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huitzitziltzin04/03/20251 replyview on HN

I don’t agree that it doesn’t make sense. It’s a good approximation a lot of the time.

Also: from your comment I’m pretty sure you don’t have the background (correct me if that’s wrong) and so don’t know what it really means in practice to make an equilibrium assumption in a macro model: Markets clear, on average people have reasonable beliefs about the evolution of aggregate variables, firms maximize expected profits. That’s all pretty harmless.

I definitely don’t agree that we are “using mathematical tools which aren’t suited for that.” We aren’t treating the economy “like a steam engine.” The entire revolution in macro from the 1970’s on involves optimizing agents. There is no useful analogy to a steam engine.

I suspect you have been reading criticism by people who are misinformed about what macro actually is and how it is practiced.


Replies

littlestymaar04/03/2025

> I don’t agree that it doesn’t make sense. It’s a good approximation a lot of the time.

So is a weather forecast that says “the weather will be sunny tomorrow” in Miami. True most of the time yet utterly meaningless.

> Also: from your comment I’m pretty sure you don’t have the background (correct me if that’s wrong)

I have to admit my DSGE class was more than 10 years ago at this point, but I still vividly remember the hypothesis being hilarious (spherical cow in vacuum−level) even though now I would need to spend a bit of time digging into it to be able to write down why exactly.