One of my concerns about mainstream economic methodology is the dependence upon hidden variables that are estimated with techniques like the Kalman Filter. The issue is that the resulting methodology is non-falsifiable: it will always end up being consistent with any observed data (admittedly, some outright bizarre behaviour might be rejected).Bond Economics
Although this might appear to be my own hobby horse, I just want to note that I was not the first person to make such a complaint. Various heterodox authors have levelled similar complaints, but my feeling they have done so in such a long-winded fashion that non-heterodox readers like myself have a very hard time picking out what is a straightforward -- but important -- point. In reading Prosperity for All: How to Prevent Financial Crises by Roger E. Farmer (Amazon affiliate link), he makes the same point with respect to the natural rate of unemployment....
Roger Farmer's Comments On The Natural Rate Of Unemployment
Brian Romanchuk
Actually, given that working for wages should be, per the Bible, the EXCEPTION, not the rule for citizens, we should be talking about the Natural Rate of EMPLOYMENT (i.e. wage-slavery), not UNEMPLOYMENT
ReplyDeleteThat would make the Natural Rate of Unemployment about 80-95% since the vast majority of citizens should not need to work for wages (wage-slavery).