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10 sats \ 14 replies \ @Undisciplined OP 10 Nov \ parent \ on: All States are Empires of Lies econ
They might make the distinction. Macro has come to be the field that contains business cycles, growth, money, and interest.
They might, however, those factors come from individual human actions. The Austrians base everything in their theory on individual human actions (not just choices, but actions). They work their way up to interest rates, money, growth and business cycles from those basic premises of individual human action. They definitely do not like aggregated numbers.
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That's right and that's what modern macro folks also mean by "micro founded" macroeconomics. They build up from the mainstream micro theory.
There are still loads of problems with what they're doing, but it is interesting that there is now an acknowledgement that all economics needs to rest on subjective value theory.
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Finally, they are admitting it and moving away from labor theory. The problems are with those not using subjective value theory, since the basic premises are faulty.
Also, mathematics is not very useful to work with human action, but logic is.
Math based economics is a bit unreal and comes to nonsensensical conclusions that cause a lot of problems when applied to real economies.
Just look at the botchery of the BLS.
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The compounding errors of stacking various mathematical models on top of each other is one of the main issues in modern macro.
The simplifying assumptions that convert Austrian Theory into mathematical microeconomics really aren't very bad. There are a handful of rationality assumptions that still allow for a very broad realistic range of preferences. I think there's some value in making that tradeoff, because being able to use mathematical notation is really powerful.
The problem, though, is that en route to building up macro models, far more simplifying assumptions are introduced. By the end, there's little semblance of real human action remaining.
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That’s right. The simplifying assumptions take the rigor out of the logical thought and conclusions drawn. A lot of the simplifications are aggregations. When you aggregate data you loose all the fine grain focus of the original data. Sometimes the data become useless because it looses its acuity. This may be the problem with the BLS data and how they botch everything, then take more guesses.
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I think the data issues are largely separate from the theoretical ones.
Aggregation is probably the fundamental error of macroeconomics now. Doing so in the way they do it, is flagrantly contradictory to the key findings of Social Choice Theory.
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It is flagrantly contradictory to Austrian economic theory, Social Choice Theory, common sense and even uncommon sense. They don’t even make sense to themselves, for that matter. I don’t think they take a critical look at what they are publishing before they publish it for the laughs and belly chuckles it will get. Sometimes, if it is too good to be true, than it isn’t true.
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That does remind me of something I heard, but I don't remember from where exactly. I want to say Steve Levitt.
Anyway, it was a prominent economist answering a question about macro forecasts and he said that almost no economists actually believe macro models, including the economists using and creating them.