Real-World Economics Review

from David Ruccio Economic journalists, like Neil Irwin, are falling all over themselves celebrating the strength of the current economic recovery.  According to the latest data from the Bureau of Labor Statistics, 313 thousand new jobs were added in February. The official unemployment rate remained at a relatively low 4.1 percent. Hourly wages grew at an annual rate of 2.6 percent. And so on. Here’s Irwin: This is not the kind of data you expect in an expansion that is nine years old,...

“Social researchers of the 19th century were impressed by the success of this branch of science [thermodynamics], and also by its similarity to economics. A gas is a macroscopic thing, characterized by macroscopic properties — temperature, pressure, volume. But it consists of many microscopic constituents (molecules) whose interactions collectively create the macroscopic state. The study of macroscopic properties arising from microscopic interactions is called statistical mechanics. That...

from Asad Zaman Romer writes that macro-economists casually dismiss facts, and the profession as a whole has gone backwards over the past few decades, losing precious and hard-won knowledge. He does not consider WHY this happened. What are the methodological flaws that create the possibility of moving backwards, losing knowledge, affirming theories known to be in conflict with facts. How is it that leading economists can confidently assert theories which border on lunacy, and receive...

from Dean Baker Donald Trump’s tariffs on steel have elicited near universal condemnation. In addition to issuing warnings from retaliation by our trading partners, the media have also been giving us economics lessons on how steel tariffs will mean higher prices for consumers. If we pay 10 percent more for our steel, then the price of cars and other items that use large amounts of steel can be expected to rise. This will reduce demand for these products and might cause consumers to buy...

from Lars Syll Everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find...

Source: Emmanuel Saez, UC Berkeley

from David Ruccio This is the first in a series of blog posts on the utopian dimensions of healthcare. I’ve written quite a bit about the U.S. healthcare dystopia over the years—including a seven-part series back in 2016.* But I haven’t yet addressed the utopian dimensions of healthcare reform. The appearance of the new issue of Jacobin Magazine, titled “The Health of Nations,”  is a good occasion to start that discussion. Adam Gaffney starts with much the same question that provoked my...

from Lars Syll Because I was there when the economics department of my university got an IBM 360, I was very much caught up in the excitement of combining powerful computers with economic research. Unfortunately, I lost interest in econometrics almost as soon as I understood how it was done. My thinking went through four stages: 1. Holy shit! Do you see what you can do with a computer’s help. 2. Learning computer modeling puts you in a small class where only other members of the caste...

from Malgorzata Dereniowska That economics is a value-laden science is not a new idea. Most of the prominent economic thinkers were also philosophers, wary of moral and philosophical content of scientific assumptions, models, and theories. That economics needs philosophy, and the separation between these two cannot be maintained any longer, is gaining recognition, and has become a subject of debates in the field of philosophy of economics that brings together (to various extends)...

WEA Commentaries Formerly the World Economics Association NewsletterVolume 8, Issue No. 1  Download the issue as a PDF In this issue How to Inspire and Motivate Students Asad Zaman Redefining Governance in Cooperative BanksMitja Stefancic, Silvio Goglio, and Ivana Catturani The Biophysical Basis of Production and the Public Economy June Sekera Tesla, Amazon, Bitcoin, Efficient Markets and FTT Dean Baker Keynes and Econometrics Maria Alejandra Madi Corrupted Economic Research—two...