Lars P. Syll

Social mechanisms and inference to the best explanation Epistemologically speaking, all theory is a representation of reality, an intellectual construct, and it is always abstract: it can never catch the full-bodied reality … But if we accept the theory, we accept that the generative mechanism is real. That is, not only could it have produced the outcome, but having ruled out alternative explanations, we believe that it did produce the outcome … But we...

Norbert Häring und das Endspiel des Kapitalismus .[embedded content]

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The logic of financial markets Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each​ competitor has to pick not those faces which he himself finds prettiest, but those which he thinks likeliest to...

On Diane Coyle’s Cogs and Monsters Macroeconomists seem to me the biggest offenders in not taking such empirical issues (of practical data handling) seriously enough. This might sound like sheer contrarianism given that macroeconomists are constantly wielding data; after all, their business is analysing the behaviour of the whole economy and forecasting its future path. My concerns are, first, that too few think about the vast uncertainty associated with...

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With models, it is easy to lose track of three essential points: (i) results depend on assumptions, (ii) changing the assumptions in apparently innocuous ways can lead to drastic changes in conclusions, and (iii) familiarity with a model’s name is no guarantee of the model’s truth. Under the circumstances, it may be the assumptions behind the model that provide the leverage, not the data fed into the model. This is a danger with experiments, and even more so with...

Why economists should prefer accurate imprecision to inaccurate precision Microfounded DSGE models standardly assume rational expectations, Walrasian market clearing, unique equilibria, time invariance, linear separability and homogeneity of both inputs/outputs and technology, infinitely lived intertemporally optimizing representative household/ consumer/producer agents with homothetic and identical preferences, etc., etc. At the same time the models...

Of what use are RCTs? In her interesting Pufendorf lectures Nancy Cartwright presents a theory of evidence and explains why randomized controlled trials (RCTs) are not at all the “gold standard” that it has lately often been portrayed as. As yours truly has repeatedly argued on this blog (e.g. here and here), RCTs usually do not provide evidence that their results are exportable to other target systems. The almost religious belief with which its advocates...

How to achieve exchangeability (student stuff) .[embedded content]