Real-World Economics Review

from Lars Syll In my judgment, the practical usefulness of those modes of inference, here termed Universal and Statistical Induction, on the validity of which the boasted knowledge of modern science depends, can only exist—and I do not now pause to inquire again whether such an argument must be circular—if the universe of phenomena does in fact present those peculiar characteristics of atomism and limited variety which appear more and more clearly as the ultimate result to which material...

from Asad Zaman Last semester I taught an MMT-based Macro course which attempted to re-integrate history into economics. The course was based on the premise that economic theories cannot be understood outside the historical context in which they were born. Standard graduate macro courses attempt to teach a body of theory which has been empirically falsified. My course had the goal of giving the student the ability to understand major economic events of the past century.  A previous post...

from Ikonoclast Conventional economics is a prescriptive discipline pretending to be a descriptive discipline. I find it useful, at a first principles level of thinking, to distinguish between “rules” and “laws”. (1) A “rule” is a prescribed guide for conduct or action by any agent (human or machine). (2) A “law” is a fundamental law of (physical) nature described by the hard sciences after extensive observation, experiment, deduction and mathematical analysis. A “rule” is made in a given...

from Lars Syll Mathematical statistician David Freedman‘s Statistical Models and Causal Inference (Cambridge University Press, 2010)  and Statistical Models: Theory and Practice (Cambridge University Press, 2009) are marvellous books. They ought to be mandatory reading for every serious social scientist — including economists and econometricians — who doesn’t want to succumb to ad hocassumptions and unsupported statistical conclusions! How do we calibrate the uncertainty introduced by...

from Jamie Margolin and The Guardian Many people trace the origins of today’s climate crisis to the Industrial Revolution, when humans first began to burn large amounts of coal, but the crisis’s true roots extend further back to the onset of colonialism. When European colonizers ventured to Africa, Asia, North and South America, they invariably plundered the local natural resources, damaged habitats, hunted species to extinction and often forced human inhabitants into slavery....

from Ikonoclast Democracy is seen mainly as a hindrance to economics. Technology and science are funded (or not funded) mainly at the behest of economics. Production science which assists corporate capitalism gets massive subsidies. Impact science (ecology, climate science etc.) gets pitiful funding by comparison. It is not so much the unintended consequences of technology and science which are causing climate change (for example) but the ignored consequences of technology and science...

from John Tomer   Elinor Ostrom’s (1990; 2009) research focuses on common pool resources (CPR) and the dilemmas they have posed for their users and society. A CPR is a resource such as a fishing ground, an irrigation system, ground water, pasture land for grazing animals, etc. that jointly benefits a group of people (the users) but which provides diminished benefits to the users involved if each individual pursues his or her narrow self-interest without considering other users. The CPR...

Subskrib

from Lars Syll Time to explain ergodicity … The difference between 100 people going to a casino and one person going to a casino 100 times, i.e. between (path dependent) and conventionally understood probability. The mistake has persisted in economics and psychology since age immemorial. Consider the following thought experiment. First case, one hundred persons go to a Casino, to gamble a certain set amount each and have complimentary gin and tonic … Some may lose, some may win, and we...

from Dean Baker Between making threats of actual war with North Korea and Iran, Donald Trump has also gotten us into a trade war with China. Trump’s ostensible reason for this trade war — the large US trade deficit with China — actually did have some basis in reality, but in practice the trade war is straying into turf that is likely to offer few gains for US workers and could actually lead to sizable losses. A major theme in Trump’s campaign was that China is a world-class currency...