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First I suggest you click this link and read this very interesting post on challenges to liberalism and liberal responses by Zack Beauchamp. It is an excellent essay, not super brief, but well worth reading end to end. Also stimulating enough that I began to type this comment before finishing it (I finished it after typing “by” and before typing Zack. I was lead to it by a tweet in which Ross Douthat asks if Beauchamp sees anything useful people to the...

from Lars Syll What does concern me about my discipline … is that its current core — by which I mainly mean the so-called dynamic stochastic general equilibrium approach — has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one … While it often makes sense to assume rational expectations for a limited application to isolate a particular mechanism that is distinct...

from Asad Zaman The following is a slightly revised excerpt of Section 1.2 from my paper on “Empirical Evidence Against Utility Theory“ – Game theorists rule out Humans with hearts by assumption. The excerpt provides some empirical evidence (not needed by anyone except economists) that human actually do have hearts, and this actually affects their behavior! surprise, surprise! The “Goeree-Holt Humans with Hearts” (GHHwH) Game: Conventional game theory operates under the assumption that...

The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The paper argues central bank independence is […]

from Lars Syll 1. Thou shalt use common sense and economic theory. 2. Thou shalt ask the right question. 3. Thou shalt know the context. 4. Thou shalt inspect the data. 5. Thou shalt not worship complexity. 6. Thou shalt look long and hard at thy results. 7. Thou shalt beware the costs of data mining. 8. Thou shalt be willing to compromise. 9. Thou shalt not confuse statistical significance with substance. 10. Thou shalt confess in the presence of sensitivity.

from Ken Zimmerman Greed is a personality disorder. While it is sometimes correct that without greed humans would still be living in caves, it is also correct that left unchecked, the insatiable desire for more and better material things can be destructive. These are the warning signs of uncontrolled greed. The first sign of the greed syndrome is overly self-centered behavior. Greedy people are always saying “me, me, me” with very little regard for the needs and feelings of others. Envy...

from Lars Syll I believe that as an economic theorist, I have very little to say about the real world and that there are very few models in economic theory that can be used to provide serious advice. However, economic theory has real effects. I cannot ignore the fact that our work as teachers and researchers influences students’ minds and does so in a way with which I am not comfortable. Can we find a way to be relevant without being charlatans? As economic theorists, we organize our...

Gross World Product source Global Carbon Dioxide Emissions source

from Lars Syll Even if interest-rate cuts at all points proximately increase demand, there are substantial grounds for concern if this effect is weak. It may be that any short-run demand benefit is offset by the adverse effects of lower rates on subsequent performance … From a macro perspective, low interest rates promote leverage and asset bubbles by reducing borrowing costs and discount factors, and encouraging investors to reach for yield. Almost every account of the 2008 financial...