Tag Archives: Economics

Krugman to Lietaer: “Never touch the money​ system” [embedded content]Bernard Lietaer (1942-2019) was a former professor of international finance and president at the Central Bank of Belgium. One of our greatest monetary thinkers, and contrary to Krugman et consortes,  he dared to talk about — and question — our monetary system!

Dirk Ehnts über Staatsschulden & MMT .[embedded content] Dieses Interview ist wirklich hörenswert. Yours truly schätze Dirk Ehnts’ eher pragmatische Haltung gegenüber MMT und der Frage des Umgangs mit Staatsschulden. Er warnt davor, die MMT-Theorie als eine Art Allheilmittel zu betrachten. Er betont die Notwendigkeit, die Anwendung der MMT-Prinzipien an die spezifischen Gegebenheiten eines Landes anzupassen. Zudem weist er darauf hin, dass hohe...

Busting the natural rate of unemployment myth Almost sixty 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 of the idea...

‘New Keynesianism’ — more useless than ever .Macroeconomic models may be an informative tool for research. But if practitioners of ‘New Keynesian’ macroeconomics do not investigate and make an effort to provide a justification for the credibility of the assumptions on which they erect their building, it will not fulfil its tasks. There is a gap between its aspirations and its accomplishments, and without more supportive evidence to substantiate its claims,...

Speculative manias and financial crises .[embedded content] The recurring pattern in financial crises is more or less the same. For some reason, a shift occurs in the economic cycle (such as war, innovations, new regulations, etc.) that leads to changes in the profit opportunities for banks and companies. Demand and prices rise, pulling more and more parts of the economy into a state of euphoria. Speculative mania, whether it pertains to tulip bulbs, real...

Lucas critique and the modularity assumption Prima facie modular systems seem very special. But a number of authors suppose that modularity is the hallmark of causality … I have two objections to the usual claims about modularity. First, it is not a hallmark of causality. Recall the Phillips curve, a canonical example of a non-modular causal connection – one that, à la Robert Lucas, breaks down under attempts to manipulate the cause (inflation) to control...

Claudia Goldin — gender gaps and inequality The Nobel Committee has awarded this year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Claudia Goldin “for having advanced our understanding of women’s labour market outcomes”. Indeed, Claudia’s contributions to the topic are vast, perhaps best epitomised by her 1990 book Understanding the Gender Gap. This book illustrates at once her rigor as a University of Chicago-trained PhD as...

This paper introduces the notion of monetary disorder. The underlying theory rests on a twin circuits view of the macro economy. The idea of monetary disorder has relevance for understanding the experience and consequences of the recent decade-long period of monetized large budget deficits and ultra-easy monetary policy. Current policy rests on Keynesian logic whereby […]

The purist streak in economics So in what sense is this “dynamic stochastic general equilibrium” model firmly grounded in the principles of economic theory? I do not want to be misunderstood. Friends have reminded me that much of the effort of “modern macro” goes into the incorporation of important deviations from the Panglossian assumptions that underlie the simplistic application of the Ramsey model to positive macroeconomics. Research focuses on the...

Economic myths that just won’t die .[embedded content]