Tag Archives: Economics

Economics — a contested space Neoliberals try to close down the space of political debate and social possibility by excluding all except neoliberal ideas. The tragedy of the past 40 years is they have been succeeding. In the academy there is a neoclassical monopoly, and in politics Labor and Social Democratic parties have been captured by the Trojan horse of the Third Way, creating a neoliberal political monopoly. Reversing this state of affairs is a...

I received an e-mail from an undergraduate economics student who was curious about economic policy in Washington, DC. His question says a lot about the current state of affairs. Here it is with my reply. From: Xxxxxxx Xxxxxxx [mailto:[email protected]] Sent: Saturday, October 1, 2016 10:56 AM To: mail Subject: Question from an undergraduate Dear Dr. Palley, I am [...]

My favourite girls (personal) Hedda (3), Linnea (17), and Tora (23)

Why economists are useless at forecasting We forget – or willfully ignore – that our models are simplifications of the world … One of the pervasive risks that we face in the information age … is that even if the amount of knowledge in the world is increasing, the gap between what we know and what we think we know may be widening. This syndrome is often associated with very precise-seeming predictions that are not at all accurate … This is like claiming you...

‘Rational expectations’ is wrong Lynn Parramore: It seems obvious that both fundamentals and psychology matter. Why haven’t economists developed an approach to modeling stock-price movements that incorporates both? Roman Frydman: It took a while to realize that the reason is relatively straightforward. Economists have relied on models that assume away unforeseeable change. As different as they are, rational expectations and behavioral-finance models...

Karl Gunnar Persson In Memoriam (personal) Like a bolt out of the blue, sad, sad, news reached us today that my dear old teacher, colleague, and neighbour — Karl Gunnar Persson — has died of a heart attack while on a bicycling tour in Sinea, Italy. Among his foremost works are An Economic History of Europe, Knowledge, Institutions and Growth, 600 to the Present (Cambridge University Press 2014), Grain markets in Europe 1500–1900, Integration and...

In issue no. 76 of real-world economics review — published today — yours truly has an article on Paul Romer’s frontal attack on the New Classical and ‘New Keynesian’ theories that has put macroeconomics on a path of intellectual regress for more than two decades now.

Price stickiness is NOT the problem ‘New Keynesian’ macroeconomists have for years been arguing (e.g. here) about the importance of the New Classical Counter Revolution in economics. ‘Helping’ to change the way macroeconomics is done today — with rational expectations, Euler equations, intertemporal optimization and microfoundations — their main critique of New Classical macroeconomics is that it didn’t incorporate price stickiness into the Real Business...

After almost forty years in Lund, yours truly has returned to the town where he was born and bred — Malmö. Living on the top floor of this grandiose building — next to The Magistrate’s Park, and with The Opera and The Municipal Art Gallery just across the street — makes it easy to convince me returning was a good decision …

My philosophy of economics A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative to the failing mainstream theory, I shouldn’t expect people to pay attention. This is however to totally and utterly misunderstand the role of philosophy and methodology of economics! As John Locke wrote in An Essay Concerning Human Understanding: The Commonwealth of Learning is not at this time without Master-Builders, whose...