tag:blogger.com,1999:blog-2546602206734889307.post7758019722175236637..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Paul Romer and microfoundationsMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-2546602206734889307.post-14676781156822677042015-06-05T17:53:36.464+00:002015-06-05T17:53:36.464+00:00Economics is the study of the behaviour of vital (...Economics is the study of the behaviour of vital (as in affecting life and death) aspects of human societies. Of course it is and always has been political. How could it not be? Only the naive could imagine otherwise. This does not mean it is only political. But it is political.Martin Wolfhttps://www.blogger.com/profile/06865994744430634646noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-12291933702294362712015-05-19T10:29:56.482+00:002015-05-19T10:29:56.482+00:00You don't have any idea about "emergent p...You don't have any idea about "emergent properties," do you?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-14702938549678806382015-05-19T05:50:56.459+00:002015-05-19T05:50:56.459+00:00Who ya gonna believe, my fancy numbers or your lyi...Who ya gonna believe, my fancy numbers or your lying eyes?Anonymoushttps://www.blogger.com/profile/07944928931697915829noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41418864212814425792015-05-19T03:37:13.392+00:002015-05-19T03:37:13.392+00:00You don't have any idea how to aggregate thing...You don't have any idea how to aggregate things, do you?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1008398835142690982015-05-18T21:30:51.358+00:002015-05-18T21:30:51.358+00:00"There seems to be too much of what Paul Rome..."There seems to be too much of what Paul Romer calls "persistent disagreement" over some of the most basic parts of economic theory."<br /><br />Are you suggesting which should all agree on something that is almost certainly wrong? Is that what you call healthy and flourishing?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-72160010603624117562015-05-17T19:55:43.374+00:002015-05-17T19:55:43.374+00:00Some microeconomic theories could also benefit fro...Some microeconomic theories could also benefit from "macrofoundations". Yes, an economy is built upon the behaviour of many people, but we can also observe the whole instead and so the behaviour of each single part must be in accordance with the macro-level.<br />Another possible conclusion could be that it's not just a straight transformation from the micro to the macro-level (or the other way round), but that there are levels in between with their own rules, say, people in a market, in a company, or as part of a regionally constrained economy (national, municipial, regional, urban?) behave differently from the way they behave on their own or collectively. That would be another heavy blow for the microfoundations crusade.Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-76927353164058245312015-05-17T10:01:35.838+00:002015-05-17T10:01:35.838+00:00It's interesting to note that most models in p...It's interesting to note that most models in physics ignore the microscopic details in favour of reproducing the macroscopic effects. Examples abound: the Drude-Sommerfield Free electron model assumes electrons do not interact with one another, Lattice-Boltzmann methods assume fluid probability distributions sit on a discrete lattice, the Kuramoto model assumes identical coupled oscillators. Often it's enough to capture a few important quantities in the model (usually that energy and momentum are conserved) and leave everything else until later.<br /><br />In almost all cases the aim is to reproduce the empirically verifiable macroscopic properties of the system first, and then use that information as a bounding limit to deduce the possible microscopic behaviour of the system.<br /><br />I can't imagine what it would be like to have politically or ideologically motivated physicists (or even historians of physics) using esteemed national newspapers to espouse that clearly the free electron model is entirely wrong in its description of temperature dependent heat capacity because we know that electrons are electrically charged.<br /><br />The reason why these people don't exist in physics is obvious: it's difficult to make money out of denying physical reality. In economics, unfortunately, it wins elections.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-23897299275183606892015-05-17T00:20:43.061+00:002015-05-17T00:20:43.061+00:00Nice post and thank you for linking that blog and ...Nice post and thank you for linking that blog and paper. It really bothers me when the discipline is described as flourishing because so many different approaches are being pursued. There seems to be too much of what Paul Romer calls "persistent disagreement" over some of the most basic parts of economic theory. Anonymoushttps://www.blogger.com/profile/07730077084140053327noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42099442203453633502015-05-16T19:38:49.723+00:002015-05-16T19:38:49.723+00:00During the 08 crisis Larry Summers describes being...During the 08 crisis Larry Summers describes being visited in the White House by his Harvard colleagues full of excellent economic advise based on impeccable econometric evidence which was politically worthless. And therefore worthless. Prof. Summers found himself relying on Bagehot, Kindleberger and Minsky for guidance - not some model, however “scientific”.