Lars P. Syll

Der deutsch-sowjetische Nichtangriffspakt — auch als Hitler-Stalin-Pakt bekannt — wurde am 23. August 1939 unterzeichnet. Der Pakt garantierte dem Deutschen Reich die sowjetische Neutralität bei einer kriegerischen Auseinandersetzung mit den Westmächten. [embedded content]

Rethinking Economics actually gives a pretty good description of the state of modern macroeconomics here. There is a purist streak in economics that wants everything to follow from asumming things like ‘rationality’ and ‘equilibrium.’ That purist streak has given birth to a kind ‘deductivist blindness’ of mainstream economics, something that also to a larger extent explains why it contributes to causing economic crises rather than to solving them. But where does this...

What — if anything — do p-values test? Unless enforced by study design and execution, statistical assumptions usually have no external justification; they may even be quite implausible. As result, one often sees attempts to justify specific assumptions with statistical tests, in the belief that a high p-value or ‘‘nonsignificance’’ licenses the assumption and a low p-value refutes it. Such focused testing is based on a meta-assumption that every other...

Econometrics and the problem of unjustified assumptions There seems to be a pervasive human aversion to uncertainty, and one way to reduce feelings of uncertainty is to invest faith in deduction as a sufficient guide to truth. Unfortunately, such faith is as logically unjustified as any religious creed, since a deduction produces certainty about the real world only when its assumptions about the real world are certain … Unfortunately, assumption uncertainty...

Pourquoi un changement de direction théorique est nécessaire Il y a une certaine tendance française à attribuer à l’utilisation des mathématiques les difficultés des modèles à expliquer les phénomènes économiques … Pour moi, le problème ne réside pas dans l’utilisation des méthodes formelles mais plutôt dans une obsession poussant à améliorer et même à perfectionner des modèles qui semblent être totalement détachés de la réalité. Comme Robert Solow l’a...

Hicks on the lack of scientific progress in economics Economics, also, is prone to revolutions; but they are mostly, I believe, of a different character … They are not clear advances in the scientific sense. This is not the fault of economists. It is a consequence of the nature of the facts which we study. Our facts are not permanent, or repeatable, like the facts of the natural sciences; they change incessantly, and change without repetition … Our...

Marginal productivity theory — a dangerous thought virus The marginal productivity theory of income distribution was born a little over a century ago. Its principle creator, John Bates Clark, was explicit that his theory was about ideology and not science. Clark wanted show that in capitalist societies, everyone got what they produced, and hence all was fair: “It is the purpose of this work to show that the distribution of the income of society is...

The ‘practical’ theory of the future Now a practical theory of the future … has certain marked characteristics. In particular, being based on so flimsy a foundation, it is subject to sudden and violent changes. The practice of calmness and immobility, of certainty and security, suddenly breaks down. New fears and hopes will, without warning, take charge of human conduct. The forces of disillusion may suddenly impose a new conventional basis of valuation....

Wren-Lewis trying to cope with ideology Simon Wren-Lewis has also commented on the study by Mohsen Javdani and Ha-Joon Chang — on economics and ideology — that I wrote about earlier today. Says Wren-Lewis: I also, from my own experience, want to suggest that in their formal discourse (seminars, refereeing etc) academic economists normally pretend that this ideological bias does not exist. I cannot recall anyone in any seminar saying something like ‘you only...

We need more redistribution Income inequality as measured by the Gini coefficient rose by about 36% in the 1980s under Thatcher, but the real story is the share of income that goes to people at the very top: According to Greg Mankiw … in the United States the 1%’s share of total income, excluding capital gains, rose from about 8 percent in 1973 to 17 percent in 2010. Between 2010 and 2015 it’s risen from 17% to 22%!! It’s incredibly concentrated even among...