NBER Summer Conference

So, I was at the 2009 Econ shindig. There were literally a hundred presentations, and discussions, and the variance of findings very broad.

My summary in brief (see papers here):

• On average, economists are thinner than average. I'm not sure why, or if that's good for economists. Financial economists are also about 85% male, and while most practice in the US, most are from Europe and Asi. Most importantly for me: Everyone in finance speaks English!


• discussions are very honest and thorough about things like logic, innovation, and relation to the literature.


• discussions are silent on irrelevancies. If you estimate something very complicated on something that 90% of he audience finds irrelevant, those 10% who find it interesting will mention ways to adjust your method. The 90% who find it irrelevant just keep their mouths shut. This encourages irrelevancies (eg, GMM, looking at various instruments)


• there was a strong feeling that the Federal Reserve was in danger of losing its independence. That the Federal Government was basically lost all fiscal discipline, and so anticipating future Fed monetizations, was a common theme. If hyperinflation due to fiscal irrationality comes, it will be with a large number of those seeing it before the fact, very unlike the recent crisis where very few in 2006 warned of a housing price collapse.


• There were a lot of papers about how to account for fat tail events. These were called 'nuclear' or crisis events under the Barro-Reitz framework (aka Peso problems). If you listen to Nassim Taleb you would think economists were unaware of fat tails, but if you went to this conference, you would hear a lot about what Taleb calls 'Black Swans'. This is why Taleb hates academics, because they don't see his big idea as 'new'.


• Calibration exercises, which are true by definition, have too much weight. Either demonstrate out-of-sample usefulness or don't mention it. I find these totally useless empirically, but that's because my game is to make money for investors, in contrast to academics, which is to publish papers useful for future publications.