Michal Stelmach, James Kensett and Philip Schnattinger Economists frequently use the vacancies to unemployment (V/U) ratio to measure labour market tightness. Analysis of the labour market during the current inflationary period often assumes the V/U ratio is constant and compares this measure with a supposed pre-2019 equilibrium. However, the V/U ratio has trended upwards over … Continue reading What can 40 years of data on vacancy advertising costs tell us about labour market equilibrium?
economics
Analogue-economy models may picture Galilean thought experiments or they may describe credible worlds. In either case we have a problem in taking lessons from the model to the world. The problem is the venerable one of unrealistic assumptions, exacerbated in economics by the fact that the paucity of economic principles with serious empirical content makes […]
First, Knight and Keynes derive from their different philosophical worldviews distinct definitions of uncertainty. Keynes’s is a wholly epistemic uncertainty concept (see Packard and Clark, 2020), the ignorance of an actor regarding the objective and knowable (a priori) probabilities of future outcomes. Such probabilities are discoverable by learning the underlying ‘probability-relations’ between causes and effects. […]
. In case you want to solve the problem yourself, here’s a Python script yours truly made (assuming the utility function is of the natural log kind and with some explicit numerical parameterization):
A science that fails to reflect on its own history and neglects critical methodological and theoretical questions about its practice is a science in crisis. As early as 1991, a commission led by Anne Krueger—featuring esteemed economists such as Kenneth Arrow, Edward Leamer, and Joseph Stiglitz—highlighted a fundamental weakness in graduate economics education. Drawing from […]
Post Keynesian authors have offered various classifications of uncertainty … A common distinction is that of epistemological versus ontological uncertainty, with the former depending on the limitations of human reasoning and the latter on the actual nature of social systems … Models of ontological uncertainty tend to hinge on the existence of information that is […]
Back in 1991, when yours truly earned his first PhD with a dissertation on decision making and rationality in social choice theory and game theory, I concluded that “repeatedly it seems as though mathematical tractability and elegance — rather than realism and relevance — have been the most applied guidelines for the behavioural assumptions being […]