Field

15 Dec, 2018 at 15:03 | Posted in Varia | Comments Off on Field

 

Rom i regnet

14 Dec, 2018 at 16:20 | Posted in Varia | Comments Off on Rom i regnet


Svante är kung!

Preskriberade romanser

14 Dec, 2018 at 16:11 | Posted in Varia | Comments Off on Preskriberade romanser

 

Satsa på järnväg — inte fossil utbyggnad

14 Dec, 2018 at 15:56 | Posted in Politics & Society | Comments Off on Satsa på järnväg — inte fossil utbyggnad

svd.jpgVärlden står inför akuta klimatproblem samtidigt som det säkerhetspolitiska läget blir alltmer spänt med uppblossande handelskonflikter och minskande respekt för folkrätten. Det ökar riskerna med vårt oljeberoende och vår känsliga infrastruktur. Preem AB och Trafikverket har ett stort ansvar för att minska oljeförbrukningen och koldioxidutsläppen från transportsektorn och för rikets säkerhet. Men man agerar tyvärr tvärtom …

En robust järnväg kan inte nås via nedläggning av järnväg. Vid en analys av alla hotade banor med 1800-talsstandard visar det sig dessutom att en modernisering av dem skulle förbättra Trafikverkets ekonomi på underhållssidan med upp till 1 miljard kronor årligen … Men Trafikverket klarar tydligen inte av att sköta och utveckla landets järnvägssystem. Ett illavarslande tecken på detta är också införandet av EU:s nya signal- och säkerhetssystem ERTMS …

I stället för olönsamma megaprojekt som ERTMS, Ostlänken och Västlänken med tillhörande stora koldioxidutsläpp kan oglamorösa snabba vardagsåtgärder på hela bannätet ge robustare järnväg med mångdubblad kapacitet. Bevarande av elbanor, elektrifiering av dieselbanor och utbyggnad av dubbelspår ihop med utvecklad tågtrafik kan ge kraftigt sänkta koldioxidutsläpp från transportsektorn och minskat oljeberoende. Landets säkerhetsläge skulle då också förbättras.

Jan Du Rietz   Hans Albin Larsson   Lars P Syll

Why all models are wrong

13 Dec, 2018 at 17:53 | Posted in Economics, Theory of Science & Methodology | 11 Comments

moModels share three common characteristics: First, they simplify, stripping away unnecessary details, abstracting from reality, or creating anew from whole cloth. Second, they formalize, making precise definitions. Models use mathematics, not words … Models create structures within which we can think logically … But the logic comes at a cost, which leads to their third characteristic: all models are wrong … Models are wrong because they simplify. They omit details. By considering many models, we can overcome the narrowing of rigor by crisscrossing the landscape of the possible.

To rely on a single  model is hubris. It invites disaster … We need many models to make sense of complex systems.

Yes indeed. To rely on a single mainstream economic theory and its models is hubris.  It certainly does invite disaster. To make sense of complex economic phenomena we need many theories and models. We need pluralism. Pluralism both in theories and methods.

Using ‘simplifying’ mathematical tractability assumptions — rational expectations, common knowledge, representative agents, linearity, additivity, ergodicity, etc — because otherwise they cannot ‘manipulate’ their models or come up with ‘rigorous ‘ and ‘precise’ predictions and explanations, does not exempt economists from having to justify their modelling choices. Being able to ‘manipulate’ things in models cannot per se be enough to warrant a methodological choice. If economists do not think their tractability assumptions make for good and realist models, it is certainly a just question to ask for clarification of the ultimate goal of the whole modelling endeavour.

The final court of appeal for models is not if we — once we have made our tractability assumptions — can ‘manipulate’ them, but the real world. And as long as no convincing justification is put forward for how the inferential bridging de facto is made, model building is little more than hand-waving that give us rather a little warrant for making inductive inferences from models to the real world.

Mainstream economists construct closed formalistic-mathematical theories and models for the purpose of being able to deliver purportedly rigorous deductions that may somehow by be exportable to the target system. By analyzing a few causal factors in their ‘laboratories’ they hope they can perform ‘thought experiments’ and observe how these factors operate on their own and without impediments or confounders.

Unfortunately, this is not so. The reason for this is that economic causes never act in a socio-economic vacuum. Causes have to be set in a contextual structure to be able to operate. This structure has to take some form or other, but instead of incorporating structures that are true to the target system, the settings made in mainstream economic models are rather based on formalistic mathematical tractability. In the models they often appear as unrealistic ‘tractability’ assumptions, usually playing a decisive role in getting the deductive machinery to deliver precise’ and ‘rigorous’ results. This, of course, makes exporting to real-world target systems problematic, since these models – as part of a deductivist covering-law tradition in economics – are thought to deliver general and far-reaching conclusions that are externally valid. But how can we be sure the lessons learned in these theories and models have external validity when based on highly specific unrealistic assumptions? As a rule, the more specific and concrete the structures, the less generalizable the results. Admitting that we in principle can move from (partial) falsehoods in theories and models to truth in real-world target systems do not take us very far unless a thorough explication of the relation between theory, model and the real world target system is made. To have a deductive warrant for things happening in a closed model is no guarantee for them being preserved when applied to an open real-world target system.

