Jim, I don't know how else to put this but frankly. You mix up so many things it's hard to even disentangle them. Let me take up a sliver of your post:
You say rational expectations is "nothing but" an equilibrium condition. Next you say that it "has a very very weak story for why and how equilibrium is achieved." Then you say it's "not like supply and demand." So here it is your supply-demand equilibrium condition: Q_S = Q_D. Now, tell me: Where's *the story* about how equilibrium is achieved? The mechanism leading to or away from equilibrium is separate from the equilibrium condition. You can perfectly have the form of the functions Q_S=S(.) and Q_D=D(.) be such that there's no tendency to equilibrium at all. How can your equilibrium condition Q_S = Q_D change that? You say that the advocates of the EMH "take this purely mental test (is the model internally consistent?)." Just so that it's clear: EMH is not the only possible use of rational expectations, but anyway, Don't logical or mathematical models need to be internally consistent? *Anything* can be deduced from a self-contradictory reasoning. How does that help you? Then you you shift the argument to empirical validity. The issue of the empirical validity of a hypothesis like rational expectations has to be predicated on a particular empirical application of the hypothesis. Particular empirical applications typically refer to specific sets of stylized facts or data. What particular application are you talking about? What particular facts or data sets? So, if rational expectations is only "an equilibrium condition," What kind of empirical test would be required to reject equilibrium condition Q_S = Q_D? If I showed you that at my local apple market, at the given price and point in time, Q_S is not equal to Q_D, would that suffice to you? And then, would you reject this or that proposition in Capital because to derive it Marx *explicitly* assumed Q_S = Q_D? You say that empirically, rational expectations has "been soundly rejected." Then you say that it's "empirically irrelevant." If you care to refute it, then you're admitting that it's relevant. No? If it were irrelevant, there'd be no need to refute it. It's "the real world that matters" -- you say -- as if postulating a hypothesis to "close" a model implied that it doesn't. How do people transform the real world anyway? Can we transform the world intentionally without transforming ourselves and our conceptions of the world? How do we appropriate the real world conceptually? How do we grapple with it in our minds? Directly in its concretion? Have we ever been able to do anything human without abstractions, logic, concepts? The trees are not the forest, but without trees there's no forest. According to Deutscher, Trotsky used to say that there's nothing more practical than a good theory. We can paraphrase it in many other forms: There's nothing more concrete than a good abstraction. There's nothing more empirical than a sharp logical proposition (one that you can test against observations as directly as possible). Etc. I know where this argument leads. Nowhere. You can type faster than I can think. I just wanted possible young readers to know that there's a different way to look at these things. That's all. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
