Thinking is hard work, which may be why so few people do it. Good thinking is done in simple language and never uses jargon to make a point. In fact, the purpose of jargon is to stop people from questioning the basic assumptions that underlie an analysis. Economists are experts at doing that. Here are a few of my favorite terms of textbook jargon that I delete whenever I find them:
Multiplier
Accelerator
NAIRU
Natural Rate
Alpha
Optimal Portfolio
Buy the Dip
“Modern” Anything (Modern Macro, Modern Portfolio Theory, Modern Monetary Theory)
I will write about these and others as we go along. What are some of your favorites?
Yeah when I first learned about General Equilibrium I had a lot of questions as to the underlying assumptions. I had tried to build a "vibration" model in which all three markets vibrate, meaning there were potentially multiple equilibria, not just one. But, they vibrate over time and trying to pin down a point of equilibrium at any one point in time seems like folly because the way I see it the economy is a chaotic system in which many small decisions aggregate into the macro world. Very much like a chaotic feedback loop as well.
Interesting. Share your thought that a macro economy has to be looked at from a systems point of view. And system metrics, like GDP, refer to the system as a whole, rather than to an individual agent, much like we use pressure or temperature to measure the result of many particles vibrating in a closed container. What makes macro special, I think, is that the effects of the interactions among the agents can be as important or more important than the individual decisions, something no representative agent model can capture. When I first studied complex adaptive systems 40 years ago, I came to think of the small variations in metrics (the vibrations you mention) as the system "breathing" in a single state. They are fundamentally different than the violent change we see in phase transitions to a new state. More on this later.
Yes, I've been wanting to learn more about these models. I don't want to reinvent the wheel but my experience in parallel processing, coding, and system design leads me to believe there has to be a better way to model and predict endogenous factors affecting the macro economy and how it feeds into decision making. With better computers maybe that's possible soon.
I also love that you like Prigogine. "Order Out of Chaos" is a great book and in a way perfectly describes the overall functioning of the economy. It really is order (stability) out of chaos.
Regarding your question about the best way to get familiar with the complex adaptive systems literature. 1. First thing to do is go to the Complexity Explorer section of the Santa Fe Institute website. They have free online courses in various aspects of complexity. (I have taken them all) Sign up for "Introduction to Complexity" taught by Melanie Mitchell. You will love it. You can also read her book by the same name. Then claw through other courses as you like. After than read Per Bak's little book "How Nature Works" for a good start at both Criticality and network failures. Have fun.
Steady State.
I like it. Kind of like "general equilibrium"
(Edited)
Yeah when I first learned about General Equilibrium I had a lot of questions as to the underlying assumptions. I had tried to build a "vibration" model in which all three markets vibrate, meaning there were potentially multiple equilibria, not just one. But, they vibrate over time and trying to pin down a point of equilibrium at any one point in time seems like folly because the way I see it the economy is a chaotic system in which many small decisions aggregate into the macro world. Very much like a chaotic feedback loop as well.
Interesting. Share your thought that a macro economy has to be looked at from a systems point of view. And system metrics, like GDP, refer to the system as a whole, rather than to an individual agent, much like we use pressure or temperature to measure the result of many particles vibrating in a closed container. What makes macro special, I think, is that the effects of the interactions among the agents can be as important or more important than the individual decisions, something no representative agent model can capture. When I first studied complex adaptive systems 40 years ago, I came to think of the small variations in metrics (the vibrations you mention) as the system "breathing" in a single state. They are fundamentally different than the violent change we see in phase transitions to a new state. More on this later.
JR
Yes, I've been wanting to learn more about these models. I don't want to reinvent the wheel but my experience in parallel processing, coding, and system design leads me to believe there has to be a better way to model and predict endogenous factors affecting the macro economy and how it feeds into decision making. With better computers maybe that's possible soon.
I also love that you like Prigogine. "Order Out of Chaos" is a great book and in a way perfectly describes the overall functioning of the economy. It really is order (stability) out of chaos.
Regarding your question about the best way to get familiar with the complex adaptive systems literature. 1. First thing to do is go to the Complexity Explorer section of the Santa Fe Institute website. They have free online courses in various aspects of complexity. (I have taken them all) Sign up for "Introduction to Complexity" taught by Melanie Mitchell. You will love it. You can also read her book by the same name. Then claw through other courses as you like. After than read Per Bak's little book "How Nature Works" for a good start at both Criticality and network failures. Have fun.