tag:blogger.com,1999:blog-17232051.post5669627590457800270..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: Is economics a science?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-17232051.post-27116333784806412862017-12-22T06:34:08.651-05:002017-12-22T06:34:08.651-05:00On the off chance that you can make a model of hal...On the off chance that you can make a model of halfway differential conditions to reproduce the whole implanted economy, at that point it is a science. I think this is possible, Minsky perhaps, so I vote that financial aspects is a science.Tamahaganehttp://tamahagane.org/noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-53056693199697780052017-06-24T10:25:23.016-04:002017-06-24T10:25:23.016-04:00Anonymous
You say: “Tell me your definition of sc...Anonymous<br /><br />You say: “Tell me your definition of science and we can debate this further.”<br /><br />(i) Science is well-defined since 2000+ years. There is NO such thing as “my” or “your” definition. Because of this there is NOTHING to debate.<br /><br />(ii) Either one complies to the well-defined and well-known scientific standards or one is out of science.<br /><br />(iii) Economics is materially and formally inconsistent and therefore out of science.#1<br /><br />(iv) The definition of science has been given in the post above.#2 It seems that your attention span is less than that of a fruit fly.<br /><br />(v) You say: “I thought rational choice theory and behavioral economics was a thing.” Yes, this the very characteristic of the scientifically incompetent economist.#3<br /><br />(vi) All of your arguments show that you are trying to play silly semantic games.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 “… suppose they [the economists] did reject all theories that were empirically falsified … Nothing would be left standing; there would be no economics.” (Hands)<br /><br />#2 See here<br />http://noahpinionblog.blogspot.de/2017/06/is-economics-science.html?showComment=1497436163802#c9033740712884140360<br />or here<br />http://axecorg.blogspot.de/2017/06/economics-200-years-of-scientific.html<br /><br />#3 See ‘Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2207598AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71776622061159618642017-06-20T12:49:40.453-04:002017-06-20T12:49:40.453-04:00(i) Tell me your definition of science and we can ...(i) Tell me your definition of science and we can debate this further. Many people consider Physics a science and there are parts of Physics that are provable and other parts that are theoretical. Survivability is irrelevant to the discussion as there have been previous universal truths that were found to be false when science evolved.<br />(ii) I'm sorry, I thought rational choice theory and behavioral economics was a thing. Please define economics for me because I'd love to hear how you think the efficient way of allocating resources can occur without understanding human preferences.<br />(iii) Macro is an economic estimation of how x amount of micro games are going to work in a system. The art of estimating is not a proof or else more people could do it. There is nothing in my previous post that would indicate that macroeconomics is a science. Please offer a more scientific way of operating a large scale economy so I can phone the press.<br />(iv) Sounds good Shakespeare.<br /><br />Some of your responses show a lack of understanding of basic economics principles. I don't think you are qualified to conclusively state whether economics is a science or not.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87975541480797827682017-06-20T08:10:36.481-04:002017-06-20T08:10:36.481-04:00Anonymous
You argue: “Some parts of Econ are a sc...Anonymous<br /><br />You argue: “Some parts of Econ are a science (game theory and I’d argue basic macro in simple markets) while the rest is more of an art (everything else).”<br /><br />You are trying to evade a clear-cut conclusion and your argument is way beside the point.<br />(i) Economics is either a science or not. That parts of it are acceptable is irrelevant. Every false theory has acceptable parts. Even the flat earth theory has some content that is true. False theories are always partially and commonsensically true. This is exactly why they can survive.<br />(ii) Game theory is NOT economics because economics does not deal with human behavior but with the behavior of the economic system. Economics is a system science and all Human Nature/behavior issues belong to psychology, sociology, anthropology and so on. To define economics as a social science has been the foundational blunder 200+ years ago.<br />(iii) Basic macro is provable false.*<br />(iv) To call economics an art is simply an euphemism.<br /><br />The conclusion is inescapable: Economics is NOT a science.<br /><br />Egmont Kakarot-Handtke<br /><br />* For details see ‘Textbooks and the mental cloning of dumb economists’<br />http://axecorg.blogspot.de/2017/06/textbooks-and-mental-cloning-of-dumb.html<br />and ‘Why Post Keynesianism Is Not Yet a Science’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1966438AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71278627778289754082017-06-19T12:45:45.071-04:002017-06-19T12:45:45.071-04:00Regarding the Minimum Wage Bombshell, you are assu...Regarding the Minimum Wage Bombshell, you are assuming the price ceiling of the minimum wage is higher than the equilibrium market price; I doubt those are true in those markets. Labor markets are very complex so I agree a simplified Econ 101 model doesn't work but making that argument with that assumption is an error.<br /><br />Some parts of Econ are a science (game theory and I'd argue basic macro in simple markets) while the rest is more of an art (everything else). Creating an algorithm for all resource allocation that can be proven is impossible given that human choice/consumption patterns are dynamic and volatile.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-82858389110990901612017-06-19T12:13:49.102-04:002017-06-19T12:13:49.102-04:00Sociology is far more data driven that economics, ...Sociology is far more data driven that economics, which is one reason why you never really see sociologists being invited to comment on issues of the day - cause they would make terrible TV, equivocating all the time. Gepaphttps://www.blogger.com/profile/08513808536794870024noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-43676199491766531582017-06-18T09:27:42.213-04:002017-06-18T09:27:42.213-04:00Jake Thompson
