Jeffrey Wooldridge, a famous econometrician, posed the following question to Bayesians on twitter: > I think frequentists and Bayesians are not yet on the same page, and > it has little to do with philosophy. It seems some Bayesians think a > proper response to clustering standard errors is to specify an HLM. > But in the linear case, HLM leads to GLS, not OLS. > > Moreover, a Bayesian would take the HLM structure seriously in all > respects: variance and correlation structure and distribution. I'm > happy to use an HLM to improve efficiency over pooled estimation, but > I would cluster my standard errors, anyway. A Bayesian would not. > > There still seems to be a general confusion that fully specifying > everything and using a GLS or joint MLE is a costless alternative to > pooled methods that use few assumptions. And the Bayesian approach is > particular unfair to pooled methods. > > One only needs to think of something like a simple time series > regression with serial correlation. I think there are four common > things one might do. > > 1. OLS with usual (nonrobust) SEs > 2. OLS with Newey-West SEs > 3. Prais-Winston with usual SEs > 4. P-W with N-W SEs > > In my view, choice (3) is almost as bad as (1). Choices (2) and (4) > make sense, with (4) requiring strict exogeneity. But at least we're > then comparing applies with applies. > > Again, what is the Bayesian version of (4) after priors and > distributional assumptions are imposed? What is the answer to Wooldridge's question?