Assorted links

by on May 6, 2011 at 12:05 pm in Uncategorized | Permalink

1. Watch markets in everything, why not just run faster?

2. The economics of Groupon.

3. The macro learned in economics grad school, though I disagree that ideology is the reason for RBC popularity.

4. Singapore allows political competition on the internet (1/20), ungated version here.

Yancey Ward May 6, 2011 at 12:15 pm

#4 is mislinked.

Yancey Ward May 6, 2011 at 12:23 pm

Was #4 meant to be this?

Andy May 6, 2011 at 12:23 pm

People complaining about the unrealistic ‘assumptions’ in RBC models are silly.

1. It’s a model, of course there are simplifying assumptions.
2. Keynesian models are filled with unrealistic assumptions too! (see point 1)

Everyone knows this, and when push comes to shove will admit their desired framework has unrealistic assumptions, but it’s such an easy debate point to make every time this discussion arises.

And it’s worth pointing out that the obvious questions about what happens when you relax certain assumptions is more or less the entire research program of macro. See: heterogeneous agents, search frictions, pricing frictions, bounded rationality, different shocks to DSGEs/VARs, etc, etc.

Ron Potato May 6, 2011 at 2:06 pm

The basis of a realistic science is and must be realistic premises.

For example, of physics, the major premise, and goal, is universally constant law over time and space. This is real because, without it, you lack a universe at all. Otherwise, the more specific and circumstantial your premises, the more you tread from science to applied science and engineering.

So what are the unrealistic assumptions in the new economics? Are they only valid for some specific non-existent domain? Classically, the rational agent is the realistic premise, and goal, because trade is a science of persons. This is entirely reasonable.

For otherwise, if the economist believes that he is instead a hedonist behaviorially determined, what kind of science is he creating anyway? Or does he believe that he is better than the lesser humans he models?

Loren F. File May 6, 2011 at 2:50 pm

Well the Keynesian unrealistic assumptions seem to produce accurate predictions. So should we care?

see: http://www.hamilton.edu/documents/An-Analysis-of-the-Accuracy-of-Forecasts-in-the-Political-Media.pdf

lff

Cliff May 6, 2011 at 3:42 pm

Your link shows nothing of the kind and is frankly ridiculous.

Noah Yetter May 6, 2011 at 12:30 pm

I would think the political influence would be in the opposite direction: towards models that suggest a large role for government.

Loren F. File May 6, 2011 at 2:41 pm

Incentives for economists do not come from government. They come from Wall Street.

lff

Cliff May 6, 2011 at 3:42 pm

Explain

lena May 6, 2011 at 11:41 pm

well you said that political influence would push models that suggest a large role for gov and wall street has political influence over gov so they get what they want.

caseynshan May 6, 2011 at 1:06 pm

Groupon economics… This is PR.. I would bet the real place Groupon makes money is that a large percentage of Groupon’s go unused.

Chicago May 8, 2011 at 7:44 pm

Actually, Groupon would prefer that they are used so customers stay happy and continue to buy more. Groupon makes the same amount regardless of use. The merchant does make free money if they aren’t used, but the whole purpose is cheaper customer acquisition (versus traditional marketing/coupons) so the merchant actually wants them to be used as well.

Rich Berger May 6, 2011 at 1:47 pm

Noah-

I concur. Without models of some sort, how else would the government justify its role. Wasn’t a model of some sort used to sell the stimulus? Of course, “sell” is just a eumphemism for “I won, suckers.”

blah May 6, 2011 at 2:45 pm

Wait, you forgot to include your usual gratuitous Bush backward-looking cheerleading and whining about those pinko Dems.

Please edit and resubmit.

Sincerely,

The Consistency Police

Matt Waters May 6, 2011 at 1:56 pm

Yeah, Paul Krugman and others have an undying allegiance to debt-exploding fiscal stimulus. That’s despite the fact that fiscal stimulus has just not worked for any sustained period of time. In reality, they have an allegiance to big-government first and Keynsian theory helps to validate a case for increasing spending without increasing taxes.

For me, as somebody who is a big advocate of bigger monetary stimulus, I do not like how my view and their view get combined in public discourse. People think I’m advocating running up the credit card to reduce unemployment, like Krugman and others, when I’m really advocating the opposite. I want monetary policy to put people back to work so we actually work and pay down the credit card.

Loren F. File May 6, 2011 at 2:47 pm

Interesting that such a biased reporter using such a flawed system makes such highly accurate forecasts.

lff

Cliff May 6, 2011 at 3:43 pm

What forecasts would those be?

Rich Berger May 6, 2011 at 5:41 pm

Cliff

I like your style. Speaking “truth to bullshit”.

indianajim May 6, 2011 at 11:21 pm

Rich, I like yours too: calling bullshit bullshit.

Ahrash May 6, 2011 at 2:03 pm

Tyler,

Can you elaborate on the reasons why you think RBC models are so pervasive in modern academic macro?

jj May 6, 2011 at 3:52 pm

Regarding #3, I think “Noah Smith” is going to learn that it was a foolish idea to run a public blog during grad school…especially one that criticizes his own program. I imagine the faculty are not too enthused. Apparently he didn’t learn anything practical in his Game Theory classes either.

Careless May 6, 2011 at 4:24 pm

On the “1/20″ thing, has anyone actually run into the paywall yet without trying?

Jordan May 6, 2011 at 6:44 pm

If you view an article by clicking a link from a blog it doesn’t count against one of your twenty.

Noah May 6, 2011 at 5:55 pm

“jj” – Well, the profs who taught the classes were cool with it, as are my committee members. But thanks for looking out for me. ;-)

jj May 7, 2011 at 1:35 pm

Well, MIles has good judgement. Getting attention from a blog like Marginal Revolution is good, but remember that it might rub recruiters the wrong way.

Mulberry May 8, 2011 at 5:00 am

This is real because, without it, you lack a universe at all. Otherwise, the more specific and circumstantial your premises, the more you tread from science to applied science and engineering.

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