If the ultimate criteria for success of a deductivist system are to what extent it predicts and cohere with (parts of) reality, modern mainstream economics seems to be a hopeless misallocation of scientific resources. To focus scientific endeavours on proving things in models is a gross misapprehension of what an economic theory ought to be about. Real-world economic systems do not conform to the restricted closed-system structure the mainstream modelling strategy presupposes.

What is wrong with mainstream economics is not that it employs models per se. What is wrong is that it employs poor models. They — and the tractability assumptions on which they to a large extent build on — are poor because they do not bridge to the real world in which we live. And — as Page writes — “if a model cannot explain, predict, or help us reason, we must set it aside.”

Disconfirming rational expectations

13 Dec, 2018 at 11:12 | Posted in Economics | Comments Off on Disconfirming rational expectations

56238100Empirical efforts at testing the correctness of the rational expectations hypothesis have resulted in a series of empirical studies that have more or less concluded that it is not consistent with the facts. In one of the more well-known and highly respected evaluation reviews made, Michael Lovell (1986) concluded:

it seems to me that the weight of empirical evidence is sufficiently strong to compel us to suspend belief in the hypothesis of rational expectations, pending the accumulation of additional empirical evidence.

And this is how Nikolay Gertchev summarizes studies on the empirical correctness of the hypothesis:

More recently, it even has been argued that the very conclusions of dynamic models assuming rational expectations are contrary to reality … If taken as an empirical behavioral assumption, the RE hypothesis is plainly false; if considered only as a theoretical tool, it is unfounded and selfcontradictory.

Those who want to build macroeconomics on microfoundations usually maintain that the only robust policies and institutions are those based on rational expectations and representative actors. As I have tried to show elsewhere — in On the use and misuse of theories and models in economics and Rational expectations: a fallacious foundation for macroeconomics in a non-ergodic world — there is really no support for this conviction at all. On the contrary. If we want to have anything of interest to say on real economies, financial crises and the decisions and choices real people make, it is high time to dump macroeconomic models building on representative actors and rational expectations microfoundations in the pseudo-science dustbin.

Day of glory

12 Dec, 2018 at 18:14 | Posted in Varia | 1 Comment

 

Oíche Chiúin

11 Dec, 2018 at 21:22 | Posted in Varia | Comments Off on Oíche Chiúin

 

Econometrics — analysis with incredible​ certitude​

10 Dec, 2018 at 18:41 | Posted in Statistics & Econometrics | Comments Off on Econometrics — analysis with incredible​ certitude​

9780199679348There have been over four decades of econometric research on business cycles …

But the significance of the formalization becomes more difficult to identify when it is assessed from the applied perspective …

The wide conviction of the superiority of the methods of the science has converted the econometric community largely to a group of fundamentalist guards of mathematical rigour … So much so that the relevance of the research to business cycles is reduced to empirical illustrations. To that extent, probabilistic formalisation has trapped econometric business cycle research in the pursuit of means at the expense of ends.

The limits of econometric forecasting have, as noted by Qin, been critically pointed out many times before. Trygve Haavelmo assessed the role of econometrics — in an article from 1958 — and although mainly positive of the “repair work” and “clearing-up work” done, Haavelmo also found some grounds for despair:

Haavelmo-intro-2-125397_630x210There is the possibility that the more stringent methods we have been striving to develop have actually opened our eyes to recognize a plain fact: viz., that the “laws” of economics are not very accurate in the sense of a close fit, and that we have been living in a dream-world of large but somewhat superficial or spurious correlations.

Maintaining that economics is a science in the ‘true knowledge’ business, I remain a sceptic of the pretences and aspirations of econometrics. The marginal return on its ever higher technical sophistication in no way makes up for the lack of serious under-labouring of its deeper philosophical and methodological foundations that already Keynes complained about. The rather one-sided emphasis of usefulness and its concomitant instrumentalist justification cannot hide that the legions of probabilistic econometricians who give supportive evidence for their considering it ‘fruitful to believe’ in the possibility of treating unique economic data as the observable results of random drawings from an imaginary sampling of an imaginary population, are skating on thin ice.

A rigorous application of econometric methods in economics really presupposes that the phenomena of our real world economies are ruled by stable causal relations between variables. The endemic lack of predictive success of the econometric project indicates that this hope of finding fixed parameters is an incredible hope for which there, really, is no other ground than hope itself.

