Archive

The company’s focus on stock buybacks to increase shareholder value is a reminder of why so much of the value created daily by millions of workers ends up in the hands of the billionaires

Anxiety over human labor being replaced by cyborgs may be in vogue, but it’s overblown — machines may help us achieve healthier and more meaningful lives

The Institute is proud to welcome the revival of an indispensable resource for those seeking to understand the evolution of economics in context

Neither the Rational Expectations Hypothesis nor behavioral finance approaches alone provides an adequate predictor of investor behavior, argues Roman Frydman

New economic thinking has the potential to make political debates far more productive

Why most economists did not see the 2008 crash coming

What we’re reading: A weekly scan of published items relevant to the Institute’s work

Is Neoliberalism a fixed set of ideas, or even an identifiable political movement?

A meditation on Vercelli, Vernengo and Levitt & Seccareccia

Eight years after the 2008 crisis the global economy is still stuck with low growth, too low inflation, and rising debt burdens. Massive monetary stimulus has failed to generate adequate demand, and some commentators suggest that we are “out of ammunition” with which to counter deflationary pressures.

Mass protests challenging the government to focus on job-creation rather than on market liberalization and trade deals may carry a cautionary message to Western policy makers, too.

From 1958 onward, the back cover of Paul Samuelson’s bestselling textbook, Economics, showed a family-tree of economists. The diagram’s evolution, in particular its use of the term “mainstream economics,” reflected, and, I speculate, influenced how economists came to perceive the structure of their discipline.

I am pleased to announce that the History of Economic Thought Website is back. I am thankful for the assistance of the Institute for New Economic Thinking (INET), which has supported its revival and made it possible.

What we’re reading: A weekly scan of published items relevant to the Institute’s work

The shift toward applied economics in the last 40 years is usually associated with the development of computers and datasets. Yet, the success of computer-based approaches is highly selective, and what computerization failed to change in economics is equally remarkable.

Renewed interest by policymakers in the challenges of long-term slow economic growth highlights the importance of the Institute’s research

Author Rana Foroohar explains why the economic policies being touted by both presidential frontrunners offer none of the new thinking necessary to drive a policy response to revitalize the economy

The SPD, the Social Democratic Party of Germany, has been collapsing in the popularity polls ever since they in 2003 launched the reform Agenda. What would have come of the party if it had not been for this insane rush to reform? Possibly Gerhard Schroeder could even still be chancellor today. A case for the time machine.

Despite using different methodologies, a number of scholars agree that most of the ‘bailout’ money is going to Greece’s foreign creditors

Peter Conti Brown’s new book explores and debunks a powerful meme shaping public understanding of the role of the Fed

What we’re reading: A weekly scan of published items relevant to the Institute’s work

A major shift is needed in the Econometrics curriculum for both graduate and undergraduate teaching to include modern topics.

The corrosive social and economic effects of what have now become ‘normal’ unemployment levels require new solutions, and tradewithout full employment exacerbates the problem

Any use of money-financed fiscal expansion as a policy tool will require rules to ensure discipline and avoid excess

Five lessons from the last crisis — for managing the next one

Economist James K. Galbraith warns that ‘unrealistic expectations’ by Athens’ creditors is a recipe for turmoil

As empirical evidence continues to roll in, can the theoretical orthodoxy continue to hold their ground?

A new book by economist Julia Cagé offers a participatory business model for independent media.

Amid the ongoing research interest in questions of inequality, it is important to examine the question of access to housing — and how that has changed over the decades. The specific question I have sought to answer, here, is whether the real cost (measured against income) of buying the average home has risen.

Capitalism will destroy itself, the former Greek finance minister warns, if economic calculation excludes human needs and ignores democratic verdicts

Keynes passed away 70 years ago today, with his copyright now expiring, there is an opportunity to build a digital archive of all his work

Orthodox macroeconomics has become a place where visions die and hopes are banished, for both liberals and conservatives.

How Gerald Friedman’s assessment of Bernie Sanders economic proposals prompted a rare public political spat among economists.

