Tag Archives: Economics

Why most economists don’t know what they’re doing As a subject, economics seems to have a fear and disgust of thinking about philosophy and methodology that might be described as Freudian. While other social scientists’ obsession with minute discussions of their methods and rhetoric, standards of proof and what they hope to achieve might be thought of as pathological in another way, the economists’ determination to sideline methodological discussion has...

At a first glance, DSGE models seem to imply total ignorance because representative agents (or representative groups of agents with limited heterogeneity) featuring objective utility functions populate the literature. At a second glance, however, it becomes obvious that “methodological individualism” prevails and even dominates. To understand this dominance one only has to once again note that the representative agent has fixed properties only within any given model, or paper....

“New Keynesian” DSGE models To be fair to academia, it has realized that the pure DSGE model is incapable of explaining observable phenomena so they have introduced numerous amendments, known, oddly, as “imperfections” in the model. Long-term nominal contracts, other labour market frictions, imperfection in credit markets, all these and more are prayed in aid and, either rigorously or more usually ad hoc, introduced into the model, generating lags that...

Deirdre McCloskey’s shallow and misleading rhetoric This is not new to most of you of course. You are already steeped in McCloskey’s Rhetoric. Or you ought to be. After all economists are simply telling stories about the economy. Sometimes we are taken in. Sometimes we are not. Unfortunately McCloskey herself gets a little too caught up in her stories. As in her explanation as to how she can be both a feminist and a free market economist: “The market is the...

Paul Davidson (1930-2024) In Memoriam Paul Davidson, the co-founder of the Journal of Post Keynesian Economics (JPKE) and a leading Post Keynesian economist, died on June 20, 2024, in Chicago. He was born in Brooklyn, NY, on October 23, 1930, about a year after the Great Crash of 1929. He was a staunch defender of the importance of John Maynard Keynes, whose ideas, he insisted, differed fundamentally from those of the Neo-Keynesians who came to dominate...

Nedanstående är en gästpost signerad Mats Bladh Lars Syll skriver att felet med den neoklassiska teorin är dess deduktiva karaktär. Han tar Paul Krugman som exempel på att kritiska nationalekonomer själva faller tillbaka på sådana slutna modeller, och därför kan man inte ta slutenheten som det avgörande inslaget. Syll kunde ha tagit Joseph Stigler som exempel, hos vilken ”informationsmisslyckanden” höjs upp till norm i försöket att omvandla ”mainstream” inifrån. Jag vill hävda...

Paul Davidson was a critical figure in the preservation of John Maynard Keynes’s ideas, sticking with them when they were out of fashion. He was also key to the survival of the Post Keynesian school. Davidson endorsed Keynes’s liquidity preference theory of interest, and he emphasized fundamental uncertainty as a central feature of economic reality, […]

We’ve lots of evidence from different times and places that the elasticity of output with respect to capital is indeed small. In his famous paper which kickstarted this approach to thinking about economic growth, Robert Solow estimated (pdf) that only one-eighth of the increase in US GDP per worker between 1900 and 1949 was due to increases in the capital stock. The rest, he said, was due to technical progress. In Fully Grown, Dietrich Vollrath estimated that from 1950 to 2000...

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Perché yours truly non è un neo-ricardiano Così come la macroeconomia tradizionale del dopoguerra è stata criticata per essere fondata su una metodologia matematica assiomatico-deduttiva, ritengo che il nucleo del neo-ricardianismo sia basato sulla stessa metodologia. Per risolvere il problema di trovare una misura del valore che non sia influenzata dai cambiamenti nella distribuzione del reddito, Sraffa — in “Produzione di merci a mezzo di merci” —...