Real-World Economics Review

Source: http://wir2018.wid.world/executive-summary.html

from Dean Baker Donald Trump was apparently angry about the value of the Russian ruble and the Chinese yuan against the dollar. He complained in a tweet that both are playing the “Currency Devaluation game” in a tweet yesterday. Neil Irwin rightly points out that the complaint against Russia is bizarre, both because we don’t have much trade with Russia, but also because the most obvious reason its currency is falling is sanctions pushed by the United States and other western countries....

from Lars Syll Distinguished social psychologist Richard E. Nisbett has a somewhat atypical aversion to multiple regression analysis. In his Intelligence and How to Get It (Norton 2011) he writes: Researchers often determine the individual’s contemporary IQ or IQ earlier in life, socioeconomic status of the family of origin, living circumstances when the individual was a child, number of siblings, whether the family had a library card, educational attainment of the individual, and other...

from David Ruccio As federal deficits and debt grow, they end up receiving, not paying for, a larger and larger share of federal expenditures. Tax cuts and spending increases enacted by Republicans over the past four months will lead to wider than previously expected budget deficits, according to the Congressional Budget Office. The federal budget deficit would total $804 billion this year, 43 percent higher than it had projected last summer, and exceed $1 trillion a year starting in...

Economist Dean Baker On Fox, Audit The Federal Reserve!

from J.-C. Spender There is some heavy stuff in this section – but we cannot get beyond today’s literature on managing as rational decision-making and connect with managers’ practice without engaging uncertainty. All attempts to define uncertainty must fail – by definition, for to define is to take as certain, axiomatic. Those who see uncertainty in terms of probability stand on the certainty of population statistics. Knight saw such modified certainty as ‘risk’. Yes, risk management is...

from John Locke The problem, however, is not the failure of economic departments and business schools to create a prescriptive science, but the refusal of nomothetic neoclassical economists and mathematical modelers in them to admit the failure, and their actions after they gained a monopoly of the sinews of institutional power, that produced dysfunctionality in Anglo American higher education. That dysfunctionalism is expressed in their constant battle with people in academia who realize...

from Michael Joffe This perspective contrasts with standard neoclassical theory in several respects. That theory puts forward models relating to the decision making of (potential) workers, and of firms – respectively the supply of and the demand for labor. Workers choose whether or not to accept employment, based on a comparison of the offered wage with their reservation wage. Firms’ decision making is seen as a comparison between employing one more or one fewer worker with the difference...

from Bernard Guerrien  One of the most widespread myths in economics, but also in sociology and political science, is that game theory provides “tools” that can help solve concrete problems in these branches – especially in economics. Introductory and advanced textbooks thus often speak of the “applications” of game theory that are being made, giving the impression that they are revolutionizing the social sciences. But, looking more closely, we see that the few examples given concern...

from Lars Syll Model builders face a constant temptation to make things more complicated than necessary because this makes them appear more capable than they really are. Remember that a model is not the truth. It is a lie to help you get your point across. And in the case of modeling economic risk, your model is a lie about others, who are probably lying themselves. And what’s worse than a simple lie? A complicated lie.