Real-World Economics Review

The EU-commission issued a tweet (below). Another step towards EU statehood. A large one. Since around 1500, access to credit was key for European (later: all) states waging war. The early development of central banks was intertwined with the history of national wars. Look here for the Wikipedia page on the history of the Bank of England -it literally starts with a ‘crushing defeat’ of England by France. Credit was needed to win. Government borrowing had to be enabled by central banks,...

from Lars Syll Post Keynesian authors have offered various classifications of uncertainty … A common distinction is that of epistemological versus ontological uncertainty, with the former depending on the limitations of human reasoning and the latter on the actual nature of social systems … Models of ontological uncertainty tend to hinge on the existence of information that is critical to the decision-making task. Fundamental uncertainty occurs in “situations in which at least some...

from Dean Baker I was having an exchange with an old friend on Mastodon (yes, I’m there now @[email protected]), in which I was arguing that the best way to get alternatives to the current patent system was to have examples of successful drugs developed without relying on patent monopolies. Of course, there are great historical examples, like the development of insulin as a treatment for diabetes or the polio vaccine, but it would be good to have one from the current...

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from Lars Syll Many American undergraduates in Economics interested in doing a Ph.D. are surprised to learn that the first year of an Econ Ph.D. feels much more like entering a Ph.D. in solving mathematical models by hand than it does with learning economics. Typically, there is very little reading or writing involved, but loads and loads of fast algebra is required. Why is it like this? … One reason to use math is that it is easy to use math to trick people. Often, if you make your...

from Peter Radford Let the dust settle. Absorb the information embedded in the results. Take a deep breath and avoid partisan primping. First: this election was insanely expensive.  Candidates seeking election to Federal office spent an estimated $8.9 billion.  Their state level counterparts spent a further $7.8 billion.   Second:  all that expenditure had little effect.  Sure, the House changed hands, but by the slimmest of margins, and for all the...

Summary: to understand inflation we should not use the neoclassical ‘one good, one worker, one sector, one piece of physical capital’ or Y = f(K,L) concept of production. We should use a concept looking at nominal production (Y(n)) with multiple interrelated sectors (‘S’), multiple products and capital conceptualized not as a physical entity but as ownership rights of land (including natural resources), depreciable capital and ‘non produced’ capital like patents and marketing rights:...

from Lars Syll Both approaches to DSGE macroeconometrics (VAR and Bayesian) have evident vulnerabilities, which substantially derive from how parameters are handled in the technique. In brief, parameters from formally elegant models are calibrated in order to obtain simulated values that reproduce some stylized fact and/or some empirical data distribution, thus relating the underlying theoretical model and the observational data. But there are at least three main respects in which...

from Imad Moosa   The spread of the virus has been aided by the neoliberal drive to privatise everything under the sun, including healthcare. Forty years of the privatisation of public health institutions (allegedly in the name of efficiency and for the benefit of consumers) has resulted in a disastrous situation as private healthcare providers have no commercial interest in preparing for or preventing emergencies. The spread has been aided by the lack of staff and material...