‘Rational expectations’ — nonsense on stilts

from Lars Syll Assumptions in scientific theories/models are often based on (mathematical) tractability (and so necessarily simplifying) and used for more or less self-evidently necessary theoretic…

Source: rwer.wordpress.com

If the base assumptions do not match with empirical reality, the whole model will be thrown off. There is no point in persisting with information that is simply wrong and to do so in economics and social sciences is to ultimately destroy it through bad policy and decision-making. It is to sail in a harbor or along a coast or shoals with incorrect and inaccurate charts and navigation devices. The policy makers will be removed for their incompetence or else have a harder time making a case for re-election. Just try and do it. See what happens again and again and again.


Think about it.


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