Lars P. Syll

Michael Woodford on models But I do not believe that the route to sounder economic reasoning will involve an abandonment of economists’ penchant for reasoning with the use of models. Models allow the internal consistency of a proposed argument to be checked with greater precision; they allow more finely-grained differentiation among alternative hypotheses, and they allow longer and more subtle chains of reasoning to be deployed without both author and...

On war and economics They soon found out how difficult the subject was, and felt justified in evading the problem by again directing their principles and systems only to physical matters and unilateral activity. As in the science concerning the preparations for war, they wanted to reach a set of sure and positive conclusions and for that reason considered only factors that could be mathematically calculated … It is only analytically that these attempts at...

Does it — really — take a model to beat a model? No! Many economists respond to criticism by saying that ‘all models are wrong’ … But the observation that ‘all models are wrong’ requires qualification by the second part of George Box’s famous aphorism — ‘but some are useful’ … The relevant  criticism of models in macroeconomics and finance is not that they are ‘wrong’ but that they have not proved useful in macroeconomics and have proved misleading in...

On ergodicity and epistemological vs. ontological uncertainty A couple of years ago yours truly had a discussion on the real-world economics review blog with Paul Davidson on ergodicity and the differences between Knight and Keynes re uncertainty. It all started with me commenting on Davidson’s article Is economics a science? Should economics be rigorous? : LPS: Davidson’s article is a nice piece – but ergodicity is a difficult concept that many students of...

Covid-19 — comme le disait Keynes, nous ne savons tout simplement pas! La pandémie bouscule les économistes. Sauront-ils nous aider à appréhender l’incertitude de notre avenir collectif ? La question plonge ses racines dans des débats anciens sur la possibilité même de penser un futur incertain … Il y a exactement un siècle, en 1921, l’économiste américain Frank Knight (1885-1972) pose les fondements analytiques des théories économiques contemporaines de...

Comment l’Allemagne est devenue keynésienne En quelques semaines, l’Allemagne, championne des excédents budgétaires, est devenue keynésienne … Comment expliquer un revirement si radical ? D’abord par la nature particulière de la crise due au Covid-19. Dans cette pandémie, à la différence de la crise de l’euro, il n’y a pas de « fautif », pas d’incurie politique ou bancaire à corriger … Tous les responsables politiques du pays se sont rendus à l’évidence :...

David Graeber In Memoriam . [embedded content] Depuis le début de la pandémie, ses travaux opposant les « boulots à la con »(« bullshit jobs ») aux métiers du soin (le « care »), sous-payés alors qu’indispensables à nos sociétés, ont une résonance particulière avec l’actualité. David Graeber, anthropologue et anarchiste américain, est mort mercredi 2 septembre à Venise, en Italie … Il avait 59 ans. Auteur de plusieurs ouvrages reconnus, il était l’un des...

What the euro is all about There are still some economists and politicians out there who think that the euro is the only future for Europe. However, there seem to be some rather basic facts about optimal currency areas that it would perhaps be wise to consider … The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do. That progenitor...

Pandemic depression antidote (XXIII) [embedded content]

In L. J. Savage’s seminal The Foundations of Satistics the reader is invited to tackle the problem of an uncertain future using the concept of ‘lottery tickets’ and the principle of ‘look before you leap.’ Carried to its logical extreme, the ‘Look before you leap’ principle demands that one envisage every conceivable policy for the government of his whole life (at least from now on) in its most minute details, in the light of the vast number of unknown states of the world, and...