Economics and Reality
31 Pages Posted: 28 Aug 2011
There are 2 versions of this paper
Economics and Reality
Economics and Reality
Date Written: July 12, 2011
Abstract
This paper is a non-technical and somewhat philosophical essay, that seeks to investigate the relationship between economics and reality. More precisely, it asks how reality in the form of empirical evidence does or does not influence economic thinking and theory. In particular, which role do calibration, statistical inference, and structural change play? What is the current state of affairs, what are the successes and failures, what are the challenges? I shall tackle these questions moving from general to specific. For the general perspective, I examine the following four points of view. First, economics is a science. Second, economics is an art. Third, economics is a competition. Forth, economics is politics. I then examine four specific cases for illustration and debate. First, is there a Phillips curve? Second, are prices sticky? Third, does contractionary monetary policy lead to a contraction in output? Forth, what causes business cycles? The general points as well as the specific cases each have their own implication for the central question at hand. Armed with this list of implications, I shall then attempt to draw a summary conclusion and provide an overall answer.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Harald Uhlig
-
Measuring the Changing Generosity of Unemployment Benefits: Beyond Existing Indicators
-
Aggregate Hours Worked in OECD Countries: New Measurement and Implications for Business Cycles
By Lee E. Ohanian and Andrea Raffo