I need help from an economist?

Question

What do you think of Finn e. Kyldland's Quantitative Aggregate Theory (prize lecture)

http://nobelprize.org/nobel_prizes/economics/laureates/2004/kydland-slides.pdf

or

http://nobelprize.org/nobel_prizes/economics/laureates/2004/kydland-lecture.html

what is good and bad about it?

I dont have that much background in economics

Answer 1

It sounds like a technique used in the physical sciences to check theory for complex systems, such as climate models. You set up a computer simulation the best you can, and adjust parameters to match reality. Then you can change values of an underling variable, such as CO2 or solar intensity, and get an estimate of how much it can effect the system.
I think it is potentially very useful in economics because the real economy is dynamic and not in equilibrium has a multitude of feedback effects. The equilibrium solutions commonly used often do not capture reality, for example the divergence between empirical results and theory on the effect of minimum wage.
However care must be used in interpreting the results of such models. They are often taken to be "right" because the computer said so, or worthless because they have large errors. But knowing something is between 2 and 4 is not the same as knowing nothing.

Answer 2

Its sort of like abstract theoretical astrophysics - who cares? What is a shock? The language and the model shows a lack of historical and economical perspective -
more like what a linear programmer might write. What is the point of maximizing into the indefinite futre, and then, in order to solve the equation you look at the end steady state. Its complete foolishness. And more foolishness: they assume nice convex functions that have unique solutions so that what - everything is equal to zero at the margin. Does this tell you anything? Only that you know how to take derivatives of convex, twice differentiable equations.