Some ideas of macroeconomics study as a beginner

This semester I take a microeconomics analysis course in the advanced level. When I first get access with this course, I find it almost has no relationship with macroeconomics course under intermediate level. I have to abandon most of the concept in the undergraduate study to adapt new framework of advanced macroeconomics study. To tell the truth, I am quite familiar with solving the general terms of a particular sequence. In my very young age I used the fixed-point theorem to solve general terms hundreds of times. When I go to the graduate school, I am delighted to call this memory back to solve the macroeconomics model in a similar way. But is that really the truth? I am told that the whole economics can be decomposed into several parts such as capital sequence, consumption sequence, leisure sequence, etc. In macroeconomics we use first order condition under Lagrange Theorem or KKT Theorem(and probably with some other methods in optimization theorem) to deduce the recursive formula. And then we can solve it in a general term form and check some characteristics of stable state variables. Later on some scholars found these sort of models were too simple to illustrate the real world. Hence random variables or process were added into the function such as AR process, Markov process, martingale and submartingal. Combining with the progress in the stochastic analysis study, we can revise the model in a more complicated way so as to convince more audiences in the economics study or even ordinary people. I would like to say macroeconomics research is more meaningful to human race than microeconomics, which can supply important economics index prediction to benefit economy. However, just as what Solow said in the congress, current macroeconomics models are still too simple to illustrate the whole economy. We cannot make the conclusion we can simulate the real economy condition by adding complex stochastic factors into the model. Maybe current model is not on the correct way to simulate the real life. Maybe it is the time for me to change. A famous economists argue that young scholars should never dream of reconstructing the framework of macroeconomics study and should precisely revise current models and cover simulation or prediction task, or they will not become famous and disappear on the job market. This sounds like writing papers is just for earning a living. Maybe I can never accept this point of view. If I finally go to the academia, I shall maximize the beauty and practicability of economics theory rather than maximize my personal academic position or salary. If I cannot realize this point, I shall not go to the academia. My life is not utilized to write meaningless papers. And what I wish is to make the economics theory more elegant and useful rather than increase the digit number in my bank account. If one day I can fail to keep this faith, it is the time to quit academia to do other useful things. Intuitionally real economics are so complicated that we can fail to use simple mathematical methods to handle with. In other word, it is a must that advanced and difficult mathematical tools should be applied in economic theory. We have to use stochastic differential equations and dynamic systems in physics to depict some characteristics of objective substances in the universe while some more complicated mathematical methods ought to be used to describe complex and puzzling human behavior selections, which is obviously more intricate than substances. We have to admit it is the time macroeconomic research IS in its recession because none of the most accurate models succeeded in predicting 2008 financial crisis and most of them even gave opposite estimations. But it is no room for regret and sadness. It is our scholars’ duty to make our model more elegant and precise in the future, which shall never lead to inappropriate policies.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s