Félix RANSON

@drmtgr Bien reçu merci! Geanakoplos est au programme aussi😎

@RansonFelix Sympa! Dans le lot pour les gens qui voudraient approfondir ce papier en particulier j'ajouterais ces deux chapitres, sfipress.org/eecs-iv-04 et sfipress.org/eecs-iv-05 Tous deux très en lien avec ce que raconte ce papier

This weekend, a colleague of mine sent an extremely interesting article by an economist at the NY Fed that does what I feel is a formalisation (much better than what I would have been able to do) of a criticism on equilibrium models in economics that me and my colleagues who do

@jujudanslarue @drmtgr And a half

@RansonFelix @drmtgr *1 month, no?

Il y a un côté pathétique du "jeu" politique. Les mêmes qui vous disent que la situation à Paris est équivalente à celle de Marseille n'ont pas censuré le gouvernement où Dati était ministre et qui était soutenu par les mêmes partis qui la soutiennent au 2nd tour.

When AGI will automate all scientific research but you work in macroeconomic theory which is so unscientific and vibes-based that no hyperintelligent AI could ever bring itself to do it properly.

The old world is dying and the new world is also dying. The recent world is dying and the distant past is also dying. The future is dying as well. The monsters? Yes they’re also dying.

Never seen so much political unity behind a public figure, let alone a conservative central banker. In a way encouraging, but I see people are resharing Rogoff 1985 with a "worth re-reading😔" so I don't know man. We're condemned to the eternal political pendulum.

La France de Macron ? Un vulgaire paillasson sur lequel l’Oncle Sam trumpiste peut décrotter ses grosses Rangers boueuses en toute impunité. C’est la honte intergalactique.

Financial repression

@jujudanslarue @HeleneZgc Bien coordonnons nous

@HeleneZgc @RansonFelix Donc pas besoin de combat à mort pour l'avoir en premier? :(

Ok so my top 4 this year

@HeleneZgc @jujudanslarue Moi aussi je veux

@jujudanslarue Vendu je te le prêterai

@farmerrf Since stochastic linear models consistently need extremely persistent shocks to produce a response, I’m not so sure that okham’s razor lies entirely on their side. But it’s true that the empirical case is very challenging - although not completely impossible

@farmerrf And it’s also sometimes a natural conclusion of the models we are commonly using once we allow for the solution to sit in the region of the parameter space that produces endogenous fluctuations (one of the messages of BPG)

I am a fan of the literature on endogenous cycles, particularly Richard Goodwin’s work. But Goodwin’s model was mechanistic and did not account for people adapting their behavior in response to anticipated price signals. To improve on that idea, I wrote a paper on nonlinear cycles when I was at Penn in the 1980s that used an overlapping generations model to generate cycles in a competitive economy static1.squarespace.com/static/573b5f2… Jean Michel Grandmont was visiting Penn at the time and he had just written his Econometrica paper on limit cycles in Overlapping Generations models. ideas.repec.org/a/ecm/emetrp/v… I was struggling with how to generate a limit cycle. I’d talked to Peter Howitt and he told me that the only way to do it was with global methods. Peter, as it transpired, was wrong. Grandmont put me in touch with Jess Benhabib and he explained the Hopf Bifurcation theorem to me over the phone. [It is a beautiful theorem.] Using Jess’s input I computed the solution to the model I was working on, on a HP hand calculator. Later that year Jean Michel ran a conference in Paris on non-linear cycles. The papers, including mine, were published in a special issue of the Journal of Economic Theory. That conference introduced me to the literature on deterministic chaos through a paper by William aka (Buzz) Brock. In physics, it’s possible to carry out experiments that demonstrate that turbulence in fluid flows are better described by a deterministic chaotic model rather than a linear model hit by random shocks. In the talk he gave in Paris, Buzz convinced me — and most of the audience — that there are not enough data in economics to distinguish between a stable linear system hit by random shocks from a nonlinear model characterized by deterministic chaos. I still have nothing against nonlinear cycle models — (and the Beaudry et. al. paper is a big advance ) — or even models of deterministic chaos. But Occam’s razor suggests that for most purposes, a stochastic linear model is a probably a good approximation.

