Lars P. Syll

To complete the reconciliation of Keynesian economics with general equilibrium theory, Paul Samuelson introduced the neoclassical synthesis in 1955 … In this view of the world, high unemployment is a temporary phenomenon caused by the slow adjustment of money wages and money prices. In Samuelson’s vision, the economy is Keynesian in the short run, when some wages and prices are sticky. It is classical in the long run when all wages and prices have had time to adjust…. Although...

Mainstream economics — nothing but an assumption-making Nintendo game In advanced economics the question would be: ‘What besides mathematics should be in an economics lecture?’ In physics the familiar spirit is Archimedes the experimenter. But in economics, as in mathematics itself, it is theorem-proving Euclid who paces the halls … Economics … has become a mathematical game. The science has been drained out of economics, replaced by a Nintendo game of...

Det är inte ofta som skillnader mellan olika ekonometriska modellspecifikationer skapar rubriker i media men när PISA-undersökningen släpptes för några veckor sedan hände just detta. Orsaken var att OECD hävdade att svenska friskolor presterade sämre än kommunala skolor medan Skolverket kommit fram till att skillnaden mellan offentliga och privata huvudmän var liten och statistiskt osignifikant. Eftersom det är samma datamaterial som används kan det vara värt att klargöra vari...

Probability and confidence — Keynes vs. Bayes An alternative possibility is to accept the consequences of the apparent fact that the central prediction of the Bayesian model in its descriptive capacity, that people’s choices are or are ‘as if’ they are informed by real-valued subjective probabilities, is, in general, false … According to Keynes’s decision theory it is rational to prefer to be guided by probabilities determined on the basis of greater...

On analytical statistics and critical realism In this paper we began by describing the position of those critical realists who are sceptical about multi-variate statistics … Some underlying assumptions of this sceptical argument were shown to be false. Then a positive case in favour of using analytical statistics as part of a mixed-methods methodology was developed. An example of the interpretation of logistic regression was used to show that the...

There have been over four decades of econometric research on business cycles … The formalization has undeniably improved the scientific strength of business cycle measures … But the significance of the formalization becomes more difficult to identify when it is assessed from the applied perspective, especially when the success rate in ex-ante forecasts of recessions is used as a key criterion. The fact that the onset of the 2008 financial-crisis-triggered recession was...

O Magnum Mysterium (personal)  [embedded content] Breathtaking and absolutely magnificent!

The pretence of knowledge — ‘New Keynesian’ DSGE models The centre-piece of Paul Romer’s scathing attack on these models is on the ‘pretence of knowledge’ (Romer 2016) … He is critical of the incredible identifying assumptions and ‘pretence of knowledge’ in both Bayesian estimation and the calibration of parameters in DSGE models … A milder critique by Olivier Blanchard (2016) points to a number of failings of DSGE models and recommends greater openness to...

[embedded content] David Bowie, Leonard Cohen, Umberto Eco, Alan Rickman, Gene Wilder, Andrzej Wajda. RIP

Keynes’ critique of econometrics — the nodal point In my judgment, the practical usefulness of those modes of inference, here termed Universal and Statistical Induction, on the validity of which the boasted knowledge of modern science depends, can only exist—and I do not now pause to inquire again whether such an argument must be circular—if the universe of phenomena does in fact present those peculiar characteristics of atomism and limited variety which...