Economics — Economics is a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services according to the Merriam-Webster Dictionary.
It seems not at all unreasonable that excellent predictions would be yielded by the hypothesis that the billiard player made his shots as if he knew the complicated mathematical formulas that would give the optimum directions of travel, could estimate accurately by eye the angles, etc.
Our confidence in this hypothesis is not based on the belief that billiard players, even expert ones, can or do go through the process described; it derives rather from the belief that, unless in some way or other they were capable of reaching essentially the same result, they would not in fact be expert billiard players.
How do we know expert players play this way? The only thing that matters is the accuracy of the predictions obtained if we assume bodies fall as if they are falling in a vacuum.
The purview of science, as I saw it then and still see it today, is to understand and explain the subject matter of a scientific discipline. The result has proved to be disastrous. The fundamental paradigm of economics that emerged from this methodology not only failed to anticipative the Crash of and its devastating effects, it has proved incapable of producing a consensus within the discipline as to the nature and cause of the economic stagnation we find ourselves in the midst of today.
The place to begin is with the history of the law of falling bodies that Friedman alludes to, and then ignores. According to Aristotle, a constant force applied to an object will cause it to move at a constant velocity, the greater the force the greater the velocity. He also assumed that heavier bodies fall with a greater velocity than lighter bodies.
He also concluded, guided by observations, measurements, logic, and reason that in the absence of external resistance caused by the Empirical evidence on okuns law economics essay through which an object fell—that is, in a vacuum—all falling bodies would accelerate at the same constant rate irrespective of their shape, density, weight, or the distance through which they fell.
His theory of gravity assumes that there is an inverse-square relationship between the force of gravity and the distance between the centers of gravity of the earth and a falling body. These two assumptions, taken together, imply that the rate of acceleration must increase as a falling body and earth approach each other.
The fact is that Galileo accepted his understanding of this law, not simply because it works, but because his understanding of this law is implied by the assumptions embodied in the cosmology within which Galileo attempted to understand and explain the physical universe.
If it could have been shown that any of the assumptions on which the derivation of the Newtonian understanding of this law depend were demonstrably false, the Newtonian understanding of this law would most certainly not have been accepted, at least not by physicists.
There can be no theory without assumptions since it is the assumptions embodied in a theory that provide, by way of reason and logic, the implications by which the subject matter of a scientific discipline can be understood and explained.
These same assumptions provide, again, by way of reason and logic, the predictions that can be compared with empirical evidence to test the validity of a theory. It is the form of a logical argument that makes it valid, irrespective of the truth of its premises.
The argument a all men with blue eyes are infallible, b I have blue eyes, therefore, c I am infallible is logically valid even though, in light of reason, this is not the kind of argument my wife would find convincing.
And even if I were infallible this argument would still have no substantive meaning, in spite of its logical validity and my blue eyes, because it is based on the demonstrably false premise that all men with blue eyes are infallible.
It is intuitively obvious that a logical argument only has substantive meaning if its premises are true even to those who lack a formal understanding of logic.
And, yet, this is the kind of reasoning in which mainstream economist indulge when they ignore the realism of their assumptions. Aside from the fact that this argument makes absolutely no sense at all as a foundation for scientific inquiry, it begs the question: Why should mainstream economists be taken seriously if their theories and, hence, their arguments are based on false assumptions?
This question is particularly relevant with regard to the policy recommendations of mainstream economist when the realism of the assumptions on which the arguments that justify their recommendations are blithely ignored.
Today we find ourselves in the midst of a world-wide economic, political, and social catastrophe that has followed in the wake of the worst financial crisis since the s. This crisis, in turn, was the direct result of the financial deregulation policies implemented over the past forty years at the behest of mainstream economists—policies that mainstream economists justified on the basis of an economic theory that assumes speculative bubbles cannot exist in spite of the innumerable economic, political, and social catastrophes that have followed in the wake of speculative bubbles throughout the course of history.
It is the clear, bright line that exists between those who accept arguments based on circular reasoning and false assumptions as meaningful and those who do not. To make matters worse, the vast majority of economists seem to assume that since so many others accept this kind of nonsense it must, somehow, make sense, and relatively few speak out against it.Okuns law says that GDP increases if unemployment decreases and vice versa.
The Philips curve states that when unemployment is low inflation increases because of the relative bargaining power of workers against employers. POVERTY REDUCTION STRATEGIES IN SOUTH AFRICA by BHEKIZIZWE NTUTHUKO MBULI submitted in fulfillment of the requirements for the degree of MASTER OF COMMERCE in the subject ECONOMICS at the UNIVERSITY OF SOUTH AFRICA SUPERVISOR: PROF OA AKINBOADE JOINT-SUPERVISOR: DR P .
Economics, June , 24(3), pp. 3Lee, Jim. “The Robustness of Okun’s Law: Evidence from OECD Countries.” Journal of Macroeconomics, Spring , 22(2), pp. EconomicSYNOPSES schwenkreis.com 2 schwenkreis.com Posted on February 3, Views expressed do not necessarily reflect official positions of the Federal Reserve System.
The empirical results from all models do not indicate robust evidence and do not confirm an inverse linkage between unemployment rate and economic growth, as the Okun's Law suggests.
This paper builds on Okun's law and Phillips curve theoretical frameworks to analyse the relationship between macroeconomic aggregates and unemployment in the Economic Community of West African States (ECOWAS).
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