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description= 15 posts published by Lars Syll during January 2014;
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the, of, dsge, models, and, recent, comments, lars, syll, statistical, inference, we, praise, thee, preferences, that, make, economic, explode, encounters, with, fisher, is, calibration, really, scientific, advance, ll, be, dipped, det, avreglerade, järnvägssystemet, har, havererat, tillsätt, en, kriskommission, ode, la, patrie, failure, macroeconomics, on, art, using, absolutely, ridiculous, modeling, assumptions, soros, theory, reflexivity, why, wall, street, shorts, economists, their, neoklassiska, fantasifoster, chant, exil, de, döda, skall, inte, tiga, men, tala, pernicious, impact, widening, wealth, gap, posts, policy, reading, list, categories, archives, till, fadime, sahindal, född, april, 1975, turkiet, mördad, 21, januari, 2002, sverige,
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the (273), and (121), that (102), och (52), #theory (43), models (43), jan (38), for (36), not (35), this (33), with (33), are (33), som (31), but (31), have (29), 2014 (29), att (26), comments (23), model (23), people (22), may (21), utility (21), skall (20), they (19), their (19), can (19), more (18), risk (18), time (17), how (17), wealth (17), one (17), some (17), was (17), has (17), dsge (17), mar (16), apr (16), jun (16), posted (16), economists (16), new (16), med (16), jul (15), aug (15), sep (15), oct (15), nov (15), dec (15), feb (15), inte (15), most (15), you (15), from (15), för (14), har (14), wages (14), when (14), unemployment (14), expected (14), calibration (14), only (13), out (13), men (13), 2012 (12), 2013 (12), 2015 (12), 2016 (12), 2017 (12), 2018 (12), 2019 (12), 2020 (12), 2021 (12), 2022 (12), 2023 (12), 2024 (12), 2025 (12), economics (12), det (12), there (12), lars (11), lönebildning (11), arbetslöshet (11), den (11), its (11), real (11), prescott (11), 2011 (10), why (10), ett (10), market (10), world (10), who (10), till (10), would (10), labour (10), over (10), preferences (10), döda (9), off (9), use (9), expectations (9), really (9), very (9), were (9), other (8), like (8), what (8), where (8), just (8), economic (8), which (8), could (8), into (8), general (8), such (8), make (8), way (8), science (7), policy (7), should (7), economy (7), them (7), been (7), tiga (7), tala (7), problem (7), explain (7), also (7), than (7), equilibrium (7), used (7), different (7), assumptions (7), say (7), data (7), our (7), rational (7), stakes (7), aversion (7), view (6), 2026 (6), statistics (6), econometrics (6), will (6), research (6), without (6), nonsense (6), many (6), much (6), sin (6), detta (6), fönster (6), prices (6), money (6), lowering (6), supply (6), wage (6), about (6), indeed (6), because (6), terms (6), made (6), share (6), opens (6), window (6), sargent (6), inference (6), now (5), varia (5), methodology (5), politics (5), society (5), arbetslöshetssiffran (5), styr (5), being (5), allow (5), neoclassical (5), actually (5), less (5), wrote (5), kind (5), icke (5), samhälle (5), samhället (5), kan (5), mångkulturalism (5), his (5), monetary (5), keynes (5), writes (5), basic (5), since (5), work (5), these (5), economies (5), wrong (5), any (5), even (5), think (5), evidence (5), firms (5), help (5), noah (5), smith (5), those (5), right (5), seriously (5), long (5), hypothesis (5), scientific (5), effects (5), syll (4), fred (4), milch (4), recent (4), does (4), later (4), come (4), david (4), get (4), article (4), business (4), put (4), finance (4), small (4), rich (4), financial (4), mot (4), ska (4), vara (4), innebär (4), rättigheter (4), man (4), paul (4), samuelson (4), response (4), published (4), understanding (4), theories (4), employment (4), classical (4), changes (4), rather (4), modern (4), fact (4), reality (4), representative (4), determined (4), case (4), going (4), ridiculous (4), empirical (4), function (4), two (4), works (4), future (4), result (4), little (4), had (4), own (4), growth (4), results (4), then (4), enough (4), point (4), all (4), standard (4), important (4), bluesky (4), facebook (4), choices (4), statistical (4), experiments (4), advance (4), modest (4), framing (4), required (3), email (3), comment (3), school (3), reading (3), full (3), nothing (3), philosophy (3), sverige (3), same (3), dipped (3), surprise (3), add (3), robert (3), george (3), standards (3), impact (3), between (3), social (3), planet (3), political (3), eld (3), bli (3), länge (3), sig (3), när (3), dem (3), vårt (3), vill (3), kulturella (3), eller (3), normativ (3), måste (3), alla (3), specifika (3), annat (3), pinne (3), hela (3), ned (3), lawson (3), skulle (3), slutsatsen (3), years (3), chapter (3), assumed (3), milton (3), interesting (3), while (3), old (3), difference (3), inability (3), involuntary (3), macroeconomists (3), agent (3), take (3), ill (3), 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gäller (2), fungerande (2), kanske (2), kunna (2), oss (2), situation (2), blir (2), pinnar (2), dels (2), neoklassiska (2), fantasifoster (2), pointed (2), found (2), system (2), fixity (2), debate (2), friedman (2), entitled (2), davidson (2), relevant (2), part (2), explaining (2), keynesianism (2), rest (2), self (2), rigidity (2), added (2), damning (2), critique (2), obviously (2), cannot (2), incorporate (2), working (2), voluntary (2), agents (2), proposition (2), lower (2), depressions (2), flexible (2), worse (2), price (2), mostly (2), nominal (2), possibly (2), perhaps (2), substitute (2), impacts (2), exist (2), management (2), although (2), lot (2), output (2), assumption (2), choice (2), totally (2), her (2), below (2), pay (2), strong (2), firm (2), bank (2), good (2), want (2), maybe (2), useful (2), telling (2), established (2), getting (2), anyone (2), individuals (2), returns (2), support (2), perform (2), recently (2), dynamic (2), attention (2), banks (2), 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Text of the page (random words):
erable to such obvious counterexamples survived for so long i can explain it only by a weakness of the scholarly mind i call it theory induced blindness once you have accepted a theory and used it as a tool in your thinking it is extraordinarily difficult to notice its flaws you give the theory the benefit of the doubt trusting the community of experts who have accepted it but they did not pursue the idea to the point of saying this theory is seriously wrong because it ignores the fact that utility depends on the history of one s wealth not only present wealth the works of people like rabin thaler and kahneman show that expected utility theory is indeed transmogrifying truth it s an ex hypthesis or as monty python has it this parrot is no more he has ceased to be e s expired and gone to meet is maker e s a stiff bereft of life e rests in peace if you hadn t nailed im to the perch e d be pushing up the daisies is metabolic processes are now istory e s off the twig e s kicked the bucket e s shuffled off is mortal coil run down the curtain and joined the bleedin choir invisible this is an ex parrot share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky encounters with r a fisher 29 jan 2014 at 19 46 posted in statistics econometrics comments off on encounters with r a fisher is calibration really a scientific advance i ll be dipped 29 jan 2014 at 12 47 posted in economics comments off on is calibration really a scientific advance i ll be dipped noah smith had a post up yesterday lamenting nobel laureate ed prescott the 2004 prize went partly to ed prescott the inventor of real business cycle theory that theory assumes that monetary policy doesn t have an effect on gdp since rbc theory came out in 1982 a number of different people have added frictions to the model to make it so that monetary policy does have real effects but prescott has stayed true to the absolutist view that no such effects exist in an email to a new york times reporter he very recently wrote the following it is an established scientific fact that monetary policy has had virtually no effect on output and employment in the u s since the formation of the fed professor prescott also on the faculty of arizona state university wrote in an email bond buying by the fed he wrote is as effective in bringing prosperity as rain dancing is in bringing rain wow prescott definitely falls into the category of people whom miles kimball and i referred to as purist freshwater macroeconomists prescott has made some odd claims in recent years but these recent remarks were totally consistent with his prize winning research odd claims indeed true there are many kinds of useless economics held in high regard within mainstream economics establishment today few if any are less deserved than the macroeconomic theory method mostly connected with nobel laureates finn kydland robert lucas edward prescott and thomas sargent called calibration interviewed by seppo honkapohja and lee evans in macroeconomic dynamics 2005 vol 9 thomas sargent answered the question if calibration was an advance in macroeconomics in many ways yes the unstated case for calibration was that it was a way to continue the process of acquiring experience in matching rational expectations models to data by lowering our standards relative to maximum likelihood and emphasizing those features of the data that our models could capture instead of trumpeting their failures in terms of dismal likelihood ratio statistics celebrate the features that they could capture and focus attention on the next unexplained feature that ought to be explained one can argue that this was a sensible response a sequential plan of attack let s first devote resources to learning how to create a range of compelling equilibrium models to incorporate interesting mechanisms we ll be careful about the estimation in later years when we have mastered the modelling technology but is the lucas kydland prescott sargent calibration really an advance let s see what two eminent econometricians have to say in journal of economic perspective 1996 vol 10 lars peter hansen and james j hickman writes it is only under very special circumstances that a micro parameter such as the inter temporal elasticity of substitution or even a marginal propensity to consume out of income can be plugged into a representative consumer model to produce an empirically concordant aggregate