Real-World Economics Review

Source: Oxfam calculation based on Credit Suisse Global Wealth Report.

from C. P. Chandrasekhar and Jayati Ghosh  Tight monetary policies in rich countries obviously affect people in the countries where they are applied, but they also cause ripple effects across the world. We were already in a very unequal world before the most recent global price increases. Most developing countries were not able neutralize the damage inflicted by the pandemic, largely because they had much weaker fiscal stimuli. Of nearly $14 trillion in additional fiscal spending by...

from Lars Syll If we have independent reasons to believe that the phenomena under investigation are mechanical in Mill’s sense, well and good: mathematical modeling will prove an apt mode of representation … But if we have independent reasons to believe that there is more going on in the phenomena under investigation than a mathematical model can suggest – that is, that the phenomena in question are not in fact mechanical in the required sense – then mathematical modeling will prove...

The Covid-19 pandemic highlighted the urgent need for a universal social protection floor—something that has been talked about and even internationally accepted for more than a decade now, but has still received relatively little serious attention from policy makers in most countries. The challenge is to ensure basic levels of food, health, income and livelihood security, not only in periods of crisis like the pandemic or economic shocks but also in the “normal” course of economies and...

from Dean Baker The New York Times had a major article reporting on how many people in South Korea, Hong Kong, and Japan are being forced to work well into their seventies because they lack sufficient income to retire. The piece presents this as a problem of aging societies, which will soon hit the United States and other rich countries with declining birth rates and limited immigration. While the plight of the older workers discussed in the article is a real problem, the cause is not the...

from Lars Syll A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative to the failing mainstream theory, I shouldn’t expect people to pay attention. This is however to misunderstand the role of philosophy and methodology of economics! As John Locke wrote in An Essay Concerning Human Understanding: The Commonwealth of Learning is not at this time without Master-Builders, whose mighty Designs, in advancing the Sciences, will leave lasting...

from Mark Weisbrot Here are eight predictions for the coming year, in accordance with a hallowed tradition that I have previously not honored. If some of the supporting facts below seem unfamiliar, it could be because they have not received the attention they deserve. But they are real, and links to sources are provided. First, some good news about the US economy: Inflation will likely continue to fall until it becomes obvious that it is no longer a serious concern. Inflation (as measured...

from Lars Syll • Mind the assumptions — assess uncertainty and sensitivity. • Mind the hubris — complexity can be the enemy of relevance. • Mind the framing — match purpose and context. • Mind the consequences — quantification may backfire. • Mind the unknowns — acknowledge ignorance. Andrea Saltelli, John Kay, Deborah Mayo, Philip B. Stark, et al. Five principles I think modern times “the model is the message” economists would benefit much from pondering. And especially when it comes to...

from Peter Radford Is it just me? Or is the realm of punditry in a state of confusion? There seems to be an emerging consensus that something big is happening.  It’s just that we don’t quite know what.  The problem is that the template we are all applying is frayed if not shattered.  Consequently we are searching for the safety of explanations but finding that our questions do not elicit comfortable answers.  This is not a place we like to inhabit.  What are we to do? Let’s speculate....

from Asad Zaman and the WEA Pedagogy Blog Why does “Sovereign Default” become a hot topic with annoying regularity in Pakistan? The fundamental problem is the huge imbalance between our exports and imports. In 2021, our exports were USD 30 Billion, while our imports were around USD 62 Billion. In general, since 1960 onwards, our imports have averaged about 18%, while exports have been around 12% of the GNP. After reaching a high of 16.9% in 1996, the export ratio has been declining...