Real-World Economics Review

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from Lars Syll One way that macroeconomics stands out from other fields in economics is in how often it produces forecasts. The vast majority of empirical models in economics can be very successful at identifying causal relations or at fitting explaining behavior, but they are never used to provide unconditional forecasts, nor do people expect them to. Macroeconomists, instead, are asked to routinely produce forecasts to guide fiscal and monetary policy, and are perhaps too eager to...

from David Ruccio Is it any surprise, as Christina Starman, Mark Sheskin, and Paul Bloom argue, that fairness is not the same thing as equality? There is immense concern about economic inequality, both among the scholarly community and in the general public, and many insist that equality is an important social goal. However, when people are asked about the ideal distribution of wealth in their country, they actually prefer unequal societies. We suggest that these two phenomena can be...

In 2008, conventional economics led us blindfolded into the greatest economic crisis since the Great Depression. Almost a decade later, with the global economy wallowing in low growth that they can’t explain, mainstream economists are reluctantly coming to realise that their models are useless for understanding the real world. How did mainstream economists not see the crisis coming? Was it unpredictable, as they now assert, or did their theory blind them to the real causes? Will another...

from Jayati Ghosh Mr Trump’s policy stance will, however, mean that the United States – which has been providing less and less of a positive demand stimulus to the rest of the world economy ever since the Global Financial crisis – will continue to shrink its import demand and add to the forces that are making global trade decelerate and even decline. What does all this mean for developing countries? First, that those who are worried are right to be worried, but perhaps not for the reasons...

from Peter Radford One of the controversies buried by contemporary economists in their great cause of advocating market freedoms, is that of the role of central panning. There was a time when economics accomodated controversy. Nowadays it’s arguments are securely contained within the narrow bounds of saltwater versus freshwater type spats that are little more than professional name calling inspired over minor differences of detail. Recall the capital controversy? No? How about the...

from Lars Syll In the latest issue of Fronesis yours truly and a couple of other academics (e.g. Julie Nelson, Tony Lawson, and Phil Mirowski) made an effort at introducing its readers to heterodox economics and its critique of mainstream economics. Rather unsurprisingly this hasn’t pleased the Swedish economics establishment. On the mainstream economics blog Ekonomistas, professor Daniel Waldenström today rode out to defend the mainstream with the nowadays standard defense — heterodox...

from David Ruccio One of the arguments I made in my piece on “Class and Trumponomics” (serialized on this blog—here, here, here, and here—and recently published as a single article in the Real-World Economics Review [pdf]) is that, in the United States, the class dynamic underlying the growing gap between the top 1 percent and everyone else was the much-less-remarked-upon divergence in the capital and wage shares of national income. Thus, I concluded, “the so-called recovery, just like...

What do you get when you apply a 13 year smoothing function to the yearly data on global temperature? The graph above. According to ‘climate optimists’ the graph above is misleading, as, for one thing, these surface data are supposed to show a different pattern of development than the ‘satellite data’. The point: they don’t. The graph above shows about 0,7 to 0,8 degrees warming after 1979 and a pattern of relentless increase. The ‘satellite  data’ (graph below) show 0,5 degrees warming...

from Peter Radford One of the least credible aspects of economics, an enterprise that suffers from a credibility problem at the best of times, is that of general equilibrium. Chasing after this mirage comes at a great cost. For one thing it makes economists look more like priests than scientists or even artists. It is an article of faith, not anything remotely plausible in a real economy. Any reference to general equilibrium in an article, book, or paper, automatically disqualifies its...