Saturday, September 14, 2013

why we sniff at shlock macro hyrdaulics or Krug on rugged old cross type Wynn Godley

"It’s not at all clear how much good the whole apparatus of maximizing behavior in New Keynesian models really does"

" to the extent that such models do seem more or less to work,
  it’s only by making some ad hoc behavioral assumptions
      that are grafted on to the rest of the structure"

that said
PK still goes "shoo fly"
 when Godleynomics buzzes by

"mere hydraulics "

no maximizing agents
too much ad hoc

but PK  chooses to knock two of the  H-K model's  alleged
 long run "predictions"

post WWI secular over savings

a nearly static Phillips curve

al this
about a decidedly short run  model
and aimed at a gent renowned for the accuracy of his " this cycle we're in now " forecasting

again its not hydraulics  here
its all  history driven

determined by n independent actors
   however for that reason
            not  made to fit  any particular actors orders
nor destined to prove providential by any set of explicit social aspirations or "values"

mutual consistency and the justice intrinsic to a higher harmony
             has to be imposed by the modeler
so a rough and ready set of historically ad hoc
-- non bottom up agent up  derived--
  estimated relationships
   can work quite as well as these consistent  agent inter temporal maximize models
 using a limited time horizon like the present cycle
after all stabilization mobilization is all about NOW
yes dynamic adjustments over a series of cycles generates a wild flock of caveats
but none definitively prohibit  state  macro activism
and only the most wonderlandish render such activism substantively inefficacious