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from Peter Radford Fascinating. The war in Europe is messing with some major preconceptions and exposing some as illusions that, perhaps, we would be better off without. Take, for instance, The Economist magazine’s leader article entitled “Trading with the enemy.”  Here’s the key question the article poses: “Is it prudent for open societies to conduct normal economic relations with autocratic ones, such as Russia and China, that abuse human rights, endanger security and grow more...

from Dean Baker There has been much press around President Biden’s demands that China not support Russia in its invasion of Ukraine. The implication of these demands is that the United States has the ability to punish China economically in a way that imposes more pain on China than on us. That may be true for now, but it’s not clear it will be true much longer, and it may not even prove to be true at present. It is common to refer to China as the world’s second largest economy, after the...

Putin’s invasion of Ukraine has upended all kinds of certainties, created new possibilities, and closed off old ones. We can certainly see this in relation to nuclear power. Here are a few developments related to the war Russia’s capture of the Chernobyl plant, and the associated fire, have raised new concerns about nuclear safetyBelgium has announced that its planned closure of a nuclear plant will be deferred, possibly until 2035, in order to reduce reliance on Russian oil and...

from Lars Syll So in what sense is this “dynamic stochastic general equilibrium” model firmly grounded in the principles of economic theory? I do not want to be misunderstood. Friends have reminded me that much of the effort of “modern macro” goes into the incorporation of important deviations from the Panglossian assumptions that underlie the simplistic application of the Ramsey model to positive macroeconomics. Research focuses on the implications of wage and price stickiness, gaps and...

Headline as well as ‘core’ consumer price inflation in the EU has increased (graph 1). How to rate these increases? Do we have to jack up interest rates and to restrict spending? Below, I’ll argue that when we try to understand present inflation using a non-neoclassical frame of analyses we do have to take into consideration that: Not all increases are created equalWe should not just look at expenditure prices (consumption, investments) but also at factor prices and cost prices...

from Yanis Varoufakis . . .  While the working classes may rise up 10 years from now to claim the share of aggregate income that they deserve, it is arguable that another 10 years of underinvestment in the green transition will push us all to the brink of, if not extinction, irreparable damage to humanity’s prospects. So how do we deal with inflation without jeopardising investment in the green transition? What is the alternative to a class war in the form of a blunt interest-rate policy...

Gone flat post covid, adjusted for inflation: The post covid slump continues, and now there are war disruptions: US Consumer Sentiment Lowest since 2011The University of Michigan consumer sentiment for the US fell to 59.7 in March of 2022 from 62.8 in February, below market forecasts of 61.4, preliminary estimates showed. It is the lowest reading since November of 2011, as inflation expectations rose sharply due to a surge in fuel prices exacerbated by the Russian invasion...