You argue: “It’s certainly, by a lo...Jake Thompson<br /><br />You argue: “It’s certainly, by a long shot, the most scientific of the social sciences.”<br /><br />Your lethal methodological blunders are:<br />(i) The underlying binary code of science is true/false with NOTHING in between. Because of this, economics is either a science or not. The statement, economics is more scientific than X is entirely devoid of meaning. (Just like the statement, Jake Thompson is by a long shot more innocent than Lee Harvey Oswald. Guilty/not guilty is also binary with NOTHING in between.)<br />(ii) Scientific truth is well-defined by material and formal consistency. It is not an easy task to establish scientific truth but from these practical difficulties cannot be concluded that it does not exist or that anything goes.<br />(iii) The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept profit wrong.<br /><br />Conclusion: Economics is NOT a science.<br /><br />In order to rise above the proto-scientific level, economics needs a paradigm shift.#1 What failed economists first of all have to understand is that economics is NOT a social science but a system science. To define economics as a social science has been the foundational blunder 200+ years ago. Being scientifically incompetent, though, economists will not understand this. It’s Catch 22 and the representative economist is trapped in the scientific coal-pit.#2<br /><br />Egmont Kakarot-Handtke<br /><br />#1 For details see ‘Redefining economics’<br />http://axecorg.blogspot.de/2015/10/redefining-economics.html<br />and cross-references Paradigm shift<br />http://axecorg.blogspot.de/2015/02/essentials-cross-references.html<br />#2 “... but when the road ends at a coal-pit, he [the traveler] doesn’t need much judgment to know that he has gone wrong, and perhaps to find out what has led him astray.” (Hume) Obviously, you lack even this tiny quantity of judgement.AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-1811221660999921142017-06-17T15:30:03.768-04:002017-06-17T15:30:03.768-04:00It's certainly, by a long shot, the most scien...It's certainly, by a long shot, the most scientific of the social sciences. Anonymoushttps://www.blogger.com/profile/03603797185134267934noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4595015761679250632017-06-16T21:09:24.641-04:002017-06-16T21:09:24.641-04:00I think economics may become a science, but it isn...I think economics may become a science, but it isn't a science as it is currently practiced. Most sciences start with "stamp collecting" and use that to build a theory. As the stamp collecting continues and conflicts with the current theories, those theories are changed and updated. We just don't see this in economics. We keep hearing theories that have long been contradicted by reality. Economists win prizes for working with and advacning theories that are demonstrably false.<br /><br />I used to compare economics as it is currently practiced with alchemy, but as modern chymists have demonstrated, a lot of alchemy was just chemistry in the early "stamp collecting" stage. They were finding interesting reactions, but did not understand them well enough to build a useful theory around them.<br /><br />Economics seems more like Lysenkoism, a branch of biology practiced in the Stalinist USSR. Lysenkoism conflicted with evolutionary theory in that it argued that organisms could be improved and those improvements inherited in a manner consistent with Communist party doctrine. <br /><br />Lysenko was in charge of just about all biological research in the USSR, and arguing an alternate theory could get you a stint in the gulag. However, it was compatible with and provided a "scientific" basis for the ruling party under Stalin, so it was promulgated and accepted. Modern economics is quite similar, in that it starts with precepts compatible with the ruling powers and is then developed into a "scientific" theory, acceptable to the point where it challenges political dogma.<br /><br />I think that economics has a lot to offer, but it is too politically correct for it to be considered scientific.<br /><br />P.S. Don't get me started on the mathematics that economists use. Weierstrass has been dead for 120 years now. Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-45721966842375954582017-06-16T09:35:40.188-04:002017-06-16T09:35:40.188-04:00I think Post-Keynesian empirical studies, and anal...I think Post-Keynesian empirical studies, and analysis of those studies definitely meet the standards being shared in this comment thread to qualify as a science, but the Friedmanite and Austrian schools don't meet that standard. Friedmanites and Austrians are propagandists, not scientists. They are more concerned with pushing supply-sider nonsense that's amenable to the interests of the wealthy, and have demonstrated that they have no real interest in describing how the economy works. The Contentious Otterhttps://disqus.com/by/The_Contentious_Otter/noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-62866126412470307072017-06-16T03:17:36.558-04:002017-06-16T03:17:36.558-04:00"systematic study of the structure and behavi..."systematic study of the structure and behavior of the physical and natural world through observation and experiment" captures it.