Home > Uncategorized > RBC models — the art of missing the point completely

RBC models — the art of missing the point completely

from Lars Syll

64f5d94d9836c6a09b5d2009f0d4634a845bb2d7ba56bbaa16176c2fd0e958c0Vielleicht ist diese Grundperspektive der radikalen Trennung von Form und Gehalt hilfreich, einige zunächst überaus paradoxe Äußerungen von Lucas etwas zu erhellen. Erinnert man sich der Forderungen von Lucas, die Makroökonomik zwingend auf Basis der klassischen Postulate, die Lucas und Sargent (1978) als (a) „Markträumung“ und (b) „Eigennutz“ umrissen hatten, zu errichten, so erstaunt man doch angesichts Passagen wie der folgenden:

“In recent years, the meaning of the term “equilibrium” has undergone such dramatic development that a theorist of the 1930s would not rec ognize it. It is now routine to describe an economy following a multi variate stochastic process as being “in equilibrium,” by which is meant nothing more than that at each point in time, postulates (a) and (b) above are satisfied. This development, which stemmed mainly from work by K. J. Arrow […] and G. Debreu […], implies that simply to look at any economic time series and conclude that it is a “disequilibrium phenomenon” is a meaningless observation. Indeed, a more likely conjecture […] is that the general hypothesis that a collection of time series describes an economy in competitive equilibrium is without con tent.” (Lucas und Sargent 1978: 58-9)”

Zunächst ist man erstaunt, weil die Argumentation nicht nur kontraintuitiv, sondern geradezu widersinnig erscheint: Wie passt das zusammen, dass Lucas und Sargent einerseits einfordern, jegliche Makrotheorie habe von den Prinzipien „Markträumung bzw. Gleichgewicht“ und „Eigennutz bzw. Optimierung“ auszugehen, wenn sie direkt anschließend konstatieren, dass solche Aussagen inhaltsleer und ohne Bedeutung sind? Die hier gelieferte Verteidigung der Gleichgewichtsan nahme „geräumter Märkte“ hat demnach für Lucas gar nichts mit jener alltäglichen Bedeutung zu tun, wonach der Markt für Äpfel geräumt ist, wenn wie beo bachten können, dass alle angebotenen Äpfel auch gekauft werden. Markträumung als Konzept ist somit kein Ereignis, dass mit der Realität korrespondiert, sondern ein Modellbaukonzept, mit dem Modellstrukturen erzeugt werden kön nen, die Zeitreihen nachbilden können. Die Begriffe „Markträumung“ und „Eigennutz“ haben eben in diesem Sinne keine empirische, oder reale Bedeutung, wie Lucas und Sargent klar herausstellen, sie dienen nur zur Erzeugung der formalen Struktur des Modells, sie sind jedoch losgelöst von ihrer (anschaulichen) Bedeutung oder Interpretation.

Roberto Cruccolini

In case your German isn’t too rusty, Cruccolini’s dissertation on the development of modern macroeconomics is highly recommended reading.

Some of us have for years been urging economists to pay attention to the ontological foundations of their assumptions and models. Sad to say, economists have not hearkened the appeal — and so modern economics has become increasingly irrelevant to the understanding of the real world.

Within mainstream economics internal validity is still everything and external validity nothing. Why anyone should be interested in that kind of theories and models is beyond imagination. As long as mainstream economists do not come up with any export-licenses for their theories and models to the real world in which we live, they really should not be surprised if people say that this is not science, but autism!

Studying mathematics and logics is interesting and fun. It sharpens the mind. In pure mathematics and logics we do not have to worry about external validity. But — economics is not pure mathematics or logics. It’s about society. The real world. Forgetting that, economics is really in dire straits.

Mathematical axiomatic systems lead to analytic truths, which do not require empirical verification, since they are true by virtue of definitions and logic. It is a startling discovery of the twentieth century that sufficiently complex axiomatic systems are undecidable and incomplete. That is, the system of theorem and proof can never lead to ALL the true sentences about the system, and ALWAYS contain statements which are undecidable – their truth values cannot be determined by proof techniques. More relevant to our current purpose is that applying an axiomatic hypothetico-deductive system to the real world can only be done by means of a mapping, which creates a model for the axiomatic system. These mappings then lead to assertions about the real world which require empirical verification. These assertions (which are proposed scientific laws) can NEVER be proven in the sense that mathematical theorems can be proven …

hqdefaultMany more arguments can be given to explain the difference between analytic and synthetic truths, which corresponds to the difference between mathematical and scientific truths … The scientific method arose as a rejection of the axiomatic method used by the Greeks for scientific methodology. It was this rejection of axiomatics and logical certainty in favour of empirical and observational approach which led to dramatic progress in science. However, this did involve giving up the certainties of mathematical argumentation and learning to live with the uncertainties of induction. Economists need to do the same – abandon current methodology borrowed from science and develop a new methodology suited for the study of human beings and societies.

Asad Zaman

  1. Craig
    February 26, 2017 at 5:14 pm

    Neither axiomatic nor empirical “proofs” alone are sufficient, only a thorough integration of the relevant truths of each and the resultant cognition of a thirdness/oneness/wholeness. Science, despite the wonderful tool it is, will be forever the religion it has become, until it recognizes wisdom/consciousness as a most basic and primary reality, and that there is no necessary conflict between the two perspectives of science and wisdom, only an inclusion, integration, expansion and completion of both.

  2. February 26, 2017 at 5:25 pm

    It was this rejection of axiomatics and logical certainty in favour of empirical and observational approach which led to dramatic progress in science.

    Yes.

    And the measures used to quantify observations must be empirical, not axiomatic. ‘Utility’ is the use-value of goods/services used in specific ways to obtain specific ends, direct and indirect. A theory of demand for goods cannot transcend the basic fact that, in the absence of use-values, there is no exchange and certainly no monetary value in monetized economies. Indeed, even goods of only sentimental value have that value because for those who have them they give rise to feelings, often cherished as priceless.

  3. Norman L. Roth
    February 26, 2017 at 7:09 pm

    Feb.26, 2017

    Once again the venerable Lars Syll is trying to hammer the stake of irrelevance through the vacuous heart of General {not micro}Equilibrium theory and its innumerable progeny; The models it begat. But, as we all know from the equally repetitious instructions on how to do-in vampires, YOU must also cut off its head. The stake is “necessary but not sufficient”.
    No one did it better than the great Gunnar Myrdal in 1957. His celebrated essay on the non-existence .of GE is a classic of clarity and straight-shooting. It should be drummed into the skulls of all who undertake the study of economics at the earliest possible stage, But it has been fatally ignored. So has Clive Granger’s exhaustive & rigorous working career of how to make sense out of TIME SERIES.
    For a thumb nail summary of Lars Syll’s previous efforts we humbly suggest the following re-reads,and scroll-downs to Norman L. Roth:

    {1} July 28, 2015,WHY REAL BUSINESS CYCLES CAN’T BE TAKEN SERIOUSLY

    {2}August 10,2013, REAL BUSINESS CYCLES, TRANSMOGRIFYING OBFUSCATION

    {3} Oct. 0,2014, MACRO-ECONOMIC ASPIRATIONS

    Please GOOGLE: Norman L. Roth

  4. March 12, 2017 at 9:01 am

    Economics is nonsense because it hasn’t even defined its basic unit i.e. money in a formal ratified coherent and decidable fashion.

    https://www.moneytransparency.com/msta-summary

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