Axel Leijonhufvud showed economists a promising path forward. They should have taken it. Leijonhufvud passed away on May 5, 2022

Dean Corbae is a leader of the Markets network and Professor of Finance, Investment, and Banking at the Wisconsin School of Business, where he also holds an appointment in the Department of Economics. His current research focuses on consumer credit and bankruptcy, foreclosures, and banking industry dynamics.

Contrary to common belief, this shift is not so much caused by the refugee crisis, but rather by the historical disaster that followed the big financial crisis since 2007.

Anyone watching the stock market has seen this: a post hits Twitter containing old news, and investors react as if it were new.

Struggles over shadow money today echo 19th century struggles over bank deposits.

We have developed over a number of years and now make publicly available a new and unprecedented data resource for understanding levels of living, poverty, inequality and inclusivity of growth and development around the world.

The intra-EMU divergences are a feature of the system rather than just a bug.

European Union countries are facing an epic challenge of integrating more than 1 million refugees from conflict zones in the Middle East and beyond.

Industrial journalist Ken Jacobson and economist William Lazonick (both of the Academic-Industry Research Network), call for an end to stock market manipulation through buybacks.

As the European Union Commission readies itself for a new round of budgetary recommendations, INET senior economist Orsola Costantini warns that that the debate over how those harsh fiscal constraints are to be determined is based on a formula that masks political choices as technocratic imperatives.

John Eric Humphries is a member of the Inequality: Measurement, Interpretation, and Policy (MIP) network and a National Science Foundation Graduate Research Fellow in the Department of Economics at the University of Chicago. He is the co-author of the book, The Myth of Achievement Tests, The GED and the Role of Character in American Life, along with James J. Heckman and Tim Kautz. Humphries is also a 2013 alum of the Summer School on Socieconomic Inequality.

Leading expert says Iceland is showing the way on tackling a global peril.

When billionaires pay less, we all pay more.

A new film shows what economic apartheid looks like through the eyes of schoolchildren.

Democratic capitalism is an evolving system that responds to crises by radically transforming both economic relations and political institutions. The time for a new phase has come, regardless of whether “responsible” politicians are prepared to admit it.

A recent policy brief by Blanchard (2016), based on an earlier paper (Blanchard, Cerutti, Summers 2015) raises a number of interesting points concerning the NAIRU and the Phillips Curve, which are further discussed in the comment on the paper by Ball (2015).

A stark warning from Institute researchers on the probability that ‘2°C capital stock’ will be reached in 2017

Some fundamental Keynesian and Post-Keynesian insights, with an analysis of possible mechanisms to achieve a sustained recovery.

What can we learn from the Vietnamese, Cuban, Rwandan, and Syrian refugees crisis?

How excessive debt hurts the economy and why to curb it.

Paying tribute to one of the world’s most distinguished economic historians.

The Haas Institute for a Fair and Inclusive Society’s report analyzes the Trans-Pacific Partnership and examines the widespread global implications in the event of its passage.

Gerald Friedman responds to the Romers on the Sanders Plan.

Jamie Galbraith and I rarely agree. But we agree here.

HCEO’s new three-question series will regularly publish quick Q&As with members who will discuss their work, frontiers in the field of inequality that could use more knowledge, and advice for emerging scholars.

The Romer/Romer letter to Professor Gerald Friedman marks a turning point. It concedes that there are indeed important issues at stake when evaluating the proposed economic policies of Presidential Candidate Bernie Sanders. These issues go beyond the political debate and should be discussed seriously between and among professional economists.

Servaas Storm has conviction, yet his analysis throws the baby out with the bathwater.

More on substance, coherence, and relevance in the Eurozone debate.

The current bout of exchange rate anxiety is really just a symptom of the fact that China’s transition from an export-led growth strategy to one propelled by domestic consumption is proceeding far less smoothly than hoped.

Bullet-point financial reform proposals are either too simple or too vague.

On 25 September 2015, the United Nations General Assembly adopted the Sustainable Development Goals (SDGs), an ambitious policy agenda that aims to eradicate poverty, in all its forms and dimensions, by 2030.

It is high time to ditch this myth for at least the following five reasons.

