Wednesday, July 9, 2014

Lars P. Syll — What to do to make economics a relevant and realist science

The other day yours truly wrote re Krugman‘s dangerous neglect of methodological reflection… 
Now Brad DeLong earlier today commented on my critique:
OK …
Suppose we decide that we are no longer going to:
Pretend that agents — or economists — know the data-generating process…
Recognize that people are not terribly committed to Bayesianism -– that they do not model probabilities as if they have well-defined priors and all there is is risk…
What do we then do –- what kind of economic arguments do we make–once we have made those decisions? 
Lars P Syll's Blog
What to do to make economics a relevant and realist science
Lars P. Syll | Professor, Malmo University

5 comments:

Dan Kervick said...

All of Lars's suggestions are of the form "Stop doing so-and-so." But I think the spirit of DeLong's question was to wonder what positive contributions economists can make once they stop making negative ones.

y said...

Paul Krugman has a few posts on how the wealthy benefit the most from higher interest rates:

http://krugman.blogs.nytimes.com/2014/07/09/on-losing-interest/

http://krugman.blogs.nytimes.com/2014/07/09/more-on-class-and-monetary-policy/

http://krugman.blogs.nytimes.com/2014/07/08/class-and-monetary-policy/


He describes cutting interest rates to near zero as equivalent to a tax...

Neil Wilson said...

Interest rates at zero isn't a tax. It's a redistribution from savers to the borrowers that subsidise them.

But that still means you have to have private borrowers.

Which is the fundamental problem with any 'monetary policy uber alles' approach.

We'll not get anywhere until jiggling interest rates around is dropped as a tool. People don't respond to interest rates in the way economists think they do.

Roger Erickson said...

The most positive thing economists might do is to stop constraining democracy, and instead return to promoting political economics .... instead of currency economics in isolation.

Just tell the truth, that there is no one subset of cultural metrics that allows continuous management of a diversifying culture. Agile cultures requires exploring unpredictable options, and then discovering whatever unpredictable combination of metrics allow navigation of transient contexts.

Ryan Harris said...
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