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Thursday, September 22, 2016

What (Some) Mathematicians Do With Incorrect Proofs In Journals

Paul Romer has a followup article about "post-Real" economics. I just wanted to launch a digression around his comments about mathematicians and incorrect proofs. Although there might be some useful conclusions for academic economics, the problems faced by the field are more difficult than the issue of incorrect proofs.

Wednesday, September 21, 2016

Whither Post-Keynesian Economics?


I returned from the University of Missouri Kansas City Post-Keynesian Conference, and I have been reflecting on the state of the field. From my external vantage point, it has the defects that are inherent in the institutions in modern academia, but it does have the advantages over the mainstream. The trick is being able to get an understanding of the theory from outside. Modern Monetary Theory (MMT) remains attractive as the project was structured in a fashion to be useful for non-academics.

Fed In December Remains Base Case

I looked at the information that came out after the Fed announcement, and it still looks like a hike in December is the base case. No matter how dovish you want to be as a result of "risk management" considerations, it is very hard to see how one rate hike per year is going to tip the economy over into recession. Worries about confidence shocks point in favour of rate hikes -- "See, the economy is so strong that the Fed has to hike rates!" I will leave the immediate commentary to the people who do full-time Fed watching; I may write a longer comment later if I see anything interesting after the dust settles.


Monday, September 19, 2016

Paul Romer's Criticisms of Mainstream Macro Are Weak

Paul Romer recently raised a stir with a paper "The Trouble with Macroeconomics." In my view, the implications of this paper are being misunderstood. The interpretation I have seen is that a senior practitioner of mainstream macro is pointing out the deficiencies in DSGE modelling, and that this will cause some soul searching and changes of habits in the economic mainstream. However, this paper seems to be best understood as a venting of professional grievances by someone leaving academia to take a senior policy position, and there is nothing in the paper that is already obvious to any halfway competent mainstream economist.

Wednesday, September 14, 2016

On Fed Hysteria


Although I am otherwise distracted, I just want to comment on the wave of news flow about Fed policy and bond market mayhem. From a big picture perspective, nothing has really happened.

Sunday, September 11, 2016

Kansas City, Here I Come



I am getting ready for the UMKC Post-Keynesian Conference this week, and I might not be publishing anything for a week or two. I just wanted to comment briefly on what I hope to accomplish there.

If The Mathematics Of New Keynesian Economics Were Solid...

Alexander Douglas has an interesting article on Modern Monetary Theory (MMT) and (mainstream) New Keynesian models. The question is what happens if the economy is at "full employment," and whether the MMT description is better than the New Keynesian analysis. My response is: why are we having this verbal debate in the first place? If the mathematics of the New Keynesian Dynamic Stochastic General Equilibrium were even halfway as rigourous as their proponents claim, they could actually demonstrate their results mathematically, and not wave their hands about vaguely defined concepts like "full employment."