Tag Archives: Economics

Keynes vs. Wicksell — the loanable funds theory The fundamental difference between Keynes and Wicksell and in general the supporters of the LFT [Loanable Funds Theory] lies in the specification of the consequences of the presence of bank money. Introducing the distinction between the natural rate of interest and interest rate on money, Wicksell and the LFT supporters state that an economy that uses bank money converges towards the equilibrium position that...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. Jobs: NPR’s Planet Money is looking for someone who knows about econ to do shorter stories linked to the news of the day (explaining the econ of current issues in the news). Good communication/explainer skills but no previous journalism experience required. I know several of the people there and they’re all amazing, I can’t recommend them enough. (I would just caution, from experience, that journalism culture differs from...

Jobs: NPR’s Planet Money is looking for someone who knows about econ to do shorter stories linked to the news of the day (explaining the econ of current issues in the news). Good communication/explainer skills but no previous journalism experience required. I know several of the people there and they’re all amazing, I can’t recommend them enough. (I would just caution, from experience, that journalism culture differs from academia. It moves fast and requires precision under hard deadlines...

[embedded content]Fifteen years ago today, I married this wonderful lady. As always, for you, Jeanette Meyer. “Though I speak with the tongues of angels, If I have not love… My words would resound with but a tinkling cymbal. And though I have the gift of prophecy​… And understand all mysteries… and all knowledge… And though I have all faith So that I could remove mountains, If I have not love… I am nothing.” div{float:left;margin-right:10px;} div.wpmrec2x div.u >...

That’s how it goes when you prefer to read Ayn Rand A couple of years ago the former chairman of the Fed, Alan Greenspan, wrote in an article in the Financial Times, speaking of the continually increasing demands for stronger regulation of banks and finance: Since the devastating Japanese earthquake and, earlier, the global financial tsunami, governments have been pressed to guarantee their populations against virtually all the risks exposed by those...

Why the euro divides Europe The ‘European idea’—or better: ideology—notwithstanding, the euro has split Europe in two. As the engine of an ever-closer union the currency’s balance sheet has been disastrous. Norway and Switzerland will not be joining the eu any time soon; Britain is actively considering leaving it altogether. Sweden and Denmark were supposed to adopt the euro at some point; that is now off the table. The Eurozone itself is split between...

A gender tax to address gender pay gap In dem Café Handsome Her in Melbourne, Australien, können Kaffee und Snacks für männliche Gäste mehr kosten – wenn sie wollen. Und das hat gute Gründe. Die Inhaberinnen des Cafés im angesagten Stadtteil Brunswick bitten männliche Kunden, rund 18 Prozent mehr zu zahlen, damit sie „das geschlechtsspezifische Lohngefälle reflektieren“. In Australien verdienen Männer durchschnittlich 17,7 Prozent mehr für ihre...

Krugman and Mankiw on loanable funds — so wrong, so wrong A couple of years ago — in a debate with James Galbraith and Willem Buiter — Paul Krugman made it perfectly clear that he was a strong believer of the ‘loanable funds’ theory. Unfortunately, this is not an exception among ‘New Keynesian’ economists. Neglecting anything resembling a real-world finance system, Greg Mankiw — in his intermediate textbook Macroeconomics — more or less equates finance to...

The loanable funds hoax The loanable funds theory is in many regards nothing but an approach where the ruling rate of interest in society is — pure and simple — conceived as nothing else than the price of loans or credits set by banks and determined by supply and demand — as Bertil Ohlin put it — “in the same way as the price of eggs and strawberries on a village market.” It’s a beautiful fairy tale, but the problem is that banks are not barter institutions...

DSGE ​​models — worse than useless The main point of this book is to serve as an antidote to the intellectual poison of the erroneous’veil of ignorance’ aphorism … Accordingly [it] rejects as erroneous the standard macroeconomic model, whose assumptions have been built into DSGE models. Among other conceptual absurdities, such as the assumption that economic actors consist of identical omniscient ‘rational agents’ all of whom have perfect information about...