tag:blogger.com,1999:blog-6823896801570193056.post5840690152048354729..comments2023-11-28T13:09:47.691+04:00Comments on Dr Zoom: * The equilibrium exchange rate is a chimeraUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6823896801570193056.post-59077731096257290832012-03-21T09:16:53.426+04:002012-03-21T09:16:53.426+04:00Agree 1000%!!!!Agree 1000%!!!!Eric Ngnoreply@blogger.comtag:blogger.com,1999:blog-6823896801570193056.post-73588822634476800312012-03-20T08:22:35.667+04:002012-03-20T08:22:35.667+04:00I think the Austrian economist Fritz Machlup said ...I think the Austrian economist Fritz Machlup said it best in a 1958 article in the Economic Journal, where he pointed out that "equilibrium as a tool for theoretical analysis is not an operational concept." While we can assume that things such as technology and industrial organization "remain unchanged for the duration of a particular process in an abstract model," he wrote, "it is quite another thing to simulate such stability for practical purposes or to make it an integral part of a concept designed for applied analysis." He goes on to argue that confusing an equilibrium exchange rate calculated by a model with a rate that might be expected to produce an equilibrium in practice is an example of Whitehead's "fallacy of misplaced concreteness" --the error of mistaking an "abstract" representation of the real world for "concrete" reality itself.<br /><br />Funny how fifty years later people still don't understand this point!Mark A. DeWeavernoreply@blogger.com