Lars P. Syll

Understanding the limits of statistical inference  [embedded content] This is indeed an instructive video on what statistical inference is all about. But we have to remember that economics and statistics are two quite different things, and as long as economists cannot identify their statistical theories with real-world phenomena there is no real warrant for taking their statistical inferences seriously. Just as there is no such thing as a ‘free lunch,’...

Principal agent problems and incentive pay schemes If bonus or “incentive pay” schemes work so well for senior executives and bankers, why does everyone not get them? The conventional answer is that a bonus scheme or incentive plan will indeed encourage the recipients to make more money for the shareholders or clients on whose behalf they act … A classic paper on the “principal-agent problem” … by Bengt Holmstrom and Paul Milgrom pointed out that the...

 [embedded content] Besides illustrating that it is simply not a good description of how we make inferences in science to assume that non-black armchairs confirm the hypothesis that all ravens are black, Hempel’s paradox — at least in my reading of it — makes a good argument for a causal account of confirmation of empirical generalizations. Contrary to positivist theories of confirmation, the paradox shows that to have a good explanation in sciences, we have to make...

Mainstream economics is perfectly correct — and totally useless A balloonist, lost, sees someone walking down a country lane. The balloonist lowers the balloon and shouts down to the the walker: — Where am I? — About 20 feet above the ground, comes the reply. After a moment’s pondering, the balloonist says: — You must be an economist. — How did you know? — Your information is perfectly correct — and totally useless. Timothy Brennan...

Is Robert Lucas a Keynesian? In his Keynote Address to the 2003 History of Political Economy Conference, Nobel laureate Robert Lucas said: Well, I’m not here to tell people in this group about the history of monetary thought. I guess I’m here as a kind of witness from a vanished culture, the heyday of Keynesian economics. My credentials? Was I a Keynesian myself? Absolutely … I thought when I was trying to prepare some notes for this talk that people...

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Defenders of microfoundations and its rational expectations equipped representative agent’s intertemporal optimization often argue as if sticking with simple representative agent macroeconomic models doesn’t impart a bias to the analysis. I unequivocally reject that unsubstantiated view, and have given the reasons why here. These defenders often also maintain that there are no methodologically coherent alternatives to microfoundations modeling. That allegation is of course...

On scouts and soldiers  [embedded content] div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

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