From: John Conover <john@email.johncon.com>
Subject: Re: WWII
Date: 16 Aug 1999 18:59:43 -0000
John J. Weatherby writes:
>
> Because I have stated before using econometric methods you can show that
> your results are wrong. Structural breaks do exist. The literature is very
> recent that discusses this the techniques used aren't even printed in but
> one or two texts yet. The conclusions of the new methods show structural
> breaks exist. I know by using this old method you will argue against this.
> The point is newer methods overturn this and show regime-wise stationarity.
> If you don't beleive me I can show you RATS output for hundreds of country
> that all leads to the same conclusion. GDP is regime-wise stationary. This
> hold for three hundred different countries at least included in the sample
> is the US.
> I could explain it but you will have to catch up to the literature
> first.
>
OK, John, I'll concede that the GDP is not a first order fractal; it
does have Levy flight characteristics-and a more meticulous
investigation would tend to indicate a 57% persistence, (ie.,
leptokurtosis,) meaning that structural breaks, indeed, do exist. (It
is not a new concept, BTW; it was proposed by Mandelbrot in 1963.)
However, it still raises the question whether the economy is a
deterministic system which can be manipulated through the static
perturbation and equilibrium methodologies of macroeconomics-as
opposed to dynamic stochastic methods.
Its a paradigm issue.
John
--
John Conover, john@email.johncon.com, http://www.johncon.com/