“The narrow beach between the continent of clear effects and the sea of confusion”: that sweet spot between signals that are so clear you don’t need statistics, and signals that are so weak that statistical analysis can’t help

Steve Heston writes: Marginal Revolution has a nice link showing that data provide almost no power to tell us anything about macroeconomic models. Tabarrok calls this “embarrassing.” I’m not so sure. In my own field of finance, efficient market theory … Continue reading → …