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Tag Archives: Economics

Angus Deaton rethinking economics

Angus Deaton rethinking economics Like many others, I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century. I will come to some of the substantive topics, but I start with some general failings. I do not include the corruption allegations that have become common in some debates. Even so, economists, who have prospered mightily over the past half century, might fairly...

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Ideology and the politics of economic method

Ideology and the politics of economic method Political economy has long taken a keen interest in the politics of economic ideas, but considerably less attention has been paid to the politics of economic method. Method gets neglected as the technical realm within which, it is assumed economic ideas, once established, are implemented in straightforward fashion. In fact, economic method and technique are in fact key sites in the battle of economic ideas …...

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‘New Keynesian’ unemployment — a paid vacation essentially!

‘New Keynesian’ unemployment — a paid vacation essentially! Franco Modigliani famously quipped that he did not think that unemployment during the Great Depression should be described, in an economic model, as a “sudden bout of contagious laziness”. Quite. For the past thirty years we have been debating whether to use classical real business cycle models (RBC), or their close cousins, modern New Keynesian (NK) models, to describe recessions. In both of these...

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Gatekeepers of the economics profession

Gatekeepers of the economics profession The power structures within the profession reinforce the mainstream in different ways, including through the tyranny of so-called top journals and academic and professional employment. Such pressures and incentives divert many of the brightest minds from a genuine study of the economy (to try to understand its workings and the implications for people) to what can only be called “trivial pursuits.” Too many top...

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Incompetent economists

Teaching economics students the fundamentals of the utility theory used in mainstream economics is a bit of a challenge. But I guess we all expect the professors to know what they are teaching … At a meeting of the American Economic Association (AEA), 200 of the professional economists present were asked to answer the following question:  “You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your...

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Finanspolitiken och de växande investeringsbehoven

.[embedded content] Ett av de grundläggande feltänken i dagens diskussion om statsskuld och budgetunderskott är att man inte skiljer på skuld och skuld. Även om det på makroplanet av nödvändighet är så att skulder och tillgångar balanserar varandra, så är det inte oväsentligt vem som har tillgångarna och vem som har skulderna. Länge har man varit motvillig att öka de offentliga skulderna eftersom ekonomiska kriser i mångt och mycket fortfarande uppfattas som förorsakade av för...

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Utility theory — explaining everything and nothing

Utility theory — explaining everything and nothing Despite the rise of behavioral economics, many economists still believe that utility maximization is a good explanation of human behavior. Although evidence from experimental economics and elsewhere has rolled back the assumption that human agents are entirely self-interested, and shown that altruism and cooperation are important, a prominent response has been to modify individual preference functions so...

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How economists reshape the world

How economists reshape the world [embedded content] To yours truly, the real value of Appelbaum’s meticulously researched history of how economists have come to increasingly influence public policies in modern societies, is that it shows how fundamentally ideological economics is. Of course, you never hear anyone at our seminars telling the lecturer that the assumptions on which his models are built are only made for ideological reasons. But that does not...

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The problem with model-based explanations in economics

The problem with model-based explanations in economics One of the most important tasks of social sciences is to explain the events, processes, and structures that take place and act in society. Explanations are important within science since the choice between different theories hinges in large part on their explanatory powers. The most reasonable explanation for one theory’s having greater explanatory power than others is that the mechanisms, causal...

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Keynes visar vägen ut ur krisen

Keynes visar vägen ut ur krisen Egentligen är det märkligt att den ekonomiska mainstreamteorins företrädare inget verkar vilja lära av historien och åter under senaste tiden stått tämligen handfallna inför den nuvarande ekonomiska krisens härjningar runtom i världen. Speciellt erfarenheterna av den stora depressionen under mellankrigstiden borde annars vara lärorika. Att den neoklassiska ekonomiska teorin stod handfallen när denna bröt ut i slutet på...

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