So both the (inverted) yield curve and the Sahm rule indicate a recession. This together with two months of slower employment creation, and the slightly higher unemployment rate, has many wondering whether the economy will crash soon. I discussed before — a while ago, before the pandemic recession, that had nothing to do with the yield curve — why an inverted yield curve doesn’t necessarily mean a forthcoming recession. The Sahm rule, like the inverted yield curve has an impressive track record. It suggests that if three month moving average of the rate of unemployment rises 0.5 or more above the minimum of the same averages for the previous twelve months a recession is under way. Figure below, although scale doesn’t help, shows that we are at 0.57 for last August [ominous music

Spaghetti economics: Shootout at Harvard Square There were two letters about the poorly written (not the English, always impeccable, contrasting to my spaghetti English, which is always slightly off, like the Westerns) piece that The Economist had on Donald Harris. One by Robert Blecker, Steve Fazzari and Peter Ho, setting the record straight on the breadth and depth of Harris’ contributions to economics. On this, they echo what the Post said about Harris’ policy advice in his native Jamaica. The subtitle of the Post piece said: "An unconventional economist at Stanford, Donald J. Harris pushed strikingly nonideological economic solutions to the nation of his birth." Harris was (and still is, from what I can assume) a reasonable man, both as a scholar concerned with knowledge, and as a

I start teaching this week (tomorrow). One of the things we are encouraged to discuss with students is the issue of academic misconduct. One of those problems that always existed, and not just among students, and it is hard to say whether things are better or worse than before, even though everyone thinks it has worsened. Certainly AI has made things even more complicated. At least in my classes, AI has limited impact, since it is an average of what is out there, and that is conventional economics.Economics, as a field, is also not particularly good, with fewer retractions than other fields. Carmen Reinhart and Ken Rogoff was never retracted, even though the mistake was acknowledged. More recently Francesca Gino and Dan Ariely were caught, essentially, fabricating data, and putting in

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My colleague and friend Geoff Schneider on teaching and pluralism in economics.  He was the director of the Teaching & Learning Center at Bucknell, when I arrived here, and I learned quite a bit from him. At any rate, worth watching it.

[embedded content] Carlos Pinkusfeld interviews Ramaa Vausdevan (Colorado State University) and Franklin Serrano (Federal University of Rio de Janeiro) to discuss the complex challenges of monetary policy in the international arena. Exploring issues such as financial globalization, the influence of large economies on the global monetary system, and the implications for developing countries, the experts offer important perspectives on the role of central banks and the effectiveness of monetary policies in the globalized economy. This is an essential debate for those who want to understand the direction of the world economy in a context of dynamic changes and growing uncertainty.

Original thoughts  The 30 year anniversary of the stabilization plan that controlled high inflation in Brazil, the so-called Real Plan, just passed earlier in July. I wanted to write something about it, but it got buried with other things. Here just some very short reflections. There was a huge coverage in the media and several new books and papers written about it, including by several of the actual participants of the stabilization plan. If I have to leave one impression beyond the problems of all the mythology making, and the self-congratulatory mood of the whole thing, is that most of the analysts, including the economists that designed the plan, unlearned what they knew back then. People start defending some ideas because they are convenient, and next thing they end up believing

By Sergio CesarattoA debate has developed in Europe (on Vox.eu and elsewhere) on the fiscal costs related to the interest payments that central banks in the eurozone are bestowing on commercial banks, a result of the way monetary policy is currently conducted. The implementation of monetary policy currently revolves around the ECB’s direct control of the interest rate paid on an abundant excess of bank reserves (relative to mandatory reserve requirements) (see Cesaratto 2020, chapter 7). This excess is the result of past quantitative easing (QE) operations whereby the eurozone’s national central banks (NCBs) bought government and corporate bonds by issuing reserves (liquidity). At the ECB’s current target rate of 3.75 per cent, banks are collecting considerable sums, more than 118 billion

The election in Venezuela is always contentious. I’ve written quite a bit about it over the years (see everything here; on the previous presidential election see here). Some have decided already that is a fraud, and sustain that the previous ones were also, although that is far from clear, and most likely Maduro (let alone Chávez did win all the previous elections). This time around things are less clear. First of all, the opposition seemed more unified, even with the disqualification of Maria Corina Machado, a mistake by Maduro, both from a general preoccupation with democracy, and also, because the actual opposition candidate, Edmundo González Urrutia, might have been more effective.In my view, the only way to know what happened one would have to check the data, and that is still not

The big question in the case of Argentina, as always is when it will explode. If the current developments are an indicator of anything, it should be sooner rather than later. Note that the fundamental problems regarding the possible crisis and default are associated to the external debt in dollars (one has to repeat this all the time). It does not mean that there weren’t other problems with the Argentine economy, but the domestic issues do NOT lead to a default (yes, that means the fiscal problems).In spite of all the criticism of the Fernández government, and some of that is certainly correct (but not the fact that they didn’t do fiscal adjustment or not enough industrial policy; it’s the reserves idiot!), the increase in debt happened all during the Macri administration (2015-2019).

