Heterodox
[embedded content]John Eatwell On Why Economists Disagee I like the above lecture by John Eatwell. He concludes by talking about the partial equilibrium model of supply and demand "that we teach, and we justify it by the general equilibrium model". He notes that lots of economists put imperfections in. The Arrow-Debreu is currently the fundamental model of price theory among mainstream economists. According to Eatwell, economists fall into at least five groups. Those who think revisions are important to retain market rationality and try to find ways to make the model work, for example, with representative agents in Dynamic Stochastic General Equilibrium models. Those who think reasonable, empirically-based imperfections can be used to produce practical models. Those who find things that
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| John Eatwell On Why Economists Disagee |
I like the above lecture by John Eatwell. He concludes by talking about the partial equilibrium model of supply and demand "that we teach, and we justify it by the general equilibrium model". He notes that lots of economists put imperfections in. The Arrow-Debreu is currently the fundamental model of price theory among mainstream economists. According to Eatwell, economists fall into at least five groups.
- Those who think revisions are important to retain market rationality and try to find ways to make the model work, for example, with representative agents in Dynamic Stochastic General Equilibrium models.
- Those who think reasonable, empirically-based imperfections can be used to produce practical models.
- Those who find things that fit empirically and don't worry too much about the explanation. For example, consider the Solow growth model.
- Those, the top econometricians, who simply study economic variables, without a lot of theory.
- In despair, those who are trying to analyze economic variables in entirely new ways, for example, behavioral economists, Colin Cameron.
Economics today is a catalogue of results and models built around a core, the Arrow-Debreu model, the results of which nobody believes. "And we ignore the long run. Economists have a theoretical core, which we don't use, or we modify to take away from its essence, or we don't believe it."
I think that many mainstream economists will refuse to tell an outsider that that is the state of mainstream economics today.