HAVE YOU EVER thought some of us use too much jargon - or to put it another way, obscure or pretentious language - to explain our fields of interest?
I just received the 1993 Economic Review of the Federal Reserve Bank of San Francisco and perused the lead article, "Adaptive Forecasts, Hysteresis, and Endogenous Fluctuations," by George W. Evans and Seppo Honkapohja, both economics professors. When I read the synopsis of the article, I was flabbergasted.Here it is:
This paper considers fluctuations and policy in an economic model with multiple steady states due to a production externality. In the absence of policy changes, the driving forces generating fluctuations are exogenous random productivity shocks. However, because there are multiple steady states, large productivity shocks can shift the economy between high- and low-level equilibria, providing an additional endogenous source of fluctuations. The scope for macroeconomic policy is large since changes in policy can also shift the economy between equilibria. In this setting macroeconomic policy exhibits hysteresis (irreversibilities) and threshold effects and can be used to eliminate endogenous fluctuations.
That is a summary of the more detailed article to follow, and I confess, I have no idea what it is saying. But considering myself reasonably well-educated, I gave it everything I had. I grabbed a dictionary and attempted to translate it to layman's language. Here is my attempt:
In an economic system that is ordinarily designed to be pretty stable, there can be uncertain policy shifts brought on by outside forces. If this happens, policy must be changed. If it is not, the forces causing those shifts will increase, production will drop dramatically, and no one will be able to figure out why. The fact is, the system is still pretty stable, yet drops in productivity can foul up the economy so badly that it will be impossible to keep it on an even keel. But don't forget that forces from within the system will foul it up too. The entire economic system may fall apart because these policy shifts will ruin the balance. If it isn't fixed before it reaches its outer limits, an entire economic system can be permanently retarded. But don't lose heart. If caught in time, policy shifts from within the system can be corrected.
When I finished my own interpretation, I realized I had failed, because it still didn't make any sense. At least to me.
So I called Judith Goff, the editor of Economic Review, and asked her if she could please interpret it for me.
Caught a little off-guard, she said the article was "highly theoretical," and written by visiting scholars who were "using a model that has little to do with real life." She admitted to knowing little about the article but said she would try to find someone who could give me an interpretation in layman's language.
Later, she called me back and gave me the address in Edinburgh, Scotland, of George Evans, one of the authors of the article. I kid you not - I wrote him a letter, requesting he provide an interpretation in layman's language. Unfortunately, he has failed to respond.
Maybe he couldn't understand my letter.
I would be excited if any reader of this column could write a simple but convincing layman's interpretation of the synopsis printed at the beginning of this column - one the rest of us can understand.
If you can, I will print it in the column.
In the meantime, how about if we just avoid the use of jargon?