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Real-World Economics Review

But more of what?

      Source: Nitzan and Bichler, Capital as Power In 2005, Microsoft’s market value was 2,583% greater than that of General Motors. Mainstream economists would say that Microsoft therefore had more property than GM. But more of what? Nitzan and Bichler point out that when we look under the hood of market value, there’s nothing ‘real’ to back it up. Microsoft, for instance, has only 18% as many employees as GM. And it owns only 3% as much equipment (in dollar terms). So is this a...

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Lies, damned lies, and statistics

from Asad Zaman From Ancient Greece to the late 19th century, rhetoric played a central role in Western education in training orators, lawyers, counsellors, historians, statesmen, and poets. However the rise of empiricist and positivist thinking marginalized the role of rhetoric in 20th Century university education. Julie Reuben in “The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality” writes about this change as follows: “In the late...

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Econometrics — a matter of BELIEF and FAITH

from Lars Syll Everybody who takes regression analysis course, studies the assumptions of regression model. But nobody knows why, because after reading about the axioms, they are rarely mentioned. But the assumptions are important, because if any one assumption is wrong, the regression is not valid, and the interpretations can be completely wrong. In order to have a valid regression model, you must have right regressors, the right functional form, all the regressors must be exogenous,...

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Challenges of complexity economics

from Joachim H. Spangenberg and Lia Polotzek and WEA Commentaries  In recent WEA Commentaries, the issue of complexity theory and its implications for economics have rightfully gained some prominence. However, while the authors picked up some relevant points, the issue deserves a more comprehensive treatment in new economics, beyond mobilising some arguments to bolster ongoing debates. It should be recognised instead that complexity requires a different way of thinking, and of asking...

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We shouldn’t have to beg Mark Zuckerberg to respect democracy

from Dean Baker Last month George Soros had a New York Times column arguing that Mark Zuckerberg should not be running Facebook. (Does the NYT reserve space on its opinion page for billionaires?) The gist of Soros’ piece is that Zuckerberg has made a deal with Trump. He will allow all manner of outrageous lies to be spread on Facebook to benefit Trump’s re-election campaign. In exchange, Trump will defend Zuckerberg from efforts to regulate Facebook. Soros is of course right. Zuckerberg...

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The transnational corporation and economics

from Grazia Ietto-Gillies and WEA Commentaries  There is now a very large body of literature on theories of the transnational corporation (TNC) and the subject has reached a suitably mature stage to have a history of economic thought about it.2 The first theory of the ‘International Firm and its Operations’ was developed in 1960 by Steven Hymer, a Canadian student working for a doctorate under the supervision of Charles Kindleberger at the Massachusetts Institute of Technology. A British...

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Econometrics and the Axiom of Omniscience

from Lars Syll Most work in econometrics and regression analysis is — still — made on the assumption that the researcher has a theoretical model that is ‘true.’ Based on this belief of having a correct specification for an econometric model or running a regression, one proceeds as if the only problem remaining to solve have to do with measurement and observation. When things sound to good to be true, they usually aren’t. And that goes for econometric wet dreams too. The snag is, of...

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Failure of Turing’s conjecture

from Asad Zaman Note that this is a very POSITIVIST idea — if the surface appearances match, that is all that matters.         I quote a passage from Pearl: The Book of Why, which provides a gentle introduction to the newly developed field (largely by him) of causal inference via path diagrams: In 1950, Alan Turing asked what it would mean for a computer to think like a human. He suggested a practical test, which he called “the imitation game,” but every AI researcher since then has...

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new issue of WEA Commentaries

WEA Commentaries Volume 10, Issue 1  –    February 2020download whole issue Simpson’s Paradox           – Asad ZamanHow International Corporations Could Be Taxed and Why the US is Working to Prevent It          – Norbert HäringThe Transnational Corporation and Economics           – Grazia Ietto- GilliesChallenges of Complexity Economics          – Joachim H. Spangenberg and Lia PolotzekWEA Commentaries Appoints New Co-EditorsWEA contact details Please click here to support the WEA...

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