Bananas and petrol: further evidence on the forecasting accuracy of the ABS ‘headline’ and ‘underlying’ rates of inflation

In the light of the still topical nature of ‘bananas and petrol’ being blamed for driving much of the inflationary pressures in Australia in recent times, the ‘headline’ and ‘underlying’ rates of inflation are scrutinised in terms of forecasting accuracy. A general structural time‐series modelling strategy is applied to estimate models for alternative types of Consumer Price Index (CPI) measures. From this, out‐of‐sample forecasts are generated from the various models. The underlying forecasts are subsequently adjusted to facilitate comparison. The Ashley, Granger and Schmalensee (1980) test is then performed to determine whether there is a statistically significant difference between the root mean square errors of the models. The results lend weight to the recent findings of Song (2005) that forecasting models using underlying rates are not systematically inferior to those based on the headline rate. In fact, strong evidence is found that underlying measures produce superior forecasts. Copyright © 2009 John Wiley & Sons, Ltd.     

Weyl’s ‘agens theory’ of matter and the Zurich Fichte

This paper investigates Hermann Weyl’s reception of philosophical concepts stemming from the German Idealist Johann Gottlieb Fichte. In particular, Weyl’s ‘agens theory’ of matter, which he held around 1925, will be looked at. In the extant literature, the—admittedly also important—influence of Husserl on Weyl has mainly been addressed. Thus, apart from investigating some detailed Fichtean inheritances in Weyl’s concepts of causality, chance and continuity, the general difference which Weyl saw between the philosophies of Fichte and Husserl will also be discussed. For Weyl this is above all a difference between an active constructivism and a rather passive phenomenological seeing (Schau). Further, the paper shows in some detail the way Weyl was drawn into a certain reading of Fichte by his Zurich colleague, the philosopher Fritz Medicus. The methodological frame of the paper is that of Konstellationsforschung, a historical and systematic approach which proves to be particularly fruitful when investigating a (broadly speaking) German Idealist context and which allows special attention to be given to the acting subjects within the constellation under investigation. Conversely, Weyl’s agens theory suggests amendments to this methodology.     

Revisiting Galison’s ‘Aufbau/Bauhaus’ in light of Neurath’s philosophical projects

In his article entitled ‘Aufbau/Bauhaus’ and related work, Peter Galison explores the connections between the Vienna Circle and the Dessau Bauhaus. Historically, these groups were related, with members of each group familiar with the ideas of the other. Galison argues that their projects are related as well, through shared political views and methodological approach. The two main figures that connect the Vienna Circle to the Bauhaus—and the figures upon which Galison focuses—are Rudolf Carnap and Otto Neurath. Yet, in our view, the connections that Galison develops do not properly capture the common themes between the Bauhaus and Neurath’s philosophical projects. In this paper, we will examine a few of the historical connections between the Dessau Bauhaus and the Vienna Circle, as well as the philosophical connections that Galison draws between these two groups. By examining in greater depth Neurath’s philosophical commitments, we aim to demonstrate that some of these philosophical connections fail to resonate with Neurath’s projects. And, finally, we develop different connections between Neurath’s projects and the Bauhaus. In our view, these new connections between Neurath and the Dessau Bauhaus are both substantive and philosophically interesting.     

Galileo as a ‘bad theologian’: a formative myth about Galileo’s trial

For 150 years after Galileo’s condemnation in 1633, there were many references to the trial, but no sustained, heated or polarized discussions. Then came the thesis that Galileo was condemned not for being a good astronomer but for being a bad theologian (using Scripture to support astronomical hypotheses); it began in 1784–1785 with an apology of the Inquisition by Mallet du Pan in the Mercure de France and the printing in Tiraboschi’s Storia della letteratura italiana of an apocryphal letter attributed to Galileo but forged by Onorato Gaetani. This thesis is not only untenable and false but inverts and subverts the truth; it proved to be long-lasting and widely accepted; so it may be labeled a myth. It was held by such writers as Bergier; Bergier; B; Feller; Cooper; Purcell; Marini; Reumont; Madden and Duhem. Afterwards, it was generally abandoned, its death knell being pope John Paul II’s speeches in 1979–1992. The myth seems to have acted as a catalyst insofar as its creation encouraged the proliferation of pro-clerical accounts and the articulation of pro-Galilean ones, thus making the discussion of Galileo’s trial the cause célèbre it is today.     

Forecasting with an econometric model: The ‘ragged edge’ problem

In practical econometric forecasting exercises, incomplete data on current and immediate past values of endogenous variables are available. This paper considers various approaches to this ‘ragged edge’ problem, including the common device of treating as ‘temporarily exogenous’ an endogenous variable whose value is known, by deleting it from the set of endogenous variables for whose forecast values the model is solved and suppressing the corresponding structural equation. It is seen that this forecast can be adjusted to coincide with the optimal forecast. The initial discussion concerns the textbook linear simultaneous equation model; extensions to non-linear dynamic models are described.     

