Chapter dzǵ: Tacit Preachments are the Worst Kind ȁȃȀthe frequent usefulness of “model-free estimation or approximation” and
“model freedom.”)
Far be it from me to taboo modeling, which can be a way of stimu-
lating, organizing, and presenting one’s thoughts.ȅA burst of insistence
on modeling may even be justified if it is provoked by someone’s argu-
ment that is too vague, is phrased in idiosyncratic language, or rests on
unstated assumptions. If so, challenging the theorist to put his argument
into graphs or equations may force him to make his assumptions and rea-
soning explicit. More generally, translating an argument from one style
into another may serve as a check on one’s reasoning and improve com-
munication. (Ļomas Hobbes made a noteworthy case for the transla-
tion test inȀȅȄȀ/ȀȈȅȇ, chaps.ȇandȃȅ.) While translation can indeed
be beneficial, the logical priority of propositions over models embodying
them casts doubt on insistence on modeling as the only legitimate way
to develop and communicate propositions. What warrant, then, does a
critic have for accusing an investigator of doing something disreputably
cryptic—namely, working with a model while protecting it from inspec-
tion—when he may not be working at the modeling stage at all?
őŏśŚśřőŠŞŕŏ őŢŕŐőŚŏő
Ļe recent vogue of real-business-cycle models has produced economet-
ric studies purportedly discrediting the more traditional focus on money
as a source of business fluctuations. Econometric studies enjoy the rec-
ommendations of explicit and tacit methodology both. Ļey enjoy the
reputation of coming to grips with reality by high-powered techniques,
in contrast with commonplace and mostly qualitative observations of the
role of money over the centuries and throughout the world and also in
contrast with questions about the nature of the barriers in the channels
through which money plausibly would affect output.ȅJones and NewmanȀȈȈȁis a good example. Ļe authors argue that technologi-
cal progress increases potential output but may reduce current output by making cur-
rent knowledge obsolete and disrupting current adaptations. Ļey adopt the metaphor
of goods concealed in holes in the ground in definite amounts each period. Progress
increases the amounts of goods available but reshuffles their locations, making knowledge
gained from past searches obsolete. A mathematical formulation of this metaphor, with
parameters expressing the probability of technological shocks and their effects on pro-
ductivity, does illuminate questions of welfare and its distribution and of possible policy
tradeoffs.