<br /><br />One essential element of systematic study is having an exact as possible description of what you are studying. Physicists do this with well-defined measures, biologists do this with classificatory schemes, historians do this with careful chronologies. It's an area where economics is often (not always) lacking. The components of, for example, "price" or "cost" or "service" are often not untangled and examined, aggregates not re-visited and so on. This makes local empirical findings - even when well-founded - hard to compare. It's an area where econ could learn a lot from sociology, which is much more careful about what exactly people mean when they say things.Peter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-17338595732978911952017-06-14T07:09:47.576-04:002017-06-14T07:09:47.576-04:00An analogy: people who worry about Art sometimes ...An analogy: people who worry about Art sometimes argue about whether or not something is Art. "It's not art, it's just knitting!", etc.<br /><br />This is usually done when what they really mean is "It's bad art", and if they realised that a much more useful conversation could ensue.<br /><br />I mention this because I think you're right to skip from "Is Economics is a Science" to the more useful question is " How can economics be better science"?Mr Wiggleshttps://www.blogger.com/profile/10819074203230794043noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-72604755034044565362017-06-14T06:30:15.840-04:002017-06-14T06:30:15.840-04:00Part 2
Economists have found a way to deal with t...Part 2<br /><br />Economists have found a way to deal with the problem of manifest failure: they simply ignore and violate scientific standards. Or, as Blaug put it, they are playing tennis with the net down. Morgenstern reminded his fellow economists back in 1941: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.”<br /><br />This is why Walrasianism is still around although it has already been dead in the cradle 140+ years ago. Standard economics has been based on provable false axioms but economists proudly cling to them until this day: “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.” (Krugman) Note in passing that maximization and equilibrium are NONENTITIES like angels or the Easter Bunny. Time for Krugman and the rest to end stubborn self-delusion: all equilibrium models are a priori false and this starts with textbook supply-demand-equilibrium.#4<br /><br />Economics is a failed science because economists (i) are scientifically incompetent, and (ii), violate scientific standards/ethics on a daily basis. Since Adam Smith economic policy guidance never had sound scientific foundations. Both, orthodox and heterodox economists sell proto-scientific rubbish in the bluff package of science.<br /><br />In order to become a science, economics needs a paradigm shift.#5 Nothing less will do.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 See ‘First Lecture in New Economic Thinking’<br />http://axecorg.blogspot.de/2017/05/first-lecture-in-new-economic-thinking.html<br /><br />#2 See ‘The real problem with the economics Nobel’<br />http://axecorg.blogspot.de/2016/09/the-real-problem-with-economics-nobel.html<br /><br />#3 See ‘Failed economics: The losers’ long list of lame excuses’<br />http://axecorg.blogspot.de/2017/01/failed-economics-losers-long-list-of.html<br /><br />#4 See also ‘The father of modern economics and his imbecile kids’<br />http://axecorg.blogspot.de/2016/11/the-father-of-modern-economics-and-his.html<br /><br />#5 See also ‘The identification problem and the dumping of the old guard’<br />http://axecorg.blogspot.de/2016/09/the-identification-problem-and-dumping.htmlAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90337407128841403602017-06-14T06:29:23.802-04:002017-06-14T06:29:23.802-04:00Economics: 200+ years of scientific incompetence a...Economics: 200+ years of scientific incompetence and fraud<br />Comment on Noah Smith on ‘Is economics a science?’<br /><br />“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)<br /><br />The fact of the matter is that economists do NOT have the true theory. More precisely, economists do not know how the price- and profit mechanism works. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong.#1 With the pluralism of provable false theories economics sits squarely at the proto-scientific level.<br /><br />The representative economist either does not realize it or cannot officially admit it. In this dire situation, the Pavlovian reaction is always and everywhere to muddy the waters and to retreat deeper into the swamp. Noah Smith is no exception, he rhetorically asks: “What the heck is a ‘science’?” and answers “No one knows.”<br /><br />This is patently false. Science is, since the ancient Greeks made the distinction between opinion (= doxa) and knowledge (= episteme), well-defined by material and formal consistency: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)<br /><br />First question to Noah Smith: if no one knows what science is how does it come that we have a prize with the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.