John Kay is one of my preferred columnists (from Financial Times).
I loved his book “Obliquity”.
He doesn’t really use oblique means to denounce the irresponsible blindness of the latest models macro-economists use to come up with advice on economic and fiscal policies.
Indeed, he concludes that:
“Economists – in government agencies as well as Universities – were obsessively playing “Grand Theft Auto” while the World aroud them was falling apart.”
How come government agencies are still basing policies on fallacious advice?
Why did providing such advice not conduct to scientific and professional liability claims? Should we, ordinary citizens, who suffer so much, undertake this?
How long will blind ideology and orthodoxy remain in power?
John Kay: The Map Is Not the Territory: An Essay on the State of Economics
Today, INET presents you a paper that deals with the relationship between economics and the world we live in. John Kay spells out methodological critiques of economic theory in general, and of DSGE models and rational expectations in particular. The paper builds on two articles that Kay, Fellow at St. John’s College of Oxford University and Visiting Professor at the London School of Economics, recently published in the Financial Times (scroll down to find the links). It is concerned with the relation of quantitative models to the world in which we live, and with evergreens such as the implications of unrealistic assumptions in economic theory. Highly recommended reading.
INET forwarded Kay’s paper to a handful economists and invited them to respond. In the following days, we are going to publish direct responses to the paper by a handful of prominent economists. Follow the INET Blog and stay tuned to what is going to be a healthy discussion.