Rabbit’s Ph.D. Thesis:

A Parable for Graduate Students

Scene: It’s a fine sunny day in the forest, and a rabbit is sitting outside
his burrow, tippy-tapping on his typewriter.

Along comes a fox, out for a walk.

Fox: “What are you working on?”

Rabbit: “My thesis.”

Fox: “Hmmm. What’s it about?”

Rabbit: “Oh, I’m writing about how rabbits eat foxes.”
(incredulous pause)

Fox: “That’s ridiculous! Any fool knows that rabbits don’t eat foxes.”

Rabbit: “Sure they do, and I can prove it. Come with me.”

They both disappear into the rabbit’s burrow. After a few minutes, the
rabbit returns, alone, to his typewriter and resumes typing.

Soon, a wolf comes along and stops to watch the hardworking rabbit.

Wolf: “What’s that you’re writing?”

Rabbit: “I’m doing a thesis on how rabbits eat wolves.”
(loud guffaws)

Wolf: “You don’t expect to get such rubbish published, do you?”

Rabbit: “No problem. Do you want to see why?”

The rabbit and the wolf go into the burrow, and again the rabbit
returns by himself, after a few minutes, and goes back to typing.

Scene: Inside the rabbit’s burrow. In one corner, there is a pile of fox
bones. In another corner, a pile of wolf bones. On the other side of the
room, a huge lion is belching and picking his teeth.

(The End)

Moral:
It doesn’t matter what you choose for a thesis subject.
It doesn’t matter what you use for data.
What does matter is who you have for a thesis advisor.

Suppose that people are unduly optimistic about a new technology. Companies hire staff and expand production. In a world with inflexible wages, companies create excess capacity but wages do not rise sufficiently fast. The result is that inflation falls. An inflation-targeting central bank would be forced to cut interest rates under these circumstances, which would lead to even more investment. In this model, monetary policy is directly responsible for creating a boom-bust cycle.