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The future of Europe is at stake. Yesterday, the European commission published a Roadmap for deepening Europe’s Economic and Monetary Union. coincidentally, the German Handelsblatt ‘EZB Schattenrat’ (‘ECB shadow council’, of which I’m a member) today discussed the ideal European Central Bank. The coming days I will post some (written) remarks made by members of the shadow council as well as some stuff relating to the Roadmap. No mention will be made of individual verbal remarks. Recurring...

from David Ruccio If you read the business press in the United States (e.g., the Wall Street Journal), you’ll find something along the lines of the following argument: the fact that U.S. worker productivity rebounded in the third quarter while hourly wages rose moderately is a sign “the economy is strengthening.” But look at the numbers. Nonfarm business sector productivity (the blue line in the chart above) rose 1.5 percent (from the same quarter a year ago) while real hourly...

from Peter Radford OK, let’s all calm down. The Republican tax plan is now in its last stages of design. The two versions that exist need to be stitched together and then the compromise version passed in both houses of Congress. The law as we currently know it is a classic piece of plutocratic largesse. It will fail in its supposed intentions: it will not do much at all for the economy. It gives rich people and large corporations big dollops of cash and a slew of new loopholes to feather...

“The “nature of money” is the most important factor, Pettifor says. She believes that the common view of banks is that they act as intermediaries between patient savers and impatient borrowers, but “banks haven’t done that since 1694,” she says. If this were the case, she adds, then “we wouldn’t have a massive expansion of credit at the same time as we have a contraction of savings” – something she cites as the cause of the 2000 dotcom bubble bursting. The conversation turns to the...

from Lars Syll Important and far-reaching problems still beset regression analysis and econometrics — many of which basically is a result of unsustainable ontological views. Most econometricians have a nominalist-positivist view of science and models, according to which science can only deal with observable regularity patterns of a more or less lawlike kind. Only data matters and trying to (ontologically) go beyond observed data in search of underlying real factors and relations that...

Winding down from post hurricane levels, however keep in mind this is a forecast of Friday’s number, not report of actual private payrolls: Highlights A pre-hurricane total of 190,000 is ADP’s call for November private payroll growth which would follow a hurricane-related upswing of 252,000 in October and 15,000 downswing in September. This fits with Econoday’s consensus for Friday’s November report where private payrolls are expected to rise 184,000. Demand for labor has...

from Asad Zaman The title is an inversion of De-Finetti’s famous statement that “Probability does not exist” with which he opens his famous treatise on Probability. My paper, discussed below, shows that the arguments used to establish the existence of subjective probabilities, offered as a substitute for frequentist probabilities, are flawed. The existence of subjective probability is established via arguments based on coherent choice over lotteries. Such arguments were made by Ramsey,...

from David Ruccio One of the rationales for the great Republican tax heist of 2017 is that American corporations desperately need tax relief.  However, as is clear from the chart above, the current corporate tax rate is already very low—not absolutely (since it was in fact lower in 2009, when corporate profits fell during the Great Recession), but certainly in comparison to the rest of the postwar period.* Today, the effective corporate tax rate in the United States is only 20.4 percent,...

from Lars Syll Imagine you and someone you do not know can share $100. It is up to you to propose how to divide the $100 between the two of you, and the other player will need to accept or reject your proposal. If he rejects the proposal, neither of you will receive anything. What sum will you offer the other player? I have data on the choices of about 12,300 people, most of them students, who were asked this question. Nearly half of the participants (49%) offered the other player the...

from Jayati Ghosh The global financial media are always on the lookout for signs of an impending financial crisis in China – and the dark prognostications about the future made by several external observers relate to both internal and external financial flows. But there are reasons to believe that both concerns may be overplayed, and that what is occurring especially with respect to cross-border flows is a much more complex process reflecting a medium-term plan of the Chinese state, in...