[11/18/19] No doubt Keynes was an economist first and a methodologist second, but he was none the less very articulate about his theorizing……..Lonergan, for his part, is perhaps a methodologist first and an economist second, but, as we shall see, he was able to push his economic reflections further than Keynes because he had a firmer grasp of the essentials of an effective theory. [Gibbons, 1987] [#54] (Click here for previous “Single Paragraphs”)
Economic process – like other world processes – has an immanent intelligibility consisting of primary relativities which can be applied to the coincidental secondary determinations which occur throughout time in a non-systematic manifold. Economic process is constituted by schemes of recurrence under the dominance of abstract principles and laws; nevertheless, the actual concrete workings of the economic schemes of recurrence are shot through and throughout time with indeterminancy. So, it is a fact that prediction is impossible in the general case, since the concrete patterns of events occurring throughout time are a non-systematic aggregate. Thus, the point-to-line and higher correspondences are based upon the indeterminacy of the relation between current surplus products and the ultimate later basic products that eventually exit the dynamic process and enter into the standard of living.
An event in an economic scheme of recurrence has a diverging series of conditions. Continue reading
We have arranged this Topic into four parts:
- Part I: The Disorientations of Macroeconomists
- Part II: Principles and Precepts of Analysis
- Part III: A New Textbook, Lonergan’s Macroeconomic Dynamics: A Textbook in Circulation Analysis
- Part IV Comments on The Federal Reserve’s Current Framework For Monetary Policy: A Review and Assessment, by Janice C. Eberly, James H. Stock, and Jonathan H Wright.
Part I: The Disorientations of Macroeconomists
One cannot help but admire and be grateful to the Federal Reserve Bank for its Flow of Funds matrices and the National Bureau of Economic Research for its GDP tables. Great information, well done! However, the Fed, the NBER, and the proponents of the DSGE methodology suffer from fundamental disorientations. The NBER’s descriptive, commonsense, national-income accounting must integrate the Fed’s data on credit and to be recast to provide an explanatory systematization of interdependent flows of products and money. Devotees must reorient themselves. (Continue reading)
DSGE is – to many economists – the standard model and method of macroeconomic analysis. See our treatment of the textbooks’ IS-LM, AD-AS models and the Phillips Curve correlation.
The acronym stands for Dynamic (in Newtonian mechanics an external force causes a change to constant velocity, i.e. an acceleration, which may be negative or positive), Stochastic (random, not according to system, probabilistic, unexplained) General (pertaining to the entire economic process), Equilibrium (essentially Walrasian static equilibrium).
Leon Walras developed the conception of the markets as exchange equilibria. Concentrate all markets into a single hall. Place entrepreneurs behind a central counter. Let all agents of supply offer their services, and the same individuals, as purchasers, state their demands. Then the function of the entrepreneur is to find the equilibrium between these demands and potential supply. … The conception is exact, but it is not complete. It follows from the idea of exchange, but it does not take into account the phases of the productive rhythms. … [CWL 21, 51-52] (Continue reading)