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Why Economic Theories and Policies Fail? Unnoticed Variables and Overlooked Economics

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  • Olkhov, Victor
Abstract
Accuracy of economic theories and efficiency of economic policy strictly depend on the choice of the economic variables and processes mostly liable for description of economic reality. That states the general problem of assessment of any possible economic variables and processes chargeable for economic evolution. We show that economic variables and processes described by current economic theories constitute only a negligible fraction of factors responsible for economic dynamics. We consider numerous unnoted economic variables and overlooked economic processes those determine the states and predictions of the real economics. We regard collective economic variables, collective transactions and expectations, mean risks of economic variables and transactions, collective velocities and flows of economic variables, transactions and expectations as overlooked factors of economic evolution. We introduce market-based probability of the asset price and consider unnoticed influence of market stochasticity on randomness of macroeconomic variables. We introduce economic domain composed by continuous numeric risk grades and outline that the bounds of the economic domain result in unnoticed inherent cyclical motion of collective variables, transactions and expectations those are responsible for observed business cycles. Our treatment of unnoticed and overlooked factors of theoretical economics and policy decisions preserves a wide field of studies for many decades for academic researchers, economic authorities and high-level politicians.

Suggested Citation

  • Olkhov, Victor, 2022. "Why Economic Theories and Policies Fail? Unnoticed Variables and Overlooked Economics," MPRA Paper 114187, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114187
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    References listed on IDEAS

    as
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    Cited by:

    1. Olkhov, Victor, 2023. "Economic complexity limits accuracy of price probability predictions by gaussian distributions," MPRA Paper 118373, University Library of Munich, Germany.
    2. Olkhov, Victor, 2023. "Economic Theory as Successive Approximations of Statistical Moments," MPRA Paper 118722, University Library of Munich, Germany.

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    More about this item

    Keywords

    theoretical economics; macroeconomic variables; market trade; expectations; economic policy;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • D0 - Microeconomics - - General
    • E0 - Macroeconomics and Monetary Economics - - General
    • F0 - International Economics - - General
    • G0 - Financial Economics - - General
    • K0 - Law and Economics - - General

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