I had today off, so I started to write up a draft outline of what a set of lecture notes for teaching an introductory economics course would look like in the counterfactual world where the information transfer framework takes over all of economics.

**I. Introductory history**

Denise Schmandt-Besserat and Mesopotamian tokens

Adam Smith**

Diagrammatic approaches**, marginalism** and Alfred Marshall**

**II. Principles of economics and supply and demand**

Principles of economics

Basics of supply and demand curves (e.g. like these notes [pdf]**)

**III. Opportunity sets and demand curves**

Demand curves from state space properties (Becker, monkeys)

**IV. Production possibilities and supply curves**

Production possibilities (trade-offs, diversity)

Supply curves and production possibilities

**V. Price mechanism**

Hayek on the price mechanism**

The price system as a communication channel (utility, Stiglitz)

**VI. Allocation and information**

Economic allocation problem

Information theory 101 and information equilibrium (Fisher, Fielitz and Borchardt**)

Information, knowledge and the EMH

**VII. Information equilibrium**

*update 23 Apr 2017*: Overview of information equilibrium concepts

General and partial equilibrium solutions to IE condition (taken from the paper)

*update 23 Apr 2017*: Relationship of general and partial equilibrium (scope conditions)

Power laws

Time series

**VIII. Partial information equilibrium**

Interpreting supply and demand curves

Elasticities

Minimum wage

**IX. Non-ideal information transfer**

Physical systems

Aside: information transfer traffic model (traffic jams)

Supply and demand

**X. Entropy**

Entropy and the Walrasian auctioneer

Entropy and supply and demand

Price shocks and non-ideal information transfer

Wicksellian roundabout

*update 23 Apr 2017*: Ensembles and partition functions

*update 23 Apr 2017*: Example: ensemble of labor markets

Economic potentials/statistical economics (here, here)

**XI. Macroeconomics, part 1**

AD-AS model

IS-LM (low inflation, generally)

"Quantity theory of labor"

Labor and capital model

*update 22 Jan 2017*: Dynamic employment equilibrium

*update 23 Apr 2017*: More dynamic equilibrium

**XII. Macroeconomics, part 2**

Babysitting co-op

MINIMAC

Macro stickiness versus micro stickiness (Calvo as entropic force)

Emergent representative agent

**XIII. Macroeconomics, part 3**

DSGE form

Interest rate dynamics (and this and this)

Employment shocks and nominal shocks

(Changing) Phillips curve (here, here)

**XIV. Growth**

Price revolution

Issues with extrapolating growth to the past (here, here)

Solow model (here, here and here)

**XV. Money**

As information mediation

Origin?

Paradox of fiat money (solved)

**XVI. Utility**

Utility maximization versus information equilibrium

Utility maximization, matching and information equilibrium

**XVII. Microeconomics**

Asset pricing equation (Cochrane)

Stochastic processes and information equilibrium

Stock value versus book value

**XVIII. Behavioral economics**

Prediction markets

Excess volatility, "momentum", yield curve slope

Value premium

Endowment effect

...

There is also a presentation giving a general overview of information equilibrium here.

...

**Updated 22 January 2017 and 23 April 2017 (see above).**

...

** Reference material -- links aren't to this blog (all other links are).

Nice! I asked you about this once and you gave a brief reply, but this a much more complete answer.

ReplyDelete"...in the counterfactual world where the information transfer framework takes over all of economics."

Lol! Nice positive attitude.

BTW, I didn't realize the sad story of Boltzmann's demise. It seems weird he had peers telling him they didn't believe in atoms... I figured the chemists had that pretty well nailed down by the time he started his career.

Almost as depressing as Georg Cantor's life. Or Goedel's.

DeleteBTW, Brian Romanchuk did another post with you figuring in the body of it.

ReplyDeleteIf it is this post:

Deletehttp://www.bondeconomics.com/2016/03/models-are-not-frequency-invariant.html

then it still misses the point. He is talking about sampling error. That does affect all finite difference models, but isn't what I am talking about.

I was talking about the first finite difference not nailing down the curvature without auxiliary assumptions (the graphic is here). This only affects models of the type that specify dynamics via a single finite difference (such as G&L's SIM). You could specify a second derivative -- which would push the assumed implicit time scale to a higher order derivative.

It's not the discreteness of those red curves in the graphic (sampling error), but the fact that an infinite number of them go through the two end points (therefore the blue curve is an implicit assumption).

Yep, that's the one. I didn't realize the "discreteness" (in time?) of your red curves was on purpose.

DeleteYes, in time. And yes, on purpose.

DeleteBTW, when I asked you before about this (the topic of your post here) I think you mentioned Irving Fisher and Gary Becker... I ran that past Nick Rowe and he dismissed that out of hand, sounding a little annoyed... "No! Just a normal intro text... Mankiw or Krugman... doesn't matter!" (paraphrasing) :D

ReplyDeleteI asked John Handley what he read to get up to speed... he just said papers and slides he found online: no books.

If I was to try and learn Econ, I'd start with an intro text. I did eventually read both Mankiw and Krugman.

DeleteI started with Romer's grad text though. I figured Econ grad school admitted students that weren't Econ undergrads (e.g. Noah Smith was a physics undergrad) so it would be fine to start at the grad school level.

Say, maybe what you need to get your econ course off to a good start is a little name recognition. Do you suppose "Trump University" might be interested? ;)

ReplyDeleteI bet you could garner 100% student satisfaction.