G. L. S. Shackle and the Indeterminacy of Economics

A post by Greg Hill, which inspired a recent post of my own, and Greg’s comment on that post, have reminded me of the importance of the undeservedly neglected English economist, G. L. S. Shackle, many of whose works I read and profited from as a young economist, but which I have hardly looked at for many years. A student of Hayek’s at the London School of Economics in the 1930s, Shackle renounced his early Hayekian views and the doctoral dissertation on capital theory that he had already started writing under Hayek’s supervision, after hearing a lecture by Joan Robinson in 1935 about the new theory of income and employment that Keynes was then in the final stages of writing up to be published the following year as The General Theory of Employment, Interest and Money. When Shackle, with considerable embarrassment, had to face Hayek to inform him that he could not finish the dissertation that he had started, no longer believing in what he had written, and having been converted to Keynes’s new theory. After hearing that Shackle was planning to find a new advisor under whom to write a new dissertation on another topic, Hayek, in a gesture of extraordinary magnanimity, responded that of course Shackle was free to write on whatever topic he desired, and that he would be happy to continue to serve as Shackle’s advisor regardless of the topic Shackle chose.

Although Shackle became a Keynesian, he retained and developed a number of characteristic Hayekian ideas (possibly extending them even further than Hayek would have), especially the notion that economic fluctuations result from the incompatibility between the plans that individuals are trying to implement, an incompatibility stemming from the imperfect and inconsistent expectations about the future that individuals hold, at least some plans therefore being doomed to failure. For Shackle the conception of a general equilibrium in which all individual plans are perfectly reconciled was a purely mental construct that might be useful in specifying the necessary conditions for the harmonization of individually formulated plans, but lacking descriptive or empirical content. Not only is a general equilibrium never in fact achieved, the very conception of such a state is at odds with the nature of reality. For example, the phenomenon of surprise (and, I would add, regret) is, in Shackle’s view, a characteristic feature of economic life, but under the assumption of most economists (though not of Knight, Keynes or Hayek) that all events can be at least be forecasted in terms of their underlying probability distributions, the phenomenon of surprise cannot be understood. There are some observed events – black swans in Taleb’s terminology – that we can’t incorporate into the standard probability calculus, and are completely inconsistent with the general equilibrium paradigm.

A rational-expectations model allows for stochastic variables (e.g., will it be rainy or sunny two weeks from tomorrow), but those variables are assumed to be drawn from distributions known by the agents, who can also correctly anticipate the future prices conditional on any realization (at a precisely known future moment in time) of a random variable. Thus, all outcomes correspond to expectations conditional on all future realizations of random variables; there are no surprises and no regrets. For a model to be correct and determinate in this sense, it must have accounted fully for all the non-random factors that could affect outcomes. If any important variable(s) were left out, the predictions of the model could not be correct. In other words, unless the model is properly specified, all causal factors having been identified and accounted for, the model will not generate correct predictions for all future states and all possible realizations of random variables. And unless the agents in the model can predict prices as accurately as the fully determined model can predict them, the model will not unfold through time on an equilibrium time path. This capability of forecasting future prices contingent on the realization of all random variables affecting the actual course of the model through time, is called rational expectations, which differs from perfect foresight only in being unable to predict in advance the realizations of the random variables. But all prices conditional on those realizations are correctly expected. Which is the more demanding assumption – rational expectations or perfect foresight — is actually not entirely clear to me.

Now there are two ways to think about rational expectations — one benign and one terribly misleading. The benign way is that the assumption of rational expectations is a means of checking the internal consistency of a model. In other words, if we are trying to figure out whether a model is coherent, we can suppose that the model is the true model; if we then posit that the expectations of the agents correspond to the solution of the model – i.e., the agents expect the equilibrium outcome – the solution of the model will confirm the expectations that have been plugged into the minds of the agents of the model. This is sometimes called a fixed-point property. If the model doesn’t have this fixed-point property, then there is something wrong with the model. So the assumption of rational expectations does not necessarily involve any empirical assertion about the real world, it does not necessarily assert anything about how expectations are formed or whether they ever are rational in the sense that agents can predict the outcome of the relevant model. The assumption merely allows the model to be tested for latent inconsistencies. Equilibrium expectations being a property of equilibrium, it makes no sense for equilibrium expectations not to generate an equilibrium.

