Macroeconomic Patterns and Stories

by Edward E. Leamer

The story of this book began with my dif?cult transition from teaching international economics and econometrics in Economics Ph. D. programs at Harvard and UCLA to teaching in the MBA programs at the Anderson School at UCLA. On the basis of 20 years of apparent teaching success in Ph. D. education, I arrived at the Anderson School in 1990 with a self-image as a star teacher, but I was greeted with highly disturbingmediocreteachingevaluations. Facedwithadatasetthatwasinconsistent with my view of reality, I did what analysts usually do – I formulated a theory why the data were misleading. Here is how I thought about it. Two aspects of the course – content and amu- ment – drive numerical course evaluations. If you rank courses by the average of the content score and the amusement score, then the component that can be measured most accurately will determine the ranking. Do you understand why? It is what - eraging it eliminates the noise. Suppose, for example, that a student cannot tell anything about the content, and the content score is simply a random number, varying from student to student. Those random numbers will average out across students to about the same number for each course. As the average course content score is about the same for every course, it is the amusement score that will drive the rankings.

Genres: Economics, Academic

376 pages, Hardcover

First published December 1, 2008

About the author

Edward Emory Leamer was a professor emeritus of economics and statistics at UCLA Anderson School of Management. He was Chauncey J. Medberry Professor of Management and former director of the UCLA Anderson Forecast.
He attended Princeton (B.A., mathematics, 1966) and the University of Michigan (M.A., mathematics, Ph.D., economics, 1970).
Leamer is the author of five books and over 100 articles on a range of subjects especially including applied econometrics and quantitative international economics.
Leamer was the vice presidential nominee on Laurence Kotlikoff's independent ticket in the 2016 US presidential election.
Leamer is known amongst economists for his paper "Let's Take the Con Out of Econometrics", widely referred to as Leamer's critique, which is said to have catalyzed the implementation of more rigorous research designs in the economic sciences.

Reviews

[Wolfgang Polasek]

After the introduction, Part II explains the key macro-economic variables for the US in separate chapters. Part III comes in 4 subparts where the first one on “Recession Symptoms” explains the concept of idleness and key indicators of recessions. In sub-part “Recession Stories” deals with unemployment and the concept of “accelerators” during the business cycle, based on the concept of abnormal contributions of growth. In sub-part “Recession Early Warning Signs” Leamer explores possible leading indicators. This part contains the central chapter on growth contributions (with reference to look up the formula at BEA ) because deviations from the non-linear trend of growth contributions to GDP defines the variable “abnormal growth contributions”. This variable seems to be a good indicator to predict turning points in a business cycle. In the last sub-part “Recession Causes” we are confronted with the problems of making inference with non experimental data. In Part IV “Expansions: With and Without Spurts” we are shown that a cycle can have intermediate phases of growth between the major turning points, called sputters and spurts. The final Part V “The Longer Run” describes further macro-economic variables that change over the cycle.
The book has some minor drawbacks. While the figures by chapters are available on Leamers’s homepage, there is no software that supports the approach. Also, all the chapters of the book can be downloaded separately via the Internet: http://www.springerlink.com/content/9...
Some R programs I have written while I read the book. The structure of the chapter is suited for an MBA course but could be improved to present the results in a more compact way. The chapters are quite heterogeneous in size and contents. Summary of the finding at the end of a chapter would be useful. Exercises can be found on the homepage of Edward Leamer.
Nevertheless, the book is impressive to read if you enjoy a fresh look at macro-economics. Or to answer the question how do business people perceive the economic development in the US and how to evaluate their future business if they look at the tons of figures e.g. in Wall street journal. People with a strong theoretical background will easily be bored by the flood of empirical facts.
On top of all is the quite personal writing style of E. Leamer. Sometime it seems that we are thrown back into our own classroom experiences. “Did you get that?” The style certainly adds to the easy reading of the book and the impression that you learn something new about the current behavior in economics. It remains to be seen if the scientific community or the students pick up on this approach. The book might be used as supplement in teaching courses in business forecasting with the focus on the US economy. It will be difficult to transfer the findings and approaches to other countries, as it was my experience in Polasek (2009).

[Vadim · Rating 2 out of 5]

Неплохое введение в макроэкономику. Автор, хороший эконометрист, следует дельной стратегии: начните с картинок (лучший способ познакомиться с данными), продолжите словами (историями о происходящем) и закончите цифрами (они все равно мало кем воспринимаются). Будучи сильным прогнозистом и умея писать непринужденно, автор способен научить многому. К недостаткам книги можно отнести то, что она построена на американском материале и не во всем пригодится российскому читателю, а также то, что сильные стороны автора -- это все же картинки и цифры, но не истории.

[Minger]

Good book for learning about the indicators and stats that drive our thinking about the economy.

[Alex · Rating 5 out of 5]

This is how introductory economics should be taught.