Tag Archives: Economics

When no formal theory is available, as is often the case, then the analyst needs to justify statistical specifications by showing that they fit the data. That means more than just “running things.” It means careful graphical and crosstabular analysis … When I present this argument … one or more scholars say, “But shouldn’t I control for every-thing I can? If not, aren’t my regression coefficients biased due to excluded variables?” But this argument is not as persuasive as...

Worst of all, when we feel pumped up with our progress, a tectonic shift can occur, like the Panic of 2008, making it seem as though our long journey has left us disappointingly close to the State of Complete Ignorance whence we began … It often takes years down the Path, but sooner or later, someone articulates the concerns that gnaw away in each of us and asks if the Assumptions are valid … It would be much healthier for all of us if we could accept our fate, recognize...

NAIRU — closer to religion than science Once we see how weak the foundations for the natural rate of unemployment are, other arguments for pursuing rates of unemployment economists once thought impossible become more clear. Wages can increase at the expense of corporate profits without causing inflation … The harder we push on improving output and employment, the more we learn how much we can achieve on those two fronts. That hopeful idea is the polar...

Mainstream economics finally made it … Wooh! So this is reality!

NAIRU — a harmful fairy tale The NAIRU story has always had a very clear policy implication — attempts to promote full employment is doomed to fail, since governments and central banks can’t push unemployment below the critical NAIRU threshold without causing harmful runaway inflation. Althouigh a lot of mainstream economists and politicians have a touching faith in the NAIRU fairy tale, it doesn’t hold water when scrutinized. One of the main problems...

The compulsive types there correspond to the paranoids here. The wistful opposition to factual research, the legitimate consciousness that scientism forgets what is best, exacerbates through its naïvété the split from which it suffers. Instead of comprehending the facts, behind which others are barricaded, it hurriedly throws together whatever it can grab from them, rushing off to play so uncritically with apochryphal cognitions, with a couple isolated and hypostatized...

The Coase Theorem at 60 Steven Medema — who knows more about the theories of Ronald Coase than any other economist yours truly is familiar with — has written an incisive and learned article about the history of the Coase theorem —  The Coase Theorem at Sixty — in the latest issue of Journal of Economic Literature. Medema concludes : The Coase theorem is, by any number of measures, one of the most curious results in the history of economic ideas. Its...

I few weeks ago I was approached to write an article about “game theory and organizations”…I wasn’t quite sure what to talk about at first, but then I realized that managers play “games” with their employees every time them implement any type of inventive system (or promotion system, for that matter!). So let’s think about the different factors we should think about when structuring incentives in the workplace, both to maximize profitability but also to do right by workers…

Why everything we know about modern economics is wrong The proposition is about as outlandish as it sounds: Everything we know about modern economics is wrong. And the man who says he can prove it doesn’t have a degree in economics. But Ole Peters is no ordinary crank. A physicist by training, his theory draws on research done in close collaboration with the late Nobel laureate Murray Gell-Mann, father of the quark … His beef is that all too often, economic...

What can RCTs tell us? We seek to promote an approach to RCTs that is tentative in its claims and that avoids simplistic generalisations about causality and replaces these with more nuanced and grounded accounts that acknowledge uncertainty, plausibility and statistical probability … Whilst promoting the use of RCTs in education we also need to be acutely aware of their limitations … Whilst the strength of an RCT rests on strong internal validity, the...