tag:blogger.com,1999:blog-2546602206734889307.post2291962593261674702..comments2024-03-29T12:16:15.785+00:00Comments on mainly macro: DSGE critics and future directions for macroMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2546602206734889307.post-49820130935076187232019-12-24T06:03:52.243+00:002019-12-24T06:03:52.243+00:00niceniceishhuhttps://www.blogger.com/profile/16471174977986572058noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-78737736276037288512012-10-14T13:02:20.801+00:002012-10-14T13:02:20.801+00:00Why not use agent-based modelling (ABM)? They'...Why not use agent-based modelling (ABM)? They're a great alternative to DSGE models, without compromising microfoundations. The Economist had a good article about ABMs: http://www.economist.com/node/16636121Corneliushttps://www.blogger.com/profile/06782914097860066903noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-89413871575601388902012-10-10T04:47:30.183+00:002012-10-10T04:47:30.183+00:00Somewhat vainly, I like to imagine that this post ...Somewhat vainly, I like to imagine that this post is directed at me ( among many others many of whom have made contributions which dwarf mine ). I am going to try to reply without being rude (there's a first time for everything).<br /><br />I will invent a hypothetical possible alternate Simon Wren-Lewis (hence ASWL) with whom I agree. Not claiming to read minds, I won't guess if this fantasy figure is in any way similar to Simon Wren-Lewis. ASWL thinks that the DSGE school dominates the field (hence the alernative is called heterodoxy) and so to suggest tossing DSGE models in the bin is to become irrelevant. The proper rhetorical strategy for reducing the dominance is to argue for reform not revolution, to argue for diversity and not to dismiss the vast bulk of research in recent decades as totally unsatisfactory etc. <br /><br />I note that the hypothetical ASWL would feel no need to address the relationship between recent research in Macro-economics and the data. Even in the hypothetical case that it were similar to that which would one expect for a fundamentally misguided research program, the power within the profession would make it unwise to consider that this might be possible.<br /><br />Someone with a higher opinion of economists than I or the purely hypothetical ASWL have might assume that the best approach to the common quest for knowledge is frank discussion in which data are considered when evaluating the promise of research programs. But since the academic debate has some effect on the very important policy debate, potentially influential people should not sacrifice their potential influence by expressing frank opinions.<br /><br />Again I am not even speculating about the relationship between ASWL and Simon Wren-Lewis.Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-6986391233181665892012-10-09T15:21:04.849+00:002012-10-09T15:21:04.849+00:00Ivan Kitov is correct: metrology is the key. Gary ...Ivan Kitov is correct: metrology is the key. Gary Gorton made a similar point: <br />"Go back to macroeconomics. Macroeconomics as a paradigm in large part is determined by what is measured. If I told you that I had a 30-year panel data set of firms by sector and I had the deltas of the change in value with respect to certain systemic risks and idiosyncratic risks, people would calibrate models to measures of risk, right?<br /><br />The way models are built, and the way people think, is determined in large part by what we measure. It’s determined by Kuznets, basically. So it’s hard to even imagine how you’re going to build models if we don’t measure things that are more directly associated with what we would like to know."<br /><br />Gorton, 2011Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41170334991770645792012-10-09T11:20:31.735+00:002012-10-09T11:20:31.735+00:001. I would strongly supports any efforts in econom...1. I would strongly supports any efforts in econometrics (statistics). At the end of the day, physics is a huge number of statistical links before any theory can be built. The Higgs boson is not a particle in the Standard Model- it needs the propability of 0.999999 and five standard deviations to be "found". Without an elaborated statistical model one can not declare the Higgs boson as found. A similar statistical approach is applicable to any theory.<br /><br />2. Both macro or microeconomics have to follow up all general prescriptions of metrology. When a researcher from hard sciences starts to dig into economic time series the first impression is that they all garbage. All macro time series I have ever touched (GDP, GDP defaltor, CPI, umeployment, labor force, productivity, population characteristics) have a big flag "not time compatibale". This kills any reasonable econometric approach by default. The first step has to be the preparation of a set of time compatible time series. <br /><br />3. In the history of physics, macrofeatures (e.g. gas laws or photo effect) were usually precursors of microfoundations. When some phenomenon has a consistent (in time and space) behaviour one may try to explain it using a (short or far-field) coordinated (collective) behaviour of constituent parts. At this stage, the link between micro and macro economics looks like "garbage in - garbage out". Ivan Kitovhttps://www.blogger.com/profile/16756147426052505832noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-73534408229109771582012-10-09T09:21:36.111+00:002012-10-09T09:21:36.111+00:00What is your view on why the intellectual tide is ...What is your view on why the intellectual tide is moving ever more strongly in favour of calibrated DSGE models?<br />Bradnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-16274351687707533312012-10-09T08:33:52.393+00:002012-10-09T08:33:52.393+00:00But for those who think that, for at least some pr...<i>But for those who think that, for at least some problems, basic micro reasoning is a good place to start, microfoundations provided a common language with which to discuss and appreciate different points of view</i><br /><br />It's a common language, but as such, it's more like Scholastic Latin than Swahili - it lets a particular class of high-status professionals talk to each other about a particular set of problems in their own area of interest. For example, emphasis on microfoundations pretty much killed institutional economics and the whole tradition running from Veblen to Galbraith.<br /><br />At the moment, probably the biggest and most interesting question in macroeconomics is whether and on what terms Spain will enter an IMF/ESM program. That question is clearly tied up with the perceived long term political consequences of doing so for Rajoy and the Partido Popular. Obviously one could create a microfounded model whereby rational voters working with limited information decided to severely penalise governing parties who gave up sovereignty, and then combine it with a microfounded public-choice model, but it would be pretty clear that this was an ad hoc response; you wouldn't have it hanging around in the literature unless you had an independent reason to believe it might come in useful. So a literature based wholly on microfounded approaches is going to be doomed to always be fighting the last war. The real scandal of macroeconomics isn't anything to do with modelling - it's that so many macroeconomists didn't know what a CDO was until they read it in the Financial Times.<br /><br />My point is that it isn't just in empirical work that DSGE needs to be reformed and supplemented; there does need to be space for views that aren't based on a view of the economy under which everything can be reduced to choice theory. I would guess that this is sort of what you have in mind by saying that DSGE needs to be "a central part" rather than "the central part" of macroeconomics, but this is where a sociological approach to the profession itself is important. The microfoundations approach, as you say, is still dominant. They have a position at the top of the profession with a massive share of the top journal slots. They're not going to give that up or share it with other schools of thought willingly. So if you're a reformer in terms of ultimate aims, you need to be a revolutionary in terms of immediate tactics. The Rioja Kidhttps://www.blogger.com/profile/06462814606739183471noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-68658154069501871892012-10-09T04:24:35.654+00:002012-10-09T04:24:35.654+00:00Heya¡my very first comment on your site. ,I have ...<br />Heya¡my very first comment on your site. ,I have been reading your blog for a while and thought I would completely pop in and drop a friendly note. . It is great stuff indeed. I also wanted to ask..is there a way to subscribe to your site via email?<br /><br /><br /><br /><br /><br /><br /><br /><a href="http://www.tutorsindia.com/ukdissertation-assignments.html" rel="nofollow">UK Assignment Help</a>kambanhttps://www.blogger.com/profile/04952904123588851721noreply@blogger.com