tag:blogger.com,1999:blog-6837159629100463303.post8252129417066065314..comments2023-06-18T01:25:08.748-07:00Comments on Information Transfer Economics: Coordination costs money, causes recessionsJason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6837159629100463303.post-20838847012666072912016-02-12T08:33:13.755-08:002016-02-12T08:33:13.755-08:00Should say "even when not in recession"....Should say "even when not in recession".Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-20248724030612244422016-02-12T08:30:49.060-08:002016-02-12T08:30:49.060-08:001. Maybe I deleted the reference. And it doesn'...1. Maybe I deleted the reference. And it doesn't matter, but Helmholtz.<br /><br />2. In order to change a distribution from a higher entropy one to a lower entropy one, you have to use energy. Energy is aggregate demand in analogy, so you'd have to add AD.<br /><br />But think of it as cooling a system through a phase transition. That costs energy to reduce the entropy, even though the system has less energy afterwards.<br /><br />It always costs energy to move a distribution to lower entropy.<br /><br />3. The 16% was relative to a uniform distribution, but the spike at zero is there even when not in a uniform distribution. So it's not 16%, but lower. Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-78602162409452584472016-02-12T01:50:15.553-08:002016-02-12T01:50:15.553-08:00Hi Jason,
1) I don't see what line in the pos...Hi Jason,<br /><br />1) I don't see what line in the post goes with your footnote [1]. Also, do you mean "Gibbs free energy?"<br /><br />2) In this paragraph:<br /><br />"Interestingly, attempting to implement the nominal wage cut coordination it after the recession hits would involve adding NGDP comparable to the loss in NGDP from the sticky wages/unemployment coordination -- immediately bringing to mind fiscal stimulus sufficient to close the output gap as advocated by Keynesians."<br /><br />I assume the "it" in "coordination it after" is a typo?<br /><br />Also, you're saying that after the recession hits (which could involve a combination of scenarios 2, 3, and 4?), if we attempted to add more of scenario 2 (which I associate with a loss of entropy (and thus a loss of NGDP)), then this will require adding NGDP? Or are you saying that before 2, 3 or 4 happens, we could try to force only 2 to happen.<br /><br />I'm sorry, I'm not getting the sense of that paragraph (nor the one after). What's trying to implement scenario 2 have to do with fiscal stimulus? That's the NGDP we'd need to add to overpopulate the low wage states?<br /><br />3) In this sentence: "Likewise, 10% of the labor force having zero wage growth can accommodate a shock of 5% of NGDP (using NGDP ~ 2.1 NW)" I'm not sure how you calculate that.<br /><br />4) In equation (3) you approximate:<br /><br />-H(p) - p*log(n)<br /><br />as<br /><br />-p*log(n)<br /><br />Which implies<br /><br />|H(p)| << |p*log(n)|<br /><br />But using your 16% figure (p = 0.16)<br /><br />H(p) = 0.44 nats > |ΔSe/ke| for case 2 or 4 with p=0.3 and m=0.1*n<br /><br />This implies<br /><br />|ΔSe/ke| in case 3 >> |ΔSe/ke| in case 2 or 4 with the numbers you gave.<br /><br />Does that make sense that |ΔSe| in case 3 is so big? Or, since you say it amounts to 16% of the starting entropy, that means that with p=0.3 and m=0.1, entropy loss in case 2 and 4 is negligible in comparison, doesn't it?Tom Brownhttps://www.blogger.com/profile/17654184190478330946noreply@blogger.com