Lars P. Syll

One of my absolute favourites Inference to the Best Explanation can be seen as an extension of the idea of `self-evidencing’ explanations, where the phenomenon that is explained in turn provides an essential part of the reason for believing the explanation is correct. For example, a star’s speed of recession explains why its characteristic spectrum is red-shifted by a specified amount, but the observed red-shift may be an essential part of the reason the astronomer has for believing that...

The irony of the program of microfoundations is that, in the name of preserving the importance of individual intentional states and preserving the individual economic agent as the foundation of economics, it fails to provide any intelligible connection between the individual and the aggregate. Instead, it embraces the representative agent, which is as close to an untethered Hegelian World (or Macroeconomic) Spirit as one might fear in the microfoundationist’s worst nightmare. Kevin...

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Big Think on Keynes  [embedded content]

Håller du inte måttet? Det gör inget. Du är kränkt! Fick du för dåliga betyg? Höll inte uppsatsen måttet? Vågade någon tala om för dig att du gjort ett dåligt arbete eller inte ansträngt dig nog? Det gör inget! För nu för tiden kan alla slö, slappa, lata och likgiltiga komma undan det egna ansvaret med tidens egen deus ex machina — de är kränkta. Och simsalabim är problemet inte längre deras utan den som hade fräckheten att våga påtala bristerna och undermåligheten. O tempora, o mores!...

In his new book — Why Minsky Matters — L. Randall Wray tries to explain in what way Hyman Minsky’s thoughts offer a radical challenge to mainstream economic theory. Although there were a handful of economists who had warned as early as 2000 about the possibility of a crisis, Minsky’s warnings actually began a half century earlier—with publications in 1957 that set out his vision of financial instability. Over the next forty years, he refined and continually updated the theory. It is not...

The most devastatingly important trade-off in mainstream economics Using formal mathematical modeling mainstream economists sure can guarantee that the conclusion holds given the assumptions. However, the validity we get in abstract model worlds does not warrantly transfer to real world economies. Validity may be good, but it isn’t enough. From a realist perspective both relevance and soundness are sine qua non. In their search for validity, rigour and precision, mainstream macro modellers...

Ben Bernanke’s econometric shadow boxing with reality I consider the work of Bernanke (1986) on the relationship between money and output because I agree with Robert King’s observation that it is an “admirable piece of normal science” even if I do not share his view that the paper is “a tribute to macroeconomics”. Bernanke’s thoughtfulness, care and attention to detail is apparent. His scientific objectivity in considering his own theory and that of others is exemplary … I single...

Larry Summers — ‘New Keynesian’ economics needs to be replaced Standard new Keynesian macroeconomics essentially abstracts away from most of what is important in macroeconomics. To an even greater extent, this is true of the dynamic stochastic general equilibrium (DSGE) models that are the workhorse of central bank staffs and much practically oriented academic work. Why? New Keynesian models imply that stabilization policies cannot affect the average level of output over time and that the...

Empirical macroeconomics — a scientific illusion Theoretical particle physicists wait anxiously to see whether experimentalists will be able to identify the particles their theories postulate. The image of an economic theorist nervously awaiting the result of a decisive econometric test does not ring true. The negligible impact of formal econometric work on the development of economic science is manifest in a number of ways … In the natural sciences, investigators rush to check out the...