Lars P. Syll

[h/t Unlearning Economics] The only economic analysis that mainstream economists accept is the one that takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics. All models and theories that do not live up to the precepts of the mainstream methodological canon are pruned. You’re free to take your models — not using (mathematical) models at all is considered totally unthinkable — and apply them to whatever you want — as long...

Economics — an empty and inexact science Of course economics involves cases where economists appear too reluctant to give up their favoured models. You can find similar stories in the hard sciences. There will be more such stories in economics because the inexact nature of economics makes it easier to discount any single piece of evidence. What I cannot understand is what leads someone … to argue against the use of evidence, and instead that “economics is...

Yes — there is something really wrong with macroeconomics One way that macroeconomics stands out from other fields in economics is in how often it produces forecasts. The vast majority of empirical models in economics can be very successful at identifying causal relations or at fitting explaining behavior, but they are never used to provide unconditional forecasts, nor do people expect them to. Macroeconomists, instead, are asked to routinely produce...

Swedish economics establishment and pluralism in economics In the latest issue of Fronesis yours truly and a couple of other academics (e.g. Julie Nelson, Tony Lawson, and Phil Mirowski) made an effort at introducing its readers to heterodox economics and its critique of mainstream economics. Rather unsurprisingly this hasn’t pleased the Swedish economics establishment. On the mainstream economics blog Ekonomistas, professor Daniel Waldenström today rode...

Confusing statistics with research Coupled with downright incompetence in statistics, we often find the syndrome that I have come to call statisticism: the notion that computing is synonymous with doing research, the naïve faith that statistics is a complete or sufficient basis for scientific methodology, the superstition that statistical formulas exist for evaluating such things as the relative merits of different substantive theories or the “importance”...

‘Rigorous’ evidence — often worse than useless So far we have shown that for two prominent questions in the economics of education, experimental and non-experimental estimates appear to be in tension. Furthermore, experimental results across different contexts are often in tension with each other. The first tension presents policymakers with a trade-off between the internal validity of estimates from the “wrong” context, and the greater external validity of...

Why the realism of assumptions do matter Few economists think about methodology, but the methodological foundation of neoclassical economics is Milton Friedman’s (1953) version of ‘positivism.’ Positivism asserts two important theses. First, neither the extent to which the assumption set of a theory incorporates all the core elements of the phenomenon under investigation, nor the institutional or behavioral or empirical realism of the assumptions adopted...

Sticky wages is not the problem! The stickiness of wages seems to be one of the key stylized facts of economics. For some reason, the idea that sticky wages may be the key to explaining business-cycle downturns in which output and employment — not just prices and nominal incomes — fall is now widely supposed to have been a, if not the, major theoretical contribution of Keynes in the General Theory. The association between sticky wages and Keynes is a rather...

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Higher — not lower — wages could be the answer The general view of most policymakers and analysts is that if firms, in aggregate, increase workers’ wages before there has been an increase in national productivity, the result will simply be a damaging burst of economy-wide inflation as too much money chases too few goods and services. This is the kind of description of the way the world works that one can find from economic authorities such as the Bank of...