Lars P. Syll

Krugman and Mankiw on loanable funds — so wrong, so wrong A couple of years ago — in a debate with James Galbraith and Willem Buiter — Paul Krugman made it perfectly clear that he was a strong believer of the ‘loanable funds’ theory. Unfortunately, this is not an exception among ‘New Keynesian’ economists. Neglecting anything resembling a real-world finance system, Greg Mankiw — in his intermediate textbook Macroeconomics — more or less equates finance to...

The loanable funds hoax The loanable funds theory is in many regards nothing but an approach where the ruling rate of interest in society is — pure and simple — conceived as nothing else than the price of loans or credits set by banks and determined by supply and demand — as Bertil Ohlin put it — “in the same way as the price of eggs and strawberries on a village market.” It’s a beautiful fairy tale, but the problem is that banks are not barter institutions...

DSGE ​​models — worse than useless The main point of this book is to serve as an antidote to the intellectual poison of the erroneous’veil of ignorance’ aphorism … Accordingly [it] rejects as erroneous the standard macroeconomic model, whose assumptions have been built into DSGE models. Among other conceptual absurdities, such as the assumption that economic actors consist of identical omniscient ‘rational agents’ all of whom have perfect information about...

If bonus or “incentive pay” schemes work so well for senior executives and bankers, why does everyone not get them? The conventional answer is that a bonus scheme or incentive plan will indeed encourage the recipients to make more money for the shareholders or clients on whose behalf they act … A classic paper on the “principal-agent problem” … by Bengt Holmstrom and Paul Milgrom pointed out that the conventional answer makes the mistake of assuming that jobs are simple and...

What is love (personal)  [embedded content]  [embedded content] div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

How rigged markets make the rich richer Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten — which means they also have no...

Former Swedish minister of finance showing off … Anders Borg, the former minister of finance in Sweden, shocked the guests at a party last weekend in the archipelago of Stockholm. According to sources, Borg exposed his penis, threw sexist slurs at female guests and threatened the host. ”I feel a lot of disappointment and regret my behaviour”, Borg wrote in a Facebook post. A party in the archipelago of Stockholm last Friday got out of hand. One of the...

 [embedded content] Evert och Sven-Bertil i all ära, men för mig är det Tottes version som gäller! div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

The Venice of the North (personal) For the third time in a year yours truly will make a guest appearance in Hamburg — The Venice of the North. Regular blogging will be resumed next weekend. Tschüss! [embedded content] div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

Ways in which economists overbid their cards  [embedded content] div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements