stephen
Cullenberg quoted Ed Prescott:
"In the Great Depression,
employment was not low because
investment was low. Employment and investment were low because
labor market institutions and industrial policies changed in a way
that lowered normal employment."
This is obviously nonsense, but does Prescott produce any argument
to this effect? Or is it pure assertion?
Professor of Economics
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