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| ruetheday@outgun.com |
 Posted: Wed Nov 23, 2005 8:16 am |
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Guest
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[quote:cb3910d9e6]The main problem is in macroeconomics. The appeal for the student is
in the mathematical models which themselves are perfectly rigorous.
But the models abstract from the real world which is messy and
complex. They are necessarily full of simplifying assumptions and
ceteris paribus arguments which ignore significant effects.
The same can be said about microeconomics.
[/quote:cb3910d9e6]
[quote:cb3910d9e6]Really? What examples do you have in mind?
[/quote:cb3910d9e6]
Ever hear of a Walrasian Auctioneer? Even putting aside some of the
esoterica of general equilibrium theory, there are a number of
abstractions within basic partial equilibrium theory that sufficiently
remove the models from reality to question the applicability of their
results.
The reduction of time to a "short run" and a "long run". (Yes, I
recognize that by definition these are static rather than dynamic
models, that is very much the point).
All of utility theory.
The assumption of endowments, tastes, and technology as a given.
The assumption (outside of oligopoly) that firms and consumers each
maximize a single variable (profit or utility) and do not strategically
interact with one another. |
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| sinister |
| Posted: Wed Nov 23, 2005 8:49 am |
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<ruetheday@outgun.com> wrote in message
news:1132751776.277744.172440@g47g2000cwa.googlegroups.com...
[quote:4d9d9547bc]The main problem is in macroeconomics. The appeal for the student is
in the mathematical models which themselves are perfectly rigorous.
But the models abstract from the real world which is messy and
complex. They are necessarily full of simplifying assumptions and
ceteris paribus arguments which ignore significant effects.
The same can be said about microeconomics.
Really? What examples do you have in mind?
Ever hear of a Walrasian Auctioneer? Even putting aside some of the
[/quote:4d9d9547bc]
No...
Here's what Wikipedia says: "The Walrasian auctioneer (introduced by Leon
Walras) is the presumed auctioneer that matches supply and demand in a
market of perfect competition. The auctioneer provides for the features of
perfect competition: perfect information and no transaction costs. The
process is called tātonnement, or groping, relating to finding the market
clearing price."
Seems OK for *competitive* markets. Doesn't seem right for e.g. labor
markets.
[quote:4d9d9547bc]esoterica of general equilibrium theory, there are a number of
abstractions within basic partial equilibrium theory that sufficiently
remove the models from reality to question the applicability of their
results.
[/quote:4d9d9547bc]
Really? What's a short list of problems with partial equil. th.?
[quote:4d9d9547bc]The reduction of time to a "short run" and a "long run". (Yes, I
recognize that by definition these are static rather than dynamic
models, that is very much the point).
[/quote:4d9d9547bc]
My impression is that there's zero dynamical content to economics. Does
anyone ever publish papers with a "d/dt" or "partial/partial t" in them?
[quote:4d9d9547bc]All of utility theory.
[/quote:4d9d9547bc]
What part of utility theory don't you like?
[quote:4d9d9547bc]The assumption of endowments, tastes, and technology as a given.
[/quote:4d9d9547bc]
Who'd you trust---economists, or firms which spend billions of dollars on
advertising?
;-)
[quote:4d9d9547bc]The assumption (outside of oligopoly) that firms and consumers each
maximize a single variable (profit or utility) and do not strategically
interact with one another.[/quote:4d9d9547bc] |
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| ruetheday@outgun.com |
| Posted: Wed Nov 23, 2005 10:57 am |
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Guest
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[quote:6fd37e523f]Ever hear of a Walrasian Auctioneer? Even putting aside some of the
[/quote:6fd37e523f]
[quote:6fd37e523f]No...
Here's what Wikipedia says: "The Walrasian auctioneer (introduced by Leon
Walras) is the presumed auctioneer that matches supply and demand in a
market of perfect competition. The auctioneer provides for the features of
perfect competition: perfect information and no transaction costs. The
process is called tātonnement, or groping, relating to finding the market
clearing price."
[/quote:6fd37e523f]
[quote:6fd37e523f]Seems OK for *competitive* markets. Doesn't seem right for e.g. labor
markets.
