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Challenging Time Series

Limits to Knowledge, Inertia and Caprice

9781840641431 Edward Elgar Publishing
T.D. Stanley, Professor of Economics and Business, Hendrix College, US
Publication Date: 2000 ISBN: 978 1 84064 143 1 Extent: 240 pp
This unorthodox book derives and tests a simple theory of economic time series using several well-known empirical economic puzzles, from stock market bubbles to the failure of conventional economic theory, to explain low levels of inflation and unemployment in the US.

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This unorthodox book derives and tests a simple theory of economic time series using several well-known empirical economic puzzles, from stock market bubbles to the failure of conventional economic theory, to explain low levels of inflation and unemployment in the US.

Professor Stanley develops a new econometric methodology which demonstrates the explanatory power of the behavioral inertia hypothesis and solves the pretest/specification dilemma. He then applies this to important measures of the world’s economies including GDP, prices and consumer spending. The behavioral inertia hypothesis claims that inertia and randomness (or ‘caprice’) are the most important factors in representing and forecasting many economic time series. The development of this new model integrates well-known patterns in economic time series data with well-accepted ideas in contemporary philosophy of science.

Academic economists will find this book interesting as it presents a unified approach to economic time series, solves a number of important empirical puzzles and introduces a new econometric methodology. Business and financial analysts will also find it useful because it offers a simple, yet powerful, framework in which to study and predict financial market movements.
Contents
Contents: Preface 1. Introduction 2. Empirical Paradox and the Behavioral Inertia Hypothesis 3. Economic Inertia as Humean Habit and Stylized Fact 4. Caprice: Dostoevsky’s Uncertainty Principle 5. Empirical Economics? An Econometric Dilemma with only a Methodological Solution 6. Ain’t Misbehavin’ – Capricious Consumption or Permanent Income? 7. Prices, Inflation, Unemployment, and Okun’s Law 8. An Empirical Critique of the Lucas Critique 9. Meta-Analysis of Ricardian Equivalence: New Wine in Old Bottles 10. The Trouble with Testing: Bubbles, Inertia and Experience in Experimental Asset Markets 11. Dénouement: What’s the Difference? References Index

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