A Flawed Model

Most blog posts are not this academic, but I can't resist forwarding this piece as a nice postscript to the Krugman article recently assigned in Economics. The blog author describes himself as "neo-monetarist," which should indicate respect for Milton Friedman and a generally conservative bent, but he is mostly reporting on the thoughts of one Joseph Stiglitz. I've read 2 full books by Stiglitz, who has his own Nobel prize in Economics and a well-deserved reputation as a political liberal who might nominally prefer to invoke Keynesian models. I share Krugman's outrage at the absurdity of the efficient market hypothesis but cringe at his dualistic way of framing, well, everything. In other words, take Krugman with a grain of salt. Behavioral economics is real, and its implications have met resistance from entrenched interests in the economy and in conservative academia, and that's sort of lame. Krugman setting his own hair on fire is also sort of lame.