Real-World Economics Review

What was the cause of the infamous Euro Area 2011-2013 double dip? Answer: a grave policy mistake. Already high ECB interest rates were increased (13 April 2011 13 July 2011) at the same time when fiscal policy was tightened (‘austerity’), unemployment was at record levels (graph 1) and use of capacity was still lowish (less important, core inflation was low, too). As a consequence, Euro Area unemployment started to increase at a time when Japanese and USA unemployment continued to...

from Dean Baker Somehow, some way, someone paid $450 million, after buyer’s fees, for Leonardo da Vinci’s Salvator Mundi at Christie’s last Wednesday. Believed to be the last work by the artist in private hands, the painting’s price smashed all previous records. Since the price also seemed more on par with the education budget of a medium-sized country, Artsy asked a range of leaders from the arts, economics, bioethics, and development to tell us how they’d spend $450 million. I have to...

from Lars Syll Nowadays many mainstream economists maintain that ‘imaginative empirical methods’ — especially randomized experiments (RCTs) — can help us to answer questions concerning the external validity of economic models. In their view, they are, more or less, tests of ‘an underlying economic model’ and enable economists to make the right selection from the ever-expanding ‘collection of potentially applicable models.’ It is widely believed among economists that the scientific value...

from Norbert Häring How many companies have merged into corporate groups in Germany? We don’t know. The official figures are completely unconvincing. We have a Monopolies Commission which, together with the German Federal Statistical Office, has the legal mandate to monitor market concentration. Germany’s parliament wanted to ensure that the necessary information about the possible emergence of problematic market power is available, only to discover this no longer fits in with the...

from David Ruccio Yesterday, I looked at the enormous wealth of U.S. billionaires and the growing gap between them and the rest of the American people. Today, I want to examine what’s happened in recent years at the bottom of the wealth pyramid. We know that, for decades, the share of net personal wealth owned by the bottom 90 percent has been declining. It peaked at 38.5 percent in the mid-1980s and, by 2014, it had fallen to 27 percent—more or less where it started in the early...

from Asad Zaman The bull charges the red flag being waved by the matador, and is killed because he makes a mistake in recognizing the enemy.  A standard strategy of the ultra-rich throughout the ages has been to convince the masses that their real enemy lies elsewhere. Most recently, Samuel Huntington created a red flag when he painted the civilization of Islam as the new enemy, as no nation was formidable enough to be useful as an imaginary foe to scare the public with. Trillions of...

from Lars Syll In a recent attempt to defend DSGE modelling, Lawrence Christiano, Martin Eichenbaum and Mathias Trabandt have to admit that DSGE models have failed to predict financial crises. The reason they put forward for this is that the models did not “integrate the shadow banking system into their analysis.” That certainly is true — but the DSGE problems go much deeper than that:  A typical modern approach to writing a paper in DSGE macroeconomics is as follows: o to establish...

from C.P. Chandasekhar News that the US economy grew at 3 per cent during the hurricane-blighted third quarter of 2017, close to the 3.1 per cent recorded in the previous quarter, has once more revived claims that the world economy has left the Great Recession behind. There is one reason to discount this claim. Back to back 3 per cent annualized rates of growth in consecutive quarters has been observed more than once since the 2008 crisis. In fact, as recently as the second and third...

Christian Democrats of America director Christina Forrester speaks with Dean Baker of the Center of Economic and Policy Research, a non-partisan organization, at the We the People Summit in Phoenix, AZ, who explains why the GOP "tax reform" bill is a scam on the poor and middle class to benefit the rich. Part 1 of video series interviews, follow us for more! Please share! Video Produced & Edited by Carol "THE SNEED" Sneed for Christian Democrats of America

from David Ruccio Wealth inequality in the United States has reached such extreme levels it is almost impossible to put it into perspective. But the folks at the Institute for Policy Studies (pdf) have found a novel way, by comparing the fortunes of the 400 wealthiest Americans to the meager assets of everyone else. Here’s what they found:   The three wealthiest people in the United States—Bill Gates, Jeff Bezos, and Warren Buffett—now own more wealth than the entire bottom half of the...