Mike Yates mikey+ at
Wed Sep 23 12:07:21 PDT 1998

"Can someone find me an economist who knows what is going on?"

--Ali Atlas, Indonesia' foreign minister

This quote begins an excellent article by David McNally in this month's "Monthly Review": "Globalization on Trial: Crisis and Class Struggle in East Asia." Very sobering and inspiring reading. Also, Louis Proyect recommended an article on the world economy by Walter Russell Mead in this month's "Esquire." Short on the inspiring but very, very sobering, especially coming from someone from the establishment.

In the meantime, here is a description of an upcoming seminar in Macroeconomics at the Univ. of Pittsburgh:


We introduce adaptive learning behavior into a general equilibrium life cycle economy with capital accumulation. Agents form forecasts of the rate of return to capital assets using least squares autoregressions on past data. We show that, in contrast to the perfect foresight dynamics, the dynamical system under learning possesses equilibria characterized by persistent excess volatility in returns to capital. We explore a quantitative case for these learning equilibria. We use an evolutionary search algorithm to calibrate a version of the system under learning and show that this system can generate data that matches some features of the time series data for U.S. stock returns and per capital consumption. We argue that this finding provides support for the hypothesis that the observed excess volatility of asset returns can be explained by changes in investor expectations against a background of relatively small changes in fundamental factors.

Michael Yates

More information about the lbo-talk mailing list