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From:
[log in to unmask] (Barkley Rosser)
Date:
Wed May 23 07:46:08 2007
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While Pat ruled it out for reasons unexplained, most economists have
treated policy changes, especially those of a discrete and unexpected
variety (either arising in response to unexpected changes in exogenous
events or changes in the composition and orientation of the policymakers)
as exogenous in macroeconomics.

Also, while asset bubbles can be viewed as endogenously arising from
an economy, what pricks a bubble is usually some exogenous shock or
event.   However, the multiplier effects (if Pat is allowing such wicked
things to exist) from the collapse of a bubble should probably be viewed
as endogenous.

Of course this whole question of exogeneity versus endogeneity has a
certain arbitrary and artificial character to it.  In formal terms it simply
depends on how one defines the boundary of the system in question.
What is generated by the system is endogenous; what comes from outside
of it is exogenous.  But what is inside or outside is arbitrarily defined 
ulitmately.

The complexity economist William (Buz) Brock has infamously quipped
that the only truly exogenous force in the economy is the sun, and he is
not referring specifically to Jevonsian theories of the business cycle. 
OTOH,
I am not sure that he is the originator of that quote.

Barkley Rosser

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