Real-World Economics Review

from Peter Radford and the current issue of RWER There is a continuum between the abstraction of economics theory and the practice of business. The two, after all, coexist in the same domain. The one seeks to explain phenomena which are consequences of the other. In the past few decades the highly stylized version of the firm that exists in economic theory has deeply influenced the way in which business is practiced. This is despite the detail excluded in theory, and the evident...

from Lars Syll Empirically, far from isolating a microeconomic core, real-business-cycle models, as with other representative-agent models, use macroeconomic aggregates for their testing and estimation. Thus, to the degree that such models are successful in explaining empirical phenomena, they point to the ontological centrality of macroeconomic and not to microeconomic entities … At the empirical level, even the new classical representative-agent models are fundamentally macroeconomic in...

from Dean Baker and WEA Commentaries Okay, it’s that time of year when we are all supposed to commit ourselves to performing nearly impossible tasks over the next twelve months. I will play the game. Here is the list of areas where I will try to bring economics into economic policy debates in 2019. 1) Patent and copyright monopolies are government policies: This one is pretty simple, but that doesn’t mean it is easy. It should be pretty obvious that these and other forms of intellectual...

from Maria Alejandra Madi A decade after the 2008 global crisis, some key trends can be highlighted: a) There has been a shift to defined contribution (DC) pension plans, b) The increasing role of alternative assets, such as private equity, among pension assets. Many governments in OCDE countries have been committed to structural reforms in labour markets and pension plans. As a result, the current era of austerity has deep impacts on the diversification of types of pension plans....

from yesterday’s New York Times The economics profession is facing a mounting crisis of sexual harassment, discrimination and bullying that women in the field say has pushed many of them to the sidelines — or out of the field entirely. Those issues took center stage at the American Economic Association’s annual meeting, the largest gathering of the profession, last weekend in Atlanta. Spurred by substantiated allegations of harassment against one of the most prominent young economists in...

from Lars Syll We recommend dropping the NHST [null hypothesis significance testing] paradigm — and the p-value thresholds associated with it — as the default statistical paradigm for research, publication, and discovery in the biomedical and social sciences. Specifically, rather than allowing statistical signicance as determined by p < 0.05 (or some other statistical threshold) to serve as a lexicographic decision rule in scientic publication and statistical decision making more...

from Dean Baker It is common to see stories that have China’s economy reeling as a result of the Trump tariffs. While it does seem that China’s economy is experiencing difficulties, it is hard to tell a story where Trump’s tariffs are a major factor. First, as I pointed out in the past, China’s trade surplus has actually risen in 2018 compared to 2017. In the first 10 months of 2018, (Census is not releasing new data because of the shutdown), China’s surplus on goods trade was up 11.5...

from Tim Thornton and WEA Commentaries The importance of economics textbooks Economics textbooks are central to how the discipline of economics reproduces itself and how it convinces society of the legitimacy of its conclusions. Whilst writing a textbook does not have the glamour or esteem of producing highly cited research, it is perhaps at least as important. As Paul Samuelson, the father of the modern economics textbook remarked,“I don’t care who writes a nation’s laws – or crafts its...

from Lars Syll A couple of years ago yours truly had a discussion with the chairman of the Swedish Royal Academy of Sciences (yes, the one that yearly presents the winners of ‘The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel’). What started the discussion was the allegation that the level of employment in the long run is a result of people’s own rational intertemporal choices and that how much people work basically is a question of incentives. Somehow the...

from David Ruccio We’re all done singing to “days gone by” (even though no one really knows the lyrics). But, unless we change our tune and resolve to fundamentally alter the way the economy is organized, we’re going to have to face up to the problem that’s been haunting the United States for decades now: growing inequality. And it’s only getting worse. Part of the problem stems from the increase in market concentration in the United States. According to a recent research paper by Joshua...