Transcript Comments on Intangibles and Microdata Analysis Discussion by Susanto Basu 2008 World Congress on National Accounts, May 13, 2008

Comments on
Intangibles
and
Microdata Analysis
Discussion by Susanto Basu
2008 World Congress on National Accounts, May 13, 2008
What we want to do
• Take measurement seriously
• Use theory as a guide—so start from
optimizing units: Firms, consumers
• Then use this work to say something about
aggregates: Connect micro to macro
May 13, 2008
Comments on sessions 1 and 2
2
What is macroeconomics?
“Macroeconomics is microeconomics
plus aggregation”
--Frank Fisher
May 13, 2008
Comments on sessions 1 and 2
3
Dominant approach:
Macroeconomics is microeconomics
1. Most DSGE theory
2. Most macro uses of micro-econometrics
3. Exceptions rarely connect theory, data & GE
May 13, 2008
Comments on sessions 1 and 2
4
Whither aggregation?
1. Implicit in macro uses of microdata:
Learning about micro parameters tells us
what we need for macro
2. Houthakker (1955) example:
• All micro substitution elasticities zero
• Macro elasticity is one
3. Macro parameter can be outside the support
of the micro distribution. Empirical support.
May 13, 2008
Comments on sessions 1 and 2
5
Macro and micro parameters
• Macro parameters are simply different objects
• Cannot infer from micro estimates directly
• Especially since most micro estimates treat
individual / firm heterogeneity as “nuisance
parameters”
May 13, 2008
Comments on sessions 1 and 2
6
Two unpalatable alternatives
1. Macro parameter estimation using only
macro data
• Would work in Houthakker’s example
• Basu-Fernald (1997) present examples
both ways
• Generally, macro parameter instability
due to changes in micro distributions
May 13, 2008
Comments on sessions 1 and 2
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Two unpalatable alternatives, cont’d
2. Derive all macro parameters using
explicit aggregation over micro
heterogeneity
• Individual micro data series
short / noisy
• Need micro census to do any macro?
May 13, 2008
Comments on sessions 1 and 2
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My own take
• Option 1 the lesser evil; more likely to be the
conceptually correct parameter
• Until we are willing / able to do explicit
aggregation, we can overdo
“microfoundations of macroeconomics”
May 13, 2008
Comments on sessions 1 and 2
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