Re: RATIONAL EXPECTATIONS

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Henry:

There is another side to the fuss - purely academic.

The thrust thereof is indicated by the fact that Paul Samuelson thinks
highly of Robert Lucas and his Rational Expectations stuff.

Briefly, it is a last-ditch attempt by mathematical economists to
make-believe that their contributions to theoretical economics are superior
to those of late nineteenth-century mathematicians.

And, while they know better than to follow in the footsteps of Walras (the
"greatest" of all purely theoretical economists by Schumpeter's lights),
their stuff is neither better or worse than that of Walras - it is merely
different in ways which are substantively inconsequential.

In my view, therefore, Keynes' following comments on Walrasian "economics"
are also applicable to Rational Expectations "economics":

"Walras/s theory and all others along those lines are little better than
nonsense."  (Letter to John Hicks, December 9, 1934, cited by Skidelsky in
the second volume of his Keynes biography, p. 615)

Gunnar


----- Original Message -----
From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Thursday, May 08, 2003 2:18 PM
Subject: Re: RATIONAL EXPECTATIONS


> The fuss is the double guessing of policy makers of the guesses of
> market participants that either make the policy guessing self-fulfilling
> or self-denying.  Mush of this has to do not with the accuracy of the
> guesses, but on the credibility of policy intentions. Crditability is
> affected by 1) facts, 2) power and 3) past records.
>
> Henry C.K. Liu
>
> Warren Mosler wrote:
> > FROM BARRO'S BOOK:
> >
> > THE VIEWPOINT THAT INDIVIDUALS MAKE FORECASTS OR
> > ESTIMATES OF UNKNOWN VARIABLES, SUCH AS THE GENERAL
> > PRICE LEVEL, IN THE BEST POSSIBLE MANNER, UTILIZING
> > ALL INFORMATION CURRENTLY AVAILABLE.
> >
> > What's the fuss???
> >
> > warren
> >
> > =====
> > Warren Mosler, www.mosler.org
> > c/o James River Capital Corp
> > 5007 Chandler's Wharf, Suite 201/202
> > Christiansted, USVI  00820
> > 340-719-8813 office phone
> > 340-719-8804 Fax
> > Primary email contact:  mosler@xxxxxxxxxxxxxx
> >
> > __________________________________
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>
>