Lars P. Syll

When we die / När vi dör  [embedded content]

The real debt problem One of the most effective ways of clearing up this most serious of all semantic confusions is to point out that private debt differs from national debt in being external. It is owed by one person to others. That is what makes it burdensome. Because it is interpersonal the proper analogy is not to national debt but to international debt…. But this does not hold for national debt which is owed by the nation to citizens of the same...

Lucas’ Copernican revolution — nonsense on stilts In Michel De Vroey’s version of the history of macroeconomics, Robert Lucas’ declaration of the need for macroeconomics to be pursued only within ‘equilibrium discipline’ and declaring equilibrium to exist as a postulate, is hailed as a ‘Copernican revolution.’ Equilibrium is not to be considered something that characterises real economies, but rather ‘a property of the way we look at things.’ De Vroey  —...

Microfoundations — contestable incoherence 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...

Robert Lucas’ warped methodology Economic theory, like anthropology, ‘works’ by studying societies which are in some relevant sense simpler or more primitive than our own, in the hope either that relations that are important but hidden in our society will be laid bare in simpler ones, or that concrete evidence can be discovered for possibilities which are open to us which are without precedent in our own history. Unlike anthropologists, however, economists...

[embedded content] Ricardian equivalence basically means that financing government expenditures through taxes or debts is equivalent, since debt financing must be repaid with interest, and agents — equipped with rational expectations — would only increase savings in order to be able to pay the higher taxes in the future, thus leaving total expenditures unchanged. Why? In the standard neoclassical consumption model — used in DSGE macroeconomic modeling — people are basically...

Bank stress testing — not particularly helpful  [embedded content]

Keynes-Hicks macrotheory — a ‘New Keynesian’ unicorn fantasy Paul Krugman has in numerous posts on his blog tried to defend “the whole enterprise of Keynes/Hicks macroeconomic theory” and especially his own somewhat idiosyncratic version of IS-LM. The main problem is simpliciter that there is no such thing as a Keynes-Hicks macroeconomic theory! So, let us get some things straight. There is nothing in the post-General Theory writings of Keynes that suggests...

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Responding to the critique of his Bloomberg View post on heterodox economics and its alleged anti-math position, Noah Smith approvingly cites Steve Keen telling us there is a wing of heterodox economics that is anti-mathematical. Known as “Critical Realism” and centred on the work of Tony Lawson at Cambridge UK, it attributes the failings of economics to the use of mathematics itself… Although yours truly appreciate much of Steve Keen’s debunking of mainstream economics, on...