A Good Murphy Critique of Krugman

By -
Here. Murphy honestly notes that his predictions were  often wrong on the macroeconomy as well.

My explanation as to why essentially no macroeconomists have a consistently good prediction record on the macroeconomy: while almost all of their models make sense
1) given their assumptions, and
2) if those assumed factors were the only things influencing the macroeconomy,
number 2) is never true: the macroeconomy is influenced by a myriad of factors, ceteris is never paribus, and the real use of these models should be to give us hints as to what factors, among others, are at play in any situation.

So, for instance, I still think the Austrian model of distortion of the capital structure is a fine model, and captures something important that sometimes occurs, and that can be a factor in a boom-and-bust cycle, a distorted capital structure is only one thing among many that can be wrong about the economy, and its effect can be swamped by a thousand other things going on.

Comments

  1. Samson Corwell7:29 AM

    What is the reason for considering one "capital structure" to be "distorted" and another to be "not distorted"? Also, what does "capital structure" mean here?

    ReplyDelete

Post a Comment

Popular posts from this blog

Libertarians, My Libertarians!

By -
Cruel to be kind means that I love you . Because, while I think you are mistaken, your hearts are in the right place -- yes, even you, Silas --  unlike some people . This Breitbart fellow (discussed in the link above), by all appearances, deliberately doctored a video of Shirley Sherrod to make her remarks appear virulently racist, when they had, in fact, the opposite import. I heard that at a recent Austrian conference, some folks were talking about "Callahan's conservative turn." While that description is not entirely inaccurate, I must say that a lot of these people who today call themselves conservative give me the heebie-jeebies.
Read more

"Pre-Galilean" Foolishness

By -
 I am currently reading The Master and His Emissary , which appears to be an excellent book. ("Appears" because I don't know the neuroscience literature well enough to say for sure, yet.) But then on page 186 I find: "Asking cognition, however, to give a perspective on the relationship between cognition and affect is like asking astronomer in the pre-Galilean geocentric world, whether, in his opinion, the sun moves round the earth of the earth around the sun. To ask a question alone would be enough to label one as mad." OK, this is garbage. First of all, it should be pre-Copernican, not pre-Galilean. But much worse is that people have seriously been considering heliocentrism for many centuries before Copernicus. Aristarchus had proposed a heliocentric model in the 4th-century BC. It had generally been considered wrong, but not "mad." (And wrong for scientific reasons: Why, for instance, did we not observe stellar parallax?) And when Copernicus propose
Read more