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from Lars Syll One can generally develop a theoretical model to produce any result within a wide range. Do you want a model that produces the result that banks should be 100% funded by deposits? Here is a set of assumptions and an argument that will give you that result. That such a model exists tells us very little … Being logically correct may earn a place for a theoretical model on the bookshelf, but when a theoretical model is taken off the shelf and applied to the real world, it is...

from Gerald Holtham (originally a comment) The problems of economics as an academic pursuit have a sociological origin. The subject matter of economics is of interest to nearly everyone who lives in a commercial society and has to make a living. Intelligent people develop opinions about it and advance opinions in a way they would not do about astronomy or quantum physics. Similarly every politician has a story about the economic policy to be followed. This situation has created a strong...

Despite yet another round of policy announcements from the Morrison government, energy policy in Australia is still stuck in the morass created by a combination of climate denialism and the failed reforms of the 1990s, of which privatisation was a critical element. I’ve argued for some time that the grid should be renationalised, and the case is even more urgent now. The case for renationalisation has been massively strengthened by the fact that real interest rates on government...

from Dean Baker Last week an official with China’s Center for Disease Control and Prevention (CDC) said that the country may have a vaccine available for widespread distribution by November or December. This would almost certainly be at least a month or two before a vaccine is available for distribution in the United States, and possibly quite a bit longer. While we may want to treat statements from Chinese government officials with some skepticism, there is reason to believe that this...

from David Ruccio Year 3 of the Trump presidency was absolutely terrific—indeed, record-breaking—for Americans. At least that’s how things look in terms of the headline numbers from the Census Bureau: median household income was up (by 6.8 percent, a record) over 2018 and the official poverty rate decreased (by 1.3 percentage points, to 10.5 percent, the lowest rate observed since estimates were initially published for 1959).* And then there’s Kevin Hassett, former chair of Trump’s White...

from Lars Syll Evidence-based theories and policies are highly valued nowadays. Randomization is supposed to control for bias from unknown confounders. The received opinion is that evidence based on randomized experiments, therefore, is the best. More and more economists have also lately come to advocate randomization as the principal method for ensuring being able to make valid causal inferences. Yours truly would, however, rather argue that randomization, just as econometrics, promises...

Easily lost in the news of the day, from the NYT: President Xi Jinping of China pledged on Tuesday that his country would adopt much stronger climate targets and achieve what he called “carbon neutrality before 2060.” If realized, the pledges would be crucial in the global fight against climate change. This may be mostly PR, but it may signal a significant increase in China’s commitment to decarbonization.  We will learn more as details are provided and...

from Asad Zaman This continues from the previous post on Post-Keynesian Response. A large number of contributions from different areas need to be integrated to build an economics for the 21st Century. For an acknowledgement of the failure of 20th Century Macro from one of its architects, see Romer’s Trouble With Macro. This post explains Modern Monetary Theory briefly. Since the time of Keynes, major changes have taken place in the global financial system. Against wishes of Keynes,...