Real-World Economics Review

from David Ruccio The premise and promise of the Republican tax cuts—officially, the Tax Cuts and Jobs Act—are that lower corporate taxes would lead to increased investment and thus more jobs and higher wages for American workers. We all knew at the time that the logic was a sham. As I explained last August, one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans supported—and, as we saw, eventually rammed through—would be an increase in...

from C.P. Chandrasekhar and Jayati Ghosh There is no doubt that President Trump is upending global trade. He has unleashed a trade war with China as well as with some of the US’ s purported allies, using grounds of “threats to national security” to impose tariffs on many US imports. The likely retaliation will obviously affect some US exports in turn. The trajectory of world trade suddenly looks quite uncertain – and this will also depress investment across the trading world. So the Trump...

from Lars Syll In plain terms, it is evident that if what is really the same factor is appearing in several places under various disguises, a free choice of regression coefficients can lead to strange results. It becomes like those puzzles for children where you write down your age, multiply, add this and that, subtract something else, and eventually end up with the number of the Beast in Revelation. Prof. Tinbergen explains that, generally speaking, he assumes that the correlations under...

from Dean Baker That’s what New York Times readers were wondering when they saw Harvard Economics Professor Greg Mankiw’s column, “Why Aren’t Men Working?” The piece notes the falloff in labor force participation among prime-age men (ages 25 to 54) for the last 70 years and throws out a few possible explanations. We’ll get to the explanations in a moment, but the biggest problem with explaining the drop in labor force participation among men as a problem with men is that since 2000, there...

Special issue on the public economy and a new public economics download whole issue edited by Michael Bernstein and June Sekera Reconstructing a public economics: markets, states and societies          2Michael A. Bernstein          download pdf There is more than one economy          16Neva Goodwin         download pdf The public economy: understanding government as a producer.          36 A reformation of public economicsJune Sekera         download pdf Economic benefits of public...

from Lars Syll I think the two most important microfoundation led innovations in macro have been intertemporal consumption and rational expectations. I have already talked about the former in an earlier post … [s]o let me focus on rational expectations …  [T]he adoption of rational expectations was not the result of some previous empirical failure. Instead it represented, as Lucas said, a consistency axiom … I think macroeconomics today is much better than it was 40 years ago as a result...

from David Ruccio The goal of mainstream economists is to get everybody to work. As a result, they celebrate capitalism for creating full employment—and worry that capitalism will falter if not enough people are working. The utopian premise and promise of mainstream economic theory are that capitalism generates an efficient allocation of resources, including labor. Thus, underlying all mainstream economic models is a labor market characterized by full employment. Thus, for example, in...

from Lars Syll For all scholars seriously interested in questions on what makes up a good scientific explanation, Alan Garfinkel’s Forms of Explanation (Yale University Press 1990) is a must-read. A lot of recent work done within different realist schools in theory of science — e.g. Roy Bhaskar, Andrew Collier, Richard W Miller and Tony Lawson — issue not so little from questions and problems posed by Garfinkel. Especially his advocacy of contrast explanations and critique of...

from Dean Baker Since Donald Trump has apparently discovered that the US imports more than it exports from China, we can put tariffs on more goods than China can. This means that China has to look to other measures to counter Trump’s trade war. Most coverage of this issue has neglected to mention China’s strongest alternative measure. The nuclear option, in this case, would be to stop honoring US patents and copyrights. This would be hugely costly to US corporations, especially if they...

from Peter Radford Here we are deep into the dark forest known as the Trump administration and half my friends are still grappling with the 2016 election result. How come America elected an erstwhile tyrant? How come a boatload of voters look quite happy tossing so-called democracy overboard? Well, as you know, I have a simple answer. Money. Or, more precisely, the lack of it. If there is one characteristic of contemporary America that stands in stark contrast to those happier times a few...