"Des waerelds doen en doolen, is maar een mallemoolen,"

"Des waerelds doen en doolen, is maar een mallemoolen," engraving from Het Groote Tafereel der Dwaasheid, 1720.

"The actions and designs of the world go round as if in a mill." South Sea bubble financial crisis.

Tuesday, October 11, 2011

Theories and reality

















A lively debate with a methodenstreit flavour about economics and its relationship with reality kicked off by John Kay's paper for Inet. Inet sent Kay's paper to some economists with the opportunity to respond. Their blog received plenty of it. The debate is timely for Christopher Sims and Thomas Sargent just won the Nobel Prize in Economics for their "empirical research on cause and effect in the macroeconomy". To put it crudely,  on how best finding macroeconomic things out ! Finding things out always implies having a map. The problem is which form this map should take.

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