Tag Archives: Economics

One of the things Chris is up to these days is being the academic lead for the new Peace and Recovery Initiative at IPA, which is looking to fund research about fragile states, repression, reducing crime and violence, and recovery from humanitarian disasters. Deadline for proposals is March 2 (that’s one short month), and please share with colleagues. But even for general interest reading, I recommend this “guiding principles” document, which is also a very readable summary of what Chris...

Modern economics — confusing models with reality What does concern me about my discipline … is that its current core — by which I mainly mean the so-called dynamic stochastic general equilibrium approach — has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one … While it often makes sense to assume rational expectations for a...

It’s inequality. By James Kwak This American Life‘s forays into politics and economics are generally less satisfying than their ordinary storytelling fare. That’s especially true when they try to answer some specific question, like “What is wrong with the Democratic Party?”—the subject of a segment last month. The story did have some telling moments, however, most vividly when moderate Congresswoman Cheri Bustos was trying to pitch the party’s forgettable and already-forgotten “Better...

It’s inequality. By James Kwak This American Life‘s forays into politics and economics are generally less satisfying than their ordinary storytelling fare. That’s especially true when they try to answer some specific question, like “What is wrong with the Democratic Party?”—the subject of a segment last month. The story did have some telling moments, however, most vividly when moderate Congresswoman Cheri Bustos was trying to pitch the party’s forgettable and already-forgotten “Better...

Economics’ pretence of knowledge While in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often is treated as important that which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes. It can hardly be denied that...

It’s high time to bury Milton Friedman’s natural rate hypotheis Fifty years ago Milton Friedman wrote an (in)famous article arguing that (1) the natural rate of unemployment was independent of monetary policy and that (2) trying to keep the unemployment rate below the natural rate would only give rise to higher and higher inflation. The hypothesis has always been controversial, and much theoretical and empirical work has questioned the real-world relevance...

What is (wrong with) neoclassical economics? If you want to know what is “neoclassical economics” and turn to Wikipedia you are told that neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits by cost-constrained...

Minimum wage à la Germany Trotz der auch im Jahr 2016 noch anhaltenden deutlichen Lohnsteigerungen im Niedriglohnbereich gibt es nach wie vor ein Problem mit weitverbreiteten Umgehungen des gesetzlichen Mindestlohns. Werden bei der Stundenlohn-Berechnung die vertragliche Arbeitszeit und bezahlte Überstunden des Vormonats zugrunde gelegt, erhalten 9,8% der Beschäftigten den Mindestlohn nicht, obwohl sie einen Anspruch darauf hätten. In absoluten Zahlen...

Theoretical studies of output and growth often focus on the behavior of equilibrium output. The usefulness of this approach depends on there being a tendency for actual output to converge on equilibrium output. With such a tendency present, studying the behavior of equilibrium output will tell us something about the behavior of actual output. It is therefore of interest to spell out the process by which an economy in disequilibrium is thought to tend toward equilibrium. A first step is to...

Why are women paid less than men?  [embedded content] Advertisements