Re: DeLong On Deficits, Interest Rate

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx> =====

>2)  De Long and Summers were right about one thing.
>They, with Shleifer and Waldmann, did show that
>"noise traders" can survive.  This fundamentally
>undercuts the idea that the market always works
>in the long run to weed out speculators and destabilizers.

But of courese they are wrong about so called "noise traders" -- since the
whole concept of noise traders requires the assumption of the ergodic axiom
operating in financial markets.

What Delong and Summers proved is if you permit them to make up a fictional
world of ergodic financial markets they can always lard on some additional
assumptions that prevents the fictional world from operating efficiently to
weed out error makers.

 But Barkley two wrong (assumptions do not make a right!

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
phone # (561)369-1951; fax #(561)369-1951;
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html