It is important for investors to avoid “either/or” arguments regarding economics and finance; both are important, and both have valid uses and applications. In many respects, economics is “big picture” (how a country/region/market is doing) and concerned about public policy, while finance is more company/industry-specific and concerned about how companies and investors evaluate and price risk and return. Historically, economics has been more theoretical and finance more practical, but this has changed in the last 20 years.
It is interesting to note, though, that the two disciplines seem to be converging in some respects. It seems that academics in finance are trying to incorporate more and more theory into their work and appear more academically rigorous. At the same time, there is at least a movement within some schools of economics to lean more heavily on math and appear practical and applicable to everyday business and policy decision-making processes. (This decision-making tool integrates the idea that every decision has an impact on overall risk. See Multivariate Models: The Monte Carlo Analysis.)
At some fundamental level, there will always be a separation, but both are likely to remain very important to the economy and financial markets for some time to come.
Hence i named this Blog