I will let Doyne, JP and Alan speak for themselves but, I have no quarrel with anything in @JesusFerna7026’s list. But I would add one important qualifier. An economic model requires an EQUILIBRIUM CONCEPT. To explain that qualifier, let me add some structure to Jesus’s list. @drmtgr I organize all of my thinking around the concept of *temporary equilibrium theory*, an idea that dates to Hicks’ book ‘Value and Capital’ (and perhaps earlier). 1. In a temporary equilibrium, a collection of agents meet every week in a market. Each agent brings to market a bundle of goods to be exchanged with other agents. And they bring financial assets and liabilities inherited from the past. At the market agents form expectations of what they think will happen in the future. 2. The objects traded at the market may include labor contracts, physical commodities and commitments to exchange money in the future under alternative states of nature. 3. In between market meetings, agents consume the commodities they purchased at the market (consumption) and they transform commodities into different commodities (production). During this process, the technology for transforming one set of commodities into another is subject to randomness. Agents may or may not know the probability distributions from which these random variables are drawn. 4. The agents make decisions based on a set of assumptions about human behavior. These assumptions — rational choice — are not particularly restrictive. However, some versions of rational choice e.g. expected utility theory are restrictive. 5. While economists usually assume that individuals are selfish — selfishness is not a necessary assumption and there are economic models where people care also for others. 6. The set of agents may or may not change over time. I will refer to a model in this class as a Dynamic Stochastic General Equilibrium model and I’ve been broad enough in my definition to include pretty much any internally consistent description of how an economy functions including MMT, Austrians, post-Keynesian, models, agent based models and neoclassical macro models. (See my invitation below for Post Keynesians to adopt DSGE theory) static1.squarespace.com/static/573b5f2… Different models differ in the specifics of the way they fill in the details. The most important of these is a point missing from Jesus’s list: the EQUILIBRIUM CONCEPT. When individuals enter the market they bring a specific set of goods, assets and liabilities. They leave with a different set. An equilibrium concept is a description of how that process works. One possible concept is Walrasian equilibrium: demand equals supply at each market meeting, subject to future expectations. But there are many others including my own favorite: Keynesian search equilibrium. Here is an example of a model which adopts that concept. static1.squarespace.com/static/573b5f2… Before the rational expectations revolution there was a literature known as disequilibrium macro. That was a misnomer. See for example Malinvaud’s book ‘The Theory of Unemployment Reconsidered’. Disequilibrium theory is simply a version of temporary equilibrium with a different equilibrium concept. Malinvaud, following work by J.P. Benassy in France and Barro and Grossman in the US called this a fixed-price equilibrium.

@HeleneZgc @LMichk @drumm_colin Je suis très d’accord

@LMichk @drumm_colin Je suis preneuse de la ref du livre en qst ! Sur la partie marxisme : ce courant ne se pose pas *du tout* les mm qsts que ceux qui font de la socio-histoire des institut°/ circuits financiers (principalement, pcq ils s'intéressent à la finance à partir du concept de crise cf ⬇️)

@drumm_colin is right: the two main enemies to avoid when studying the (history of) finance are (1) mainstream economics and (2) Marxism (inclunding theories such as those of Hilferding)

@besttrousers academic.oup.com/restud/article… This very cool paper precisely adresses this dilemma

Would be very good if The Economist was somewhat familiar with Milton Friedman's 1965 paper on recessions, which demonstrated (IMO, convincingly) that recessions are not important for clearing out dead wood, and are just Bad.

Enron would be fine in today’s world, right?

@mclucal @koroviev82 ma position c'est que ce genre de proposition a trop peu de chance d'aboutir pour des raisons politiques, constitutionnelles, économiques pour en faire le sujet principal/unique de proposition pour la gauche. Elle ferait mieux de s'opposer à l'austérité qu'en valider le principe.