Real-World Economics Review

from David Ruccio The idea that GDP numbers don’t tell us a great deal about what is really going on in the world is becoming increasingly widespread. David Leonhardt, in reflecting the emerging view, has argued that GDP doesn’t “track the well-being of most Americans.” Now, we’d expect that someone like socialist Democratic candidate Bernie Sanders would question the extent to which the low unemployment numbers, associated with economic growth, hardly tells the whole story about the...

from Lars Syll Without question, the experimental approach has produced genuine insights … All the same, there are serious limitations to a strategy centered on experimental design: 1. Good experimental design results in internal validity, where measurements actually measure the things they’re supposed to and confounding influences are suppressed. External validity, the extent to which results can be generalized to a wider array of situations beyond the confines of the experiment is a...

Two days ago I posted ‘The macro economic graph of the decade‘. The comments were highly interesting and may be summarized as: “what does ‘headline’ unemployment measure anyway”. About this: Headline of ‘U-3’ unemployment only captures a part of labor slack and is designed to capture only part of total slack. It can however be supplemented with other unemployment measurements which are designed to measure additional slack, like underemployed workers or discouraged workers. But there are...

Fresno fiddlers from 30 years ago celebrate the New Year. Founding members of District 2 - California Old Time Fiddler's Association are interviewed by a local TV station at 05:30.

Source: eurostat. What did the last decade teach us about (macro-)economics? The graph above is clear: * ‘Drunk driving’ financial crises do happen and cast a long shadow. * Even then, the response to these crises does matter. Eurozone sobriety led to a double dip (in case of unemployment: a double increase). After a crisis, sobriety is not the answer. Remember: the famous ant of the fable of the ant and the grasshopper was not an austerian as he invested in real assets all the time!...

from Asad Zaman The problem at the heart of modern economics is buried in the logical positivist methodological foundations created in the early twentieth century by Lionel Robbins. Substantive debates over the content actually strengthen the illusion of validity of these methods, and hence are counterproductive. As Solow said about Sargent and Lucas, you do not debate cavalry tactics at Austerlitz with a madman who thinks he is Napoleon Bonaparte, feeding his lunacy.  Modern Macro Models...

from Maria Alejandra Madi This post was written by Carmelo Ferlito.  He is a senior fellow at the Institute for Democracy and Economic Affairs (IDEAS) I taught economics in Malaysia for seven years. My students were mainly second and third year university students who attended my economics classes (microeconomic theory and policy and history of economic thought) after having already learnt the basic notions of macro and microeconomics. Most of my students were double majoring in economics...

from Lars Syll One of the most beautiful results of probability theory is Markov’s inequality (after the Russian mathematician Andrei Markov (1856-1922)): If X is a non-negative stochastic variable (X ≥ 0) with a finite expectation value E(X), then for every a > 0 P{X ≥ a} ≤ E(X)/a If the production of cars in a factory during a week is assumed to be a stochastic variable with an expectation value (mean) of 50 units, we can – based on nothing else but the inequality – conclude that the...

Merry christmas and a happy new year! And a picture of an off the shelf heart shaped 2018 Christmas adornment which managed to twinkle 365/24/7 (even when not very bright) on one off the shelf battery, showing the power and the glory of modern contemporary off the shelf led and battery technology. Let’s embrace and welcome the next 365. And dump the last remaining 19th century technology totally outdated short lived energy wasting heat squandering incandescent light bulbs before the next...