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• Financial Crisis, Economic Policy and Economics

  19-34

  Jozsef Moczar

  Views:

  123

  Concerning the financial crisis in 2007-2009 many politicians and economists, in addition
  to representatives of other disciplines have asked: why could it not have been avoided,
  why could it not have been forecast? The present paper provides a new answer to these
  questions. The main argument is that empirical economic policy reached a deadlock when
  economists acknowledged the equilibrium models based on efficient market theory. The
  static equilibrium paradigm which appeared in the middle of last century has strongly
  prevailed to the present day, leaving aside Kornai’s (1971) or Benassy’s (1982) or Goodwin’s
  (1991) warnings. Since the economy is never in equilibrium the simultaneous equations
  describing it may not provide any guide for politicians; what they should do and how they
  should do it in a time of economic crisis. The present author’s newest book (Móczár, 2008),
  besides the dynamic equilibrium, also sketches a new paradigm, i.e., non equilibrium
  modelling, instead of the orthodox equilibrium paradigm, which allows us to treat bubbles,
  to regulate money markets etc. Its necessity is outlined here.

  JEL classification: E00, E5, E6, G28 

• Quantophrenia? – Some remarks on the possibilities and constraints of mathematical formalization in economic and social sciences

  5-18

  Istvan Musto

  Views:

  111

  This article deals with some aspects of the constraints to the formal mathematization of economic theories and models. It points out that complex, dynamic and open systems dispose of a memory so that past events, statements or beliefs, even if they have turned out to be wrong or untrue, exert a potentially significant influence on the present state of issues, so they cannot be completely substracted from models representing reality. Reference is also made to the fact that in such complex, evolutionary systems strong interdependences and interactions exist between the subject and the object of scientific inquiry since economic actors strongly influence each other and, consequently, aggregate reality through their mutual actions and expectations. Furthermore, it is argued that the comparability of findings is highly dependent on the identity or dissimilarity of the initial conditions of the objects of economic research. The article does not take a position either for or against mathematical modelling; it limits itself to comments on some of the conditions of meaningful formalization.

  JEL classification: A1, B10, B41, C10