But the other way of thinking about rational expectations is as an empirical assertion about what the expectations of people actually are or how those expectations are formed. If that is how we think about rational expectations, then we are saying people always anticipate the solution of the model. And if the model is internally consistent, then the empirical assumption that agents really do have rational expectations means that we are making an empirical assumption that the economy is in fact always in equilibrium, i.e., that is moving through time along an equilibrium path. If agents in the true model expect the equilibrium of the true model, the agents must be in equilibrium. To break out of that tight circle, either expectations have to be wrong (non-rational) or the model from which people derive their expectations must be wrong.

Of course, one way to finesse this problem is to say that the model is not actually true and expectations are not fully rational, but that the assumptions are close enough to being true for the model to be a decent approximation of reality. That is a defensible response, but one either has to take that assertion on faith, or there has to be strong evidence that the real world corresponds to the predictions of the model. Rational-expectations models do reasonably well in predicting the performance of economies near full employment, but not so well in periods like the Great Depression and the Little Depression. In other words, they work pretty well when we don’t need them, and not so well when we do need them.

The relevance of the rational-expectations assumption was discussed a year and a half ago by David Levine of Washington University. Levine was an undergraduate at UCLA after I had left, and went on to get his Ph.D. from MIT. He later returned to UCLA and held the Armen Alchian chair in economics from 1997 to 2006. Along with Michele Boldrin, Levine wrote a wonderful book Aginst Intellectual Monopoly. More recently he has written a little book (Is Behavioral Economics Doomed?) defending the rationality assumption in all its various guises, a book certainly worth reading even (or especially) if one doesn’t agree with all of its conclusions. So, although I have a high regard for Levine’s capabilities as an economist, I am afraid that I have to criticize what he has to say about rational expectations. I should also add that despite my criticism of Levine’s defense of rational expectations, I think the broader point that he makes that people do learn from experience, and that public policies should not be premised on the assumption that people will not eventually figure out how those policies are working, is valid.

In particular, let’s look at a post that Levine contributed to the Huffington Post blog defending the economics profession against the accusation that the economics profession is useless as demonstrated by their failure to predict the financial crisis of 2008. To counter this charge, Levine compared economics to physics — not necessarily the strategy I would have recommended for casting economics in a favorable light, but that’s merely an aside. Just as there is an uncertainty principle in physics, which says that you cannot identify simultaneously both the location and the speed of an electron, there’s an analogous uncertainty principle in economics, which says that the forecast affects the outcome.

The uncertainty principle in economics arises from a simple fact: we are all actors in the economy and the models we use determine how we behave. If a model is discovered to be correct, then we will change our behavior to reflect our new understanding of reality — and when enough of us do so, the original model stops being correct. In this sense future human behavior must necessarily be uncertain.

Levine is certainly right that insofar as the discovery of a new model changes expectations, the model itself can change outcomes. If the model predicts a crisis, the model, if it is believed, may be what causes the crisis. Fair enough, but Levine believes that this uncertainty principle entails the rationality of expectations.

The uncertainty principle in economics leads directly to the theory of rational expectations. Just as the uncertainty principle in physics is consistent with the probabilistic predictions of quantum mechanics (there is a 20% chance this particle will appear in this location with this speed) so the uncertainty principle in economics is consistent with the probabilistic predictions of rational expectations (there is a 3% chance of a stock market crash on October 28).

This claim, if I understand it, is shocking. The equations of quantum mechanics may be able to predict the probability that a particle will appear at given location with a given speed, I am unaware of any economic model that can provide even an approximately accurate prediction of the probability that a financial crisis will occur within a given time period.

Note what rational expectations are not: they are often confused with perfect foresight — meaning we perfectly anticipate what will happen in the future. While perfect foresight is widely used by economists for studying phenomena such as long-term growth where the focus is not on uncertainty — it is not the theory used by economists for studying recessions, crises or the business cycle. The most widely used theory is called DSGE for Dynamic Stochastic General Equilibrium. Notice the word stochastic — it means random — and this theory reflects the necessary randomness brought about by the uncertainty principle.

I have already observed that the introduction of random variables into a general equilibrium is not a significant relaxation of the predictive capacities of agents — and perhaps not even a relaxation, but an enhancement of the predictive capacities of the agents. The problem with this distinction between perfect foresight and stochastic disturbances is that there is no relaxation of the requirement that all agents share the same expectations of all future prices in all possible future states of the world. The world described is a world without surprise and without regret. From the standpoint of the informational requirements imposed on agents, the distinction between perfect foresight and rational expectations is not worth discussing.

