This blog accompanies the econ101ab Principles of Economics course given at the University of Birmingham. The lecturers for both parts of the course (101a, microeconomics and 101b, macroeconomics) will occasionally post here on matters related to lecture material. We hope to show the relevance of the concepts we are teaching at each stage of the course for helping understand how the world works...
Wednesday, October 5, 2011
Keynes, Economics and Econometrics
Perhaps one of the biggest names in economics is Keynes; even those who have no knowledge of economics have heard of this chap Keynes. His work appears to float in and out of flavour, with a resurgence in 2008, but a fall back in 2009 on as we've headed towards the economics of austerity. Much is said and mis-said about Keynes, and one thing often presented is that he was anti-econometrics. There's a really good blog written by some econometrics lecturers in Canada which has a post on Keynes and his contributions to econometrics - it's well worth a read if you're interested in how the disciplines of economics and econometrics have developed.
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It does sound like you haven't really delved into econometrics with any great depth - if and when you do, you'll find just how rich it is. Macroeconomics suffers from aggregation as much as it benefits (it is a necessary evil to understand how economies at the national level are moving), and hence macro-econometrics will suffer from the aggregation of the millions of individual decisions. But if you look at micro-econometrics, you'll see a great many hugely interesting datasets that aren't aggregated, but that measure individual decisionmaking, and enable great insight into economic behaviour.
ReplyDeleteEconometrics is always useful in making economics real - it tests it against the real world, and an economic theory that hasn't been tested against the real world is pretty useless at best.