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"However, epiphenomenalism flourished primarily as it found a niche among methodological or scientific behaviorism. In the early 1900s scientific behaviorists such as Ivan Pavlov, John B. Watson, and B. F. Skinner began the attempt to uncover laws describing the relationship between stimuli and responses, without reference to inner mental phenomena. Instead of adopting a form of eliminativism or mental fictionalism, positions that deny that inner mental phenomena exists, a behaviorist was able to adopt epiphenomenalism in order to allow for the existence of mind. However, by the 1960s, scientific behaviourism met substantial difficulties and eventually gave way to the cognitive revolution."

Since I've been claiming that Economists seem, by and large, to be Behaviorists, I'm not surprised to find out that Central Bankers are Epiphenomenalists. I'm still puzzled about what QE is supposed to accomplish. I thought that we wanted short term interest rates to stay low, while longer term interests would rise. I don't see the point of having them move in tandem, as they would signal one simple message, rather than two conflicting messages, which is what we want. Not only that, I thought that, in the US, that is what's happening. So what's the problem if its working?

Don: my hunch is that QE, around the world, is working. But even if things are getting better, as they seem to be, what is causing it? QE, fiscal policy, or is it just getting better by itself?

But even if QE is what's working, why and how does it work? Can it be explained to work within the Bank of Canada's view of how monetary policy works?

Nick, I don't believe that there is any way to know. That's why I support QE and a stimulus. That's why we're seeing trial and error, just like in the Great Depression.

"The Bank of Canada wants it both ways. They want to keep the overnight rate at 0.25%, and they want to increase the quantity of "liquidity"."

I'm arguing that they can have it both ways because human behavior is paradoxical( Or overdetermined ) , as are explanations of it. QE is an attempt at meaningful ambiguity, with short term interest rates that are a disincentive to buy bonds, while implying inflation in the future, signaling an end to deflation and an up side to buying stocks and longer term and corporate bonds now, also attacking the fear and aversion to risk. There's no way to know at what point this will work, or what will have caused it. All of these other explanations are mechanistic, behavioristic, and correlative, and lead to confirmation bias and an unwillingness to face bothersome facts. In any case, what's wrong with my view of the incentives and disincentives offered? I admit that there's no way to know if they are what's working, but seeming to work is good enough for me. I don't need to know how we got out of this mess, only that we did.

Any number of explanations could work in the sense that you mean work, which is a model or theory that comprehends the particular events that you want to explain. Their usefulness, which is all that matters, will be a story that we tell ourselves about how we got out of this mess, and nothing more. Next time, we'll dredge these nostrums out and go through a trial and error mess again. Economics has its uses, but its not true, and a coherent explanation would be nice, but isn't essential.

"94. But I did not get my picture of the world by satisfying myself of its correctness; nor do I have it because I am satisfied of its correctness. No: it is the inherited background against which I distinguish between true and false.

95. The propositions describing this world-picture might be part of a kind of mythology. And their role is like that of rules of a game; and the game can be learned purely practically, without learning any explicit rules.

96. It might be imagined that some propositions, of the form of empirical propositions, were hardened and functioned as channels for such empirical propositions as were not hardened but fluid; and that this relation altered with time, in that fluid propositions hardened, and hard ones became fluid.

97. The mythology may change back into a state of flux, the river-bed of thoughts may shift. But I distinguish between the movement of the waters on the river-bed and the shift of the bed itself; though there is not a sharp division of the one from the other.

98. But if someone were to say "So logic too is an empirical science" he would be wrong. Yet this is right: the same proposition may get treated at one time as something to test by experience, at another as a rule of testing.

99. And the bank of that river consists partly of hard rock, subject to no alteration or only to an imperceptible one, partly of sand, which now in one place now in another gets washed away, or deposited.

100. The truths which Moore says he knows, are such as, roughly speaking, all of us know, if he knows them."

Later Wittgenstein? "Moore" = GE?

Nick,

Yes. From On Certainty, my favorite philosophy book. I'm sorry I got so philosophical, probably killing this thread. I've been down about my posting, and I felt like trying out a swan song. I feel better today.

What's great about about your blog, and it's why I think that it's the best Economics Blog, is that you think aloud and philosophically, and try and get clear about the suppositions and assumptions of these theories. That's Wittgenstein and Austin's method as well. Also my philosophy of science and math teacher Paul Feyerabend. I wonder if you ran into him at Cal.

I love Buiter, but he's not much into simplifying, or he doesn't do it as well. Salmon's blog is my favorite blog, as he also tries to get at the root of the issue.

By the way, I like Rorty, as he's basically in this tradition or club, if you will, and I've noted that he turns up as the main philosophical guide to a couple of economics blogs, which is great. But my main problem with Rorty is that he straddles the behaviorist line too closely, often appearing to follow it, as many people claim Wittgenstein does.

You have a great philosopher in Canada, possibly the best all around philosopher of recent years, with the exception of the remarkable Bernard Williams. He wrote a book many years ago called "The Explanation Of Behavior", which influenced me greatly. I need to get back to it soon and see it resembles at all the arguments I put forth based upon it. I'm getting to the age where the arguments I've been ascribing to others turn out to be mine alone. Anyway, Teleological/Human Agency Explanations are entirely different than Mechanical/Mechanistic Explanations. I simply see many economic theorems or theories or explanations as Mechanistic in form, but trying to slip in teleology through the back door at the end.

Take care,

Don

"If we interpret that to mean "we will not raise the overnight rate from its current level as long as this does not result in our forecasting inflation above the 2% target", we might ask "what's new?"."

I believe the Bank set an explicit interest rate 'deadline' and provided a quarterly forecast on inflation and output. With the deadline and the quarterly signposts, market participants can better judge if rates will be lower longer or rise earlier. The Bank shows total CPI rising 1.7% in second half 2010. If my forecast is for 2.1%, I'm expecting the Bank will tighten sooner.

The nuance is slight but this helps forecasters pinpoint when tightening begins further out than just the next meeting.

I think it's the same rationale behind fixed announcement dates, like saying 'what's the point of waiting for a date, just raise interest rates when inflation is rising'. Gives markets a better sense of timing.

Thanks Don! I was but a lowly 3rd year student at UCB, so didn't meet many of the greats. A very young Andrew Peacock for Phil Lang (I didn't understand a word, and only realised after 5 weeks I was the only undergrad left in the class). James Thom(p?)son for logic and mind. The guy for Phil science's name slips my mind. Wore a knife. Must read Rorty sometime; not sure I ever have. I had to Google to find it was Charles Taylor you were referring to as Canada's great philosopher.

Mark: so it's a bit like announcing the Bank is skipping the next few FAA's? Makes sense as an interpretation.

Peacock was hard. Very hard. I didn't take his class, but I talked with him in his office a few times. I sat in on James Thomson's graduate class on logic. It was in that class that I first met Grice. Thomson was very kind to me. I was going to graduate school in Linguistics and Philosophy at MIT until I changed my mind at the last minute. That was probably a mistake, because I was tired of the Berkeley department. However, I had a great job in the Howison Library and was going to try and study with a few people at Stanford as well. I never got that far. Ernest Adams might be the knife man.

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