model what credibility should we attach to numbers produced from their computational experiments and why should we use their calibrated models as a basis for serious quantitative policy evaluation there is no filing cabinet full of robust micro estimats ready to use in calibrating dynamic stochastic equilibrium models the justification for what is called calibration is vague and confusing error probabilistic statistician aris spanos in error and inference mayo spanos 2010 p 240 is no less critical given that calibration purposefully foresakes error probabilities and provides no way to assess the reliability of inference how does one assess the adequacy of the calibrated model the idea that it should suffice that a theory is not obscenely at variance with the data sargent 1976 p 233 is to disregard the work that statistical inference can perform in favor of some discretional subjective appraisal it hardly recommends itself as an empirical methodology that lives up to the standards of scientific objectivity and this is the verdict of paul krugman the point is that if you have a conceptual model of some aspect of the world which you know is at best an approximation it s ok to see what that model would say if you tried to make it numerically realistic in some dimensions but doing this gives you very little help in deciding whether you are more or less on the right analytical track i was going to say no help but it is true that a calibration exercise is informative when it fails if there s no way to squeeze the relevant data into your model or the calibrated model makes predictions that you know on other grounds are ludicrous something was gained but no way is calibration a substitute for actual econometrics that tests your view about how the world works in physics it may possibly not be straining credulity too much to model processes as ergodic where time and history do not really matter but in social and historical sciences it is obviously ridiculous if societies and economies were ergodic worlds why do econometricians fervently discuss things such as structural breaks and regime shifts that they do is an indication of the unrealisticness of treating open systems as analyzable with ergodic concepts the future is not reducible to a known set of prospects it is not like sitting at the roulette table and calculating what the future outcomes of spinning the wheel will be reading sargent and other calibrationists one comes to think of robert clower s apt remark that much economics is so far removed from anything that remotely resembles the real world that it s often difficult for economists to take their own subject seriously instead of assuming calibration and rational expectations to be right one ought to confront the hypothesis with the available evidence it is not enough to construct models anyone can construct models to be seriously interesting models have to come with an aim they have to have an intended use if the intention of calibration and rational expectations is to help us explain real economies it has to be evaluated from that perspective a model or hypothesis without a specific applicability is not really deserving our interest to say as edward prescott that one can only test if some theory whether it incorporates rational expectations or for that matter irrational expectations is or is not consistent with observations is not enough without strong evidence all kinds of absurd claims and nonsense may pretend to be science we have to demand more of a justification than this rather watered down version of anything goes when it comes to rationality postulates if one proposes rational expectations one also has to support its underlying assumptions none is given which makes it rather puzzling how rational expectations has become the standard modeling assumption made in much of modern macroeconomics perhaps the reason is as paul krugman has it that economists often mistake beauty clad in impressive looking mathematics for truth but i think prescott s view is also the reason why calibration economists are not particularly interested in empirical examinations of how real choices and decisions are made in real economies in the hands of lucas prescott and sargent rational expectations has been transformed from an in principle testable hypothesis to an irrefutable proposition irrefutable propositions may be comfortable like religious convictions or ideological dogmas but it is not science or as noah smith puts it but ok suppose for a moment just imagine that somewhere on some other planet there was a group of alien macroeconomists who made a bunch of theories that were completely wrong and were not even close to anything that could actually describe the business cycles on that planet and suppose that the hypothetical aliens kept comparing their nonsense theories to data and they kept getting rejected by the data but the aliens still found the nonsense theories very cool and very a priori convincing and they kept at it finding puzzles estimating parameter values making slightly different nonsense models etc in a neverending cycle of brilliant non discovery now tell me in principle how should those aliens tell the difference between their situation and our own