Dear All,
I am a student, currently enroled in the "MSc Economics and Philosophy"
program at the LSE.
I intend to write my master's thesis on the topic:
"ACE: The new paradigma in the methodology in economics
- Critical assesment of a new modeling technology"
(or something like this)
Unfortunately, I couln't find any sophisticated literature on the subject.
Although the amount of literature about ACE is ever growing, no in-depth
analysis of the methodology - it's dangers, it's errors, it's
simplifications, etc... - exists.
Most current articles dedicate only a paragraph or two to the underlying
methodological issues and dicuss only issues relevant to actual project
(usually the sensitivity of the results).
Does anybody know some literature on the subject?
The most valuable text I found so far are the introduction to "growing
artificial societies" and the some chapters from "Simulation for the Social
Scientist", both of them providing a short introductery overview. But what I
need is something more detailed, more critical, possibly published in major
economic journals. What, for example, do famous mainstream economists
(Kugman, Mankiw, etc.) think of ACE?
Any help is gratefully appreciated,
Tom
> -----Original Message-----
> From: Scott Moss [SMTP:[log in to unmask]]
> Sent: Monday, 06 March 2000 12:31
> To: Christopher Auld; [log in to unmask]
> Subject: abss or ace: humbug production function
>
> In this email, I respond specifically to Chris Auld's claim that I was
> misleading in my presentation of the humbug production function and
> Solow's response. The issues involved are actually of considerable
> social importance since Solow's technique is a key element in
> computational economic models used to inform policy discussions about
> dealing with green house gas emissions, their effects on climate and
> such measures as carbon taxes to limit humanity's effects on the
> climate. The same technique is the basis of standard economic
> contributions to policy analysis relating to education. I think it is
> important to realise that these issues -- and my polemic -- are not just
> of academic interest.
>
> The relevant passage from Auld's message is:
>
> > The central issue revolves around a critique of Solow published in
> > 1974 by
> > Shaikh. Moss tells his readers that Shaikh's critique demolishes
> > Solow's
> > technique, a result Solow himself "accepted in substance" and which
> > has
> > "never been successfully refuted." Moss proceeds to provide citation
> > counts
> > showing that Solow is still oft cited whereas Shaikh is largely
> > ignored,
> > allegedly demonstrating economists ignore criticism which undermines
> > accepted
> > methods. In reality, Solow provided an absolutely devastating reply
> > to
> > Shaikh
>
> What I actually wrote was:
>
> The conclusion is inescapable: Solow's technique for
> distinguishing between the effects of technical change and the
> effects of capital investment does no such thing. At best, it
> provides a complicated measure for the constancy of income
> distribution.... It is safe to say that the critique, accepted
> in substance by Solow and never successfully refuted, has not
> prevented the paper and the technique from remaining hugely
> influential.
>
> What Solow wrote was:
>
> Mr. Shaikh's article is based on misconception pure and
> simple. The factor-share device of my 1957 article is in no
> sense at _test_ of aggregate production functions of marginal
> productivity or anything else. It merely shows how one goes
> about interpreting given time series if one starts by
> _assuming_ that they were generated from a production function
> and the competitive marginal-productivity relations apply.
> Therefore, it is not only not surprising but it is exactly the
> point that if the observed factor shares were exactly
> constant, the method would yield an exact Cobb-Douglas and
> tuck everything else into the shift factor. That is what one
> would _want_ such a method to do.
>
> For those not trained in economics, factor shares are the shares of
> income paid as wages and as profits.
>
> I take it that the substance of Shaikh's article was that the goodness
> of fit of the Cobb-Douglas production function using Solow's technique
> depends entirely on the constancy of these factor shares. My reading of
> the quoted paragraph above and the rest of Solow's reply to Shaikh is
> that he accepts that point (how could he not?) but denies that it should
> influence what economists do. Why should anyone care "how one goes
> about interpreting given time series if one starts by assuming ..."?
> Why should "one start by assuming" that the data was "generated from a
> production function and competitive marginal-productivity relations"?
> Suppose, indeed, that we ask whether any data can ever be generated by
> "a production function and marginal producitivy relations".
>
> The answer can be found in a literature that Solow knew well and was
> surveyed by Geoff Harcourt in the June, 1969 issue of the Journal of
> Economic Literature. The answer is that data is consistent with "a
> production function and competitive marginal-productivity relations" in
> two and only two cases:
>
> Case 1: The economy has been in a steady growth equilibrium
> since before the oldest capital equipment was produced and the
> steady growth rate is exactly equal to the prevailing, common
> rate of profits on the value of all existing capital
> equipment. That steady rate of growth and that common rate of
> profits must also be expected with complete confidence to
> continue to prevail for the lifetime of all existing capital
> equipment.
>
> Case 2: The economy produces one good. That good and labour
> are used to produce the good. The good can be costlessly
> changed to equip any larger or smaller number of workers. Any
> excess of the good can be scrapped costlessly. This good is
> also the only good consumed by households.
>
> That Chris Auld finds Solow's reply to Shaikh "absolutely devastating"
> tells us a great deal about the social structures of the economics
> community. Even if he did not know about the production function
> literature surveyed by Harcourt, what reasonable scientist would
> consider it good science to make an arbitrary and patently false set of
> assumptions to devise a technique for the specification of policies
> intended to protect the planet and appropriately to educate our
> children?
>
> I repeat my charge: economics (if science it be) is both bad science and
> intellectually dishonest.
>
>
>
> --
> Professor Scott Moss
> Director
> Centre for Policy Modelling
> Manchester Metropolitan University
> Aytoun Building
> Manchester M1 3GH
> UNITED KINGDOM
>
> telephone: +44 (0)161 247 3886
> fax: +44 (0)161 247 6802
>
> http://www.cpm.mmu.ac.uk/~scott
>
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