Real-World Economics Review

from Richard Smith and issue 82 of the RWER As Trump walked away from the Paris climate accord, Xi announced his intention to “take the driver’s seat in international cooperation to respond to climate change”. Not only that but Xi’s government has also pledged to wipe out the last vestiges of poverty in China by 2030 and turn China into a “moderately prosperous society” where the basic needs of all including jobs, housing, and healthcare, are met. Trump, as we know, has different...

from Lars Syll Dani Rodrik is not satisfied with the critique of mainstream economics put forward by yours truly and other mostly non-orthodox economists. So he has put up a list of ten commandments for economists, hoping thereby to somehow ‘save’ mainstream ‘the model is the message’ economics from the critique. The two central commandments are 3. Make your model simple enough to isolate specific causes and how they work, but not so simple that it leaves out key interactions among...

from Lars Syll It has been argued that some ascription of rationality plays a crucial role in particular in game theoretic modeling from a participant’s point of view. However, ascribing some kind of ideal reasoning process symmetrically to all players in the game, it becomes very unclear whether we as analysts can truly adopt a participant’s attitude to such an idealized interaction. After all, we are as a matter of fact only boundedly rational and not perfectly rational beings ourselves...

from David Ruccio One of the most important stories I read, but did not write about, while I was away was the launch of the World Inequality Report 2018.* The authors of the report confirm what Branko Milanovic and others had previously discovered: that a representation of the unequal gains in world economic growth in recent decades looks like an elephant. Thus, the real incomes of the bottom 50 percent of the world’s population (except the poorest, at the very bottom) have increased,...

from Mari Alejandra Madi On a global level, to achieve the 2˚C agreed upon during the Paris Agreement, a decrease in emissions of 40-70 percent (relative to 2010) should be obtained by 2050. According to Bloomberg New Energy Finance, 2017 global green investments exceeded 2016´s total of $287.5 billion. With strong government policy support, China has experienced a rapid increase in sustainable investments over the past several years and nowadays this country is the leader of global...

from Lars Syll On Black Friday 1929 market fundamentalist wet dreams of eternal growth took a serious hit. The stock market bubble exploded and crashed. Today​ we have a stock market situation much reminding of that in 1929. The Shiller P/E ratio is now even higher than that year. Those of us who know our Keynes-Fisher-Kindleberger-Minsky and have not completely forgotten all about economic​ history are starting to worry …

from Edward Fullbrook The current issue (January 8, 2018) of the Heterodox Economics Newsletter lists the current issues of 16 English language journals, with each linked to the newsletter’s website where there is a link for each article in these new issues.  For each journal, I picked one article to try to read.  Here is what I found.  Research in the History of Economic Thought and Methodology, 35B Lucia Morra: Friendship and Intellectual Intercourse Between Sraffa and Wittgenstein: A...

In 1921 King, Macaulay and Mitchell published their milestone ‘Income in the United States: Its Amount and Distribution, 1909-1919’ which estimated time series of nominal and real income in the USA. Why did they measure this? The last sentence of their introduction reads: “Last but most interesting of all, we shall consider the way in which the National Income is distributed among individuals”. Distribution was paramount. The authors were also well aware of the limited nature of their...

from Gustavo Marqués If it is assumed that (a) both agents and theorists are aware they are facing an uncertain context, and (b) they hold epistemic and ontological beliefs consistent with this state of affairs, the proper way to approach economic phenomena should be very different from those that guide current modeling practice. Particularly, instead of mechanisms or economic regularities that keep running independently of agents’ expectations, the decisive role of lobbyists within...

from Dean Baker The soaring price of Bitcoin is a useful lesson about markets for people who seem to very quickly forget the last lesson. Bitcoin, a digital algorithm, backed by absolutely nothing, has been selling for more than $16,000. Perhaps Bitcoin’s price will double or triple again. After all, who knows how badly people need digital currencies that are not really currencies? But more likely the market will run out of people who are willing to trade real money for nothing. At that...