tag:blogger.com,1999:blog-17232051.post4185212356503749537..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: What I learned in econ grad school, Part 2Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-17232051.post-22542514809172435782012-04-07T02:48:44.469-04:002012-04-07T02:48:44.469-04:00Still, it sounds like success in the field has mor...Still, it sounds like success in the field has more to do with "Knowing and reacting to these theories" rather than understanding the real world.isomorphismshttp://isomorphismes.tumblr.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90788835454250483502011-12-06T10:36:41.234-05:002011-12-06T10:36:41.234-05:00Full Employment Hawk said...
" For someone...Full Employment Hawk said...<br />" For someone really interested in how the economy works it is essential that they learn the orthodox models well and become proficient in them. The better one understands them the more able one is to blow holes in them and come up with better alternatives."<br /><br />Except that it's been pointed out that the elites of the discipline don't work according to any sort of scientific method, and don't care about those holes.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-16609573998286996192011-06-04T10:45:44.656-04:002011-06-04T10:45:44.656-04:00Thanks for the update! I enjoyed your original pos...Thanks for the update! I enjoyed your original post.<br /><br />Two thoughts:<br /><br />1. Unless you're studying history, what's "interesting" about a model that is both difficult and wrong?<br /><br />2. If macroeconomics isn't discarding models that are demonstrably wrong, I would suggest that far beyond being "a science in its extreme infancy", it's not a science at all.<br /><br />To call something a science when its attitude is "we realize our theories have zero predictive or explanatory power, but we're going to keep them anyway" is a disservice to real sciences.Chris Dhttps://www.blogger.com/profile/11377834549568033187noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-73877352700442379362011-06-03T20:37:50.238-04:002011-06-03T20:37:50.238-04:00"I wouldn't group in in with those RBC ec..."I wouldn't group in in with those RBC economists who are in denial about the importance of demand shocks (even if Lucas doesn't use the term demand shock.) He's a realist, not an ideologue."<br /><br />Scott, look at the current posting "The Architect of Modern Macroeconomics speaks!"<br /><br />Lucas argues that "The reason for our current ongoing weakness in employment and business investment is the recent expansion of the U.S. welfare/regulatory state." <br /><br />That is the position of an ideologue, not a realist.Full Employment Hawknoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71761165371340362072011-06-03T19:43:11.039-04:002011-06-03T19:43:11.039-04:00"This confirms the decision I made after majo..."This confirms the decision I made after majoring in Economics as an undergraduate not to go on to graduate school in the field, for the very reasons enumerated above. What a wise decision!"<br /><br />For someone really interested in how the economy works it is essential that they learn the orthodox models well and become proficient in them. The better one understands them the more able one is to blow holes in them and come up with better alternatives.Full Employment Hawknoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-64103752883291914212011-06-03T19:27:33.696-04:002011-06-03T19:27:33.696-04:00"The first was that the DSGE framework is a s..."The first was that the DSGE framework is a straitjacket that is strangling the field."<br /><br />Right on! <br /><br />Another objection to the DSGE models is that the basic assumptions are not simplifying assumptions, they are COUNTERFACTUAL assumptions. The assumptions that the households live forever and have perfect foresight about the means and the (normal) statistical distributions into the eternal future about the various variables is incredibly implausible. If non-economists realized that these were the assumptions on which "modern" macroeconomics is based and on which it derives its conclusions, economists would be a general laughighstock and subject to widespread ridicule.<br /><br />The New Keynesians by adding various epicycles to the New Classical version of the DSGE model: sticky prices, wages, and expectations, have made it less blatently unrealistic so that useful results can be derived. But macroeconomics can never be truly relevant until this straightjacket is discarded.Full Employment Hawknoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4792748684365503682011-06-03T11:52:30.900-04:002011-06-03T11:52:30.900-04:00I wrote the comment with the reference on the theo...I wrote the comment with the reference on the theory of capital controversies. <br /><br />After that, two comments were made trashing my comment. That is, without any arguments. <br /><br />I wonder:<br /><br />Why?<br />Do they have any clue of what i am talking about?<br /><br />George<br /><br />ps: btw, my grammar was correct?!? that is a great complement to me. I'm not a native english speaker, and I'm much more fluent in portuguese and french than in english.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-7448659406612356312011-06-01T16:26:09.665-04:002011-06-01T16:26:09.665-04:00"They are a testimony of why I chose not to g..."They are a testimony of why I chose not to go for a phd in econ. "<br /><br />And econ is all the better for it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46096853631678093122011-06-01T16:21:33.697-04:002011-06-01T16:21:33.697-04:00"It's not just that RBC/DSGE models don&#..."It's not just that RBC/DSGE models don't match the data. They have been known to be logically inconsistent for decades. I hope you get interested and read the papers on this subject. "<br /><br />This statement contains essentially no correct statements. But the grammar is mostly correct, so it has that going for it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-85358377732310069842011-05-27T16:28:11.446-04:002011-05-27T16:28:11.446-04:00Interesting blog entry... now how did I stumble up...Interesting blog entry... now how did I stumble upon this page?!