Lars P. Syll

In the long run — economics as ideology Although I never believed it when I was young and held scholars in great respect, it does seem to be the case that ideology plays a large role in economics. How else to explain Chicago’s acceptance of not only general equilibrium but a particularly simplified version of it as ‘true’ or as a good enough approximation to the truth? Or how to explain the belief that the only correct models are linear and that the von Neuman prices are those to which...

Macroeconomic models — beautiful but irrelevant Roman Frydman is Professor of Economics at New York University and a long time critic of the rational expectations hypothesis. In his seminal 1982 American Economic Review article Towards an Understanding of Market Processes: Individual Expectations, Learning, and Convergence to Rational Expectations Equilibrium — an absolute must-read for anyone with a serious interest in understanding what are the issues in the present discussion on rational...

‘Some are like water, some are like the heat’  [embedded content]

 [embedded content] A video masterpiece.

When science becomes dogmatism Abstraction is the most valuable ladder of any science. In the social sciences, as Marx forcefully argued, it is all the more indispensable since there ‘the force of abstraction’ must compensate for the impossibility of using microscopes or chemical reactions. However, the task of science is not to climb up the easiest ladder and remain there forever distilling and redistilling the same pure stuff. Standard economics, by opposing any suggestions that the...

‘New Keynesianism’ — an uncomfortable trade-off The crucial point however is: market conditions, which are presupposed in the model of intertemporal choice, are not given in reality. Distributing consumption optimally over time depends on the possibility of individuals to lend money on their permanent income, if temporary periods of low market income are to be bridged. Because this perfect financial market does not exist, consumption behaviour necessarily depends strongly on current...

Modern economics — an abstract monstrosity The paradox of modern economics is that while the computers are churning out more and more figures, giving more and more spurious precision to economic pronouncements, the assumptions behind this fiesta of quantification are looking less and less safe. Economic model making was never easier to undertake and never more disconnected from reality. Somewhere along the way economics took a wrong turn. What has occurred, and what has been vastly...

Yours truly on economics rules and deductivism Yours truly has two (!) articles in the latest issue (74) of Real-World Economics Review. One is a review of Dani Rodrik’s Economics Rules (Oxford University Press 2015) — When the model becomes the message — a critique of Rodrik  — on which I run a series of blogposts here in December last year. Rodrik’s book is one of those rare examples where a mainstream economist — instead of just looking the other way — takes his time to ponder on the...

Keynes’ critique of scientific atomism The kind of fundamental assumption about the character of material laws, on which scientists appear commonly to act, seems to me to be much less simple than the bare principle of uniformity. They appear to assume something much more like what mathematicians call the principle of the superposition of small effects, or, as I prefer to call it, in this connection, the atomic character of natural law. The system of the material universe must consist, if...

Kocherlakota on picking p-values The word “significant” has a special place in the world of statistics, thanks to a test that researchers use to avoid jumping to conclusions from too little data. Suppose a researcher has what looks like an exciting result: She gave 30 kids a new kind of lunch, and they all got better grades than a control group that didn’t get the lunch. Before concluding that the lunch helped, she must ask the question: If it actually had no effect, how likely would I be...