Saturday, March 28, 2009

Macroeconomic Theory for a World of Imperfect Knowledge

The field of economics seems to be in crisis, with economists everywhere questioning the fundamentals of their beliefs, specifically whether rigid mathematical models are useful in predicting the outcome of sometimes-irrational behavior.

Roman Frydman of NYU and Michael Goldberg of UNH wrote a book about their approach which they call "imperfect knowledge economics", but it costs $55 and runs 386 pages. Luckily they also wrote a more manageable 69-page paper on the same topic, which is free for download (after registration—ugh) here.

I've added their paper to my summer reading list. If anyone gets through it before then, let me know what you think.

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