Lars P. Syll

This is not new to most of you of course. You are already steeped in McCloskey’s Rhetoric. Or you ought to be. After all economists are simply telling stories about the economy. Sometimes we are taken in. Sometimes we are not. Unfortunately McCloskey herself gets a little too caught up in her stories. As in her explanation as to how she can be both a feminist and a free market economist: “The market is the great liberator of women; it has not been the state, which is after all...

Wann Wissenschaft wahr ist  [embedded content]

Reexamining the economic costs of debt In recent months a new approach to national government budgets, deficits, and debts—Modern Money Theory (MMT)—has been the subject of discussion and controversy. A great deal of misunderstanding of its main tenets has led to declarations by many policymakers (including Federal Reserve Chairman Jerome Powell and Japan’s Prime Minister Shinzō Abe) that it is crazy and even dangerous. Supposedly, it calls on central banks...

Tobin tax — could it work? Eigentlich müsste es die Finanztransaktionssteuer – zumindest in Europa – längst geben: Das EU-Parlament stimmte zweimal für eine solche Steuer, und in Umfragen wünscht sie sich eine Mehrheit der Befragten. Die erste Idee dazu hatte John Maynard Keynes im Jahr 1936; populär machte sie in den Siebzigerjahren der Nobelpreisträger James Tobin und in den Neunzigerjahren das Bündnis Attac. Nach der Finanzkrise galt die Steuer im...

Why economists failed to predict the financial crisis  [embedded content]

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Econometrics — fictions of extremely limited value It is often said that the error term in a regression equation represents the effect of the variables that were omitted from the equation. This is unsatisfactory … There is no easy way out of the difficulty. The conventional interpretation for error terms needs to be reconsidered. At a minimum, something like this would need to be said: The error term represents the combined effect of the omitted variables,...

The origins of MMT Many mainstream economists seem to think the idea behind Modern Monetary Theory is new and originates from economic cranks. New? Cranks? How about reading one of the great founders of neoclassical economics – Knut Wicksell. This is what Wicksell wrote in 1898 on ‘pure credit systems’ in Interest and Prices (Geldzins und Güterpreise), 1936 (1898), p. 68f: It is possible to go even further. There is no real need for any money at all if a...

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