Re: [Pen-l] FYI: Skidelsky on Keynes

[raghu <mraghu01@xxxxxxxxx>]

On Thu, Dec 18, 2008 at 4:19 PM, Julio Huato <juliohuato@xxxxxxxxx> wrote:
> Jim,
>
> With all due respect, *think* about it.
>
> How can *anybody* lead a life without the ergodic assumption,
> including Keynes and his followers?
>
> *Therefore*, how can any macroeconomic theory dispense with the
> ergodic assumption altogether?
>
> What would you put in the place of the ergodic assumption instead?
>
> What else is there to form one's expectations but experience, history
> -- interpreted one way or another?


I think the point is that a much weaker ergodicity assumption is
actually required than commonly assumed. For e.g., it may be necessary
to assume that herding and mob psychology will be pretty much the same
in future as in the past. But it is not necessary to assume that stock
price distributions are stationary (let alone ergodic).
-raghu.

-- 
"I used to do drugs. I still do drugs. But I used to, too." - Mitch Hedberg
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