by Here's a quote that would make Lars Syll retch: Because DSGE models start from microeconomic principles of constrained decision-making, rather than relying on historical correlations, they are more difficult to solve and analyze. However, because they are also based on the preferences of economic agents, DSGE models offer a natural benchmark for evaluating the effects of policy change.- MathWorks: Modeling the United States Economy "... based on the preferences of economic agents, DSGE models offer a natural benchmark for evaluating the effects of policy change. I think this is one of Syll's pet peeves! DSGE models are not "based on the preferences of" actual economic agents, but on simplified agents arising from "deductivist" assumptions.... The is a good illustration of "mindless
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Mike Norman considers the following as important: assumptions, conventional economics, DSGE modeling, Lars Syll, logical errors, MathWorks
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Here's a quote that would make Lars Syll retch:Because DSGE models start from microeconomic principles of constrained decision-making, rather than relying on historical correlations, they are more difficult to solve and analyze. However, because they are also based on the preferences of economic agents, DSGE models offer a natural benchmark for evaluating the effects of policy change.- MathWorks: Modeling the United States Economy"... based on the preferences of economic agents, DSGE models offer a natural benchmark for evaluating the effects of policy change.
I think this is one of Syll's pet peeves! DSGE models are not "based on the preferences of" actual economic agents, but on simplified agents arising from "deductivist" assumptions....The is a good illustration of "mindless math" aka GIGO. Mindless math presumes (hidden assumption) that quantification somehow guarantees outcomes regardless of conceptual logic that underlies the numbers.
For example, variables have arguments based on the conceptual definition of the variable in terms of a set. If the numbers do not match the defined membership of the set, then GIGO. This is all over the place in economic modeling, e.g., where homogeneity is assumed excessively, or where micro is extended to macro when the fallacy of composition applies.
Lars Syll assiduously points out these "freshman errors" in his blog. More economists should be paying attention.
I find it rather surprising that MathWorks would stumble over this.
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