that s the question that i think we need to be asking and that a number of people on the periphery of macro are now asking out loud share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky det avreglerade järnvägssystemet har havererat tillsätt en kriskommission 28 jan 2014 at 12 41 posted in politics society 2 comments yours truly har idag tillsammans med bl a jan du rietz sven jernberg och hans albin larsson en artikel i götborgs posten om det svenska järnvägseländet staten har satsat ett par miljarder kronor i dagens penningvärde på att lägga ned och riva banor triangelspår och mötesspår vilket minskat järnvägens kapacitet och gett ett stelt och störningskänsligt trafiksystem det har ihop med ofta misskötta och olämpliga tåg och otillräcklig redundans i tekniska hjälpsystem gett inställda och försenade tåg vilket blir kostsamt för resenärerna näringslivet och samhället alla problem gör dessutom att allt fler kunder flyr tågtrafiken bildandet av trafikverket hotar bli dödsstöten för järnvägen verket har fått ett för en myndighet omöjligt politiskt uppdrag när det gäller att välja mellan väg och järnväg trafikverket har inte heller uppgiften att restaurera järnvägssystemet och saknar dessutom kompetens för detta en kriskommission med extraordinära befogenheter som kan koncentrera sig på järnvägens problem krävs regeringen bör bland annat kalla in experter från fungerande järnvägsländer för att klara en nödvändig omstrukturering av hela järnvägssystemet ode à la patrie 26 jan 2014 at 16 28 posted in varia 2 comments the failure of dsge macroeconomics 24 jan 2014 at 10 56 posted in economics 5 comments as 2014 begins it s clear enough that any theory in which mass unemployment or in the us case withdrawal from the labour force can only occur in the short run is inconsistent with the evidence given that unions are weaker than they have been for a century or so and that severe cuts to social welfare benefits have been imposed in most countries the traditional rightwing explanation that labour market inflexibility arising from minimum wage laws or unions is the cause of unemployment appeals only to ideologues who are unfortunately plentiful after the global financial crisis it became clear that the concessions made by the new keynesians were ill advised in both theoretical and political terms in theoretical terms the dsge models developed during the spurious great moderation were entirely inconsistent with the experience of the new depression the problem was not just a failure of prediction the models simply did not allow for depressions that permanently shift the economy from its previous long term growth path in political terms it turned out that the seeming convergence with the new classical school was an illusion faced with the need to respond to the new depression most of the new classical school retreated to pre keynesian positions based on versions of say s law supply creates its own demand that say himself would have rejected and advocated austerity policies in the face of overwhelming evidence that they were not working relative to dsge the key point is that there is no unique long run equilibrium growth path determined by technology and preferences to which the economy is bound to return in particular the loss of productive capacity skills and so on in the current depression is for all practical purposes permanent but if there is no exogenously determined though maybe still stochastic growth path for the economy economic agents workers and firms can t make the kind of long term plans required of them in standard life cycle models they have to rely on heuristics and rules of thumb this is in my view the most important point made by post keynesians and ignored by old old keynesians john quiggin crooked timber on dsge and the art of using absolutely ridiculous modeling assumptions 23 jan 2014 at 23 08 posted in economics theory of science methodology 4 comments reading some of the comments by noah smith david andolfatto and others on my post why wall street shorts economists and their dsge models i as usual get the feeling that mainstream economists when facing anomalies think that there is always some further technical fix that will get them out of the quagmire but are these elaborations and amendments on something basically wrong really going to solve the problem i doubt it acting like the baker s apprentice who having forgotten to add yeast to the dough throws it into the oven afterwards simply isn t enough when criticizing the basic workhorse dsge model for its inability to explain involuntary unemployment some dsge defenders maintain that later elaborations e g newer search models manage to do just that i strongly disagree one of the more conspicuous problems with those solutions is that they as e g pissarides loss of skill during unemployment and the persistence of unemployment shocks qje 1992 are as a rule constructed without seriously trying to warrant that the model immanent assumptions and results are applicable in the real world external validity is more or less a non existent problematique sacrificed on the altar of model derivations this is not by chance for how could one even imagine ...
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