[/quote:6fd37e523f]
You're missing the point. General equilibrium models typically assume
a structure where all of the buyers and sellers of each good (input
goods and final goods) cry out prices and quantities under which they
would be willing to trade. The Walrasian auctioneer then listens to
all of this and repeats the process over and over until he comes up
with a set of equilibrium prices and quantities that will balance the
system. Then and only then does trading actually happen, no trades are
actually conducted at disequilibrium prices. Does this sound like any
market you're aware of?
[quote:6fd37e523f]The reduction of time to a "short run" and a "long run". (Yes, I
recognize that by definition these are static rather than dynamic
models, that is very much the point).
[/quote:6fd37e523f]
[quote:6fd37e523f]My impression is that there's zero dynamical content to economics. Does
anyone ever publish papers with a "d/dt" or "partial/partial t" in them?
[/quote:6fd37e523f]
Not that I'm aware of, but I could be wrong. Economists' conception of
dynamic models generally consist of recursive iterations of static
models, not the sort of dynamic models used in other sciences.
[quote:6fd37e523f]All of utility theory.
[/quote:6fd37e523f]
[quote:6fd37e523f]What part of utility theory don't you like?
[/quote:6fd37e523f]
All of it. Revealed preferences are not falsifiable; they are true by
definition. |
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| sinister |
| Posted: Wed Nov 23, 2005 11:43 am |
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<ruetheday@outgun.com> wrote in message
news:1132761438.632162.267850@f14g2000cwb.googlegroups.com...
[quote:d889417959]Ever hear of a Walrasian Auctioneer? Even putting aside some of the
[/quote:d889417959]
[quote:d889417959]No...
Here's what Wikipedia says: "The Walrasian auctioneer (introduced by Leon
Walras) is the presumed auctioneer that matches supply and demand in a
market of perfect competition. The auctioneer provides for the features of
perfect competition: perfect information and no transaction costs. The
process is called tātonnement, or groping, relating to finding the market
clearing price."
[/quote:d889417959]
[quote:d889417959]Seems OK for *competitive* markets. Doesn't seem right for e.g. labor
markets.
[/quote:d889417959]
You're missing the point. General equilibrium models typically assume
a structure where all of the buyers and sellers of each good (input
goods and final goods) cry out prices and quantities under which they
would be willing to trade. The Walrasian auctioneer then listens to
all of this and repeats the process over and over until he comes up
with a set of equilibrium prices and quantities that will balance the
system. Then and only then does trading actually happen, no trades are
actually conducted at disequilibrium prices. Does this sound like any
market you're aware of?
[quote:d889417959]The reduction of time to a "short run" and a "long run". (Yes, I
recognize that by definition these are static rather than dynamic
models, that is very much the point).
[/quote:d889417959]
[quote:d889417959]My impression is that there's zero dynamical content to economics. Does
anyone ever publish papers with a "d/dt" or "partial/partial t" in them?
[/quote:d889417959]
Not that I'm aware of, but I could be wrong. Economists' conception of
dynamic models generally consist of recursive iterations of static
models, not the sort of dynamic models used in other sciences.
[quote:d889417959]All of utility theory.
[/quote:d889417959]
[quote:d889417959]What part of utility theory don't you like?
[/quote:d889417959]
All of it. Revealed preferences are not falsifiable; they are true by
definition. |
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| sinister |
| Posted: Wed Nov 23, 2005 1:54 pm |
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Guest
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<ruetheday@outgun.com> wrote in message
news:1132761438.632162.267850@f14g2000cwb.googlegroups.com...
Huh. That last post of mine added nothing; Outlook Express hiccup.
[quote:dd357a7ba1]Ever hear of a Walrasian Auctioneer? Even putting aside some of the
No...
Here's what Wikipedia says: "The Walrasian auctioneer (introduced by Leon
Walras) is the presumed auctioneer that matches supply and demand in a
market of perfect competition. The auctioneer provides for the features of
perfect competition: perfect information and no transaction costs. The
process is called tātonnement, or groping, relating to finding the market
clearing price."
[/quote:dd357a7ba1]
[quote:dd357a7ba1]Seems OK for *competitive* markets. Doesn't seem right for e.g. labor
markets.
[/quote:dd357a7ba1]
rue> You're missing the point. General equilibrium models typically assume
a structure where all of the buyers and sellers of each good (input
goods and final goods) cry out prices and quantities under which they
would be willing to trade. The Walrasian auctioneer then listens to
all of this and repeats the process over and over until he comes up
with a set of equilibrium prices and quantities that will balance the
system. Then and only then does trading actually happen, no trades are
actually conducted at disequilibrium prices. Does this sound like any
market you're aware of?