I blink, you lose! Will Rogers supposedly said that he was not a member of any organized political party. He completed that noting he was a Democrat. That feeling is alive and well among Dems. The confusion caused by Biden’s withdrawal seems to have led to many peculiar views among pundits and public intellectuals. Two typical reactions are the ones that are certain that Biden would have lost, and now with Kamala the election is in the bag, and the ones that suggest that the lefties in the party were wrong in supporting Biden. It’s true that Biden was trailing in the polls, but it is unclear that he had already lost (although the chances were high), and even less that Harris will win for sure. I hope she does, to be clear, given the alternative.But it seems only reasonable to assume that

Xxx A panel about Maria da Conceição Tavares with talks by three of her disciples and students, Ricardo Bielschowsky, Carlos Medeiros and Franklin Serrano.

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Podcast with about the never ending crisis in Argentina with Fabián Amico, and myself and interview by Carlos Pinkusfeld Bastos and Caio Bellandi from the Lado B do Rio Revista, and sponsored by the Centro Celso Furtado (Carlos is the director). In Portuguese (but fine if you speak Spanish or at least Portuñol).

The debate between Biden and Trump is on everybody’s mind. And for good reason, the future of the global economy, and the well being of the planet are always at stake in American elections. I, of course, will restrict my brief comments here to the economy, and what the alternatives might entail. But the analysis of the impacts of both programs, if one can talk of programs per se, is very poor, to say the least.Broadly speaking there has been increasing agreement on a tougher policy with respect to China, what Jake Sullivan referred to as a New Washington Consensus. Many see this as a revival of industrial policy. This is of course suggests some continuity with the Trump policies, even though I would suggest that only with Biden there was a clear plan to re-shore manufacturing jobs,

Robin Brooks, previously the chief economist at from the Institute of International Finance (IFF), and now at Brookings, suggests Brazil needs austerity, and, here is the punch line, that would promote growth (laugh track here).The notion that it is the fiscal balances that determine the interest rate on public debt, and that fiscal deficits and high debt must imply high interest rates has no correlation with reality. Imagine the rate of interest that Japan would have if that was correct. In the case of Brazil the higher interest rates are entirely associated to Central Bank decisions.In fact, if one looks at the correlation between interest rate and the size of public debt as a share of GDP, the correlation is weak, statistically insignificant, and negative. That is, higher debt is

ROKE continues to improve it’s ranking (based on the Clarivate Impact Factor measure) among heterodox journals. An old discussion about that here. You can see how much we went up since the last time I posted about this here and here.

Paul (I’m next to him) and the Brazilians at the UMKC, PK Conference in 2002Paul has passed away a few days ago. He wasn’t in good shape for a while, and this was expected. He lived a long and productive life. I wasn’t personally close to him, even though I met him several times from the mid-1990s onward. He went to two conferences I co-organized at the Federal University in Rio, always with Louise, which was a central figure of Post Keynesian (PK) life, and basically run the Journal of Post Keynesian Economics (JPKE) for him. He was more effective as an institutional organizer, and as an observer of economic reality (and his main book was called Money and the Real World) than in his theoretical endeavors. His views on Keynes stayed close to the flawed discussion of the Principle of

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Our panel at the UNICAMP conference last Thursday, with Mark Schwartz, and Andrés Arauz.

