Real-World Economics Review

At this very moment (9 september 2016), arctic sea ice may have reached its yearly minimum extent. Does global warming cause a decline of this minimum? Business cycle economists use the phrase ‘months for cyclical dominance’: how many months does it take before trend movements are larger than monthly fluctuations of variables like consumption of exports? In the case of sea ice I used ‘years for cyclical dominance (YCD)’: a fourteen year moving average shows a continuous decline (the max....

from Dean Baker While Elizabeth Warren is praising the European Union’s crackdown on Apple’s Ireland tax scheme, Jack Lew and the Obama Treasury Department are going to bat for corporate tax cheating. Warren is far too optimistic about the prospect of a successful crackdown. These folks are prepared to spend a lot of money to hide their profits from tax authorities and they are likely to find accomplices in many Irelands around the world. It would be good to look in a different direction....

from David Ruccio I have been arguing for some time on this blog that contemporary capitalism faces a profound legitimation crisis. It has failed to deliver on its promises, and therefore is being calling into question. As it turns out, Martin Wolf, the chief economics commentator at the Financial Times, has also sounded a warning about the ongoing legitimacy crisis. But for him it’s a bit different. The problem, as he sees it, is the tension between democracy and capitalism. A natural...

From: Erwan Mahé ‘Mr Draghi may have laid a fairly sophisticated trap to ensnare his most reticent colleagues.’. In a happy coincidence, the Fed and BoJ will hold their monetary policy meetings on exactly the same days, the 20th and 21st of September, with enough uncertainty in their decisions to reignite implied volatility in the preceding days! But we should, above all, focus on the ECB meeting, tomorrow, with speculation rampant about the possible changes Mr Draghi may announce in the...

from David Ruccio I have argued many times over the years that mainstream economists, especially mainstream macroeconomists, largely ignore the issue of inequality. And when they do see it, they tend to misunderstand both its causes (often attributing it to exogenous events, such as globalization and technical change) and its consequences (often failing to connect it, other than through “political capture,” to events like the crash of 2007-08). In my view, mainstream economists overlook...

from Asad Zaman The IMF has been among the principal architects, executors and enforcers of the neoliberal agenda all over the globe for several decades. This is why an IMF publication with an article entitled “Neoliberalism: Oversold?” is as surprising as an ISIS article entitled “Violence: Oversold?” would be. Has neoliberalism become so unpopular that even the IMF does not want to be associated with it? In this essay, we study the lessons that the IMF claims to have learnt from...

from Steve Keen In my last post on my Debtwatch blog, I finished by saying that the Physiocrats were the only School of economics to properly consider the role of energy in production. They ascribed it solely to agriculture exploiting the free energy of the Sun, and specifically to land, which absorbed this free energy and stored it in agricultural products. As Richard Cantillon put it in 1730: The Land is the Source or Matter from whence all Wealth is produced. The Labour of man is the...

from David Ruccio Everyone (from President Obama to venture capitalist Alan Patricof) agrees the carried tax loophole—which allows investment fund managers to treat much of their income as capital gains (taxed at a top rate of 23.8 percent) rather than as income (for which the top rate is 39.6 percent)—should be closed. But, as Michael Hiltzik reminds us, it’s a tax break the super rich are willing to give up in order to keep the loophole they really value: the capital gains tax...

Ireland (the government plus the private sector) has by far the largest net international debt of all EU countries (measured as a % of GDP). To an extent this is caused because the Irish state was pressured, by its EU friends, to borrow money from other countries to bail out (the creditors of) Irish banks. The large and fast deterioration of the Irish position in 2014 and 2015 might be caused because large international companies finance their Irish headquarters with inter company...

from Peter Radford For a variety of reasons I pulled Olivier Blanchard’s macroeconomics textbook off my shelf yesterday — I have the fifth edition which dates back to 2007. Or at least that’s how he begins his opening paragraph, he says he’s writing in mid-2007. So it would be easy to plunge into the book and start to look for evidence that Blanchard’s version of economics led us all to expect or predict the crisis that unfolded only a year later. But that’s no what caught my eye. No I...