Wald War II

10 Dec, 2018 at 14:42 | Posted in Statistics & Econometrics | Comments Off on Wald War II

 

Wynne Godley on what it means for a nation not to have its own currency

10 Dec, 2018 at 11:10 | Posted in Economics | 2 Comments

If a government stops having its own currency, it doesn’t just give up “control over monetary policy” as normally understood; its spending powers also become constrained in an entirely new way. If a government does not have its own central bank on which it can draw cheques freely, its expenditures can be financed only by borrowing in the open market in competition with businesses, and this may prove excessively expensive or even impossible, particularly under “conditions of extreme emergency.”

greece-feb12-bank__3197265kIf Europe is not to have a full-scale budget of its own under the new arrangements it will still have, by default, a fiscal stance of its own made up of the individual budgets of component states. The danger, then, is that the budgetary restraint to which governments are individually committed will impart a disinflationary bias that locks Europe as a whole into a depression it is powerless to lift.

Wynne Godley

Comment les discriminations minent la cohésion sociale

9 Dec, 2018 at 21:41 | Posted in Politics & Society | Comments Off on Comment les discriminations minent la cohésion sociale

Vous (l’économiste Stéphane Carcillo) avez publié, avec l’économiste Marie-Anne Valfort, un ouvrage sur les discriminations dans le monde du travail qui montre qu’il y a une corrélation entre les discriminations et la confiance dans les relations ­sociales. Comment fonctionne ce lien ?

discLe politiste américain Robert Putnam est le premier à avoir identifié, au début des années 2000, un lien entre la pratique des discriminations et l’émergence de la défiance. Parce que les ruptures d’égalité sont perçues comme des mécaniques profondément injustes, elles minent la cohésion sociale – et ce à grande échelle. Les discriminations n’ont rien de marginal : les homosexuels représentent 5 % à 10 % de la population, les minorités ethniques près de 10 %, et les femmes constituent une « minorité majoritaire ». Une part très importante de la popu­lation voit donc sa carrière et ses salaires stagner en raison de préjugés absurdes et de stéréotypes irrationnels.

Ces discriminations donnent naissance à de véritables cercles vicieux : au lieu de favoriser l’intégration des minorités, elles les encouragent à se replier vers leur communauté d’origine. Face à ces mécanismes d’exclusion, les minorités ont en effet tendance à rejeter les valeurs de la société d’accueil. Après les attentats du 11 septembre 2001, les musulmans qui vivaient dans les Etats américains où les actes islamophobes ont le plus augmenté affichaient ainsi, dix ans plus tard, des normes sociales plus rigoristes, des taux de mariages intracommunautaires plus élevés et des pratiques religieuses plus intransigeantes.

Le Monde

Den sista grisen — Horace Engdahl

9 Dec, 2018 at 20:53 | Posted in Varia | Comments Off on Den sista grisen — Horace Engdahl

gris2

Ibland säger en boktitel mer än tusen ord …

Wynne Godley — the man who saw through the euro

9 Dec, 2018 at 15:27 | Posted in Economics | 3 Comments

If there were an economic and monetary union, in which the power to act independently had actually been abolished, ‘co-ordinated’ reflation of the kind which is so urgently needed now could only be undertaken by a federal European government. Without such an institution, EMU would prevent effective action by individual countries and put nothing in its place …

wgodleyWhat happens if a whole country – a potential ‘region’ in a fully integrated community – suffers a structural setback? So long as it is a sovereign state, it can devalue its currency. It can then trade successfully at full employment provided its people accept the necessary cut in their real incomes. With an economic and monetary union, this recourse is obviously barred, and its prospect is grave indeed unless federal budgeting arrangements are made which fulfil a redistributive role … If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation … What I find totally baffling is the position of those who are aiming for economic and monetary union without the creation of new political institutions (apart from a new central bank), and who raise their hands in horror at the words ‘federal’ or ‘federalism’. This is the position currently adopted by the Government and by most of those who take part in the public discussion.

Wynne Godley

The euro crisis is far from over. The tough austerity measures imposed in the eurozone has made economy after economy contract. And it has not only made things worse in the periphery countries, but also in countries like France and Germany. Alarming facts that should be taken seriously.

Europe may face a future with growing economic disparities where we will have​ to confront increasing hostility between nations and peoples. What we’ve seen lately in France shows that the protests against technocratic attempts to undermine democracy may go extremely violent.

The problems — created to a large extent by the euro — may not only endanger our economies, but also our democracy itself. How much whipping can democracy take? How many more are going to get seriously hurt and ruined before we end this madness and scrap the euro?

What RCTs can and cannot tell us

8 Dec, 2018 at 18:10 | Posted in Statistics & Econometrics | Comments Off on What RCTs can and cannot tell us

using-randomised-controlled-trials-in-educationWe seek to promote an approach to RCTs that is tentative in its claims and that avoids simplistic generalisations about causality and replaces these with more nuanced and grounded accounts that acknowledge uncertainty, plausibility and statistical probability …

Whilst promoting the use of RCTs in education we also need to be acutely aware of their limitations … Whilst the strength of an RCT rests on strong internal validity, the Achilles heel of the RCT is external validity … Within education and the social sciences a range of cultural conditions is likely to influence the external validity of trial results across different contexts. It is precisely​ for this reason that qualitative components of an evaluation, and particularly the development of plausible accounts of generative mechanisms are so important …

Highly recommended reading.

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