Important thing is how far it is from reality.
If a market is extremely competitive, liquid, etc, does it really matter
much (in terms of model's departure from reality) that some trades aren't at
equilibrium?
[quote:dd357a7ba1]The reduction of time to a "short run" and a "long run". (Yes, I
recognize that by definition these are static rather than dynamic
models, that is very much the point).
[/quote:dd357a7ba1]
[quote:dd357a7ba1]My impression is that there's zero dynamical content to economics. Does
anyone ever publish papers with a "d/dt" or "partial/partial t" in them?
[/quote:dd357a7ba1]
rue> Not that I'm aware of, but I could be wrong. Economists' conception of
dynamic models generally consist of recursive iterations of static
models, not the sort of dynamic models used in other sciences.
Hmm....doesn't sound like bona fide dynamic modelling. |
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| ruetheday@outgun.com |
| Posted: Wed Nov 23, 2005 2:53 pm |
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Guest
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[quote:be1d8a2828]Important thing is how far it is from reality.
[/quote:be1d8a2828]
[quote:be1d8a2828]If a market is extremely competitive, liquid, etc, does it really matter
much (in terms of model's departure from reality) that some trades aren't at
equilibrium?
[/quote:be1d8a2828]
It matters very much if you want to show that markets always clear and
that there can never be an overall systemic over or under supply of
goods.
[quote:be1d8a2828]Hmm....doesn't sound like bona fide dynamic modelling.
[/quote:be1d8a2828]
It's not. |
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| Michael Scheltgen |
| Posted: Wed Nov 23, 2005 2:54 pm |
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sinister wrote:
[quote:312a7b9ec4]ruetheday@outgun.com> wrote in message
news:1132673978.857193.21330@f14g2000cwb.googlegroups.com...
The main problem is in macroeconomics. The appeal for the student is
in the mathematical models which themselves are perfectly rigorous.
But the models abstract from the real world which is messy and
complex. They are necessarily full of simplifying assumptions and
ceteris paribus arguments which ignore significant effects.
The same can be said about microeconomics.
Really? What examples do you have in mind?
[/quote:312a7b9ec4]
For starters: that consumers are rational and have full
information  |
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| sinister |
| Posted: Wed Nov 23, 2005 3:58 pm |
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Guest
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<ruetheday@outgun.com> wrote in message
news:1132775628.641728.225260@g44g2000cwa.googlegroups.com...
[quote:d98dca9656]Important thing is how far it is from reality.
If a market is extremely competitive, liquid, etc, does it really matter
much (in terms of model's departure from reality) that some trades aren't
at
equilibrium?
It matters very much if you want to show that markets always clear and
that there can never be an overall systemic over or under supply of
goods.
[/quote:d98dca9656]
But we know markets don't always clear...right?
[quote:d98dca9656]Hmm....doesn't sound like bona fide dynamic modelling.
It's not.
[/quote:d98dca9656] |
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| Les Cargill |
| Posted: Wed Nov 23, 2005 8:37 pm |
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sinister wrote:
[quote:26fb8f6b1b]ruetheday@outgun.com> wrote in message
snip
You're missing the point. General equilibrium models typically assume
a structure where all of the buyers and sellers of each good (input
goods and final goods) cry out prices and quantities under which they
would be willing to trade. The Walrasian auctioneer then listens to
all of this and repeats the process over and over until he comes up
with a set of equilibrium prices and quantities that will balance the
system. Then and only then does trading actually happen, no trades are
actually conducted at disequilibrium prices. Does this sound like any
market you're aware of?
[/quote:26fb8f6b1b]
How is that different from straight price thoery? Are you saying
that's out the door, too?
I know that continuous models of price perform well enough
for workaday commodities *as a basis*, with some bias
thrown in for the less linear parts. The ones I've seen are
all hacks, put together out of almost discontinuous
regions. There are of course "singularities", but
so it goes.
The disequilibrium trades sound like they're part of the
propagation delay in the feedback loops. They're
control-feedback error.
<snip>
[quote:26fb8f6b1b]What part of utility theory don't you like?
All of it. Revealed preferences are not falsifiable; they are true by
definition.
