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A framework is not a model of a specific system, but a way of formulating and studying a variety of systems. Classical mechanics, quantum mechanics and statistical mechanics are all really frameworks. In and of themselves, none of these makes direct predictions that can be ‘tested’ or ‘falsified’. For example, in classical mechanics one can write down the Hamiltonian of a hypothetical system and study the solutions of this problem, even if such a system has no existence in nature and therefore, the solutions cannot be compared to any experiment. Within a framework we can make a model of a chosen physical system and try to experimentally test it. If the model has been designed with suitable hindsight, it usually works up to some level of accuracy. We then test it by working to greater accuracy or varying the experimental parameters. What if the predictions of a model disagree with an experimental observation? There are several different conclusions that may be drawn: (i) the model is incomplete and can be improved by tweaking it; (ii) the model is inappropriate to the problem at hand, or (iii) the framework within which the model was formulated is actually inadequate.

My question is I have seen many models in economics like Solow models ,Ramsey model, Black–Scholes model etc. Do we have particular frameworks in economics ??

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  • $\begingroup$ I'd say a reasonable candidate is the framework of choice. People have preferences, and make choices based on those preferences, and so human behavior is driven by the attempt to choose things we prefer. This itself is loose enough to be basically unfalsifiable (partially due to preferences being unobserved and formation being a degree of freedom). You can extend this to the more specific model of rational choice eg Ramsey, which is falsifiable and runs up against the evidence, for example in behavioral economics. $\endgroup$
    – NickCHK
    Commented Aug 10, 2023 at 19:28

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What you call framework would be probably more appropriately called paradigm in philosophy of science, following the terminology set up by Kuhn in his seminal work.

There are paradigms or frameworks in economics. In economics people often call them 'schools of thought' , and laymen usually associate these schools of thought with some political set of beliefs or ideologies, but actually if you look into scientific literature they are paradigms that are independent of political or ideological values.

Some non-exclusive list of examples includes (taken from Brue & Grant History of Economic Thought 8th ed):

  • Keynesian economics
  • Neoclassical economics
  • New-classicism
  • New Keynesian economics
  • Post-Keynesian economics

These can be considered analogies to frameworks such quantum mechanics, since they are not just a single theory but 'frameworks' or paradigm that leads to creation of theories and models.

For example the (old) Keynesian framework, that is nowadays no longer followed because it got replaced by the synthesis of Neoclassical and New Keynesian framework, emphasized modelling from top to bottom, and adaptive expectations. This sometimes leads to different models and theories than frameworks that emphasize bottom up modelling (i.e. starting from individual or household).

For example, the Ramsay's model you mention would be considered to be following neoclassical paradigm, because it starts with the behavior of representative household, and builds the economy from bottom up, besides other reasons.

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  • $\begingroup$ are they limiting case of each other and where they conceptually different from each other ?(Keynesian economics Neoclassical economics New-classicism New Keynesian economics Post-Keynesian economic) $\endgroup$
    – quanity
    Commented Aug 11, 2023 at 17:09
  • $\begingroup$ @quanity they differ on various points, you can see the source I cited for more full treatment. For example, Keynesian paradigm stressed adaptive expectations as the correct approach to modeling people’s guesses whereas neoclassical economics stressed rational expectations. Some schools (especially the heterodox ones) depart more radically. For example, Austrian school of economics is opposed to statistical analysis because they argue that economic analysis must be deductive not inductive for example, whereas many schools of thought accept both induction and deduction $\endgroup$
    – 1muflon1 ♦
    Commented Aug 11, 2023 at 20:32
  • $\begingroup$ Could you explain me more about frameworks(may be how to come up with new one) and how to incorporate models into it $\endgroup$
    – quanity
    Commented Aug 22, 2023 at 8:42
  • $\begingroup$ @quanity you come up with it the same way as Einstein came up with paradigm of Relativity that replaced paradigm of Newtonian Mechanics. You have to find some systematically important theory (i.e. theory that can be used to derive further theories and testable hypothesis (e.g. RCT, adaptive expectations, rational expectations) that has higher explanatory power than pre-existing theory. For example, rational expectations replaced adaptive expectations in macro because they could explain more stuff than just adaptive expectations, and in near future perhaps they will get replaced by $\endgroup$
    – 1muflon1 ♦
    Commented Aug 22, 2023 at 9:47
  • $\begingroup$ quasi rational expectations, which adds some behavioral component to rational expectations (e.g. like the work of Paul DeGrauwe) since that seems to explain some autocorrelation in macro series that was difficult for pure rational expectations to explain. However, no theory will every be perfect you are just zooming in on the true mechanism closer and closer, so there will for sure be something that quasi rational expectations won't explain. Once you find something like this you need to rigorously describe the mechanism so everyone can see the logic of it (i.e. best if you do it mathematically $\endgroup$
    – 1muflon1 ♦
    Commented Aug 22, 2023 at 9:49

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