The maths business is quite interesting – you don’t see much maths out of me, or on the blog. But the real deal academic economists do a lot of maths – the discipline took the idea of trying to be a real science extremely extremely seriously. This is the general first year grad textbook for the “core” of the discipline (microeconomics):

http://www.amazon.com/Microeconomic-Theory-Andreu-Mas-Colell/dp/0195073401

On the statistics side, econometricians can get pretty serious, although I suspect this is more in line with applied statistics (?).

Glad to hear you’ve picked up the trade-offs element in your economics journey – once you start thinking in trade-offs it becomes impossible not to ask “why” about everything. The risk is going to far the other way and always refusing to confront policy choices “because” … that is probably the main issue people get annoyed with economists about!

I guess what I’m saying is that if you’re in a discipline that doesn’t (on average) use a lot of mathematics, it’s not that hard, if you know a little bit more statistics or mathematics than your peers, to come to be regarded by those peers as some sort of stats/maths guru. If you’re unscrupulous, or perhaps just suffer from that fatal combination of ignorance and arrogance, you may even encourage this perception. Essentially you are operating as a fraud. It happens in ecology, and it seems to have happened with the East Anglia climate scientists. Maybe it happens in economics too.

And by the way, one of the things I’ve really appreciated about getting to know a bit more about economics is seeing how it brings the trade-offs out of the shadows. I’ve changed my views about several issues as a result (minimum wage would be an example). And I like very much that economics seems to essentially be about human behaviour as it actually, truly is – that is a subject I have always been fascinated by.

“When I have spoken to Ganesh he has been considered in his arguments – so I suspect the story wasn’t totally fair.”

I have not spoken to him – but this is 100% how I would view the situation myself. This of course does not change the line of importers being “baddies” and exporters “goodies” which I can not see a justification for.

“Rather than trying to fix the price, perhaps we need to fix the drivers?”

On this line I am always in agreement – when we see a price we need to ask why that price is where it is, arbitrarily trying to change it makes little sense.

The big thing that comes out here is that, if there is a real exchange rate issue, “printing” makes no sense – domestic inflation now will lower the nominal exchange rate, but not the relative competitiveness of exports in the medium-long term. If we want to face the “issue” we need to work out what the issue is, not resort to forcing monetary authorities in NZ breaking down the very credibility that the rest of the world is jealous our central bank has!

“As a stats person looking in on economics, I note that the mathematics used in economics seems often sort of basic” “My suspicion is that this CGE modeling is nothing amazing and may even be a bit of a scam in its own right”

The thing with maths in economics, is that we shouldn’t view it outside of its methodological purpose. Marshall capture this well at the turn of the twentieth century:

“(1) Use mathematics as a shorthand language, rather than an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can’t succeed in (4), burn (3). This last I did often.”

None of us are innocent. If anyone believes the things I say because they feel they can trust me, I don’t believe I am appropriately discussing them. Economics is part of general social science – it is simply a section that is willing to face trade-offs that exists from our choices as individuals (methodological individualist sociologists will see what economists do as a subset of their general field). It is in this space, where the trade-offs involved in policy need to be clear, that I am demanding of other economists!

I am fond of open debate, but I struggle to understand what the problem definition is and what the policy response is meant to solve. The ‘of course’ arguments are too shallow to mention.

I wonder if there is serious thought given to the exchange rate being a relative price, which reflects fundamental factors. Rather than trying to fix the price, perhaps we need to fix the drivers? We have talked about real exchange rates and savings-investment imbalances in the past. In which case Ganesh could perhaps call borrowers the baddies and savers the goodies? Oh wait, moralising even here is no good: borrowers borrow from savers.

Doh. Apparently there are no free lunches and moralising about tradeoffs is a bit silly. Printing presses be damned….