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Tag Archives: Economics

Formalizing economic theory

What guarantee is there … that economic concepts can be mapped unambiguously into mathematical concepts? The belief in the power and necessity of formalizing economic theory mathematically has thus obliterated the distinction between cognitively perceiving and understanding concepts from different domains and mapping them into each other. Whether the age-old problem of the equality between supply and demand should be mathematically formalized as a system of inequalities or...

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Economics phrasebook

In 1990, two economics PhD students at the University of Chicago, Jeffrey Smith and Kermit Daniel … composed “Economics to Sociology Phrase Book” in order, as they put it, “to help economists adjust their way of speaking in a manner that will make it comprehensible to Sociologists” … Concerning economics terminology, by the way, one can see that not much has changed since then. Oleg Komlik

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Economic modelling

A couple of years ago, Paul Krugman had a piece up on his blog arguing that the ‘discipline of modeling’ is a sine qua non for tackling politically and emotionally charged economic issues: In my experience, modeling is a helpful tool (among others) in avoiding that trap, in being self-aware when you’re starting to let your desired conclusions dictate your analysis. Why? Because when you try to write down a model, it often seems to lead some place you weren’t expecting or...

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Neoliberalism and the Road to Inequality and Stagnation: A Chronicle Foretold

My latest book has recently been published by Edward Elgar. The book explores the impact of neoliberal policies on the US, Europe, and the global economy. It shows how the 2008 financial crisis and Great Recession were predictable outcomes of the neoliberal policy experiment, as is the emergence of global “race to the bottom” competition. […]

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On mathematics and economics

On mathematics and economics Studying mathematics and logic is interesting and fun. It sharpens the mind. But economics is not pure mathematics or logic. It’s about society. The real world. Forgetting that, economics becomes nothing but an irrelevant and uninteresting ‘Glasperlenspiel.’ Or as Knut Wicksell put it already a century ago: One must, of course, beware of expecting from this method more than it can give. Out of the crucible of calculation comes...

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The main insight of MMT

The main insight of MMT MMT is, first and foremost, a balance sheet approach to macroeconomics. At its very core lie reserve accounting, then deposit accounting, and then sectoral balances accounting. There is very little behaviour in any of this. Equilibrium rules as all balances balance – in both flows and stocks – and there are no assumptions apart from the existence of a central bank, a Treasury, a banking system and some households and firms. MMT can...

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Managing the academic job market

What follows is a summary of what I see as the key advice, with links to other resources that go into more depth or do a better job than I can. It’s going to be most accurate for economics, political science, public policy & other professional schools This post is a continuous work in progress, and it is comes not only from my own experience but that of a huge number of colleagues and readers. It can benefit from your feedback too, so please email me if a you have something to add (or if...

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Has economics — really — become an empirical science?

Has economics — really — become an empirical science? In Economics Rules (Oxford University Press, 2015), Dani Rodrik maintains that ‘imaginative empirical methods’ — such as game theoretical applications, natural experiments, field experiments, lab experiments, RCTs — can help us to answer questions concerning the external validity of economic models. In Rodrik’s view, they are more or less tests of ‘an underlying economic model’ and enable economists to...

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More on the critique of New Developmentalism

Oreiro and de Paula’s (2022) reply to my article (Palley, 2021) further convinces me that New Developmentalism (ND) substantially misconstrues the development challenge and ND’s policy recommendations lean in a Neoliberal direction. The critique of ND is not its emphasis of the importance of manufacturing. It is the regressive inclination, the narrowness of policy recommendations, […]

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