Lars P. Syll

Why Wall Street shorts economists and their DSGE models Very few Wall Street firms find the DSGE models useful … This should come as no surprise to anyone who has looked closely at the models. Can an economy of hundreds of millions of individuals and tens of thousands of different firms be distilled into just one household and one firm, which rationally optimize their risk-adjusted discounted expected returns over an infinite future? There is no empirical...

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DAGs — colliders and d-separation (wonkish)  [embedded content] Great lecture on something that most students have problems with when introduced to causal graph theory.

Il n’y a pas de «solution» aux difficultés que pose le capitalisme spéculatif. L’Ecole de Palo Alto a montré qu’on ne peut trouver de réponse à un problème en raisonnant dans le cadre qu’il dessine. Comme le capitalisme contemporain se nourrit d’une infinie spéculation sur les promesses de l’avenir, ce n’est pas en formulant de nouvelles promesses qu’on échappera à sa logique. Même «alternatives», elles entretiendront les mêmes chimères. La seule façon de sortir de labyrinthe,...

Sie brauchen keinen Führer Erstmals in der Geschichte des Bundestages hat ein Ausschuss seinen Vorsitzenden des Amtes enthoben, nach Verlesen eines mehrseitigen Antrags aller anderen Fraktionen, nach kurzer juristischer Gegenrede der AfD … Jüngster Anlass war ein Tweet, in dem Brandner dem Musiker Udo Lindenberg indirekt vorwarf, das Bundesverdienstkreuz als “Judaslohn” für seine scharfe Kritik an der AfD erhalten zu haben – Lindenberg, ein Verräter also....

On limits of the system — Keynes and Marx  [embedded content]

 If failing to understand some basic Keynes­ian relations is a part of the explanation of what happened, there was also another, and more subtle, story behind the confounded economics of austerity. There was an odd confusion in policy thinking between the real need for institutional reform in Europe and the imagined need for austerity – two quite different things … An analogy can help to make the point clearer: it is as if a person had asked for an antibiotic for his fever,...

Why do I blog?

Fundamental uncertainty due to unknown and unknowable future events prevents rational calculations from accurately anticipating the future. This implies that the expectations that intentionally rational actors hold are not of the kind assumed by rational expectations theory. The proposition developed in the paper states instead that expectations are fictional in the sense that they are based on pretensions of future states of the world. Understanding decision processes based...

Demand effects in the long run In the standard mainstream economic analysis — take a quick look in e.g. Mankiw’s or Krugman’s textbooks — a demand expansion may very well raise measured productivity in the short run. But in the long run, expansionary demand policy measures cannot lead to sustained higher productivity and output levels. In some non-standard heterodox analyses, however, labour productivity growth is often described as a function of output...