Talk:Austrian business cycle theory/Archives/2012/April
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Econometric evidence?
As requested in "Empirical Research" i too would really like to see some econometric discussion of the model, after a quick google search i suggest http://hayekcenter.org/?p=1507 which lists a few artickles. However as a student i would not feel confident in writting such a section. Would be very relevant to interests though! — Preceding unsigned comment added by 83.89.29.84 (talk) 20:37, 19 November 2011 (UTC)
- Austrian economics does not rely on econometric models. In fact, submission of papers that reference models are frowned upon by reviewing editors. Praxeology is the study of human action, which is not quantifiable under models. To quote economist Robert Wenzel:
- "In the science of physics, we know that ice freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed..
- There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.
- And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist. It is as if one were to assume a constant relationship existed between interest rates here and in Russia and throughout the world, and create equations based on this belief and then attempt to trade based on these equations. That was tried and the result was the blow up of the fund Long Term Capital Management, a blow up that resulted in high level meetings in this very building."