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- Title
THE THEORY OF INTERPRETIVE FRAMEWORKS: CETERIS NON PARIBUS.
- Authors
MUELLER, PAUL D.
- Abstract
Although most economists model individual behavior using comparative statics, that approach ignores several important aspects of human action. How do we account for people having opposite responses to the same price change? How do changes in the market or other institutions affect what people believe and how they act? The caveat of ceteris paribus gives economists the ability to bypass problems of complex individual cognition and motivations. This paper examines how people make choices outside the assumption of "all else equal." The issue is often one of asymmetric interpretation, not asymmetric information. Many phenomena defy the logic of comparative statics because people have differing interpretive frameworks. An interpretive framework method of analysis, therefore, will give better explanations of emergent economic outcomes. For example, interpretive frameworks offer better analysis of the effects of recent Federal Reserve policy than comparative statics do. The method relies upon the costs and benefits of gaining knowledge, institutional change, and recent historical context.
- Subjects
ECONOMIC models; PHENOMENOLOGICAL sociology; ECONOMISTS; MONETARY theory; BOARD of Governors of the Federal Reserve System (U.S.)
- Publication
Quarterly Journal of Austrian Economics, 2013, Vol 16, Issue 3, p331
- ISSN
1098-3708
- Publication type
Article