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Tuesday, August 14, 2007

Stock Market Ups and Downs

Mises Institute has an interesting blog on last week's stock market volatility and dump.

My only concern is that the title of the blog is "The one question you must never ask an economist." However, I don't believe he ever lets the reader in on the question he has in mind.

So I thought I'd offer up my own suggestion:

"How do your assumptions affect the results and forecasts of your model?"

Most economists (IMOP) would likely respond one of two ways:

1. "they wouldn't change a thing - they are just simplifying assumptions."
(if an economist answers thusly you can be sure he/she hasn't given the question much
thought outside of their own box)

2. "What assumptions - this is how things work"
(if an economist answers thusly, you should be scared for your life since the person is obviously posessed by their mathematical formulae and are liable to go all John Nash on you at any moment)

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