paine said in reply to paine...
yes the ivory tower has its purity of research
but none of this got us one inch closer to a useable policy of macro stability guided
transfer system injections and extractions
its as if automatic stablizers were like the wife that was once a soul mate
and is now an unpaid maid
but none of this got us one inch closer to a useable policy of macro stability guided
transfer system injections and extractions
its as if automatic stablizers were like the wife that was once a soul mate
and is now an unpaid maid
paine said in reply to paine...
from the paper
"“There have been almost these two literatures in parallel. The applied labor, heterogeneous agent micro literature thinking about all these idiosyncratic shocks and what they imply for inequality in different dimensions. And then the traditional macro literature has sort of carried on with representative agent models looking at business cycles and stabilization policy and other traditional macro questions.”
exactly ???
and
" how convenient " that is
as church lady might say
how convenient for those well heeled interests
that prefer wall street run the macro economy
and not
penn ave
"“There have been almost these two literatures in parallel. The applied labor, heterogeneous agent micro literature thinking about all these idiosyncratic shocks and what they imply for inequality in different dimensions. And then the traditional macro literature has sort of carried on with representative agent models looking at business cycles and stabilization policy and other traditional macro questions.”
exactly ???
and
" how convenient " that is
as church lady might say
how convenient for those well heeled interests
that prefer wall street run the macro economy
and not
penn ave
paine said in reply to paine...
"In 1987, using a representative agent model, Lucas showed that business cycles had relatively little impact on overall socioeconomic welfare. By implication, he proved that eliminating those transitory fluctuations wouldn’t be particularly beneficial"
that there gives you the reason
just reverse engineer
start with the desired result
showing that
" eliminating those transitory fluctuations wouldn’t be particularly beneficial"
now build a model system where the fluctuations
are of minor social welfare impact
good start assume no unemployment
no default
how
by assuming you need a single rep agent
now how can she default or lay herself off
she's the creditor employer too ..
nice
unless you want to guide policy in a time of mass unemployment and default
solving the aggregation problem ??
with...
"approximate aggregation "
how ad hoc can you get
why hardly beyond hicks in its vulgarity ??
"aggregate downturns tend to be times in which idiosyncratic risk—and particularly the risk of unemployment—is particularly large"
ya !
--------------------------
duncan foley battles mightily with one central issue
the thermo dynamic paradigm
an utterly deterministic succession of
arrangements of
atoms bouncing off identical atoms
starting in some pre assumed accidental initial arrangement
proves
quite a useless contrivance
when modeling market systems
unless you wish to prevent state interventions
once you turn these atoms into agents with internal models and data and goals ...yikes gets messy fast
unless you assume away the messy bits
when low and behold
you can use the rationality of agents to arrive right back where atoms tok you !!!
no use for state intervention
so
how to give a sense of these market systems in motion ??
produce something like their actual macro patterns etc
start with
a society of such market mediated agents
end up with something like a cloud ?
no not at all
the only shared feature
the fate over enough time
of both such a market mediated society
and a cloud
is unforecastable
that is for more then a few succeeding intervals
and yet say we are concerned about the fate of each agent as we aren't about eeach atom ?
imagine how that impacts the considerations
so assume away the nasty bits--------------------------
is it chaos out there on market earth ??
instead of chaotic system
try calling it
a system
of a-periodic elastically bound aggregate channels
that is the dynamic characteristic
of
our present market mediated social production system
dick goodwin as well as many younger others
covered this more then 20 years ago
http://en.wikipedia.org/wiki/Richard_M._Goodwin
in a little very simple book
"Essays in Nonlinear Economic Dynamics"
chaos is a lovely
even biblical sounding
word
but it chases off
by it's once faddish popularity
the dry fruit eaters
that are most of our serious economists
also the hard work involved in constructing a model of market systems
that produces the necessary outputs
is hardly likely to receive rewards in wally world
uniqueness and stability assumed
now that is delightful
what in hell is left to study ?
example
assuming calvo pricing
so you can create
a role
for monetary policy
aiding the speed of marginal adjustments
to relative prices of imperfectly competitive outputs
ie welfare enhancing effects for households
as units of consumption
firms the real culprits out there in their real incarnation as multi national corporations
get modeled away as useless mediating structures
"hey in the end ..its all about households baby "
ya sure it is
if you just like counting casualties
not locating the "shooters"
come now
its job class choices not shocks
that lead to uneven misery
lots of pundits arre content to suggest chaotic systems are indistinguishable from random systems
of course they are quite different in essence
one produces fall 08 as a matter of inevitability and in swift order
the timeless random distribution makes the crisis coming soon at your neighborhood markets
appear both remote and kismetic
now that is delightful
what in hell is left to study ?
example
assuming calvo pricing
so you can create
a role
for monetary policy
aiding the speed of marginal adjustments
to relative prices of imperfectly competitive outputs
ie welfare enhancing effects for households
as units of consumption
firms the real culprits out there in their real incarnation as multi national corporations
get modeled away as useless mediating structures
"hey in the end ..its all about households baby "
ya sure it is
if you just like counting casualties
not locating the "shooters"
come now
its job class choices not shocks
that lead to uneven misery
lots of pundits arre content to suggest chaotic systems are indistinguishable from random systems
of course they are quite different in essence
one produces fall 08 as a matter of inevitability and in swift order
the timeless random distribution makes the crisis coming soon at your neighborhood markets
appear both remote and kismetic
neuron nets as metaphor for economic agents
becomes neuron nets in the agents head
little compact nets as the nodes of larger extensive nets
on the road to nets all the way down
none of this musing
oughta strike anyone as anything other then obvious
that is if the thinker is a free thinker
with a mind not caught
--- in reified glory---
inside the dominant fad paradigm de jour
------------------
the whole rat ex rep agent gig worked its temporary magic
two generations of macro types
completely oblivious to fiscal policy as macro tool
--- imagine assuming no unemployment and no defaults---
and chugging along in splendid isolation
with models completely abstracted
from the hi fi system
which itself went off to pangloss city
while the real system got itself in a short twenty years
into one terrific cock up