On the explanatory irrelevance of general equilibrium models

6 Oct, 2017 at 16:03 | Posted in Economics | Comments Off on On the explanatory irrelevance of general equilibrium models

The model itself seems to provide no indication of how to find out under which real conditions its nomological content … has explanatory relevance. The assertion that it has such relevance if the corresponding ‘assumptions’ are satisfied is either (1) a purely logical statement — that is, if these assumptions are to be identified with the supreme hypotheses of the system itself; (2) a highly problematic statement — if the explicit if-components (antecedent clauses) of these hypotheses are meant; or (3) a completely useless statement — if it refers to the so-far-unknown conditions under which the idealizations are true.