Almost everything that’s wrong with conventional views on fiscal policy is on display in this column (well written and clear) by one of the key journalists from Folha de São Paulo, Vinicius Torres Freire. He suggests that the current fiscal adjustment is not credible. For him, this is a confidence crisis, caused by Lula’s insistence on attacking the central bank policy and his lukewarm support for the adjustment. Why the adjustment is necessary, he never asks. It’s evident, for any educated or serious person, one must conclude. Debt is too high, spending cannot go on forever. These are truisms, and if repeated long enough they do seem right.The problem of course is that the Brazilian fiscal problems (note that it is unclear why deficits that are not particularly large, by historical or

The media and a good chunk of the policy wonks are surprised that Biden does not get the deserved recognition for the relatively good state of the US economy, and that as a result he is suffering in the polls. There are two separate, but interrelated, causes for that. The most obvious can be defined in one word, inflation. The second, is related to the fact that, even though the recovery from the pandemic was fast, the economic situation for most working class people has not been great for a long while. In other words, the recovery from the pandemic brought back a situation with which most of the people at the bottom of the income distribution were struggling. I’ll deal with inflation, which is the one that everybody is discussing in the news.Regarding inflation, two things have been

(1930-2024)Maria da Conceição Tavares passed away last Sunday. She was among the key thinkers of the Latin American Structuralist School, often associated with the Economic Commission for Latin America (ECLA). In her case, Anibal Pinto, who was her teacher in a ECLA course in the early 1960s, and Celso Furtado, who was never formally her teacher, were her major influences. She was instrumental in introducing Kalecki in Brazilian academic circles, and in her debate with Furtado on the possibilities of growth in the late 1960s (Furtado defended a stagnationist thesis) she started to move in the direction of demand-led growth theories. She also noted in the mid-1980s that the diplomacy of the dollar (and the end of Bretton Woods) essentially implied that American Hegemony was stronger than

(1924-2023)Robert Solow, who was a member of the editorial board of the Review of Keynesian Economics (ROKE), died in December 2023. Solow holds a special place in the history of macroeconomics, and he was a strong supporter of the ROKE project. In this brief note I want to honor Solow’s contribution to economics and to place on record his contribution to ROKE.Histories of macroeconomics tend to emphasize the disputes between Keynesians and Monetarists, at least up to the 1970s. Those disputes very often pitted Milton Friedman against either Paul Samuelson, with whom he alternated in a famous Newsweek column, or James Tobin who was, perhaps, the most prominent of Friedman’s opponents when the Journal of Political Economy edited a debate with Friedman’s critics. In the broader cultural

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My talk at the IDEAS/PERI conference a few weeks ago. As I said there, I hate to be the optimist in the room, but I’m a bit more skeptical about the risks of a generalized sovereign debt crisis in the Global South. The two papers I cite are these (in their PERI Working Paper versions) two (one and two).

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Esteban Pérez’s talk at the University of Chile, about Raúl Prebisch, about whom we have written several papers. This is in Spanish.

Tom Palley reply to response about his paper on Keynes lack of understanding of class conflict. In many ways, this is how Tom discusses Keynes lack of understanding of old classical political economy. Tom is correct in pointing out that:"Kalecki (1933 [1971]) began the process of incorporating conflict into the Keynesian paradigm, but there is much more to be done regarding recognizing conflicts’ implications for economic theory and recognizing the multiple fora in which it appears."Of course, Kalecki was building on Marx and classical political economy. Read the full reply here.

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A seminar organized by the Association for Heterodox Economics with myself, Ramiro Álvarez and the Argentine Senator Carolina Moisés.

There was a problem during the 7th Godley-Tobin Lecture. I disconnected everyone when I was trying to fix a problem with Professor Stirati’s presentation, and I didn’t notice until much later. The worst part is that the recording was lost. I’m posting here the PowerPoint presentation for those interested. We will also post the link for the published version of the lecture, which will be open also on the website of the Review of Keynesian Economics (ROKE).

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My interview with Rick Smith on the Heritage Foundation Index and its tenuous relationship with anything that can be called freedom, economic or otherwise.

April 16th 2024 10am New York / 3pm LondonSince the beginning of the military dictatorship in March 1976, pro-market visions were imposed by violating human rights in the darkest period of Argentina’s history and occupied political thought for more than four decades, even in democracy. Although these ideas had a brief pause in the period 2003-2015, they are still in force and now more than ever under the new administration of Mr. Milei. Mr. Milei has imposed a huge depreciation of the national currency, reducing the purchasing power of workers, and an adjustment of public spending by dismissing more than 50,000 public employees under the slogan of efficiency. Inflation has reached 200% per year and poverty has reached 60% under his administration, which has been in place for less than 5

The 7th Godley-Tobin Lecture in a bit more than a week. For those not in Boston registration here.

[embedded content]My brief interview at the Rick Smith Show on the likelihood of a recession this year, and the unfounded fears about public debt in the United States.