Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
... that any general equilibrium modeling that involves a small number of equilibria with well behaved dynamics is itself theory requires absurdly heroic assumptions.

This was worked out in the high reaches of theory in the 1970's, just as the invalidity of using marginalist modeling of macroeconomic aggregates was established in the 1960's.

So we "know" that the only two ways to do conventional marginalist modeling are inapplicable to real world macroeconomies, and yet mainstream economists have to use one or the other, because those are the only two options that make use of their toolkit.

And to think that the failure of the bastardized Keynesian-marginalist models of Samuelson et al.   to be able to talk about the Oil Price Shocks of the 1970's were laid at the feet of the Keynesian side of the hybrid, when it turns out that marginalist modeling is incapable of adequately modeling the level of activity in the macroeconomy ... just as Keynes originally argued.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Mar 21st, 2009 at 07:55:06 PM EST
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