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68783214945986736942011-05-18T10:12:46.191-04:002011-05-18T10:12:46.191-04:00Noah, excellent posts. They are a testimony of why...Noah, excellent posts. They are a testimony of why I chose not to go for a phd in econ. <br /><br />You've only seen the tip of the iceberg. You probably don't even know about this:<br /><br />http://en.wikipedia.org/wiki/Cambridge_capital_controversy<br /><br />It's not just that RBC/DSGE models don't match the data. They have been known to be logically inconsistent for decades. I hope you get interested and read the papers on this subject.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57283712425576475422011-05-17T16:34:25.388-04:002011-05-17T16:34:25.388-04:00Noah, had you ever studied economics extensively b...Noah, had you ever studied economics extensively before grad school? If not, why are you in an econ program and what did you expect to get out of it? (I ask sincerely.)<br /><br />I studied and fell in love with the discipline as an undergrad, so I've come to see the tools taught in grad school as a supplement to the "economic way of thinking," but certainly not a replacement. What do you see it as? I'm curious.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37235516750427773822011-05-09T13:43:10.141-04:002011-05-09T13:43:10.141-04:00Charlie Clarke said...
" So the great reces...Charlie Clarke said...<br />" So the great recession was caused by big technology improvements in 2007?"<br /><br />Which was preceded by a collapse in the housing market and a wave of catastrophe sweeping through the financial markets *purely* by coincidence.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-26294469913226783402011-05-07T23:08:17.459-04:002011-05-07T23:08:17.459-04:00Read David Colander on how the "rocket scienc...Read David Colander on how the "rocket science" ethic has taken over economics -- how the grad schools have been dominated by math and physics majors with no economic training for decades. Colander also gives an account of why this happened, and why such things as the history of econ thought were shit canned.<br /><br />Or read the 1991 AEA Committee on Graduate Education report documenting the way grad schools were cranking out math "rocket scientists" with little or no knowledge of anything but a thin slice of math and econometrics.<br /><br />Colander is mildly left of center.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-474858807949984762011-05-07T14:12:47.395-04:002011-05-07T14:12:47.395-04:00Sorry:
Math was embraced the hardest in econ firs...Sorry:<br /><br />Math was embraced the hardest in econ first by socialists and left of center economists, (e.g. Lerner & Samuelson & Arrow).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-45615457862129536342011-05-07T13:53:34.018-04:002011-05-07T13:53:34.018-04:00Math was embraced and hardest in econ first by so...Math was embraced and hardest in econ first by socialists and left of center economists. And they used math (and bogus philosphy of science) to marginslize the great "free market" economists like Hayek who provided timeless accounts of the limitations of math constructs and math predictions in economics (and the fraudulence of a fake image of science as the model of all science).<br /><br />Math gives a formal metric for evaluation -- it's the "publish or perish" and secure tenure and status angle you point to first which matters. DSGE is merely the latest and greatest math metric for certifying "knowledge" and "science" in the discipline.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-58949082326707245772011-05-06T21:36:59.961-04:002011-05-06T21:36:59.961-04:00"polls of academic economists have c. 4/5 of ..."polls of academic economists have c. 4/5 of them voting for the dems and yet you claim there is a vast right-wing conspiracy at work!"<br /><br />These things aren't mutually exclusive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-28463931897779974992011-05-06T18:34:37.611-04:002011-05-06T18:34:37.611-04:00Well, no matter what and how well the macro-econ d...Well, no matter what and how well the macro-econ discipline/science (whatever you call) is going with respect to methodology, there might be still someways that you can (or I mean one can) discover by attempting to focus on just economic questions. This is for sure what all good economists do yet some people indeed more focus on designing environments through which you can be more flexible in terms of modeling markets (based on your definitions), preferences, the roles of institutions and the rules of the games. This might be an area that one could use serious math skills (even true for others) for example not maybe only focusing to predict future but maybe just to understand the "mechanisms". One direction would be to explore the works of Daron Acemoglu (MIT) among others, for example. As future economists (as a PhD student now), it is time for us not to be pessimistic and/or confused. Let's go for it!metenoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6938152100304647662011-05-06T17:02:15.524-04:002011-05-06T17:02:15.524-04:00It seems an easy response to Basu, Fernald, and Ki...It seems an easy response to Basu, Fernald, and Kimball is that the economy is very competitive and markets are pretty complete for practical purposes.<br /><br />"However, the evidence is consistent with simple sticky-price models, which predict the results we find: When technology improves, input use and investment demand generally fall in the short run, and output itself may also fall."<br /><br />So the great recession was caused by big technology improvements in 2007?Charlie Clarkehttps://www.blogger.com/profile/02079017903923824877noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87447187397598165922011-05-06T15:33:31.297-04:002011-05-06T15:33:31.297-04:00Thanks, Scott!
