Thinking about economics
All theory depends on assumptions which are not quite true. That is what makes it theory. But what if we relax all assumptions? Then we no longer have a theory, we have Borges.
After relaxing all the assumptions that could be relaxed, an anonymous author created a new synthesis by constructing a new-classical overlapping generations equilibrium business cycle model with Austrian roots which nevertheless contained Keynesian price rigidities, neutrality properties, involuntary unemployment, outsider power, decreasing returns to scale, irrational expectations and maximizing agents operating in a world of fundamentalist uncertainty, repeatedly hit by endogenous technical progress. When the model generated neo-Marxian predictions, the author just flipped!
When you are missing a paragraph – A crowdsourced paper in honor of Charles Wyplosz
By: Friends of Charles Wyplosz
Krugman and trade
Many critics attacking conventional economics argue, with considerable justification, that the assumptions underlying neoclassical theory bear little resemblance to the world we know. These critics however have been too quick to assert that this shows that mainstream economics can never be of any use. Recent progress in the technology of space travel as well as the prospects of the use of space for energy production and colonization make this assertion doubtful; for they raise the distinct possibility that we may eventually discover or construct a world to which orthodox economic theory applies.
The Theory of interstellar trade
By: Paul Krugman
Heckman and econometrics
Using a powerful method due to Singh, we have established a relationship between God’s attitude toward man and the amount of prayer transmitted to God. The method presented here is applicable to a number of important problems. Provided conditional density:
is assumed, we do not need to observe a variable in order to compute its conditional expectation with respect to another variable whose density can be estimated. For example, one can extend current empirical work in a variety of areas of economics to estimate the effect of income on happiness or the effect of income inequality on democracy. We conjecture that this powerful method can be extended to the more general case when X is not observed either.
The Effect of Prayer on God’s Attitude Toward Mankind
By: James Heckman
Published right before the 2007-2008 financial crisis
