There is no need for another criticism of Richard Posner's criticism of Christine Romer (too put it mildly) but I can't help myself.
The post below is not only pointless, it is long. I will try a brief summary. Posner accused Romer of intellectual dishonestly, because he was sure that a speech she gave on the effect so far of the stimulus was " "responsible academic analysis." He knows that Romer has worked in the field and is a top notch academic economist (Posner has been cited a lot and, perhaps coincidentally, judges intellectuals by their citation count so he must know that Romer has been cited a lot too). I think he has an idea of what top notch academic economists are like based the ones he knows at the economics department and business school of the University of Chicago. There is indeed a huge contrast between *their* academic work and Romer's speech. However, there is no contrast at all between Romer's academic work and her speech. The speech is clearly, among other things, the continuation of a decades long research progect.
I think that Posner can't get his head around the fact that work which is viewed with contempt at the U Chicago economics department is massively cited.
now long boring post.
Professor Judge Posner has made mistakes which should be totally humiliating but is not humbled in the slightest. Most notably he casually compared the annualized growth rate of quarterly GNP to annual GNP effectively making a factor of 16 arithmetic error.
I do think there is something still to be said. Posner is not only persistntly unable to handle the IS-LM model, unfamiliar with national income and products accounts terminology, unfamiliar with federal budgetary terminology and arithmetically challenged (just start here and follow the links).
He is also unfamiliar with the standards of academic research at Berkeley (and Harvard). Discussing Romer's speech on the stimulus, his basic claim is
Romer's speech argues that the disbursements of stimulus funds through the end of the second quarter of this year (that is, through June 30) have had a big effect on economic output and employment. I said this was unlikely as a matter of theory, and that she had no persuasive evidence to back up her claim. And I raised the question of the ethical responsibilities of an academic who takes a government job and then makes a speech that although it deals with a subject that she had studied and written about as an academic is not a responsible academic analysis.
I have a different impression. My impression of the speech was that I wish I'd written it and submitted it to a journal. I think that it is unreasonable to compare it to a "responsible academic analysis," because academics don't have access to the resources (data and staff) which made it possible. I think it is obvious that the speech could be published in the AER. The editor might demand stylistic modifications, but the analysis is top notch.
More to the point it is exactly the sort of thing that Romer wrote when she was a professor at Berkeley. It is clear to me, and many others, that, when Posner contrasts the speech to Romer's academic work, he displays his total ignorance of her academic work.
I think the problem is partly that the economics profession is divided into schools of thought -- roughly fresh water and salt water -- with profound contempt for each other (although salt water economists such as C. Romer, D. Romer and N.G. Mankiw tend
to be polite in public).
I think it very likely that Romer's speech and her academic work is considered to be not* "responsible academic analysis" by top economists working at the economics departments of the Universities of Chicago and Minnesota. My guess (and it is a wild guess) is that they don't consider it to be economics, because it has nothing to do with maximization under constraint. The number one top leader of the school (Prescott) condemns econometrics as such and, in effect, argues that one must assume his theories are true even if they are inconsistent with the data. Even among those who don't regect econometrics as such, there is a profound disagreement about methodology.
At Berkeley, Harvard and MIT simple calculations are demanded.
There is (or was when I was there) pretty much an absolute rule that one must start with summary statistics, then look at correlations and cross tabs or something, then work up to a multiple regression (OLS) then probably do something with instrumental variables with identifying assumptions comprehensible and convincing to the man on the street.
This is pretty much a description of Romer's speech.
The relatively fancy IV part would be the cross state and cross national comparisons which
Some (Thoma mostly) suggest that Posner is showing contempt for the economics profession assuming a lawyer, law professor, judge and top notch microeconomist can handle macro without brushing up on the terminology. My guess is nearly the opposite. I suspect that he is in contact with macro economists who share his view of Romer's speech and that this made him sure he is on safe ground.
Basically his view is that Romer's speech is not respectable academic economics, because it clearly involves taking the IS-LM model seriously and considering the concept of a multiplier and because the empirical work is a combination of simple reduced form calculations and simple easily comprehensible instrumental variables regressions such that no fancy economic theory or econometric technique is required.
I think Posner genuinely doesn't know that a large fraction of the economics profession agrees with Romer's approach.
The fact is that top fresh water economists think they are the only top notch economists and dismiss salt water economists including the ones with Nobel prizes and stuff.
*update: Major oops. I left the "not" out of my original post. Corrected thanks to a comment.
** update 2: another booboo corrected thanks to comments.
update 3: speling errror korrected.