Actually, my "beef" with...Thanks, Scott!<br /><br />Actually, my "beef" with Lucas is not that he insisted on RBC. It's that I think his insistence on microfoundations of one certain type was way too narrow ("tastes and technology" are not always "structural", but other things sometimes are). Even that is probably more the fault of people who rigidly interpreted the paradigm he set up. That's what I meant by "the hoops [Lucas] set up".Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57053510102005641332011-05-06T15:26:46.792-04:002011-05-06T15:26:46.792-04:00You said:
"The aforementioned paper by Basu,...You said:<br /><br />"The aforementioned paper by Basu, Fernald and Kimball uses RBC's own framework to show its internal contradictions - it jumps through all the hoops set up by Lucas and Prescott - but I don't exactly expect it to derail the neoclassical program any more than did Gali. <br />It was only after taking the macro field course that I began to suspect that there might be a political motive behind the neoclassical research program (I catch on quick, eh?). "Why does anyone still use RBC?" I asked one of the profs (not an RBC supporter himself). "Well," he said, stroking his chin, "it's very politically appealing to a lot of people. There's no role for government." "<br /><br />Lucas once gave a talk where he argued that what made Keynes such a great economist was that he believed the government couldn't just sit back and allow depressions. Lucas believes the Great Depression was caused by tight money. I wouldn't group in in with those RBC economists who are in denial about the importance of demand shocks (even if Lucas doesn't use the term demand shock.) He's a realist, not an ideologue.<br /><br />As far as the RBC research program, I share your low opinion.Scott Sumnerhttps://www.blogger.com/profile/15864819372390187247noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-15254726326462983012011-05-06T13:19:34.739-04:002011-05-06T13:19:34.739-04:00@Robert
Working in a field that's frustrating...@Robert<br /><br />Working in a field that's frustratingly stuck in its infantcy isn't discouraging. It's exciting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-86643016672064396262011-05-06T12:28:32.334-04:002011-05-06T12:28:32.334-04:00@Stephen:
As I suspected. Yeah, these terms are p...@Stephen:<br /><br />As I suspected. Yeah, these terms are pretty slippery!Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-53613522876787325962011-05-06T12:25:13.986-04:002011-05-06T12:25:13.986-04:00Hi Noah,
Actually, the Miles Kimball "neomon...Hi Noah,<br /><br />Actually, the Miles Kimball "neomonetarist" paper you link to is what Woodford would later call "New Keynesian". It's basically RBC with sticky prices grafted on. This work has nothing at all to do with what Randy Wright and I would call New Monetarism. Our work is all about monetary frictions, credit frictions, banking, etc.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-13089884055627034692011-05-06T12:20:29.766-04:002011-05-06T12:20:29.766-04:00That was an interesting article. I have to say tha...That was an interesting article. I have to say that I find the following claim really shocking:<br /><br />"it's very politically appealing to a lot of people. There's no role for government."<br /><br /><br />It implies that some (respectable) economists are less interested in understanding how the world really works and more in justifying their sacred dogmas...Epanechnikovhttp://Epanechnikov.wordpress.comnoreply@blogger.com