Tag Archives: Economics

Using ‘small-world’ models in a large world Radical uncertainty arises when we know something, but not enough to enable us to act with confidence. And that is a situation we all too frequently encounter … The language and mathematics of probability is a compelling way of analysing games of chance. And similar models have proved useful in some branches of physics. Probabilities can also be used to describe overall mortality risk just as they also form the...

We are all realists and we all — Mäki, Cartwright, and I — self-consciously present ourselves as such. The most obvious research-guiding commonality, perhaps, is that we do all look at the ontological presuppositions of economics or economists. Where we part company, I believe, is that I want to go much further. I guess I would see their work as primarily analytical and my own as more critically constructive or dialectical. My goal is less the clarification of what economists...

Graduate education in economics Modern economics has become increasingly irrelevant to the understanding of the real world. In his seminal book Economics and Reality (1997) Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject. It is — sad to say — as relevant today as it was twenty-three years ago. It is still a fact that within mainstream economics internal validity is everything...

Marknadsstyrd skola? Nej tack! Det är allvarligt att likvärdigheten brister i dag, men tyvärr blir det inte bättre utan skevheterna ökar med tiden när vi har ett fritt skolval och en rörlig skolpeng. Den dystra slutsatsen är att Sverige allt mer blir ett samhälle där du måste vara född i rätt familj och med ett starkt socialt kapital i bagaget för att kunna lyckas i livet. Det är en tankemodell som tyvärr kommer att vinna mark. Att inte se problemen med...

Le plan de relance français est-il déjà obsolète avant d’avoir servi ? En tout cas, sa forme et son application sont sérieusement remises en cause par le deuxième confinement qui est en train de replonger dans le rouge tous les indicateurs économiques, ragaillardis à la faveur de l’été. Il voyait pourtant loin cet ambitieux dispositif, baptisé « France Relance », le regard volontairement tourné vers 2030. C’est bien justement ce qu’on lui reproche aujourd’hui : avoir la tête...

Where modern macroeconomics went wrong DSGE models seem to take it as a religious tenet that consumption should be explained by a model of a representative agent maximizing his utility over an infinite lifetime without borrowing constraints. Doing so is called micro-founding the model. But economics is a behavioral science. If Keynes was right that individuals saved a constant fraction of their income, an aggregate model based on that assumption is...

Time irreversibility and non-ergodicity are — as yours truly repeatedly has argued — extremely important issues for understanding what are some of the deep fundamental flaws of mainstream economics. Ole Peters presentation at Gresham College gives further  evidence why expectation values are irrelevant for understanding real-world economic systems. [embedded content]

Olivier Blanchard fordert generöser Subventionen statt Kredite ZEIT ONLINE: Herr Blanchard, Deutschland hat gerade einen umfassenden Lockdown beschlossen, wie viele andere Staaten weltweit. Und der erste Lockdown ist noch nicht lange her. Glauben Sie, dass Unternehmen und Regierungen diesmal besser vorbereitet sind? Olivier Blanchard: Dieser zweite Lockdown hat ganz neue Dimensionen … Wir müssen die direkt und indirekt betroffenen Unternehmen und...

The issue of interpreting economic theory is, in my opinion, the most serious problem now facing economic theorists. The feeling among many of us can be summarized as follows. Economic theory should deal with the real world. It is not a branch of abstract mathematics even though it utilizes mathematical tools. Since it is about the real world, people expect the theory to prove useful in achieving practical goals. But economic theory has not delivered the goods. Predictions...

I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole. David Card Back in 1992, New Jersey raised the minimum wage by 18 per cent while its neighbour...