Roman Frydman: What Can Economists Know? 4/5

The video discusses the limitations of the core axiom in contemporary economics, which assumes that economic outcomes can be fully specified by causal factors. The speaker critiques this axiom, arguing that it leads to unrealistic models and anomalies. A simple model of asset prices is presented to illustrate these points. The video also explores rational expectations and critiques the assumptions underlying economic models. Behavioral economics is discussed, highlighting the need for a more realistic understanding of human behavior. The speaker concludes by suggesting future directions for economic research.

How does the speaker propose to persuade the audience about the core axiom?

What problems does the speaker associate with keeping the core axiom?

What is the core axiom that underpins contemporary economics according to the speaker?

What does the speaker mean by 'market clearing' in the context of the economic model?

What assumption does the speaker argue has led economists to make extravagant claims?

How does the speaker differentiate between rational expectations and behavioral economics?

What does the speaker suggest about the relationship between government policy and economic models?

What is the significance of the 'error term' in macroeconomic models according to the speaker?

What does the speaker imply about the future of economic theories and models?

How does the speaker view the role of psychology in economic models?