Take an example of dissipative structure (See for example my presentation on Economy as aDissipative Structure, in my profile page). This is one of the most famous self organizing systems. AsPrigogine, the founder of this concept, put it, a dissipative structure is possible only in a state whichis far from equilibrium. Implication to economics is tremendous. Keynes started to analyzeinvoluntary unemployment. In the GE theory framework, this is impossible. Keynes himself andmany followers tried to formulate their ideas in the GE framework and failed. In my understandingthis is inevitable. Economies are far from equilibrium and we should construct a theory, somethingsimilar to dissipative structure. If not, unemployment (and many other important topics) cannot betreated appropriately. Of course, this requires a high leveled mathematical formulation. Prigogine'sdissipative structure is rather a simple system. Even though, he barely succeeded in formulating itmathematically. A modern economy is much more complicated, by the level of mutual interactionsand by the dimension and the variety of intervening agents.We must say that we have not succeeded in formulating economy as a dissipative structure or asany other self organizing systems. In this situation, it is understandable that many researchers tendto use GE framework in their studies. But it is time to pursue a different direction. When we stick tomathematical rigor, we may not leave GE framework. For a breakthrough of economics, the vision
sense) is important. Logic comes later. Those people who believe in mathematicsare thinking that mathematics is the on... [more]
You give a very interesting continued of discussion. CGE suffer from data availability. I am trying towork with partial equilibrium model of SMART in scope to estimate the effect of creation of FTAbetween my small country of RM and EU. Model of SMART has e few advantages: it can giveinformation at a highly desegregate level that can be useful for decision makers, it makes directestimations, supply elasticities are assumed to be infinite (=99). This assumption takes place thenimporter is small country, but exporter is a rest world. What do you think about it?
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