Macroeconomic Theory for a World of Imperfect Knowledge

Datos Bibliográficos

ID8246766
AutoresRoman Frydman (New York University, autor de correspondencia), Michael D Goldberg, Michael Goldberg (0000-0003-1039-6865, University of New Hampshire at Manchester)
Año2008
Volumen3
Número3
Fecha de publicación2008-01-16
Peer ReviewedSí
Open AccessNo
TipoARTICLE
RevistaCapitalism and Society (JOURNAL)
Identificadores de la revistaISSN: 1932-0213 • E-ISSN: 2194-6140
EditorialWalter de Gruyter GmbH (PUBLISHER • DE)
DOI10.2202/1932-0213.1046
OpenAlexW2133696324
IdiomaEN
Citas recibidas5
Referencias citadas16

We have recently proposed an alternative approach to economic analysis, which we call Imperfect Knowledge Economics (IKE). Although IKE builds on the methodology of contemporary macroeconomics by modeling aggregate outcomes on the basis of mathematical representations of individual decision making, it jettisons models that generate sharp predictions. In this paper, we elaborate on and extend the arguments that led us to propose IKE. We show analytically that in order to avoid the fundamental epistemological flaws inherent in extant models, economists must stop short of fully prespecifying change. We also show how acknowledging the limits of their knowledge may enable economists to shed new light on the basic features of observed time-series of market outcomes, such as fluctuations and risk in asset markets, which have confounded extant approaches for decades.Comments on this paper can be found at: http://ssrn.com/abstract=2209269

Aggregate (composite · Asset (computer security · Capital asset pricing model · Econometrics · Economics · Extant taxon · Imperfect · Mathematical economics · Order (exchange · Perfect information · Positive economics · Complex Systems and Time Series Analysis · Computer Science · Economic theories and models · Philosophy · Finance