Rehabilitating theory: refusal of the ‘bottom-up’ construction of scientific phenomena

In this paper I inquire into Bogen and Woodward’s (1988) data/phenomena distinction, which in a similar way to Cartwright’s construal of the model of superconductivity (1995)—although in a different domain—argues for a ‘bottom-up’ construction of phenomena from data without the involvement of theory. I criticise Bogen and Woodward’s account by analysing their melting point of lead example in depth, which is usually cited in the literature to illustrate the data/phenomenon distinction. Yet, the main focus of this paper lies on Matthias Kaiser’s (1995) case study of the plate tectonic revolution, the most extensive case study that has been put forth to support the bottom-up construction of phenomena. On the basis of new historical evidence, which has been overlooked not only by Kaiser but also by the entire historical literature on the plate tectonic revolution, I demonstrate that phenomena are not constructed from the bottom-up but rather, admittedly counter-intuitively, from the top-down.     

Hermeneutical contributions to the history of science: Gadamer on ‘presentism’

This article examines how Hans G. Gadamer’s philosophical hermeneutics can contribute to contemporary debates on the concept of ‘presentism’. In the field of the history of science, this term is usually employed in two ways. First, ‘presentism’ refers to the kind of historiography which judges the past to legitimate the present. Second, this concept designates the inevitable influence of the present in the interpretation of the past. In this paper, I argue that both dimensions of the relationship between the present and the past are explored by Hans G. Gadamer in Truth and Method and other texts. In the first place, Gadamer’s critique of historicism calls into question the anti-presentist ideal of studying the past for ‘its own sake’. In the second place, Gadamer’s thesis that all understanding inevitably involves some prejudice poses the question of the inherent “present-centredness” of historical interpretations. By examining Gadamer’s hermeneutics, I seek to provide historians with new arguments and perspectives on the question of ‘presentism’.     

The ‘Popperian Programme’ and mathematics: Part II: From quasi-empiricism to mathematical research Programmes

In the first part of this article I investigated the Popperian roots of Lakatos's Proofs and Refutations, which was an attempt to apply, and thereby to test, Popper's theory of knowledge in a field—mathematics—to which it had not primarily been intended to apply. While Popper's theory of knowledge stood up gloriously to this test, the new application gave rise to new insights into the heuristic of mathematical development, which necessitated further clarification and improvement of some Popperian methodological maxims. In the present part I analyze this second phase in the development of Lakatos's Popperian programme in mathematics, and its connection to the methodology of scientific research programmes.     

Forecasting outcomes in spread betting markets: can bettors use ‘quarbs’ to beat the book?

In this paper, we examine a relatively novel form of gambling, spread (or index) betting that overlaps with practices in conventional financial markets. In this form of betting, a number of bookmakers quote bid–offer spreads about the result of some future event. Bettors may buy (sell) at the top (bottom) end of a spread. We hypothesize that the existence of an outlying spread may provide uninformed traders with forecasting information that can be used to develop improved trading strategies. Using data from a popular spread betting market in the United Kingdom, we find that the price obtaining at the market mid‐point does indeed provide a better forecast of asset values than that implied in the outlying spread. We further show that this information can be used to develop trading strategies leading to returns that are consistently positive and superior to those from noise trading. Copyright © 2005 John Wiley & Sons, Ltd.     

They give you the keys and say ‘drive it!’ Managers, referred expertise, and other expertises

On the face of it, the directors of new large scientific projects have an impossible task. They have to make technical decisions about sciences in which they have never made a research contribution—sciences in which they have no contributory expertise. Furthermore, these decisions must be accepted and respected by the scientists who are making research contributions. The problem is discussed in two interviews conducted with two directors of large scientific projects. The paradox is resolved for the managers by their use of interactional and referred expertise. The same analysis might be applicable to management in general. An Appendix, co-authored with Jeff Shrager, compares the notion of referred expertise with contributory expertise.     

‘Lord only of the ruffians and fiends’? William Whewell and the plurality of worlds debate

By the middle of the nineteenth century, the opinion of science, as well as of philosophy and even religion, was, at least in Britain, firmly in the camp of the plurality of worlds, the view that intelligent life exists on other celestial bodies. William Whewell, considered an expert on science, philosophy and religion (among other areas), would have been expected to support this position. Yet he surprised everyone in 1853 by publishing a work arguing strongly against the plurality view. This was even stranger given that he had endorsed pluralism twenty years earlier in his contribution to the Bridgewater Treatises. In this paper I show that the shift in Whewell’s view was motivated by three factors: the influence of Richard Owen’s theory of archetypes on Whewell’s view of the argument from design, and Whewell’s perception of the need to strengthen such arguments in light of evolutionary accounts of human origins; important developments in his view of philosophy and his role as a scientific expert; and new findings in astronomy. An examination of the development of Whewell’s position provides a lens through which we can view the interplay of theology, philosophy and science in the plurality of worlds debate.     

Sources of error in forecasts and expectations: U.K. economic models, 1984–8

This paper presents a comparative analysis of the sources of error in forecasts for the UK economy published over a recent four-year period by four independent groups. This analysis rests on the archiving at the ESRC Macroeconomic Modelling Bureau of the original forecasts together with all their accompanying assumptions and adjustments. A method of decomposing observed forecast errors so as to distinguish the contributions of forecaster and model is set out; the impact of future expectations treated in a ‘model-consistent’ or ‘rational’ manner is specifically considered. The results show that the forecaster's adjustments make a substantial contribution to forecast performance, a good part of which comes from adjustments that bring the model on track at the start of the forecast period. The published ex-ante forecasts are usually superior to pure model-based ex-post forecasts, whose performance indicates some misspecification of the underlying models.