Tuesday, August 17, 2010

The economics of compartments

Science makes progress through interdisciplinarity. Economists have long recognized this by venturing with their methods into other fields, something I have repeatedly documented on this blog. And Economists also borrow techniques from other fields to their advantage.

Fabio Tramontana and Mauro Gallegati looked at the biology literature and stumbled on the concept of compartments. The idea is to attribute populations to bins in such a way that they are rather homogeneous within a bin, define the transitions between the bins and then embed this into a model. Tramontana and Gallegati then proceed to demonstrate this with a model of a firm with linear technology and linear stochastic demand, and the firm needs financing from a bank and may go bankrupt. They assign firms to a whooping three size classes and then simulate something.

There is a clique in Ancona (Italy) that decided in 1995 that representative agent macro was inappropriate. That is correct, depending on the particular question. But subsequently, they decided to ignore all the work that was done on heterogeneous agents and continue to this day to claim that macro is all about representative agents. Yet, the current literature is full of models where agents are heterogeneous and, gasp, categorized in bins. From the top of my head, individuals have been distinguished by age, gender, marital status, employment, education, health, wealth, number of children, and nationality. Firms have been categorized by assets, access to credit, sector, leverage, labor intensity, and age. And I am surely forgetting some.

It looks like Tramontana and Gallegati should be peeking a little bit out of their rather hermetic compartment.

23 comments:

Vilfredo said...

Ha, compartment is the right word! I have been so frustrated with these guys who simply cannot acknowledge the existence of heterogeneous DSGE models. They charge ahead wearing their horse blinders and reinventing, poorly, the wheel. They even managed to get EU funding for this...

rosserjb@jmu.edu said...

Oh, at it again are we? Krusell's continuum of a line segment is not a set of bins. Maybe it is as good or better than what the Ancona group does in terms of dealing with heterogeneity, but it is definitely different. You have a bad history of misrepresenting people and things, and not only failing to acknowledge it, but to have your ignorant minions repeat your drivel on other sites over and over. You really are a worthless scumbag, EL.

And your representation of what supposedly goes on in DSGE models is a pathetic joke. Really, EL, can't you do better than this?

Kansan said...

Rosser, I guess you are alluding to Krusell and Smith, who solve the dimensionality problem of "bins" in a particular way.

Look at the literature that started in the late 1980's/early 1990's with Aiyagari, Deaton, Imrohoroglu and Rios-Rull, and that has mushroomed since, that definitively uses "bins."

rosserjb@jmu.edu said...

"Kansan," Like Krusell and Smith, Aiyagari also starts out with a continuum, not "bins," unless you have some weird notion of what that term means. Deaton does not do DSGE models, or at least not very often. Won't comment on others, but this is all pretty silly. EL has his head up his behind again on this one, even if you clowns can't figure it out.

Let me blunt. I do not respect liars, and I have even less respect for liars who hide behind veils of anonymity. Some of you seem to think that I really care who EL is. I do not. I have given hell to Nobelists and nobodies, and he can be the first or maybe some goofball about to not get tenure at a directional Michigan school because he spends too much time here and not publishing. Not my problem. But, I do find people lying from behind veils of anonymity to be utterly contemptible, whoever they are.

Anonymous said...

Rosserjb,

you are going a little overboard here. So EL doesn't like some people's research agenda. Fine. The question is whether EL's criticisms are substantive or not. What are you saying that EL lied about?

You seem really upset and i can't figure out why.

Anonymous said...

Rosser, I think someone hacked your Google account...

rosserjb@jmu.edu said...

Anonymous,

No, this is not about some silly game on google. I could care less if people want to call me four letter names. I have been around and been on the old internet lists in the 90s where people sometimes threatened to kill each other, no shit.

I do object to some anonymous clown claiming I have not read something and refusing to retract that when it is pointed out to him that this is false. That somebody does not cite a paper that somebody else thinks is important, does not mean that the first somebody did not read it. I read more than pretty much anybody I know, and I cite far too much of it as it is in my papers and books.

I have no problem with disagreements about economic ideas. There are ongoing disputes about the use and value and what is involved in DSGE modeling. However, some involved in these debates have employed tactics that stink pretty badly. They are lying hypocrites, and they are making themselves look ridiculous in the eyes of most observers with this sort of approach.

The person who was alone and being ridiculed at the recent Congressional hearing was not Robert Solow or David Colander. It was V.V. Chari, favorite cuddly toy of the DSGE fans, and he and his coauthors have been among the worst of that crowd in setting the sort of tone that shows up here and other venues as well.

rosserjb@jmu.edu said...

So, I do not know if it is you yourself, EL, or just your pathetic cronies, but whoever it is, is doing a good job of making it very clear why "scumbag" is exactly the correct label for you.

Anonymous said...

Rosser, all your claims are irrelevant here. Heterogeneous DSGE models do indeed use "bins," and you cannot deny that if you are somewhat aware of the literature.

rosserjb@jmu.edu said...

A.,

Not generally in the same way as in Gallegati and Tramontana, although of course you can argue that how they are used in DSGE models are better.

Anonymous said...

