Monday, October 11, 2004

Me and economics

The last in this year's series of Nobel Prizes, Economics, has been awarded to Finn E. Kydland and Edward C. Prescott, two more guys I've never heard of.

The Laureates showed how such effects of expectations about future economic policy can give rise to a time consistency problem. If economic policymakers lack the ability to commit in advance to a specific decision rule, they will often not implement the most desirable policy later on.


Now, I know they don't mean me, and they're referring to central banks, but I enjoy hearing the pros tell me if you set a spending plan and a budget, you should stick to it.

I realize they're not being prescriptive, just describing why things go wrong. But I like the implications: Do not waiver. Be strong. Stick to your guns. Ignore the little blips, and all your financial worries will eventually resolve themselves.
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