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from Lars Syll Almost all mainstream macroeconomic theories are based on Milton Friedman’s permanent income hypothesis (PIH). It is mostly used in formulating the consumption Euler equations that make up a vital part of ‘modern’ New Classical and ‘New Keynesian’ macro models. So, what’s the problem with PIH? Well, only that empirical evidence have — again and again — falsified it! One implication of PIH is that current consumption is modelled as not being influenced by predictable changes...

Quite a while back we had a discussion of the idea of Energy Return On Energy Invested (EROEI) as a measure of the viability of solar and wind energy. I did the numbers for solar (including battery backup) and came to the conclusion that EROEI was at least 10 and therefore not a problem. The issue has come up in an email discussion I’ve been having. Thinking about it, I concluded that using a ratio of energy generated to energy invested is incorrect. As a starting point, I assume...

from Jayati Ghosh  This led to the rapid development of multiple Covid-19 vaccine candidates and even more rapid regulatory approval to several of them. Typically, vaccines take several years to be developed and approved, partly because of extended clinical trials to check for all possible responses. But some Covid-19 vaccine candidates were given official approval in Russia and China even before the essential Phase III trials were completed. Even in the US and Europe, regulatory...

Source: Medecins san Frontiers, accessed 21 February 2021

 by New Deal democrat Weekly Indicators for March 2 – 6 at Seeking Alpha My Weekly Indicators post is up at Seeking Alpha. Two important data considerations this week: (1) for the first time, some YoY comparisons – e.g., restaurant reservations – are compared with data after the onset of the pandemic. The distortions will intensify next week and last at least through the end of April; and (2) long-term interest rates, in particular for...

from Blair Fix If you are interested in the megatrends of the 21st century, then Carey King’s new book The Economic Superorganism should be on your reading list. It is a well-written, meticulously researched opus on how to understand the sustainability problems that face humanity. In many ways, the book covers well-trodden ground. King is an engineer who is trained in the systems thinking pioneered by MIT engineers Donella and Dennis Meadows. (The Meadows’ book The Limits to Growth was...

from Lars Syll When I read in the 70s the publications of Sonnenschein, Mantel and Debreu I was deeply concerned. Up to the time I had the naive illusion that the microeconomic foundation of the GE model, which I had admired so much, does not only allow us to prove that the model and the concept of equilibrium are logically consistent (that equilibrium exists), but also allow us to show that the equilibrium is well determined (unique and stable). This illusion, or should I rather say,...

from Joseph Huber  Since the dotcom crisis (2000), subprime and banking crisis (2008) and the euro sovereign debt crisis (2010–12) the public is critical of the financial industry. Bubble economies should be prevented, money ought to serve the real economy rather than questionable financial dealings. However, putting it this way is not yet appropriate. One cannot separate the economy from its financing. The modern economy is a credit economy. Most invest­ments are paid only to a lesser...

from Geoff Davies The false nostrums of the pseudo-science of neoclassical economics have been used to create a system that promotes endlessly increasing consumption of resources and endless elaboration of technology. This system already operates far beyond the needs of people. Our survival requires that we rein in the machine and return to proven and durable, social and moral forms of organisation. Growth has a fundamental place in the biological world, of which we humans are a part....

I am going to comment on two smart guys who believe that they disagree about the optimal political strategy for Democrats. Brian Beutler wrote an interesting essay criticizing what he calls “issue polling essentialism”. It includes the text The topic occurred to me after I recorded last week’s Rubicon with my friend Matt Yglesias, where we took different sides on the question of how determinative issue polling should be in setting...