Rosser,
Do not pay attention at Kansan's comments; I have seen him/her around for a while... He/she seems to follow whatever EL says, who himself/herself, has very poor arguments.

Being an economist and understanding economics concepts is a hard job. These people are just frustrated; they probably tried to belong to the club... unfortunately for them, the club excluded them .... the profession I should say accepts only talented people: they are not.

Vilfredo said...

Hello, our Thai friend is also back!

Anonymous said...

Rosser, you have let your frustration get the better of you. Name calling will only reduce your credibility henceforth. You should apologize to EL.

agentcontinuum said...

Unlike Las Vegas, what happens in Ancona really stays in Ancona, so why should we care?

rosserjb@jmu.edu said...

Most recent "Anonymous." Sorry, but you have no credibility at all. I will apologize to "Economic Logician" (who lacks any credentials whatsoever in logic) for calling him a "worthless scumbag," when he apologizes for lying about me (no apology for "lying hypocrite" because it is true). I would accept him admitting (which I do not think he has, although anybody can point it out to me, if I am mistaken), that he was in no position to comment on what I have read, even if he wanted to take me to task for what I have cited, which is a different thing.

Otherwise, I will repeat my accusation of hypocrisy and put against the whole lot of you anonymous clowns. I have people repeatedly calling me a "shit," a "fucking idiot," and quite a bit more, but I do not see any of them somehow feeling like they have to apologize. Hypocrisy of the highest order.

Frustrated JEBO submitter said...

Rosser, you are hallucinating. Please calm down, and stop accusing people left and right of lying. EL made a clear point, you can refute it clearly by demonstrating that the hetDSGE literature does not resort to discrete state spaces. You will not be successful, though. But name-calling will not get you out of the hole.

And you have a journal to take care of, which should be your priority over fighting windmills.

Anonymous said...

Thanks Rosser for bringing some life to this blog.

rosserjb@jmu.edu said...

Latest A.,

You are welcome.

"Frustrated,"

Um, you are asking me to prove a negative, which has been posed to me in this threads previously. Are you aware that this is not possible? Frankly, you are too stupid to write a paper that would get published in JEBO.

I will add a comment that I have found the folks on EJMR making these silly points that I should mind my knitting with JEBO because all these submitters are just misearable and not reply when EL or others try to trash the daylights out of me on this or that blog. Sorry, but I do not believe any of you are submitters, mostly because when any of you actually say anything about the journal you show that you know next to zero about it, remarks about as intelligent as the one you just attempted to palm off here, "Frustrated."

To EL: If you had any honor you would tell your pals to apologize to me. I am supposed to apologize to anonymous people who make false remarks about me and then start thread after thread full of drivel over on EJMR? They owe me an apology big time, and I hold you responsible for their conduct. The longer you say nothing, the more you prove that the nasty things I have said about you, apply to you as well as them, to whom much worse would be completely accurate to say.

Oh, and for the record, I like the directional Michigan schools I have been at, and I know a number of faculty at them. But, it is not a slam at them to say that someone who is failing to get tenure at one of them on grounds of a poor publication record is not a very impressive researcher, which was the context of my bringing them up in sniping at our dear "Economic Logician" here. Anyway, I never insulted them (I was insulting EL), so I do not owe them an apology, to the gang of non-apologizing apology demanders.

Economic Logician said...

First off, I apologize for not reacting earlier. I have been posting through mobile these days, and I had not set things up for comments to be sent to me.

Barkley, I see no reason to apologize, looking at the comments everyone was civil but maybe you. Also, if you have points to raise regarding another paper discussion I made several months ago, please make comments there. There is no point in spreading this over several threads.

You are accusing me of lying. I would be lying if I had known you read that literature but consciously had written you did not. That is not the case. But now that you claim to have read and to know this literature, I find it even more disturbing that you consciously decided to ignore it in your discussion of modern macroeconomics.

rosserjb@jmu.edu said...

EL,

Seeinb if indeed I can post here now. Find it very annoying that my last post disappeared and then reappeared, which was noted over on that other site by somebody, although when I complained about "undeleting" there one of the usual collection of liars declared that this was more evidence of what a @$+&! I am because it is impossible to "undelete" on this sort of blog. Well. I was also taken to task for being unable to post here, obviously a sign of my incompetence.

So, am seeing if I can. I do not know what all this was about (and am really uninterested in further discussions over there), but to the extent that you have been behind all of these shifts, EL, it simply supports my general complaints about your conduct in general, which, to use your word about me, I find "disturbing."

However, if this goes through, consider yourself even more "off the hook" and behaving better, IMHO.

rosserjb@jmu.edu said...

EL,

As it went through, I shall lower the tone. You receive a flower of peace, love, and understanding. May the planets align in the seventh house or wherever, and may all future discussions be without acrimony. Have a good rest of your weekend.

JBR

Economic Logician said...

Barkley,

comments go immediately online, although they sometimes take a long time to appear in the side bar. I delete what looks like spam. I cannot "undelete." I have never delete a post of yours.

For older posts (more than two weeks), comments are moderated. That is because the signal/spam ratio is very low.

rosserjb@jmu.edu said...

EL,

I accept that there may have been some delays or snafus that were not your doing. I apologize for any kvetching over such matters that were not your doing.