Real-World Economics Review

from Lars Syll Statistical mechanics reasoning may be applicable in the economic and social sciences, but only if adequate consideration is paid to the specific contexts and conditions of its application. This requires attention to “non-mechanical” processes of interaction, inflected by power, culture, institutions etc., and therefore of specific histories which gives rise to these factors … Outside of very specific cases, statistical physics is more likely to provide useful metaphors and...

from Lars Syll A couple of years ago, former chairman of the Fed, Alan Greenspan, wrote in an article in the Financial Times, re the increased demands for stronger regulation of banks and finance: Since the devastating Japanese earthquake and, earlier, the global financial tsunami, governments have been pressed to guarantee their populations against virtually all the risks exposed by those extremely low probability events. But should they? Guarantees require the building up of a buffer of...

PRE-SAVE 'ARE WE STILL DATING?' NOW! -- lnk.to/fFL83P This is an original composition by Eliot Dean Baker. Words & Music: Eliot Dean Baker

from Asad Zaman A previous post Quotes Critical of Economics collected assorted quotes which are useful in writing up different kinds of critiques of economics. In addition, I collected quotes from Romer’s Trouble With Macro which are sharply critical of economics. In terms of the “Loyalty, Voice, Exit” paradigm, I look for “Exit” quotes, which suggest that we need to throw out the entire discipline and rebuild on new foundations; for a proposed alternative, see “Uloom-ul-Umran: An...

Since the COVID pandemic, the United States and other countries have faced challenges in terms of economic recovery. This has resulted in issues such as supply chain disruptions and what has been reported as high rates of inflation. What is inflation? What is causing high inflation? Doug Becker speaks with Dean Baker. Dean Baker is an economist and co-founder of the Center for Economic and Research Policy. He is the author of The End of Loser Liberalism: Making Markets Progressive. For...

Inflation in the Euro Area is high and erodes the purchasing power of many (but not all) incomes. Bad. But it will be transitory. And there is no indication of endogenous macro-economic instability. Why do I think this? I’ll first discuss the (largely) transitory nature of the present price increases, macro (in)stability comes next. Graph 1 shows two metrics of inflation. The first is based on the ‘normal’ consumer price index, but this time without energy and without...

from Dean Baker I’m not worried at this point about a deflationary spiral, but I see what, to my view, is a plausible scenario where the CPI actually goes negative in the next twelve months. I go through the categories and my predictions component by component below, but there are four main items driving the story that I’ll mention here. First, I assume a sharp reversal in new and used car prices. The 11.1 percent increase in the former and 31.4 percent increase in the latter, have added...

Apology from the editor This post has been withdrawn on grounds of misattribution.  But the readers’ comments, which relate to the section beginning on page 50 titled “Adam Smith and the Birth of Western Economics” in Economies and Cultures: Foundations of Economic Anthropology by Richard R Wilk and Lisa C. Cliggett | Jan 2, 2007 have been retained. 

from Lars Syll “Mediation analysis” is this thing where you have a treatment and an outcome and you’re trying to model how the treatment works: how much does it directly affect the outcome, and how much is the effect “mediated” through intermediate variables … In the real world, it’s my impression that almost all the mediation analyses that people actually fit in the social and medical sciences are misguided: lots of examples where the assumptions aren’t clear and where, in any case,...