Tag Archives: Economics

Swiss sovereign money referendum  [embedded content] The people behind the proposal​ in Switzerland​ are effectively trying to get gold back into the monetary system. This is an extremely​ bad idea. Eighty-seven years ago Keynes could congratulate Great Britain on finally having got rid of the biggest ”barbarous relic” of his time – the gold standard. He lamented that advocates of the ancient standard do not observe how remote it now is from the spirit and...

Paul Krugman has 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: You might say that the way to go about research is to approach issues with a pure heart and mind: seek the truth, and derive any policy conclusions afterwards. But that, I suspect, is rarely how things work. After all, the reason you study an issue at all is usually that you care about it, that there’s something...

From Wicksell to Le Bourva and MMT Comparing the limited work of Wicksell, Le Bourva, and MMT, we find that they share many similarities. Obviously, the institutions and issues being discussed have changed during the decades these scholars were writing, yet all three views agree on some fundamental issues. The methodology is quite similar, with a strong focus on balance sheets opposed to theoretical models based on assumptions that are necessary for the...

Guest Post by Jeff Mosenkis of Innovations for Poverty Action. Alex Tabarrok summarizes the story from the new book on RCTs, Randomistas, about how TOMS shoes invited an external evaluation of their program giving away shoes and discovered it wasn’t helping recipients very much. This isn’t that unusual in development, but faced with the evidence, they agreed to be named in the paper and be public about it, and tried to figure out how to use the insights to do better. (See study author Bruce...

Olivier Blanchard’s intellectual path, exploring different avenues – sometimes non-linear, sometimes even contradictory – can be considered as the personification of the controversial​ evolution of mainstream macroeconomic research during the last three decades … Assessing this complex intellectual path, nevertheless, also helps to understand why Blanchard’s analyses are ultimately limited by the mainstream framework, and by the role he decided to play in its defense. The...

Chicago economists — people who have their heads fuddled with nonsense “Fisher Says Prices of Stocks Are Low,” said a headline in the New York Times on October 22, 1929, referring to economist Irving Fisher. Two days later, the stock market crashed, and by the end of November the New York Stock Exchange was down 30 percent from its peak. Fisher had based his statement on strong earnings reports, few industrial disputes, and evidence of high investment in...

Italy — shows why the euro has to be abandoned if Europe is to be saved Investors had until recently been widely expected the European Central Bank to signal at its next meeting in two weeks’ time that it would wind down QE later in the year. Now, questions are growing about how feasible it will be to withdraw the ECB’s buying power at a time when investors are already driving Italian debt costs higher. Nearly half a decade ago, the Greek debt crisis turned...

The ultimate takedown​ of teflon-coated defenders of rational expectations James Heckman, winner of the “Nobel Prize” in economics, was inteviewed by John Cassidy in 2010. What about the rational-expectations hypothesis, the other big theory associated with modern Chicago? How does that stack up now? … It became a kind of tautology that had enormously powerful policy implications, in theory. But the fact is, it didn’t have any empirical content. When Tom...

Behavioural economics — still too devoted to ideas it is supposedly attacking Behavioral economics is still ‘in a relationship’ with orthodox economics and, in a relationship, one makes compromises … We all know how stubborn the other side in this relationship is: standard economics will always ‘rationalize’ behavior wherever it can and will only recognize ‘irrationality’ when there is clear and convincing evidence of it. Understandably, behavioral...

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