Monday, January 11, 2010

Indoctrination

In Greg Mankiw's workbook (price $38 new on Amazon, for $200+ for book and workbook, both of which we require students to buy), on p. 147, #11 reads: "Researchers have found that countries that permit free international trade tend to:

The answer is: (a) grow more rapidly.

In the book, Mankiw cites the Sachs & Warner study which, famously, classified Japan as a "free trade country". He then cites Frankel-Romer, which nobody takes seriously (the authors key result is barely significant at 90%, they had no geographic clusters, and they basically constructed a Europe dummy -- they admit in comments that the inclusion of continent dummies would destroy their results...)

Greg-- My copy of this book is just a joke, right?

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