Tag Archives: Economics

‘New Keynesianism’ — an unpleasant macroeconomic fairy-tale The so-called new-Keynesian (or NK) model, has emerged and become a workhorse for policy and welfare analysis … The model starts from the RBC model without capital, and, in its basic incarnation, adds only two imperfections. It introduces monopolistic competition in the goods market. The reason is clear: If the economy is going to have price setters, they better have some monopoly power. It then introduces discrete nominal price...

Wren-Lewis on the New Classical Counter Revolution Simon Wren-Lewis argues in a new paper — Unravelling the New Classical Counter Revolution — that it is essential to understand the success of the New Classical Counter Revolution (NCCR), if we are going to be able to position Keynes’s  General Theory today. Writes Wren-Lewis: One other undoubted appeal that the NCCR had was that it allowed macroeconomics to be brought back under the microeconomics umbrella. New Keynesian economists can...

Georgescu-Roegen on why ‘most of the time all of us talk some nonsense’ Positivism does not seem to realize at all that the concept of verifiability — or that the position that ‘the meaning of a proposition is the method of its verification’ — is covered by a dialectical penumbra in spite of the apparent rigor of the sentences used in the argument … I hope the reader will not take offense at the unavoidable conclusion that most of the time all of us talk some nonsense, that is, express our...

Deductivism — the original sin in economics Mathematics, especially through the work of David Hilbert, became increasingly viewed as a discipline properly concerned with providing a pool of frameworks for possible realities … This emergence of the axiomatic method removed at a stroke various hitherto insurmountable constraints facing those who would mathematise the discipline of economics. Researchers involved with mathematical projects in economics could, for the time being at least,...

‘Rigorous evidence’? Yes — and totally useless! So far we have shown that for two prominent questions in the economics of education, experimental and non-experimental estimates appear to be in tension. Furthermore, experimental results across different contexts are often in tension with each other. The first tension presents policymakers with a trade-off between the internal validity of estimates from the “wrong” context, and the greater external validity of observational data analysis...

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Tänkte inte på det … [h/t Jeanette Meyer]

Revealed preference and the fundamental flaws of conventional economics We must learn WHY the argument for revealed preference, which deceived Samuelson, is wrong. As per standard positivist ideas, preferences are internal to the heart and unobservable; hence they cannot be used in scientific theories. So Samuelson came up with the idea of using the observable Choices – unobservable preferences are revealed by observable choices … Yet the basic argument is wrong; one cannot eliminate the...

Keynes vs. Samuelson on models To his credit Keynes was not, in contrast to Samuelson, a formalist who was committed to mathematical economics. Keynes wanted models, but for him, building them required ‘ a vigilant observation of the actual working of our system.’ Indeed, ‘to convert a model into a quantitative formula is to destroy its usefulness as an instrument of thought.’ That conclusion can be strongly endorsed!  

Economics — still in the land of Mordor When it comes to my economics training, I’m a late bloomer. My primary training is in evolutionary theory, which I have used as a navigational guide to study many human-related topics, such as religion. But I didn’t tackle economics until 2008 … At the time I had no way to answer this question. Economic jargon mystified me—an embarrassing confession, since I am fully at home with mathematical and computer simulation models. Economists were very...