Real-World Economics Review

from Asad Zaman This post is Lecture 8B — from 17m to 37m of video lecture linked at bottom of post. It attempts to make sense of the Keynesian explanation of unemployment based on insufficient aggregate demand. It concludes that several elements missing from Keynes must be added to get to a satisfactory explanation.  Friedman’s Methodology  leads to crazy models: In previous post (  Lecture 8A – Microfoundations for Keynesian Economics ), we showed that even small differences in the...

from Thomas Palley and the current issue of the RWER As regards economics, the conventional wisdom interprets globalization through the lens of trade theory, which maintains there are gains for all countries that participate.[1] The narrative is that there have been two globalizations in the modern era. The first began around 1870 and ended in 1914. The second began in 1945 and is still underway. Globalization is identified with the history of trade, and the narrative is constructed...

from Lars Syll It should be emphasized that the equality between savings and investment … will be valid under all circumstances. In particular, it will be independent of the level of the rate of interest which was customarily considered in economic theory to be the factor equilibrating the demand for and supply of new capital. In the present conception investment, once carried out, automatically provides the savings necessary to finance it. Indeed, in our simplified model, profits in a...

from Trond Andresen, Steve Keen and Marco Cattaneo A new means of payment can be part of the solution for the eurozone’s unemployed. We have now seen nine years of social crisis and huge unemployment in many euro countries. An entire youth generation has barely experienced anything but being out of work. Still no solution has been found or implemented. The time is overdue to think outside the box. We propose a solution that has circulated internationally for several years: some of us have...

from David Ruccio and Jamie Morgan and the current issue of RWER What we’re seeing then, especially in the United States, is a self-reinforcing cycle of high profits, low wages, and even higher profits. That’s why the labour share of business income has been falling throughout the so-called “recovery”:[1] Eric Levitz in a July 2018 article in New York Magazine states that in the end this is political, as “American policymakers have chosen to design an economic system that leaves workers...

from John Balder and the current issue of RWER To explore the origins of the global financial crisis, the first step is to specify the relationship between banking, money and credit. According to the mainstream view, a bank serves as an intermediary between a borrower and a lender. As a pure intermediary, a bank has no impact on real economic activity. This view – taught in most Economics 101 textbooks – implicitly assumes that money is available in finite quantities that are regulated by...

from Lars Syll One of the few statisticians that yours truly have on the blogroll is Andrew Gelman. Although not sharing his Bayesian leanings, I find his open-minded, thought-provoking and non-dogmatic statistical thinking highly recommendable. The plaidoyer below for ‘reverse causal questioning’ is typical Gelmanian:  When statistical and econometrc methodologists write about causal inference, they generally focus on forward causal questions. We are taught to answer questions of the...