Saturday, April 16, 2011
Ch. 17 A Short History of the Cost of Lighting pg. 327-326
Warsh uses this section to introduce the significance of this chapter. He begins by explaining that in physics, Einstein’s E=MC squared wasn’t universally accepted until the first nuclear fission bomb. Since there are not many “real world” experiments in economics, many theories are not proven or agreed upon. In 1993, however, there was such an experiment, which provided hard data that settled the Solow and Romer growth model debate. There were many unanswered questions when it came to this debate so its settlement was comparable to a nuclear explosion.
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A for Mitch.
ReplyDeleteEconomics gets 1) looked down upon by "hard" scientists, but 2) is more difficult to do, because we can't do many experiments.
Instead, we need to do "thought experiments". We look for natural situations which allow us to do useful comparisons. Nordhaus hit upon a big one.