In simple language what rational expectations means is “if people believe this forecast it will be true.”

Well, I don’t know about that. If the forecast is derived from a consistent, but empirically false, model, the assumption of rational expectations will ensure that the forecast of the model coincides with what people expect. But the real world may not cooperate, producing an outcome different from what was forecast and what was rationally expected. The expectation of a correct forecast does not guarantee the truth of the forecast unless the model generating the forecast is true. Is Levine convinced that the models used by economists are sufficiently close to being true to generate valid forecasts with a frequency approaching that of the Newtonian model in forecasting, say, solar eclipses? More generally, Levine seems to be confusing the substantive content of a theory — what motivates the agents populating theory and what constrains the choices of those agents in their interactions with other agents and with nature — with an assumption about how agents form expectations. This confusion becomes palpable in the next sentence.

By contrast if a theory is not one of rational expectations it means “if people believe this forecast it will not be true.”

I don’t what it means to say “a theory is not one of rational expectations.” Almost every economic theory depends in some way on the expectations of the agents populating the theory. There are many possible assumptions to make about how expectations are formed. Most of those assumptions about how expectations are formed allow, though they do not require, expectations to correspond to the predictions of the model. In other words, expectations can be viewed as an equilibrating variable of a model. To make a stronger assertion than that is to make an empirical claim about how closely the real world corresponds to the equilibrium state of the model. Levine goes on to make just such an assertion. Referring to a non-rational-expectations theory, he continues:

Obviously such a theory has limited usefulness. Or put differently: if there is a correct theory, eventually most people will believe it, so it must necessarily be rational expectations. Any other theory has the property that people must forever disbelieve the theory regardless of overwhelming evidence — for as soon as the theory is believed it is wrong.

It is hard to interpret what Levine is saying. What theory or class of theories is being dismissed as having limited usefulness? Presumably, all theories that are not “of rational expectations.” OK, but why is their usefulness limited? Is it that they are internally inconsistent, i.e., they lack the fixed-point property whose absence signals internal inconsistency, or is there some other deficiency? Levine seems to be conflating the two very different ways of understanding rational expectations (a test for internal inconsistency v. a substantive empirical hypothesis). Perhaps that’s why Levine feels compelled to paraphrase. But the paraphrase makes it clear that he is not distinguishing between the substantive theory and the specific expectational hypothesis. I also can’t tell whether his premise (“if there is a correct theory”) is meant to be a factual statement or a hypothetical? If it is the former, it would be nice if the correct theory were identified. If the correct theory can’t even be identified, how are people supposed to know which theory they are supposed to believe, so that they can form their expectations accordingly? Rather than an explanation for why the correct rational-expectations theory will eventually be recognized, this sounds like an explanation for why the correct theory is unknowable. Unless, of course, we assume that the rational expectations are a necessary feature of reality in which case, people have been forming expectations based on the one true model all along, and all economists are doing is trying to formalize a pre-existing process of expectations formation that already solves the problem. But the rest of his post (see part two here) makes it clear that Levine (properly) does not hold that extreme position about rational expectations.

So in the end , I find myself unable to make sense of rational expectations except as a test for the internal consistency of an economic model, and, perhaps also, as a tool for policy analysis. Just as one does not want to work with a model that is internally inconsistent, one does not want to formulate a policy based on the assumption that people will fail to understand the effects of the policy being proposed. But as a tool for understanding how economies actually work and what can go wrong, the rational-expectations assumption abstracts from precisely the key problem, the inconsistencies between the expectations held by different agents, which are an inevitable, though certainly not the only, cause of the surprise and regret that are so characteristic of real life.

18 Responses to “G. L. S. Shackle and the Indeterminacy of Economics”


  1. 1 Tom Brown January 22, 2014 at 10:04 pm

    “So in the end , I find myself unable to make sense of rational expectations…”

    Me too. Whew… I’ll have to come back and read this one again David.

  2. 2 Unlearningecon January 23, 2014 at 4:00 am

    Great piece – gets at something I’ve noticed recently, which is the impossibly circular nature of some defences of economic theory. As you say:

    “The expectation of a correct forecast does not guarantee the truth of the forecast unless the model generating the forecast is true.”

