Lars P. Syll

The Bells of Dawn [embedded content] Dmitri Hvorostovsky — Дми́трий Хворосто́вский 1962 – 2017 RIP Advertisements

Noah Smith’s unicorn defence​ of economics Unlike the old neoclassical theories, game theory concerns strategic interaction between different people. It can encompass things like wage bargaining, fraud and lots of other things that neoclassical equilibrium glosses over or leaves out.  And in game theory, free markets full of rational actors can easily, even regularly, lead to inefficient outcomes that require government intervention. Noah Smith/Bloomberg...

How to be a great economist The master-economist must possess a rare combination of gifts …​ He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his...

Nils Landgren (trombone) & Esbjörn Svensson (piano). It breaks my heart every time I play this music and I am reminded Esbjörn is no longer with us. Thank goodness your music lives on, Esbjörn. [embedded content] Advertisements

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Statistics and econometrics are not very helpful for understanding economies A statistician may have done the programming, but when you press a button on a computer keyboard and ask the computer to find some good patterns, better get clear a sad fact: computers do not think. They do exactly what the programmer told them to do and nothing more. They look for the patterns that we tell them to look for, those and nothing more. When we turn to the computer for...

In plain terms, it is evident that if what is really the same factor is appearing in several places under various disguises, a free choice of regression coefficients can lead to strange results. It becomes like those puzzles for children where you write down your age, multiply, add this and that, subtract something else, and eventually end up with the number of the Beast in Revelation. Prof. Tinbergen explains that, generally speaking, he assumes that the correlations under...

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High school graduation (personal) Our youngest, Linnea, graduated from high school today. Congratulations​ from proud father. And here with brothers and sisters: Advertisements

I think the two most important microfoundation led innovations in macro have been intertemporal consumption and rational expectations. I have already talked about the former in an earlier post … [s]o let me focus on rational expectations …  [T]he adoption of rational expectations was not the result of some previous empirical failure. Instead it represented, as Lucas said, a consistency axiom … I think macroeconomics today is much better than it was 40 years ago as a result of...