Tag Archives: Economics

What’s the problem with economic models? Some critics of economics appear to believe that the root of the alleged problems lies in models, or the method of modelling in general. On this view, modelling just is not an appropriate way of acquiring knowledge about the social world. No (simple) model can do epistemic justice to the (complex) world, so there cannot be a proper use of models that would make the method of modelling justified. Models are the...

Guest post by Jeff Mosenkis of Innovations for Poverty Action Remember to fill out your U.S. Census form if you got a mailing! Of course accurate counts are important for apportioning leadership and federal resources, but more importantly (as someone else pointed out) so that researchers 80 years from now looking at historical trends won’t pull out their hair in frustration of the lost 2020 census data the same way ones today do about the 1890 census data fire. The Dev Impact blog had a pair...

Neoclassical economics and the severity of the coronavirus crisis. This training in economics makes politicians and bureaucrats incapable of understanding a crisis like this. They are, however, very susceptible to the advice of economists. They therefore enacted policies that reduced our capacity to cope with a pandemic, crafted systems of production and distribution that drastically amplified its damaging impact when it did arrive, and ridiculed warnings...

Development economists have been using randomized controlled trials (RCTs) for the best part of two decades, and economists working on welfare policies in the US have been doing so for much longer. The years of experience have made the discussions richer and more nuanced, and both proponents and critics have learned from one another, at least to an extent. In this essay, I do not attempt to reconstruct the full range of questions that I have written about elsewhere. Instead, I...

Statsskulden är vårt minsta problem nu Den största risken är att vi precis som 2008 underskattar nedgången … Men Magdalena Andersson verkar fast i sin metafor att hon sparat duktigt och därför kan vi använda lite av det hon ”sparat i ladan”. Men metaforen är fel, för en regering måste skydda sin befolkning även när ”ladan är tom”. I stora kriser som krig och pandemier ställs de vanliga reglerna på ända. Precis allt måste göras för att besegra viruset och...

How money is created Everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much...

Politiska reformer bakom ökade ojämlikheten Både den rikaste och den fattigaste tiondelen av befolkningen sticker ut i statistiken, men det finns även skillnader inom dessa grupper. Under 70-talet minskade de rikaste 10 procentens andel av inkomsterna från omkring en fjärdedel till en femtedel, men har sedan 1980 knaprat sig tillbaka. Den rikaste procentens andel har däremot nästan fördubblats till cirka 7 procent av landets samlade inkomster. Det mesta av...

Cauchy logic and economics  [embedded content] Yours truly has no problem with solving problems in mathematics by ‘defining’ them away. But how about the real world? Maybe that ought to be a question to ponder even for economists all to fond of uncritically following the mathematical way when applying their mathematical models to the real world, where indeed “you can never have infinitely many heaps” … In econometrics we often run into the ‘Cauchy logic’ —...

Det har uppstått ett brett politiskt stöd under coronakrisen för finanspolitiska stimulanser i de enskilda EU-länderna (och i Storbritannien). EU har åtminstone tillfälligt släppt sina stränga krav på offentlig budgetbalans och de nationella regeringarna har tvingats att göra avkall på sina egna finanspolitiska regler. Den expansiva finanspolitiken på ländernivå för att rädda jobb och företag har få restriktioner. Långräntorna är låga och kommer förmodligen att sjunka...

Dumb and Dumber — the Chicago version A couple of years ago, in a lecture on the US recession, Robert Lucas gave an outline of what the New Classical school of macroeconomics today thinks on the latest downturns in the US economy and its future prospects. Lucas starts by showing that real US GDP has grown at an average yearly rate of 3 per cent since 1870, with one big dip during the Depression of the 1930s and a big – but smaller – dip in the recent...