Tag Archives: Economics

The most important book in the history of economics [embedded content]

What mainstream economists are embarrassed to admit The true state of affairs is almost opposite of what Friedman makes it out to be when he ventures the opinion that “different predictions about the importance of so-called ‘economies of scale’ account very largely for divergent views about the desirability or necessity of detailed government regulation of industry and even of socialism rather than private enterprises.” Was there ever an economist who came to believe in either socialism or...

The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes … I believe that there is social and psychological justification for significant inequalities of income and wealth, but not for such large disparities as exist to-day. John Maynard Keynes wrote this in General Theory (1936). Four decades later the Iron Lady appeared in the Parliament with this gobsmacking...

Labor-cost competitiveness and the Eurozone — a textbook fairytale Heiner Flassbeck and Costas Lapavitsas spell out their version of what is roughly the neoclassical textbook model of a currency union. Their main point is that there would not have been large unsustainable current account imbalances within the Eurozone, and consequently no sovereign debt crisis in the deficit countries, if all member states had kept their nominal wage growth equal to labor productivity growth plus 2% (the...

By Thomas Palley, Louis-Philippe Rochon and Matías Vernengo This year marks two important anniversaries in macroeconomics: the 80th anniversary of the publication of Keynes’s The General Theory of Employment, Interest and Money, and the 70th anniversary of Keynes’s premature death, at the age of 63. To mark these anniversaries, the first issue of the fourth year [...]

BBC report on the need for rethinking economics and the way we teach it.

Walrasian economic theory — little better than nonsense You enquire whether or not Walras was supposing that exchanges actually take place at the prices originally proposed when the prices are not equilibrium prices. The footnote which you quote convinces me that he assuredly supposed that they did not take place except at the equilibrium prices … All the same, I shall hope to convince you some day that Walras’ theory and all the others along those lines are little better than nonsense!...

Pedagogik — ett ämne i kris Den antiintellektuella avgrunden är nära när den postmoderna sanningsrelativismen infekterar det offentliga samtalet på alla nivåer, inklusive den akademiska världen. I Sverige tycks den pedagogiska disciplinen vara värst smittad. En docent i pedagogik fick för några år sedan Skolverkets uppgift att skriva en rapport om fysikundervisningen i den svenska skolan, samt komma med förslag på hur den skulle attrahera fler flickor. Ur rapporten: ”Föreställningen om det...

Top 10 economics blog posts Dumb and dumber in modern macroeconomics Why Paul Krugman is no real Keynesian Dani Rodrik’s blind spot Robert Lucas, rational expectations, and the understanding of business cycles The blatant absence of empirical fit of macroeconomic models Non-ergodic economics, expected utility and the Kelly criterion Greg Mankiw makes a fool of himself — again Is macroeconomics for real? Please say after me – Sonnenschein-Mantel-Debreu James Heckman — the ultimate take down...

‘New Keynesianism’ — an unpleasant macroeconomic fairy-tale The so-called new-Keynesian (or NK) model, has emerged and become a workhorse for policy and welfare analysis … The model starts from the RBC model without capital, and, in its basic incarnation, adds only two imperfections. It introduces monopolistic competition in the goods market. The reason is clear: If the economy is going to have price setters, they better have some monopoly power. It then introduces discrete nominal price...