Paul Romer over at his his website:
John Cochrane used a theory about Lisa Cook to dismiss her as a member of the Board of Governors of the Federal Reserve System. I know Lisa well enough to know that John’s theory does not fit the facts.
I respect both John and Lisa as economists but recognize how they differ. John is a theorist. Lisa is an empiricist. Of the two, I would rather have Lisa on the Board of Governors because she is more attentive to the facts.
I may not be able to convince John that she is better suited to the job than he, but perhaps I can persuade him that she is better suited than I, a theorist like John.
Rule of Law and Economic Growth
I proposed a theory in which growth happens because of things that people do. The abstract implication of this theory is that good policy can increase the rate of growth by encouraging people to do more of those things. The practical policy implication seemed to be that improving contract law and offering more protection for intellectual property rights would be one of the most direct ways to increase a nation’s rate of growth.
In a paper available here or here, Lisa presents evidence that she spent many years accumulating about a crucial point that this line of reasoning missed. She used patenting as a proxy for the activities that spur growth and assembled convincing evidence that there is another part of the legal system that has a bigger effect: the degree to which it creates a climate of personal security by protecting citizens from the threat of violence.
This insight could be of first order significance for our understanding of differences in national rates of growth.