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Do you actually know what economists talk about when talking about 'shocks'? I mean outside popular media. Economist do actually quite a bit about studying the

by nickik 8y ago

Do you actually know what economists talk about when talking about 'shocks'? I mean outside popular media. Economist do actually quite a bit about studying these shocks, and trying to explain what they are, where the come from and so on and so on. Take a simple example, tomorrow there is war between Iran and Saudi Arabia and there is no more oil coming from the middle east. That would be a supply shock. It is true that sometime we can only observe that something change and sometimes its hard to say why that happens, but that is a problem you have in all complex systems. Your asserting that economists invent 'shocks' when the evidence doesn't fit there models is totally incorrect and leads me to believe that you don't know anything about modern economics.

mcguire 8y ago
"Take a simple example, tomorrow there is war between Iran and Saudi Arabia and there is no more oil coming from the middle east. That would be a supply shock." Would it be? One would expect, given that oil prices and the middle east are some of the most watched economic sectors, that there would be a very visible run up to such a war, the effects would be estimated and accounted for, and there would be no economic discontinuity. This is economics working correctly. As late as 2006 and 2007, we have economists on record as saying "everything's dandy". This was not due to a lack of data; they had most of the information then that we're arguing about now. Instead, it was because their models said what happened couldn't happen.
- nickik 8y ago
  Tons of war happen without run up. Even if the run-up happened threw-out a period of months, it would still be shock. A shock is change relative to some trend, not necessarily a fixed thing that happens in the news. > As late as 2006 and 2007, we have economists on record as saying "everything's dandy". This was not due to a lack of data; they had most of the information then that we're arguing about now. Instead, it was because their models said what happened couldn't happen. In 2006/2007 everything was more or less ok. While there was a housing crisis, GDP growth was on track and unemployment did not go up. You seem to think that everything after late 2008 was predetermined, witch is false.
  - mcguire 8y ago
    You seem to be asserting that events like 2006-2009 are, in principle, unforeseeable. If so, you are making my point for me.
    - nickik 8y ago
      No. The point is that the recession happen because of monetary policy mistakes in 2008 and the only way to know if it was gone happen would be to have perfect knowlage of how the central bank is was to respond to monetary demand changes in 2008.

by nickik 8y ago

mcguire 8y ago

"Take a simple example, tomorrow there is war between Iran and Saudi Arabia and there is no more oil coming from the middle east. That would be a supply shock." Would it be? One would expect, given that oil prices and the middle east are some of the most watched economic sectors, that there would be a very visible run up to such a war, the effects would be estimated and accounted for, and there would be no economic discontinuity. This is economics working correctly. As late as 2006 and 2007, we have economists on record as saying "everything's dandy". This was not due to a lack of data; they had most of the information then that we're arguing about now. Instead, it was because their models said what happened couldn't happen.

nickik 8y ago
Tons of war happen without run up. Even if the run-up happened threw-out a period of months, it would still be shock. A shock is change relative to some trend, not necessarily a fixed thing that happens in the news. > As late as 2006 and 2007, we have economists on record as saying "everything's dandy". This was not due to a lack of data; they had most of the information then that we're arguing about now. Instead, it was because their models said what happened couldn't happen. In 2006/2007 everything was more or less ok. While there was a housing crisis, GDP growth was on track and unemployment did not go up. You seem to think that everything after late 2008 was predetermined, witch is false.
- mcguire 8y ago
  You seem to be asserting that events like 2006-2009 are, in principle, unforeseeable. If so, you are making my point for me.
  - nickik 8y ago
    No. The point is that the recession happen because of monetary policy mistakes in 2008 and the only way to know if it was gone happen would be to have perfect knowlage of how the central bank is was to respond to monetary demand changes in 2008.