[/quote:26fb8f6b1b]
Hmmm. I'd think they could be verified. Revealed preferences are
pretty much canon law in discussions of media and advertising; I'd
think that's a pretty generally verified fact.
Do you have a good reference that is skeptical of this? I still
like the treatment in Vance Packard's "The Hidden Persuaders",
and haven't found an improvement.
Utility theory may be more useful as one of Roy's
"anticoncepts". They may better be "revealed discontents".
--
Les Cargill |
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| Dan in Philly |
| Posted: Thu Nov 24, 2005 5:29 pm |
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<ruetheday@outgun.com> wrote in message ...
[quote:2fbc92ba9b]The main problem is in macroeconomics. The appeal for the student is
in the mathematical models which themselves are perfectly rigorous.
But the models abstract from the real world which is messy and
complex. They are necessarily full of simplifying assumptions and
ceteris paribus arguments which ignore significant effects.
The same can be said about microeconomics.
[/quote:2fbc92ba9b]
At least some aspects of micro, such as how markets work, can be subjected
to test. In fact, I think some guy got a Nobel prize a few years ago for his
work in experimental economics.
Dan in Philly |
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| Guest |
| Posted: Fri Nov 25, 2005 12:20 pm |
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Macroeconomics and economics in general has been the subject of a great
deal of criticism right from Marx. A recent book on this is The
Rhetoric of Economics by Deidre McCloskey. It's a great book and I
highly recommend it. Another book is by Tony Lawson but I can't
remember the name of the book. It's on critical realism as a new way
forward for economics.
I tried doing new models that took into account of more factors that
shape the economy but I only found that the system is inherently
non-deterministic. A key thing missed by all economists, including
Keynes is the role assets markets play in determining macroeconomic
performance. The size of asset markets, many times that of GDP, make a
boom or bust in asset markets crucial for GDP growth.
The problem is that asset markets are mimetic. They are the subject of
a system where people copy demand for assets. This changes prices and
therefore there can be major and sustained fluctuations.
Another aspect is the paradigm of the economy. This is the general
system that determines all macroeconomic variables. This can give
general historical responses to the question, why did an economy grow,
stagnate or fall into recession but cannot give upto date predictions.
I have seen some work on chaos theory in economics but having done
models that rely on chaos I believe that this does not seem a very
fruitful area of enquiry.
The fundamental problem is that the human brain works on many inputs to
generate a decision. These inputs reach a level all together which
releases the decision message. This is not deterministic since many
different inputs could lead to the same or different outcome. In other
words the human brain cannot be modelled easily in the sense of
regressions on data since there would be errors due to there being
different models of behaviour operating at the same time.
Perhaps I haven't explained that well. Please ask if you want
clarification. |
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| lev_lafayette@yahoo.com.a |
| Posted: Fri Nov 25, 2005 9:19 pm |
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Guest
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Michael Scheltgen wrote:
[quote:06c934b0e7]royls@telus.net wrote:
The point is, physicists went about trying to create mathematics in
order to make sense of empirical data. The economists are doing it
backwards, assuming the mathematics and then trying to find empirical
data to support it (and largely failing).
That's par for the course in academic economics these days: have
model, will travel.
Donald (and Deirdre) McCloskey has written some excellent stuff
in this area.
[/quote:06c934b0e7]
Very good points by both of you...
It would be interesting to "rewrite" economics from an empirical
perspective. Personally, I've always used the axioms of market
economics as things with practical intent i.e., "in order for a person
to be a rational economic actor the following are requisite; etc ...."
Most neoclassical economists assume that the axioms are already in
place and away they go. IIRC Rothbard makes some quite loopy comments
about economics being an a priori science.
Regards,
Lev |
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| Guest |
| Posted: Sat Nov 26, 2005 10:09 am |
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On 25 Nov 2005 18:19:00 -0800, "lev_lafayette@yahoo.com.au"
<lev_lafayette@yahoo.com.au> wrote:
[quote:d0114ae3c3]Michael Scheltgen wrote:
royls@telus.net wrote:
The point is, physicists went about trying to create mathematics in
order to make sense of empirical data. The economists are doing it
backwards, assuming the mathematics and then trying to find empirical
data to support it (and largely failing).
That's par for the course in academic economics these days: have
model, will travel.
Donald (and Deirdre) McCloskey has written some excellent stuff
in this area.
Very good points by both of you...
