I’m No David R. Henderson
I was reading a blog post by David R. Henderson (btw I use his middle initial to distinguish him from a British, free-market economist named David Henderson) where he said this:
About 40 to 60 percent of the economists around my campus–the Naval Postgraduate School–get together for a brown-bag lunch around a table once a month and just talk about whatever is on our minds….
I had an idea. I told everyone that, from the tenor of the discussion, it seemed clear to me that virtually everyone in the room (there were about 9 of us) cared about poor people in poor countries. I asked them to imagine that they had the order of magnitude of wealth that Bill Gates has–at least $10 billion. How, I asked, would they use some part of that wealth to help those people? They could specify the amounts, the organizations, and the causes. I asked them not to talk to each other and to take a few minutes to write things down.
At that point in the story I was flabbergasted. When I was a college professor I had a hard time asking students to take out a sheet of paper for an experiment (involving the Prisoner’s Dilemma), because in the back of my mind it occurred to me they could call my bluff and say, “No, we’re not going to take out a piece of paper. You’re not my dad.”
In a related vein, I never want the remote if a group of people are watching TV. Way too much pressure.
On the other hand, I have no problem telling Bernanke how he should conduct monetary policy. Ishn’t zhat weird?
Could you suggest some “Austrian” critiques in the literature of the DSGE / New Keynesian work of the last 15-20 years, the post-RBC stuff sometimes called the New Neoclassical Synthesis?
It’s called the “Aladdin” method — don’t command, ask, and usually magic happens.
Sorry Greg I don’t know. I barely kept up with the literature when I was in academia.
Dare I say it, you could ask Tyler Cowen. I bet he would know.
If you aren’t aware of any, I’m thinking there may be none.
People are telling me there is everything you need in there to construct a DSGE model of the caplital part of The ABCT.
What do you think?
I think you could take it a long way, but I’m not sure how you deal with error. I.e. if you think the boom is a cluster of errors. You could make the interest rate signal noisier because of Fed action.
Thanks Bob.
I’m reading Gali’s introduction to the topic and literature.
I’m aware that all sorts of efforts are ongoing adding this or that to the basic math.
And folks like Frydman and Caballero are pointing out the limitation of the framework from the perspective of genuine uncertainty and unmodeled (unmodelable?) real world complexity.
And even Woodford is pretending to be open to accounts of heterogeneous expectations from outside the formal framework.
We’ll see how long it take for self-interest and the guild structure of the profession to whip everyone back into line producing “normal science” math crank turning.
Having control of the remote around a group of people might be the worst thing ever. I suddenly forget my own likes and dislikes, and have no idea where to stop and for how long. I spend so much energy trying to get a feel from the rest of the room that I have no idea what it is that I actually want to watch.
Bob,
I am David R. Henderson and it wasn’t that hard. I think people trust me that they’re not being set up.