tag:blogger.com,1999:blog-3621026.post493377543852725095..comments2024-03-29T06:05:04.162+01:00Comments on Robert's Stochastic thoughts: Roberthttp://www.blogger.com/profile/14455788499385673507noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3621026.post-54266047358463178392011-02-09T00:05:05.813+01:002011-02-09T00:05:05.813+01:00Interesting post.
I would not really argue that ...Interesting post. <br />I would not really argue that economists were 'bribed', but it is more than coincidental that EMH and DSGE are popular in financial models and were useless for predicting the crisis. I would say the convergence of methods used in economics and finance--driven in part by ties between the two fields--led to a mutual blind spot. I don't think this connection can explain everything, but it seems like a contributing factor to the mistakes of 00's econ.<br /><br />An analogy might be made to regulators and the Fed, arguably a similar situation. Some claim that regulators were hesitant to criticize the banks that they were hoping to work for. But certainly some of the blame for the failures of the previous regulatory regime was that the goverment was using very similar methods to the banks to evaluate the potential for economic downturns.Eric Titusnoreply@blogger.com