May 19, 2011 § Leave a comment
A critical implication of Blanchard’s haiku metaphor is that the DGSE approach had failed to generate a truly progressive [in the Lakatos sense] scientific research program. A new project in the DGSE framework will typically, as Blanchard indicates, begin with the standard general equilibrium model, disregarding the modifications made to that model in previous work examining other ways in which the real economy deviated from the modeled ideal.
By contrast, a scientifically progressive program would require a cumulative approach, in which empirically valid adjustments to the optimal general equilibrium framework were incorporated into the standard model taken as the starting point for research. Such an approach would imply the development of a model that moved steadily further and further away from the standard general equilibrium framework, and therefore became less and less amenable to the standard techniques of analysis associated with that model.
John Quiggin, Zombie Economics, pp. 105–106
Edit: Bonus quote:
The prevailing emphasis on mathematical and logical rigor has given economics an internal consistency that is missing in other social sciences. But there is little value in being consistently wrong. (p. 211)
May 6, 2011 § Leave a comment
Let’s put some quotes here for me to think about later.
The econometric tests reported in studies of the Great Moderation showed a statistically significant change occurring in the mid-1980s. However, it is an open secret in econometrics that such tests mean very little, since the same set of time series data that suggests a given hypothesis must be used to test it. This is quite unlike the biomedical problems for which the statistical theory of significance was developed, where a hypothesis is developed first, and then an experiment is designed to test it.