    We’ve also seen this with the EMH from people like John Cohrane. “The EMH predicts that we won’t be able to predict crashes, so the crash is not a problem for economics!” It’s very unconvincing and I can’t help but think some are so mired in these theories that they literally cannot think outside the confines of them.

    As for the proposition that people will tend to converge toward the ‘true’ model of the economy, Mark Buchanan has written about this:

    “In the experiments, real learning behavior led to a range of interesting outcomes in this economy, including persistent oscillations in inflation and economic output without any equilibrium, or extended periods of recession driven by several distinct groups clinging to very different expectations of the future. Relaxing the assumption of rational expectations turns out not to be a minor thing at all. Include realistic learning behavior in your models, and you get a realistically complex economy that is very hard to predict and control, and subject to many kinds of natural instability.”

    http://physicsoffinance.blogspot.com.au/2013/12/macroeconomics-illusion-of-learning.html

  3. 3 The Hat of the Three-Toed Man-Baby January 23, 2014 at 5:48 am

    You know the best part of this post? That no one anywhere will ever care. You and Greg Hill and the rest of the crackpots can continue your inane rants, and it won’t matter at all.

  4. 4 Dan Thorn January 23, 2014 at 5:54 am

    Thank you.
    There have been many great thinkers in the history of economics. It is always nice to read about someone new when their insights are used to illuminate rather than persuade or defend by authority.

    RE of course has been subject to much discussion. It is a central problem in Econ that needs to be advanced. It will take an exquisite person to have the stature and the originality and the brain power to do this. (really the challenge is expectations)

    I am glad to see it linked to Equilibrium. Another central problem. I think the only place to start is to accept that the understanding of both are incomplete. It does seem clear that both equilibrium and re share the property that they are least true at the most inconvenient of times.

  5. 5 Blue Aurora January 23, 2014 at 7:19 am

    Interesting post, David Glasner. However, were you aware that G.L.S. Shackle has been accused of falling into epistemic nihilism for taking his approach to uncertainty way too far?

    On a somewhat related note…Professor Carlo Zappia of the Department of Economics and Statistics at the University of Siena in Italy wrote a working paper about the intellectual history of decision theory in the 20th century back in 2008. Here a link to it:

    http://ideas.repec.org/p/usi/depfid/0408.html

    He wrote an updated version that appeared in October 2012.

    http://www.econ-pol.unisi.it/zappia/PaperZappiaStEdmundsSecond.pdf

  6. 6 Wonks Anonymous January 23, 2014 at 7:35 am

    I don’t understand how rational expectations of stochastic randomness doesn’t permit surprise. Low probability events will happen sometimes (at a low frequency). Can’t one be surprised when such an event happens?

  7. 7 Rajiv Sethi January 23, 2014 at 8:28 am

    Superb post, thank you. JR Hicks advocated the use of the temporary equilibrium concept precisely to allow for mutual inconsistency of individual plans. This was supposed to be augmented with positive theory of expectation revision to get a truly dynamic model of economic activity. Foley and Sidrauski tried to develop this approach but it died out with the rational expectations revolution in the 1970s:

    http://rajivsethi.blogspot.com/2010/11/foley-sidrauski-and-microfoundations.html

    Now there seems to be something of a revival. A conference at Columbia in 2011 was devoted entirely to alternatives:

    http://rajivsethi.blogspot.com/2011/02/belief-heterogeneity.html

    Regarding your point about stochastic RE models being based on more restrictive assumptions than deterministic perfect foresight models, a good analogy would be to compare Nash equilibrium in complete information games with Bayes-Nash equilibrium in games of incomplete information. The latter is generally thought to be much more demanding.

  8. 8 David Glasner January 23, 2014 at 9:21 am

    Tom, OK whenever.

    Unlearningecon, Thanks. What is also interesting is how the empirical emptiness of the theory can be transformed into the basis for a very strong policy recommendation. Thanks for the link. I haven’t heard of Buchanan, so that’s very helpful to me.

    The Hat, Merriam-Webster online defines “rant” as follows:

    “to talk loudly and in a way that shows anger : to complain in a way that is unreasonable”

    So I ask: Who’s ranting?

    I’ll just leave you with this thought. Maybe, just maybe, you could be in for a surprise.

    Dan, Thanks I am glad that you found the discussion of Shackle to have been useful.

