Tag Archives: Economics

Game theory — a scientific cul-de-sac Half a century ago there were widespread hopes game theory would provide a unified theory of social science. Today it has become obvious those hopes did not materialize. This ought to come as no surprise. Reductionist and atomistic models of social interaction — such as the ones mainstream economics and game theory are founded on — will never deliver sustainable building blocks for a realist and relevant social science....

Many American undergraduates in Economics interested in doing a Ph.D. are surprised to learn that the first year of an Econ Ph.D. feels much more like entering a Ph.D. in solving mathematical models by hand than it does with learning economics. Typically, there is very little reading or writing involved, but loads and loads of fast algebra is required. Why is it like this? … One reason to use math is that it is easy to use math to trick people. Often, if you make your...

Good reasons to become a Keynesian Until [2008], when the banking industry came crashing down and depression loomed for the first time in my lifetime, I had never thought to read The General Theory of Employment, Interest, and Money, despite my interest in economics … I had heard that it was a very difficult book and that the book had been refuted by Milton Friedman, though he admired Keynes’s earlier work on monetarism. I would not have been surprised by,...

Chicago economics — in praise of superficiality To observe that economics is based on a superficial view of individual and social behaviour does not seem to me to be much of an insight. I think it is exactly this superficiality that gives economics much of the power that it has. Its ability to predict human behaviour without knowing very much about the make up and lives of the people whose behaviour we are trying to understand. Robert Lucas The purported...

By James Kwak I think it’s highly likely that the dust will clear eventually and that our economy will come back to life at some point in the next two or three years. I know there are certain disaster scenarios that can’t be ruled out, but I think they are unlikely. I’m not going to guess when things will return to a semblance of normal. Really, no one knows. Photo by Free-Photos from PixabayThe question for now is: what will that economy look like? A few things, I think, are clear. The...

By James Kwak I think it’s highly likely that the dust will clear eventually and that our economy will come back to life at some point in the next two or three years. I know there are certain disaster scenarios that can’t be ruled out, but I think they are unlikely. I’m not going to guess when things will return to a semblance of normal. Really, no one knows. Photo by Free-Photos from PixabayThe question for now is: what will that economy look like? A few things, I think, are clear. The...

Covid-19 and the magic money tree What will be the lasting effects of the covid-19 pandemic? Start with the size of the state. Over the next year government debt will rise sharply, as spending jumps and tax revenues collapse. When the economy recovers, attention will turn to paying it down. “Capital and Ideology”, a new book by Thomas Piketty, shows that after the first and second world wars many governments in the West turned to heavier taxation of the...

On the non-neutrality of money Paul Krugman has repeatedly over the years argued that we should continue to use neoclassical hobby horses like IS-LM and Aggregate Supply-Aggregate Demand models. Here’s one example: So why do AS-AD? … We do want, somewhere along the way, to get across the notion of the self-correcting economy, the notion that in the long run, we may all be dead, but that we also have a tendency to return to full employment via price...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. It’s a little tricky to write links when it feels like things are changing hourly. Here’s the main message to keep in mind for the research community – you can do more than idle your projects. COVID-19 will affect every aspect of development, health, education, entrepreneurship, mobile money, cash transfers, political systems and trust in authority. But, if you have a research expertise in some area of development, now’s the time...

Chicago economics — a bit out of touch with the real world Tom Sargent is a bit out of touch with the real world up there in his office … Certain people have a capacity for ignoring facts which are patenty obvious, but are counter to their view of the world; so they just ignore them … Sargent is a sort of tinkerer, playing an intellectual game. He looks at a puzzle to see if h ecan solve it in a particular way, exercising these fancy techniques. Alan...