Good Noah Smith post on economic equilibrium.
Equilibrium is a term that is often thrown around as an insult (I used to hear people talk dismissively about it at university), but in truth our concern with a model isn’t that it involves some sort of equilibrium but that we believe some of the core assumptions are inappropriate. Articulating this claim, and why we think certain assumptions are inappropriate, is where value comes from specific criticism.
I find it quite cool that the main criticisms I hear nowadays are about equilibrium and the endogeneity of the money supply – as I’ve always felt those were issues where communication feel down. Essentially, when discussing economic phenomenon I have always used the process of equilibrium as a way to describe tendencies – rather than pin down outcomes. Interestingly, for a concept I’m saying is important I can only find four instances where I mentioned economists looking at tendencies (here, here, here, and here) … and one time when when I misspelt tendencies and compared Economists to Jedi 😛 .
Obviously, I need to actually write some blog posts on Mill.