    Rajiv, Thank you. Exactly right about Hicks, that should be part of the story, and Hicks got the basic idea from Hayek, though Hayek criticized the temporary equilibrium analysis (I think in the Pure Theory of Capital). I once asked Hayek what he didn’t like about temporary equilibrium, and he couldn’t give me a response, except to say that perhaps he had been too quick to dismiss the idea. This conversation took place 30 or 40 years ago so my memory could be faulty. I learned about temporary equilibrium from Earl Thompson who cited Foley and Sidrauski’s work and thought very highly of it. Thanks for the links. I will try to look at them soon. Regarding the analogy between stochastic RE and Bayes-Nash equilibrium, do you have a convenient reference for me to look at? Thanks so much.

  9. 9 greghill1000 January 23, 2014 at 10:13 am

    Blue Aurora,

    You write, “However, were you aware that G.L.S. Shackle has been accused of falling into epistemic nihilism for taking his approach to uncertainty way too far?” and mention Carlos Zappia’s excellent papers.

    In the conclusion to the October 2012 paper, Zappia writes, “There is ample evidence that most of Shackle’s insights still are of crucial relevance for decision-making under uncertainty. Indeed, they can be considered at the basis of the current modeling of probability and uncertainty, arguably moving forward to an array of non-Bayesian decision theories (Gilboa, Postlewaite and Schmeidler 2008, Binmore 2009).”

  10. 10 Diego Espinosa January 23, 2014 at 4:29 pm

    RE presupposes that Knightian uncertainty is limited. In other words, the rational, representative agent may not know where along a probability distribution an event might turn out, but he does know the distribution. In reality, the dynamic of the economy does not behave like a normal distribution. It is interdependent, non-linear, irreducible, etc. RE is not a correct view because, even with rationality, we have little foresight about what might occur. Hayek seemed to understand this, as did Keynes (irreducible uncertainty).

    Here’s a link to an interesting piece on the subject written by Hayek in 1967. Maybe it will make a convert out of you! It is a pity that the body of work on uncertainty by the likes of Hayek, Keynes and Knight seem all but ignored by modern economics.

    http://highmesa.us/Hayek/Theory%20of%20Complex%20Phemomena.pdf

  11. 11 greghill1000 January 23, 2014 at 5:28 pm

    David,

    Glad you decided to devote a full post to G.L.S. Shackle and Rational Expectations. Your post is very clear, and I don’t disagree with any of it. Hopefully the following comments will add a bit more “flavor” to Shackle’s argument.

    Robert Lucas wrote, “I prefer to use the term ‘theory’ in a very narrow sense, to refer to an explicit dynamic system, something that can be put on a computer and run.” Here, in a nutshell, lie the virtues and vices of rational expectations. If the computer program has a “bug,” then the model is inconsistent, and that’s good to know. On the other hand, no one is making any decisions as the program “runs,” and unless you’re a hardcore determinist, it’s difficult to ignore the fact that economic outcomes are driven partly by the decisions people make.

    In a rational expectations model, all the so-called agents have access to the same ready-made and comprehensive probability distribution. But for Shackle, there can be no such thing. Big events like the Arab Spring aren’t drawn from an “urn” the contents of which are known to everyone in advance. Rather, people themselves must conceive of the various ways the future may unfold. And while rational calculation may yield just one correct result, the trajectory of economic developments envisioned by people with different histories and in disparate circumstances will not be uniform.

    This multiplicity of imagined scenarios threatens the coherence of expectational equilibrium because plans can only be mutually consistent if they’re formulated in the same conceptual space. Or, as Shackle put it, “Two men cannot arrange to walk side by side when each is studying a map of a different country.” (I’m tempted to characterize this as a deep criticism of rational expectations condensed to a single sentence.)

    In addition to creating divergent maps, our powers of imagination create the possibility of self-originating choices that aren’t fully determined by antecedent events. If choice isn’t completely ensnared within the web of causation, then we can’t know what decisions that will be made tomorrow. Hence, as a matter of logic, there can be no general equilibrium extending into the future: because the future, unless we subscribe to a thoroughgoing determinism, will be shaped by decisions not yet taken. (I believe this conclusion is very close to Kenneth Arrow’s view in “Rationality of Self and Others in an Economic System”).

    Is this a path to theoretical nihilism? Are we stuck with a general equilibrium construct in which all choices are pre-harmonized, and rationality is conferred upon every choice by assuming it is made in knowledge, actual or virtual, of every other person’s choice?

