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November 04, 2014


Luis Enrique

but isn't bad luck, on the scale that might explain disappointing growth across all OECD economies, visible? I mean there was no missing the financial crisis. We can observe much of what explains the standard deviation of growth rates.

With this bet, you would not be talking about one country, I presume, but 'the developed world' slowing down, and if this set of countries experiences slow growth from say 2015 to 2025 without any really obvious explanation, then isn't the case for stagnation pretty much proven? On the other hand if growth gets back up to 2 per cent on average over that period, pretty much disproven?


The fact that such a big difference is hard to detect is therefore troubling.

I think you meant

The fact that such a big difference is hard to explain/understand is therefore troubling.

Tim Bassett

I can't help wondering if there is no slowdown but rather a growing systematic error in calculating the deflator due to technology.

Measuring qualitative improvement is hard and getting a price series for an object that didn't previously exist impossible. This has always been a problem but based on other evidence would seem to be a growing one

Matt Moore

This is probably the proudest moment of my online existence.

I wonder if there is more or less noise in the outcome of a horse race?

Your arguments certainly cast doubt on the reliability of statistical tests. But you have laid out a pretty good set of assumptions about the future distribution of outcomes, so there must be some odds that would make it worth your while? I'm trying to ascertain your degree of certainty through this offer, but I guess your degree of risk aversion (whatever it is) complicates this.

The broader point is that if we had proper liquid futures markets for these kinds of predictions, we might know a lot more about current money-where-your-mouth-is beliefs.


The assumption that 10-year variance is 10 times 1-year variance follows only if annual GDP changes, net of trend growth, are independent. Do you think they are?


As I also commented on economistsview: Wait, we don't know now, and we won't know even in ten years. On what time scale is the hypothesis of any use whatsoever then? Is it all just tilting at windmills while in an ivory tower, with a moat?

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