Real-World Economics Review

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...

from Dean Baker The folks who remain determinedly ignorant about the financial crisis and Great Recessioncontinue to look for another crisis where it isn’t. Much of the latest effort focuses on corporate debt. There are four big reasons why corporate debt does not pose anything like the same sort of problem that mortgage debt did during the housing bubble years. First, many companies took on large amounts of debt for a simple reason, it was very cheap. The debt was not a necessity for...

from Asad Zaman   Lecture 8A of Advanced Macroeconomics   — Outline below covers the first 17m of the lecture linked below at bottom of post. 1. EXCESS Savings reduce Effective Demand, Normal Savings Do Not It seems clear that shortfalls in aggregate demand can lead to recessions, but only in presence of fixed prices. Furthermore, normal levels of savings cannot create such shortfalls – an abnormally high level of savings is required. This is because of factors discussed in “ The...

from David Ruccio and Jamie Morgan and the current issue of RWER If we return to the World Inequality Lab, the share for the top 1 percent in the United States is higher than the global figure. It was, for example, an astounding 41.8 percent in 2012 and 35 percent in 2014 (compared to 45.3 percent for the bottom 90 percent of households) However, depending on how it is measured, actual wealth inequality may be even higher. Both the World Inequality Lab and the Federal Reserve (in...

from Lars Syll Truth exists, and so does uncertainty. Uncertainty acknowledges the existence of an underlying truth: you cannot be uncertain of nothing: nothing is the complete absence of anything. You are uncertain of something, and if there is some thing, there must be truth. At the very least, it is that this thing exists. Probability, which is the science of uncertainty, therefore aims at truth. Probability presupposes truth; it is a measure or characterization of truth. Probability...

from Norbert Häring A year ago, I described how the controversial and well-financed ride-hauling platform Uber pays economists with data and money to do Uber-related research. This research invariably leads to favourable results, which can be used to fend off criticism and regulation. One such study has now been ripped apart in the Industrial & Labor Relations Review (ILR), a top journal in labor-economics. Two fearless economists, Janine Berg, senior-economist at the International...