My quick response to Volker Nitsch on May 9
Thanks for your paper, which I just read through quickly. While I haven't
read it carefully, I wanted to give you some quick feedback.
I don't think I have any serious issues with what you've done. While I
could quibble on details, most of it seems reasonable enough. I do think
that you lose a lot of efficiency by not pooling the data across years
(which gives a lot of imprecise estimates which wander around), but that
may be a matter of taste.
I think you misunderstand me in the large though. I've never taken my
estimate of 1.2 literally, and I don't recommend you do either. The point
of the original paper was just to say that the effect is large, which I
believe it is (and most of your analysis bolsters that claim). I found the
tripling to be too large for intuition when I first wrote the paper, and
all you're really doing is agreeing with me.
A few other things. I've regenerated data from scratch twice more since
the original paper was written; once for my work with van Wincoop, and
again for my paper with Glick. So while I readily admit to minor data
errors (e.g., the New Zealand/Netherlands issue), I've been trying to
correct them. The stuff on language, I leave to others; I wasn't aware
that the CIA website could be so misleading; ditto with the WTO. More
importantly, I've sort of given up on pure cross-sectional stuff, since I
think that fixed-effects estimators are the way to go (that's in my current
work with Glick).
Anyway, I enjoyed the paper, which was fun and well-written. Please
continue to send me stuff --