Real-World Economics Review

from Lars Syll Public debt is normally — as emphasized again and again by MMT economists — nothing to fear, especially if it is financed within the country itself (but even foreign loans can be beneficent for the economy if invested in the right way). Some members of society hold bonds and earn interest on them, while others pay taxes that ultimately pay the interest on the debt. The debt is not a net burden for society as a whole since the debt ‘cancels’ itself out between the two...

from David Ruccio The number of initial unemployment claims for unemployment compensation in the United States once again surpassed one million—for the 21st time in the past 22 weeks—signaling a continuation of the Pandemic Depression. This morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 1 million American workers filed initial claims for unemployment compensation. While initial unemployment claims remain well below the recent peak...

from Lars Syll The rational expectations hypothesis presupposes — basically for reasons of consistency — that agents have complete knowledge of all of the relevant probability distribution functions. And when trying to incorporate learning in these models — trying to take the heat of some off the criticism launched against it up to date — it is always a very restricted kind of learning that is considered. A learning where truly unanticipated, surprising, new things never take place, but...

In today's episode, Debi Pennington interviews Dean Baker with Lake Havasu City Properties.

In today's episode, Debi Pennington interviews Dean Baker with Lake Havasu City Properties.

from Blair Fix Prices are caused by supply and demand, right? So say neoclassical economists. If you’ve bought their fairy tale, I recommend you watch this video. In it, Jonathan Nitzan demolishes the neoclassical theory of prices. It’s a master lesson in how to deconstruct a theory. Here’s the 100-word summary. Nitzan shows that the neoclassical theory of prices fails in six ways: Neoclassical theory hinges on utility that cannot be measured It relies on demand and supply curves...

from Lars Syll A view yours truly often encounters when debating MMT is that there is an inflationary bias in MMT and that its framework ignores expectations. Hmm … It is extremely difficult to recognize that description. Given its roots in the writings of Keynes, Lerner, and Minsky, it is, to say the least, rather amazing to attribute those views to MMT. Let me just quote one source to show how ill-founded the critique is on this issue: MMT recommends a different approach to the federal...

The 2008 financial crisis, the rise of Trumpism and the other populist movements which have followed in their wake have grown out of the frustrations of those hurt by the economic policies advocated by conventional economists for generations. Despite this, textbooks continue to praise conventional policies such as deregulation and hyperglobalization. This textbook demonstrates how misleading it can be to apply oversimplified models of perfect competition to the real world. The math works...