Real-World Economics Review

from Constantine Passaris and the current issue of RWER I have coined the word internetization for the purpose of circumventing the drawbacks of the concept of globalization. These drawbacks commence with the fact that globalization is not a new concept. The international outreach between nations has taken place since time immemorial. Furthermore, globalization does not reflect the contemporary digital empowerment of civil society and the electronic facility for modern financial...

from Lars Syll If human scientists could be supposed to play a system of analogous games of chance … the evidential support available for successful scientific hypotheses could be measured by a Pascalian probability-function … But unfortunately the analogy breaks down at several points. The number of co-ordinate alternative outcomes​ that are possible in any one trial of the issue investigated may be infinite, indeterminate, or at least unknowable … And even more importantly, the trial...

from Dean Baker In the fall of 2013, Jared Bernstein and I wrote a book called Getting Back to Full Employment: A Better Bargain for Working People. The main point of the book was that low unemployment rates disproportionately benefited those who are most disadvantaged in the labor market. For this reason, we argued for using macroeconomic policy to get the unemployment rate as low as possible, until inflation became a clear problem. At that time, the unemployment rate was still close to...

from Lars Syll For realists, the name of the scientific game is explaining phenomena, not just saving them. Realists typically invoke ‘inference to the best explanation’ [IBE] … What exactly is the inference in IBE, what are the premises, and what the conclusion? The intellectual ancestor of IBE is Peirce’s abduction: The surprising fact, C, is observed. But if A were true, C would be a matter of course. Hence, … A is true. Here the second premise is a fancy way of saying “A explains C”....

from Constantine Passaris and the current issue of the RWER The Great Recession commenced during the second decade of the new millennium. It was triggered by the global financial crisis of 2008 and developed in its aftermath. I believe the Great Recession is an important economic governance milepost. To my way of thinking the Great Recession is the defining economic event that revealed the fault lines in economic governance and the dysfunctional nature of our economic policy tool kit for...

from Asad Zaman As I have only recently come to realize, stabilizing the exchange rate at the wrong level can have massively harmful effects. One can trace major economic tragedies to such attempts. The British attempt to go back to the gold standard after post WW1 failed because they set the level too high (as Keynes pointed out). This attempt set of a sequence of events which had far reaching consequences. A similar story is told about Pakistan in “The Rupee is falling; let it crash”....

source: https://hackernoon.com/predator-prey-economics-2b2c0272d472

from Norbert Häring European Economic & Monetary Union (EMU) is in permanent crisis. The economic strengths of the participating nations are drifting apart instead of converging. This creates great frustration among the governments of countries being left behind and fierce disputes between them and Brussels and governments of core countries. The currency union was based on the premise that the economic structures and levels of prosperity among the members of the union would converge....

from Lars Syll Paul Krugman has repeatedly over the years argued that we should continue to use neoclassical hobby horses like IS-LM and Aggregate Supply-Aggregate Demand models. Here’s one example: So why do AS-AD? … We do want, somewhere along the way, to get across the notion of the self-correcting economy, the notion that in the long run, we may all be dead, but that we also have a tendency to return to full employment via price flexibility. Or to put it differently, you do want...

Source:https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:Wealth_distribution_by_percentile_in_the_United_States.png  Source: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:If-us-land-mass-were-distributed-like-us-wealth.png Source:  https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:U.S._economic_variables_related_to_the_distribution_of_wealth_and_income.png...