#2 And how does it come that economics is since Adam Smith/Karl Marx explicitly defined as science? And what does every economist learn in Econ 101?: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins)<br /><br />Fact is that economics claims to be a science but is what Feynman called a cargo science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”<br /><br />What is missing is the true theory. Economics is a failed science because none of the four main approaches satisfies the criteria of material and formal consistency. When this is pointed out economist immediately retract and fire their barrage of brain-dead excuses.#3 Noah Smith applies the same old defense maneuvers. Needless to emphasize that every single of these excuses has been refuted long ago.<br /><br />See part 2AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-20165411051233156302017-06-13T22:41:56.505-04:002017-06-13T22:41:56.505-04:00"We have seen how it is originally language w..."We have seen how it is originally language which works on the construction of concepts, a labor taken over in later ages by science." - Friedrich Nietzsche<br /><br />Science definition from Google: systematic study of the structure and behavior of the physical and natural world through observation and experiment<br /><br />In my opinion 'systematic' is the key word. All people observe the world but only scientists do systematic analysis. Economics that is systematic (journals, papers, mathematical analysis, etc.) is science. Banter about economics is not science. 'Systematic' is not an explicit word, so I'm a big fan of the last slide.Alex Peekhttps://www.blogger.com/profile/16599952608457953713noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-31981228762887575672017-06-13T20:17:29.574-04:002017-06-13T20:17:29.574-04:00I've used for years a labor economics example ...I've used for years a labor economics example of empirical research that actually led to a change in the theory used to explain something. And it has to do with unions.<br /><br />When I took my first course in labor econ, the textbooks basically said that unionization would lead to lower labor productivity by reducing management discretion in how to run the business. In the late 1960s, micro data sets began to become available that allowed researchers to make estimates of *by how much* unionization reduced productivity.<br /><br />Of course, the research discovered that workers in unionized settings were more productive than workers in non-union settings.<br /><br />Then began the search to explain that away...by looking at the effects of capital-labor ratios (which were higher in unionized firms, and, b itself would increase labor productivity), by looking at hiring standards (because unionized workers both made more money and were more difficult to fire, firms would seek to hire better workers, which would tend to raise labor productivity), by accounting for jo tenure (unionized workers were less likely to quit, because their alternative jobs would pay less, so workers acquired more employer specific skills, which tended to raise labor productivity), and so on. <br /><br />After which there remained the finding that workers in unionized setting were more productive, even accounting for all that. At which point, labor economists (my memory tells me that among them were Richard Freeman and Dam Hammermesh) said, well, there must be some mechanism inherent to unionization that leads to workers being more productive.<br /><br />And by the time I took labor econ in grad school, the theory had changed (to take into account Hirschmann's exit/loyalty/voice framework) and which led to a new prediction--well-run unions (the UAW, for example) would be more likely to lead to increased labor productivity, while badly managed or corrupt unions (the Teamsters) would probably not.<br /><br />So there is at least one example, dating back 40+ years, of good data killing a bad theory in economics.Don Coffinhttps://www.blogger.com/profile/07198988872512792834noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-16008864420836270052017-06-13T19:10:46.422-04:002017-06-13T19:10:46.422-04:00I'd also add that in terms of quasi-experiment...I'd also add that in terms of quasi-experiments, what worries me is not so much the "lamppost problem" as the "no field unplowed, no hill unmined" problem. Every event which superficially looks like it might provide a useful empirical result is going to be studied until it <i>does</i> provide a useful-looking empirical result. Either by the same guy trying different analyses until one hits paydirt, or by a succession of researchers all wondering why nobody else has managed to get anything useful out of this lovely dataset and whether their new empirical approach might have better luck. Inevitably, the dataset will eventually yield an amazingly fragile but eminently publishable result.Dan Davieshttps://twitter.com/dsquareddigestnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74838090049138954042017-06-13T19:05:07.929-04:002017-06-13T19:05:07.929-04:00Paul Pfleiderer notes the prevalence of "cham...<i>Paul Pfleiderer notes the prevalence of "chameleon" models that are sold as unrealistic thought experiments but then used by policymakers to support their desired conclusions</i><br /><br />This was a problem, but my god, the empirical turn! Locally valid treatment effects from natural experiments or small RCTs are what constitutes the "evidence" in rather more than half the existing "evidence based" policy initiatives of the last few years. Education reform in particular looks like it's more or less nothing but empirical chameleons.Dan Davieshttps://twitter.com/dsquareddigestnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-283820166637880712017-06-12T18:33:15.599-04:002017-06-12T18:33:15.599-04:00Wow, there's a lot to differ upon here.
