Tag Archives: assumptions

Independent economist Peter Cooper addresses the "we-knew-it-all-along" claim and shows, not really.heteconomistOne of the Fundamental Differences Between Modern Monetary Theory and New Keynesian EconomicsPeter Cooper

Say's Law ("money is a hot potato").Lars P. Syll’s BlogMainstream economics — peddling fake knowledgeLars P. Syll | Professor, Malmo University

On Twitter this morning Jason Smith asked a good question. Is this, he asked, an “anonymous blog comment from a simpleton? ... Or analysis from a prominent financial economics professor?”... Stumbling and MumblingFacts vs hand-waving in economicsChris Dillow | Investors Chronicle

These new facts are particularly puzzling from the point of view of the standard neoclassical economic model, in which markets are perfectly competitive. In this view, profits should not persist over the long run, let alone enable the owners of corporations to increase their share of income over time. The standard model, however, cannot address many of the fundamental changes that have occurred in the U.S. economy over the past 40 years.In order to explain these new trends, I and my...

Good analysis of utopian versus utopianism. Short and important. The difference is that between ideal and real.  If the core assumptions are unrealistic and infeasible, then the consequent conceptual model will be "utopian" in the pejorative sense, and the project unachievable — "pie in the sky." If there is a disconnect between the ideal and the real, then it's utopianism. If the assumptions are realistic and feasible, then the conceptual model will be "utopian" in the positive...

Experience has shown that assuming a framework based on methodological individualism, microfoundations, and rationality based on utility leading to general equilibrium through the so-called "invisible hand" of market competition generating spontaneous natural order is not fruitful for explaining the macro scale of economic behavior and its results in terms of a general theory.Assuming that scaled up micro analysis explains macro effects risks the fallacy of composition, at the very least....

Longish and detained, but worth a read if you are following this debate.Lars P. Syll’s BlogDani Rodrik’s Ten CommandmentsLars P. Syll | Professor, Malmo University

Hayek, Coase and uncertainty. In any case I find it fascinating that the two, Hayek and Coase, both in their own way, brought the impact of uncertainty to the fore in the same year. It’s a shame that economics has never fully embraced, nor realized, the full richness of their ideas. Neither author was willing to step into the world that they clearly understood existed. Hayek was right about universal central planning: it is an impossibility. He was wrong to assert that this implied...

If you didn't catch these Scott Adams Dilbert cartoons over the last couple of days. Comic for November 28, 2017 Comic for November 29, 2017 Comic for November 30, 2017 Comic for December 01, 2017 Comic for December 02, 2017

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...