Must-Read: Jan Mohlmann and Wim Suyker: Blanchard and Leigh’s Fiscal Multipliers Revisited
Must-Read: Naughty, naughty!
Blanchard and Leigh’s Fiscal Multipliers Revisited: “[We] do not find convincing evidence for stronger-than-expected fiscal multipliers for EU countries…:
…during the sovereign debt crisis (2012-2013) or during the tepid recovery thereafter…. As Blanchard and Leigh did, we find a negative and statistically significant coefficient for 2009-2010 and 2010-2011 but not for 2011-2012…. For 2012-2013 we find a larger estimate than Blanchard and Leigh, but due to the higher standard error the estimated coefficient is no longer significant at the 5% level…. In the two periods we added, our estimated coefficients are close to zero…. As Blanchard and Leigh did, we find a statistically significant negative coefficient in the panel forecast for 2009-2013. This result holds for the prolonged period 2009-2015. However, we do not find a statistically significant coefficient when we perform the panel analysis for the period 2011-2015.
Nowhere in their piece do Mohlmann and Suyker report their estimated coefficient and its standard error for the entire period 2009-2015.
Repeat: nowhere in their piece do they report estimates for their entire sample.
Trying to back out estimates from the information they do give, if they had reported it they would have reported a number like -0.60 with a standard error near 0.23. Compare that to the Blanchard-Leigh estimates for 2009-2013 of a number of -0.67 with a standard error of 0.16.
See that a good and true lead is not “[There is no] convincing evidence for stronger-than-expected fiscal multipliers… during… 2012-13 or thereafter…”
See that a good and true lead would be: “There is no statistical power at all over 2012-13, 2013-14, and 2014-15 to test whether excess fiscal multipliers in those years are different than the strong excess fiscal multipliers found by Blanchard and Leigh…”
Seizing the high ground of the null hypothesis for one’s favored position, and then running tests with no power, is undignified…