Earlier today, INET published a paper, written by John Kay, that deals with the relationship between economics and the world we live in. The Map Is Not the Territory: An Essay on the State of Economics spells out methodological critiques of economic theory in general, and of DSGE models and rational expectations in particular.
INET forwarded Kay's paper to a handful economists and invited them to respond. Here we offer a perspective by Harald Uhlig, Chairman of the Economics Department of the University of Chicago, who sent us his recent working paper:
The paper poses the question of how reality in the form of empirical evidence does or does not influence economic thinking and theory, and suggests some answers.
More responses to come
Tomorrow, and in the following days, we are going to publish direct responses to John Kay’s paper by a handful of prominent economists. Follow the INET Blog and stay tuned to what is going to be a healthy discussion.