First...Wow, there's a lot to differ upon here.<br /><br />First, the many disparate strands and methodologies of economics would have to be judged separately. You did differentiate between lab methodologies and empirical methodologies. But at the very least you should be able to say something about what parts of macro and micro would be judged more or less scientific.<br /><br />Another issue, is that parts of economics could be more like engineering (which does not have to be scientific) instead of scientific.<br /><br />"First of all, plenty of natural sciences don't involve precise mathematical laws - what's the mathematical law describing how food passes through the digestive tract?"<br /><br />Actually, I suspect that there's plenty of mathematical description of peristaltic transport. And if you are talking about chemical breakdown and absorption of the food, that is very well described mathematically.<br /><br />And lastly, the argument CAN be resolved for some strands of economics, by noting that they ARE NOT scientific. Some flavors of Austrianism are clearly not scientific, being based on false assumptions, lacking proper chains of deduction, and despising measurement.Mike Hubenhttps://www.blogger.com/profile/01371469964446567690noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-81406134405285892662017-06-12T18:32:35.206-04:002017-06-12T18:32:35.206-04:00Noisy data in finite samples cannot kill any theor...Noisy data in finite samples cannot kill any theories.Krzyshttps://www.blogger.com/profile/15794655390770135247noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-73596637042341166172017-06-12T04:41:19.051-04:002017-06-12T04:41:19.051-04:00I believe "empirical" means "based ...I believe "empirical" means "based on, concerned with, or verifiable by observation or experience rather than theory or pure logic" and isn't the right word to distinguish between observations from controllable, repeatable experiment and passive observations of the external world. Have you read e.g. <a href="http://www.preposterousuniverse.com/blog/2013/07/03/what-is-science/" rel="nofollow">Sean Carroll's</a> or <a href="https://scientiasalon.wordpress.com/2014/03/26/what-is-science-and-why-should-we-care-part-i/" rel="nofollow">Alan Sokal's</a> "what is science" articles (you're cited in the former)?Paul Hayeshttps://www.blogger.com/profile/04309125585593320043noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3133955143136540962017-06-12T03:59:26.882-04:002017-06-12T03:59:26.882-04:00Hi Noah,
How can I get a copy of your slides?Hi Noah,<br /><br />How can I get a copy of your slides?archienomicshttps://www.blogger.com/profile/12220535115935727781noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47802798533003953152017-06-12T02:27:31.607-04:002017-06-12T02:27:31.607-04:00Is economics science? Yes and no, it certainly isn...Is economics science? Yes and no, it certainly isn't a "hard science" on par with physics, chemistry, and biology. Its more akin to a discipline like psychology. Lukahttps://www.blogger.com/profile/07277134451848581852noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-797083735156074942017-06-11T23:09:49.284-04:002017-06-11T23:09:49.284-04:00If you can make a model of partial differential eq...If you can make a model of partial differential equations to simulate the entire embedded economy, then it is a science. I think this is doable, Minsky maybe, so I vote that economics is a science.Chris Heinzhttps://www.blogger.com/profile/00045972508852914723noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76344685295802914502017-06-11T20:05:35.913-04:002017-06-11T20:05:35.913-04:00I wonder if the gravity trade models need to chang...I wonder if the gravity trade models need to change - at least in some industries because of the increased globalisation of supply chains. For example if devaluing your currency is a good measurable way to increase exports i.e a trade relationship that is often assumed then devaluing of a nations' currency might be a trade policy in favour.<br /><br />Apparently this no longer works except in industries where the supply chain is very local. For example Scottish whisky but not Aston Marton cars. See https://www.wsj.com/articles/when-currencies-fall-export-growth-is-supposed-to-followuntil-now-1497207236 <br /><br />At the very least the uneven effect of changes in currency valuations must impact on the equations used for the gravity trade theory?Jasonhttps://www.blogger.com/profile/06399128462602466949noreply@blogger.com