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description=15 posts published by Lars Syll during February 2018;

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ay of thinking about the latter and of understanding the time sequences to which they give rise in particular cases good economists are scarce because the gift for using vigilant observation to choose good models although it does not require a highly specialised intellectual technique appears to be a very rare one john maynard keynes letter to harrod 1938 hit and run 23 feb 2018 at 21 08 posted in varia comments off on hit and run keeping the dream alive 23 feb 2018 at 16 25 posted in economics 1 comment for me the study of asymmetric information was a very first step toward the realization of a dream that dream was the development of a behavioral macroeconomics in the original spirit of keynes general theory macroeconomics would then no longer suffer from the ad hockery of the neoclassical synthesis which had over ridden the emphasis in the general theory on the role of psychological and sociological factors such as cognitive bias reciprocity fairness herding and social status my dream was to strengthen macroeconomic theory by incorporating assumptions honed to the observation of such behavior keynes general theory was the greatest contribution to behavioral economics before the present era almost everywhere keynes blamed market failures on psychological propensities as in consumption and irrationalities as in stock market speculation immediately after its publication the economics profession tamed keynesian economics they domesticated it as they translated it into the smooth mathematics of classical economics but economies like lions are wild and dangerous modern behavioral economics has rediscovered the wild side of macroeconomic behavior behavioral economists are becoming lion tamers the task is as intellectually exciting as it is difficult george akerlof keynes core in sight 23 feb 2018 at 11 15 posted in economics comments off on keynes core in sight but these more recent writers like their predecessors were still dealing with a system in which the amount of the factors employed was given and the other relevant facts were known more or less for certain at any given time facts and expectations were assumed to be given in a definite and calculable form the calculus of probability tho mention of it was kept in the background was supposed to be capable of reducing uncertainty to the same calculable status as that of certainty itself the fact that our knowledge of the future is fluctuating vague and uncertain renders wealth a peculiarly unsuitable subject for the methods of the classical economic theory by uncertain knowledge let me explain i do not mean merely to distinguish what is known for certain from what is only probable the sense in which i am using the term is that in which the prospect of a european war is uncertain or the price of copper and the rate of interest twenty years hence about these matters there is no scientific basis on which to form any calculable probability whatever we simply do not know john maynard keynes to understand real world non routine decisions and unforeseeable changes in behaviour ergodic probability distributions are of no avail in a world full of genuine uncertainty where real historical time rules the roost the probabilities that ruled the past cannot simply be assumed to be those that will rule the future time is what prevents everything from happening at once to assume that economic processes are ergodic and concentrate on ensemble averages is not a sensible way for dealing with the kind of genuine uncertainty that permeates real world economies what is important with the fact that real social and economic processes are nonergodic is the fact that uncertainty not risk rules the roost thinking about uncertainty in terms of rational expectations and ensemble averages has had seriously bad repercussions on the financial system keynes uncertainty concept has an ontological founding of course this also has repercussions on the issue of ergodicity in a strict methodological and mathematical statistical sense the most interesting and far reaching difference between an epistemological and an ontological view on uncertainty is that if one subscribes to the former you open up for the mistaken belief that with better information and greater computer power we somehow should always be able to calculate probabilities and describe the world as an ergodic universe as keynes convincingly argued that is ontologically just not possible to keynes the source of uncertainty is in the nature of the real nonergodic world it has to do not primarily with the epistemological fact of us not knowing the things that today are unknown but rather with the much deeper and far reaching ontological fact that there often is no firm basis on which we can form quantifiable probabilities and expectations at all we have to accept that if we really want to be able to understand and analyze real world phenomena we have to accept them on their own premisses our quest for knowledge should never decide how to perceive reality the most important and far reaching premiss on which modern mainstream economics builds is the assumption that genuine uncertainty is reducible to calculable risk since this is not the case modern mainstream economics is also totally useless take the rational expectations assumption rational expectations in the mainstream economists world imply that relevant distributions have to be time independent this amounts to assuming that an economy is like a closed system with known stochastic probability distributions for all different events in reality it is straining one s beliefs to try to represent economies as outcomes of stochastic processes an existing economy is a single realization tout court and hardly conceivable as one realization out of an ensemble of economy worlds since an economy can hardly be conceived as being completely replicated over time it is to say the least very difficult to see any similarity between these modelling assumptions and the expectations of real persons in the world of the rational expectations hypothesis we are never disappointed in any other way than as when we lose at the roulette wheels but real life is not an urn or a roulette wheel and that s also the reason why allowing for cases where agents make predictable errors in dsge models doesn t take us any closer to a relevant and realist depiction of actual economic decisions and behaviours if we really want to have anything of interest to say on real economies financial crisis and the decisions and choices real people make we have to replace the rational expectations hypothesis and calculable risk with more relevant and realistic assumptions concerning uncertainty than childish roulette and urn analogies or as quetelet once declared l urne que nous interrogeons c est la