It would be interesting to "rewrite" economics from an empirical
perspective. Personally, I've always used the axioms of market
economics as things with practical intent i.e., "in order for a person
to be a rational economic actor the following are requisite; etc ...."
Most neoclassical economists assume that the axioms are already in
place and away they go. IIRC Rothbard makes some quite loopy comments
about economics being an a priori science.
[/quote:d0114ae3c3]
That's the Austrian influence. They state explicitly that their
assumptions are not falsifiable by any empirical data!
-- Roy L |
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| The Trucker |
| Posted: Sat Nov 26, 2005 2:31 pm |
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Guest
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<royls@telus.net> wrote in message
news:43887a73.11533954@news1.qc.sympatico.ca...
[quote:3967f77b4d]On 25 Nov 2005 18:19:00 -0800, "lev_lafayette@yahoo.com.au"
lev_lafayette@yahoo.com.au> wrote:
Michael Scheltgen wrote:
royls@telus.net wrote:
The point is, physicists went about trying to create mathematics in
order to make sense of empirical data. The economists are doing it
backwards, assuming the mathematics and then trying to find empirical
data to support it (and largely failing).
That's par for the course in academic economics these days: have
model, will travel.
Donald (and Deirdre) McCloskey has written some excellent stuff
in this area.
Very good points by both of you...
It would be interesting to "rewrite" economics from an empirical
perspective. Personally, I've always used the axioms of market
economics as things with practical intent i.e., "in order for a person
to be a rational economic actor the following are requisite; etc ...."
Most neoclassical economists assume that the axioms are already in
place and away they go. IIRC Rothbard makes some quite loopy comments
about economics being an a priori science.
That's the Austrian influence. They state explicitly that their
assumptions are not falsifiable by any empirical data!
[/quote:3967f77b4d]
I gave up on economics and went to Political Economy in
wikipedia. It is much, much better but it suffers some
current problems (evolving one would hope). For instance
I found this silly stuff in the page on "Political Economy":
"
Exchange
From the view of political economy, exchange is the process where the producers
of commodities or investment exchange with consumers. Each producer is also a
consumer, and each consumer is also a producer. The market provides a mechanism
for exchange, and money provides a medium of exchange. Consequently, the
dynamics of monetary exchange are a central focus of much of political economy.
The infrastructure of exchange determines the range of market possibilities.
Political economy views the long term goal of economic activity as the
successive creation of political capital sufficient to manage the range of
monetary exchange required by the society. In simple terms, money is a commodity
which a society produces, and in order to function, the money it produces must
be capable of sustaining the market which the society uses. Adam Smith
enumerates early in The Wealth of Nations a list of requirements for the
functioning of a market, which include stability of exchange and expected rates
of profit in various enterprises.
I fixed it as best I could, but someone will probably put it
back the way it was. You might have a look at this page
anf you will probably want to join in on the changes.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org |
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| sinister |
| Posted: Sun Nov 27, 2005 7:08 pm |
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Guest
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<royls@telus.net> wrote in message
news:43887a73.11533954@news1.qc.sympatico.ca...
[quote:a2a3f0dbbc]On 25 Nov 2005 18:19:00 -0800, "lev_lafayette@yahoo.com.au"
lev_lafayette@yahoo.com.au> wrote:
Michael Scheltgen wrote:
royls@telus.net wrote:
The point is, physicists went about trying to create mathematics in
order to make sense of empirical data. The economists are doing it
backwards, assuming the mathematics and then trying to find empirical
data to support it (and largely failing).
That's par for the course in academic economics these days: have
model, will travel.
Donald (and Deirdre) McCloskey has written some excellent stuff
in this area.
Very good points by both of you...
It would be interesting to "rewrite" economics from an empirical
perspective. Personally, I've always used the axioms of market
economics as things with practical intent i.e., "in order for a person
to be a rational economic actor the following are requisite; etc ...."
Most neoclassical economists assume that the axioms are already in
place and away they go. IIRC Rothbard makes some quite loopy comments
about economics being an a priori science.
That's the Austrian influence. They state explicitly that their
assumptions are not falsifiable by any empirical data!
[/quote:a2a3f0dbbc]
I was going to ask, "Where do they state that?", then decided not to be lazy
and instead googled on
"austrian economics" falsifiability
Amazing that anyone takes them seriously.
[quote:a2a3f0dbbc]
-- Roy L[/quote:a2a3f0dbbc] |
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