<br />“ As Paul perceptively points out, this makes economics more like political discourse than a scientific discipline.” Do you honestly believe that Obama or Bush would choose as economic advisors some “scientifically objective” person (assuming there is a large pool from which to choose)<br />to advise on tax, trade, energy, health, fiscal and monetary policies? But, you may argue, an independent researcher must ignore policy implications and simply search for the truth - like a good historean. Are they scientists, all positive, no normative?<br />Anonymoushttps://www.blogger.com/profile/05062760260554764634noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-55930694939463000922015-05-16T19:02:56.056+00:002015-05-16T19:02:56.056+00:00"Most DSGE modellers, who are not subject to ..."Most DSGE modellers, who are not subject to any political aversion to using price rigidity, happily use this methodology to advance the discipline."<br /><br />Why this obsession with price rigidity? Even the General Theory says that it is not price rigidity that caused permanent disequilibrium in the labour markets and why classical theory was rejected. The issue here is whether it is appropriate to view a social system, such as a national economy as the sum of individual and small group units. The two are very different. Sociology and Psychology are different fields for that reason. It is wrong to put a a national economy into a general equilibrium framework. Micro and Macro are separate. If we keep doing so we will keep bringing up the old aggregation issues and long debunked fallacies. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-61627892850860592432015-05-16T18:47:20.751+00:002015-05-16T18:47:20.751+00:00"A discipline where a huge number of alternat..."A discipline where a huge number of alternative models persist could be described as ‘flourishing’, but risks disintegrating into alternative schools of thought, where some schools have an immunisation strategy that protects them from particular kinds of empirical evidence. As Paul perceptively points out, this makes economics more like political discourse than a scientific discipline.<br /><br />I find that a bit rich. Come off it, the rational expectations school went on for decades - especially if we consider that it laid pretty much the groundwork for so-called New Keynesianism and RBC. This is not empirically driven methodology by any stretch of the imagination. Yet what we had over this time was a monopoly over knowledge and methodology. They did not need an "immunisation strategy" without amount of power. That cannot be healthy. Who can contest it without putting their necks out? Who is going to say, "hang on, the world may not be flat; you can also explain something this way - here's the evidence - but you need another methodology and be open to primary historical evidence to show it." <br /><br />We can only have a single viable theory for something, like gravity, when the evidence is irrefutable. Until then we need as many ideas as possible. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-88356224309476300172015-05-16T18:24:13.477+00:002015-05-16T18:24:13.477+00:00How about working like an historian or political s...How about working like an historian or political scientist? All that matters is the evidence. You start from the ground up. You want to know what caused X. You have no preconceptions. You know there are alternative theories out there - Marxist, Realpolitik, Neo-liberal and so on; you know that in explaining how much of the world works they are equally true and false; but in the end after you have done your investigation you say which of these, if any of them, or perhaps all of them, or none of them, explains what caused X.<br /><br />But ultimately you are not interested in whether a model explains something. Many models probably can. You are only interested in finding out the truth.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65648533248582375382015-05-16T13:26:52.033+00:002015-05-16T13:26:52.033+00:00I suspect it would be good for economics to "...I suspect it would be good for economics to "blow the whole thing up" (as they say about sports teams), because there are so many problems in the theories, methods, and overall paradigm. There are some useful insights, but to cling to these as greatly as so many do (including Krugman) is not "science." Also, there is this idea of "theories of the middle range"--those subfields you talk about--that can facilitate overall progress, because middle-range theories can facilitate healthier empirical projects and work. It's as if economics is doing everything backwards: get the "model" right and then try to stuff the data into the model. But physics, chemistry, and so many others started from empirical studies & observations, and then tried to fit theory to the data, working between induction and deduction. But doing much of this would require economists take off their rose-colored glasses (or look outside the economist's box, pick your metaphor). Are you willing, Simon? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-90145382063380108682015-05-16T12:27:50.912+00:002015-05-16T12:27:50.912+00:00Perhaps questions about the use of monetary system...Perhaps questions about the use of monetary systems might be better addressed by anthropologists rather than economists.Demetriushttps://www.blogger.com/profile/17198549581667363991noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-87648547086331422272015-05-16T12:27:13.218+00:002015-05-16T12:27:13.218+00:00Perhaps questions about the use of monetary system...Perhaps questions about the use of monetary systems might be better addressed by anthropologists rather than economists.Demetriushttps://www.blogger.com/profile/17198549581667363991noreply@blogger.com