Real-World Economics Review

from Asad Zaman

from Lars Syll With a few notable exceptions, such as the planetary systems, our most beautiful and exact applications of the laws of physics are all within the entirely artificial and precisely constrained environment of the modern laboratory … Haavelmo remarks that physicists are very clever. They confine their predictions to the outcomes of their experiments. They do not try to predict the course of a rock in the mountains and trace the development of the avalanche. It is only the...

from Jamie Morgan Part 2 of six part Pandemic aware economies, public health business models and (im)possible futures As we are now finding out in the UK, what happens first depends on data, treatments and vaccines. Post-lockdown societies and economies require trust in social interactions and confidence that social spaces are safe. This has always been relative, rather than absolute, but in the wealthy world the need for trust and confidence has newly been impressed on our awareness. If...

from Jamie Morgan So here we are, months into the Covid-19 pandemic and starting to feel our way through it. It is extraordinary to think that it took considerably less than a Walking Dead scenario to bring the world to a standstill. The future we now occupy has come as quite a shock. A ‘new world’ with its new language and habits of social distancing, lockdown, phased releases and perpetual background sense of dread and foreboding. A world in which friends and family are now fraternal...

from David Ruccio I’ve often read that people who wash their hands in innocence do so in blood-stained basins. And their hands bear the traces.— Bertolt Brecht, Mother Courage The first time care for elderly and chronically ill Americans was radically transformed was during the first Great Depression, as almshouses were overwhelmed and public support grew to replace old-style charitable “indoor relief” with new-style government-funded “outdoor relief,” based on cash payments to people to...

from Lars Syll In New York State, Section 899 of the Code of Criminal Procedure provides that persons “Pretending to Forecast the Future” shall be considered disorderly under subdivision 3, Section 901 of the Code and liable to a fine of $250 and/or six months in prison. Although the law does not apply to “ecclesiastical bodies acting in good faith and without fees,” I’m not sure where that leaves econometricians and other forecasters … I came to think about this nineteenth-century New...

from Asad Zaman This sequence of posts goes through Charles Goodhart’s book on Evolution of Central Banking. Previous post is: RG5 Evolution of Economic Systems Chapter 2 opens with a discussion of the views of Walter Bagehot (pronounce as badge-it), author of Lombard Street, which has received a lot of recent acclaim as masterpiece on central banking. After the Global Financial Crisis, Martin Wolf asked “Doesn’t what has happened in the past few years simply suggest that [academic]...

from David Ruccio You know your generation’s screwed when even Monopoly is mocking you. Back in 2016, I argued that Millennials were in fact generation screwed. For example, in 2010 (when some of them were 20 to 24 years of age), their unemployment rate was 17.2 percent, much higher than the already high national average of 9.9 percent.* Partly because of the difficulty they had finding jobs, but also because they have been saddled with high student and healthcare debt, the typical...

source: konema

from Lars Syll The econometrician Henri Theil once said “models are to be used but not to be believed.” I use the rational actor model for thinking about marginal changes but Gary Becker really believed the model. Once, at a dinner with Becker, I remarked that extreme punishment could lead to so much poverty and hatred that it could create blowback. Becker was having none of it. For every example that I raised of blowback, he responded with a demand for yet more punishment … You can see...