Lars P. Syll

DSGE models are missing the point In a recent attempt to defend DSGE modelling, Lawrence Christiano, Martin Eichenbaum and Mathias Trabandt have to admit that DSGE models have failed to predict financial crises. The reason they put forward for this is that the models did not “integrate the shadow banking system into their analysis.” That certainly is true — but the DSGE problems go much deeper than that: A typical modern approach to writing a paper in DSGE...

Mill provides a good illustration of the tension between fallibilism and anti-foundationalism​. Mill’s first principles are supposed to be empirical and not necessary truths, but for economics to be an empirical subject at all, they have to be beyond genuine doubt, since they provide the only empirical element in an otherwise deductive system. The certainty that Mill claims for the results of scientific economics are purchased with deep uncertainty about the significance of...

Trump’s robber baron presidency  [embedded content] In Trump’s world, ​the rich in the US obviously are not rich enough. So he has set out to lower the corporate tax rate to 20 percent and abolish the estate tax. Trump’s vision for the US​ is an unregulated and immensely unequal​ country. The working and middle classes are, of course, überjoyed … Advertisements

Why Krugman and Stiglitz are no real alternatives to mainstream economics Little in the discipline has changed in the wake of the crisis. Mirowski thinks that this is at least in part a result of the impotence of the loyal opposition — those economists such as Joseph Stiglitz or Paul Krugman who attempt to oppose the more viciously neoliberal articulations of economic theory from within the camp of neoclassical economics. Though Krugman and Stiglitz have...

Linearity — a dangerous assumption  [embedded content] Advertisements

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Getting the rabbit into the neoclassical hat In public, including in the training of economists, Neoclassical economics usually reads its models backwards. This gives the illusion that they show the behaviour of individual economic units determining sets of equilibrium values for markets and for whole economies. It hides the fact that these models have been constructed not by investigating the behaviour of individual agents, but rather by analysing the...

Volker Schlöndorff on Dustin Hoffman and Hollywood pigs Vielleicht werden die Ereignisse rund um Harvey Weinstein über Hollywood hinaus einmal als eine Zeitenwende im Verhältnis der Geschlechter gesehen werden. Doch es darf nicht sein, dass von dieser ‘Säuberungsaktion’ Menschen erfasst werden, die gar nicht in diese Kategorie gehören … Arme Dustin, ich wunsche dir, dass du, dein Ruf und deine tollen Filme nicht in den Abgrund hineingezogen werden. In den...

Getting the rabbit into the neoclassical​ hat In public, including in the training of economists, Neoclassical economics usually reads its models backwards. This gives the illusion that they show the behaviour of individual economic units determining sets of equilibrium values for markets and for whole economies. It hides the fact that these models have been constructed not by investigating the behaviour of individual agents, but rather by analysing the...

On Econs and Humans Many years ago, Thaler was hosting dinner for some guests (other then-young economists) and put out a large bowl of cashew nuts to nibble on with the first bottle of wine. Within a few minutes it became clear that the bowl of nuts was going to be consumed in its entirety, and that the guests might lack sufficient appetite to enjoy all the food that was to follow. Leaping into action, Thaler grabbed the bowl of nuts, and (while sneaking a...