    Shackle didn’t think so. Rather, he found a vivid way to frame our predicament – that we must choose without foreknowledge – in Keynes’s Treatise on Money (1930). Despite the well-known shortcomings of Keynes’s first magnum opus, the book presents a model of an economy in which decisions are *not* pre-harmonized before commitments are made. It portrays a “sequence” economy of ex ante decisions and ex post results, and it purports to reveal in a very general way what happens “when time’s sudden mockery reveals [our] supposed knowledge to be hollow.” Is this not a pretty good characterization of recent events?

    These arguments are set forth in more detail here http://works.bepress.com/greg_hill/5/.

  12. 12 Blue Aurora January 23, 2014 at 9:46 pm

    Greg Hill: Notice how I said on a related note…it explains why G.L.S. Shackle became disregarded.

  13. 13 Joshua Wojnilower (Woj) January 23, 2014 at 10:41 pm

    Fantastic post and wonderful to see Shackle getting some recognition.

    How, if at all, do you think these critiques might apply to Market Monetarism? As I understand that theory, the ability of central banks to target NGDP relies on the market forecast being true in the real world. As you point out, however, a correct forecast will only match reality if the model generating the forecast is correct. It therefore seems plausible that the market could expect a certain level or growth of NGDP, yet be disappointed by the actual results if the model is incorrect (which is also plausible). My take is that Market Monetarists occasionally fail to distinguish between the substantive theory and specific expectations hypothesis regarding rational expectations.

    Other opinions and/or corrections are greatly appreciated.

  14. 14 greghill1000 January 24, 2014 at 6:27 am

    Blue Aurora: Fair enough.

    Zappia’s paper is a bit odd in that it does explain how Shackle fell out of favor among those working on probability and decision-making, yet concludes by acknowledging that Shackle’s ideas “can be considered at the basis of the current modeling of probability and uncertainty, arguably moving forward to an array of non-Bayesian decision theories (Gilboa, Postlewaite and Schmeidler 2008, Binmore 2009).”

  15. 15 David Glasner February 4, 2014 at 8:46 am

    Diego, That seems to me a very good summary of at least one of the problems with RE. I remember reading that essay in 1967 or 1968, and probably again at least once or twice, and I heard him give a lecture in which he basically went through the main points of the paper. I think it’s one of his best papers. What am I being converted to?

    Greg, Thanks for your very clear summary of the deterministic, and therefore false, premises of the RE approach.

    Joshua, Thanks. You raise a good question. I can’t speak for Market Monetarists about your question. Scott Sumner is certainly much more sympathetic to RE than I am. Nevertheless, even if we posit that the market expectation can be, and is even likely to be, wrong, it still may provide a good target for the monetary authority to shoot for. But I haven’t really thought this through.

  16. 16 Jay February 5, 2014 at 5:07 pm

    “the world described is a world with no surprise and regret” – not necessarily true.
    If the world is indeed described as a series of probabilities (as in a game of blackjack, say), there still exists plenty of post facto subjective surprise or regret. Especially if a small probability event actually happens. Suddenly a risk that a few minutes beforehand seemed trivial – a run on a few banks at the same time, for example – in retrospect may seem intolerably high. The outcome, for most people, will be surprise and regret that the risk hadn’t been reduced further before the event. Similarly, when a 1 in a 100 years event happens, it is enormously surprising even if it had been understood that it had a p of 0.01. Few people will have the equanimity to not be surprised and/or say the risk was “worth it” and the gamble was good.

    Of course, this is largely a moot point because the world cannot actually be described with objective probabilities.

  17. 17 Francisco Javier Meléndez-Hernández May 8, 2014 at 4:12 pm

    Dear gentlemen: I started reading Epistemics and Economics in 1978, I still find it fascinating, and even when I did graduate work in the U S and in Spain and got a doctorate in economics I found and still find so many writers much inflated and over rated, and profr. Shackle remains my hero for being under appreciated and yet he offered so much wisdom in his caleidoscopic views and on the impossibility of true prediction, I regret that no Nobel Prize in Econ was offered to him, even if he deserved it more than some that got it.


  1. 1 Around the Traps 24/1/14 | Vote-Often.com Trackback on January 23, 2014 at 3:53 pm

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About Me

David Glasner
Washington, DC

I am an economist at the Federal Trade Commission. Nothing that you read on this blog necessarily reflects the views of the FTC or the individual commissioners. Although I work at the FTC as an antitrust economist, most of my research and writing has been on monetary economics and policy and the history of monetary theory. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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