nature share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky courage that will live on forever 22 feb 2018 at 18 02 posted in politics society 4 comments seventy five years ago on february 22 1943 hans and sophie scholl members of the resistance group die weisse rose were killed by the nazis courage is not anything very common and the value we put on it is a witness to its rarity courage is a capability to confront fear as when in front of the powerful and mighty not to step back but stand up for one s rights not to be humiliated or abused in any ways by the rich and powerful courage is to do the right thing in spite of danger and fear to keep on even if opportunities to turn back are given like in the great stories the ones where people have lots of chances of turning back but don t dignity a better life or justice and rule of law are things worth fighting for not to step back in spite of confronting the mighty and powerful creates courageous acts that stay in our memories and means something as when hans and sophie scholl decided to fight the nazi atrocities may their beautiful souls live on forever share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky economics a science with wacky views of human behaviour 21 feb 2018 at 17 08 posted in economics 4 comments there is something about the way economists construct their models nowadays that obviously doesn t sit right the one sided almost religious insistence on axiomatic deductivist modelling as the only scientific activity worthy of pursuing in economics still has not given way to methodological pluralism based on ontological considerations rather than formalistic tractability in their search for model based rigour and certainty modern economics has turned out to be a totally hopeless project in terms of real world relevance if macroeconomic models no matter of what ilk build on microfoundational assumptions of representative actors rational expectations market clearing and equilibrium and we know that real people and markets cannot be expected to obey these assumptions the warrants for supposing that model based conclusions or hypotheses of causally relevant mechanisms or regularities can be bridged to real world target systems are obviously non justifiable incompatibility between actual behaviour and the behaviour in macroeconomic models building on representative actors and rational expectations microfoundations shows the futility of trying to represent real world target systems with models flagrantly at odds with reality as robert gordon once had it rigor competes with relevance in macroeconomic and monetary theory and in some lines of development macro and monetary theorists like many of their colleagues in micro theory seem to consider relevance to be more or less irrelevant science and the quest for truth 20 feb 2018 at 19 01 posted in economics 4 comments in my view scientific theories are not to be considered true or false in constructing such a theory we are not trying to get at the truth or even to approximate to it rather we are trying to organize our thoughts and observations in a useful manner robert aumann what a handy view of science how reassuring for all of you who have always thought that believing in the tooth fairy make you understand what happens to kids teeth now a nobel prize winning economist tells you that if there are such things as tooth fairies or not doesn t really matter scientific theories are not about what is true or false but whether they enable us to organize and understand our observations mirabile dictu what aumann and other defenders of scientific storytelling forgets is that potential explanatory power achieved in thought experimental models is not enough for attaining real explanations model explanations are at best conjectures and whether they do or do not explain things in the real world is something we have to test to just believe that you understand or explain things better with thought experiments is not enough without a warranted export certificate to the real world model explanations are pretty worthless proving things in models is not enough truth is an important concept in real science flight from the city 19 feb 2018 at 13 55 posted in varia comments off on flight from the city jóhann jóhannsson 1969 2018 r i p the future something we know very little about 18 feb 2018 at 19 54 posted in economics 1 comment all these pretty polite techniques made for a well panelled board room and a nicely regulated market are liable to collapse at all times the vague panic fears and equally vague and unreasoned hopes are not really lulled and lie but a little way below the surface perhaps the reader feels that this general philosophical disquisition on the behavior of mankind is somewhat remote from the economic theory under discussion but i think not tho this is how we behave in the marketplace the theory we devise in the study of how we behave in the market place should not itself submit to market place idols i accuse the classical economic theory of being itself one of these pretty polite techniques which tries to deal with the present by abstracting from the fact that we know very little about the future i dare say that a classical economist would readily admit this but even so i think he has overlooked the precise nature of the difference which his abstraction makes between theory and practice and the character of the fallacies into which he is likely to be led john maynard keynes next page recent posts arbetslöshetsiffran som styr den ekonomiska politiken 50 år efter studenten personal finding the late student stuff love s secret stein s paradox a lesson on precision and unbiasedness audioholic summer research ett välförtjänt bottenrekord arbetslösheten inte statsskulden är problemet how credible is the credibility revolution in econometrics randomness and representativeness are not the same lönebildning och arbetslöshet i sverige nancy cartwright s contributions to the philosophy of science what does randomisation guarantee nothing model reification in statistics and econometrics why democracy outperforms dictatorship comments policy i like comments follow netiquette comments especially anonymous ones with pseudo argumentations abusive language or irrelevant links will not be posted and please remember being a full time professor leaves only limited time to respond to comments recent comments fred torssander on arbetslöshetsiffran som styr d jan wiklund on arbetslösheten inte st lars on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet fred on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet fred on lönebildning och arbetslöshet fred on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet fredtorssander on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet lars on lönebildning och arbetslöshet fred on lönebildning och arbetslöshet reading list categories economics 4 168 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