[lbo-talk] Output Falling in Oil-Rich Mexico

[Miles Jackson]

Julio Huato wrote:
> Miles wrote:
>
>   
>> 1.  "n = 1" is misleading.  In a time series,
>> the n is the number of time samples; thus n
>> is large here, not 1.
>>     
>
> In fact, the extraction or consumption rate you use as a data point
> *for a given period* is a sample *of one* drawn from the population
> random variable, i.e. the random variable that includes all possible
> extraction or consumption rates *for that period in that economy*.
>
> Ex post, that rate is just one realization of that population random
> variable, like the winning lottery number is just one realization of
> all the possible lotto numbers.  But ex ante, the rate can be any
> among a bunch of possible ones.
>
> And your extraction or consumption rate for the next period will be
> another sample *of one*.  It will not be drawn from *the same*
> population random variable, the one including *last year's* possible
> extraction or consumption rates in *last year's* economic conditions.
> The economy from which you draw your size-one samples is shifting.
> And it may be shifting in response to those very changes.
>
>   
[snippage]

Julio,

Yes, there are various statistical challenges and problems that can crop 
up when you do time series analyses.  However, the fact remains that 
Hubbert's regression model has effectively predicted U. S. oil 
production now for over 50 years.  You can talk in abstract terms about 
how difficult and complex time series can be, but that's completely 
irrelevant!  The important question is simply this: "does the time 
series model provide accurate predictions?"  For Hubbert's model, the 
answer is yes.  (Your position reminds me of a physicist who argues in 
principle that bumblebees shouldn't be able to fly, is shown a bumblebee 
buzzing around, and continues to insist that it's impossible.)

Miles