Recently, our analysis has been questioned by Servaas Storm who has claimed that it is untenable to blame neo-mercantilist Germany for driving a wedge into the Eurozone. [i] It is shown below that Storm’s critique has a certain aplomb, but lacks substance.

Today’s richest Americans may soon blow past the tycoons of the Roaring Twenties. Lance Taylor explains why, and what to do about it.

The tragic crisis in Flint, Michigan, where residents have been poisoned by lead contamination, is not just about drinking water. And it’s not just about Flint. It’s about race and class, and the stark contradiction between the American dream of equal rights and opportunity for all and the American nightmare of metastasizing inequality of wealth and power.

Comments on “German Wage Moderation and the Eurozone Crisis: A Critical Analysis” by Servaas Storm

It is high time to look more closely at the labor cost competitiveness myth.

For most economists and indeed for social scientists in general such a question induces shudders as already asking this seems wrong – aren’t governments more prone to failures than markets, and aren’t governments supposed to provide basic and stable institutions for markets to function?

A budget approach cloaked in the aura of science and technical jargon became a tool of manipulation.

Many Americans have expressed outrage over Pfizer’s plan, through its merger with Allergan, to move its tax home from the United States to Ireland. Now, in a New York Times op-ed, Carl Icahn, the billionaire corporate raider turned hedge fund activist, has joined the chorus. He labels the Pfizer-Allergan deal a “travesty,” blaming the U.S.’s “uncompetitive international tax system.”

Since Aristotle the question about the potential relationship between economic inequality and democratic changes has been studied and debated – but scientifically our ability as researchers to assess and understand how such complex social phenomena may be related is much more limited than recognised.

‘Tis the season to celebrate gift giving. But for big banks Santa Claus comes all the time, in the form of handsomely wrapped subsidies and subtly packaged regulatory nuances worth more more gold than the wildest dreams of the Three Wise Men.

With the RMB in the SDR, careful progression in China could balance the international monetary system.

Can education stop the country’s backward slide?

There is a deeper story to be told about the inclusion of the Renminbi.

Why are we paying for corporate behavior that crushes innovation, cheats taxpayers, cost jobs, and heightens inequality?

In 2003, McCullough and Vinod wrote, “Research that cannot be replicated is not science, and cannot be trusted either as part of the profession’s accumulated body of knowledge or as a basis for policy.”(1)

“Governments propose, markets dispose,” as Charles Kindleberger liked to say.

The United States economy has come apart, with the rich getting richer and workers’ incomes not advancing at all.

Spain’s future path for economic policy will soon be decided.

How much does the standard theory of externalities and public goods really say?

A gap between theory and reality has haunted economists.

A radical solution to the current economic malaise.

Sometimes a radical path is the most practical way out of a mess.

Throughout its first 10 years operation, the John Bates Clark medal was constantly challenged. Many young economists found it biased toward theory, and demanded the establishment of a distinct award for applied work.

Is an ancient financial taboo keeping us from prosperity? Adair Turner, author of a new book on global finance, explains.

In 1953, Oskar Morgenstern proposed to reform the eligibility criterion for fellows of the Econometric Society, in an attempt to foster empirical work.

Public funding behind the technology is the secret ingredient.

The Institute extends its congratulations to Philip Lane, who has been named to succeed Patrick Honohan as the Irish central bank chief, and inherit his role on the council of the ECB.

This essay critically evaluates the benefits and costs of the dominant methodology in macroeconomics, the DSGE approach. Although the approach has led to great progress in some areas, it has also created biases and blind spots in the profession that hold back our understanding and our ability to govern the macroeconomy. There is great scope for progress in macroeconomics by judiciously pushing the boundaries of some of the methodological restrictions imposed by the DSGE approach.

The Institute recently sponsored several panels at the Kiel Global Economic Symposium. In particular, the panel on Income Distribution and Mobility struck us as likely to be of especially wide interest. We are grateful for the participation of all the scholars on them and are pleased to present summaries of their presentations here.

A new online course challenges typical teaching approaches.

Do we need to rethink the teaching of economics?

The World Bank’s global poverty estimates suffer from deep-seated problems arising from a single source, the lack of a standard for identifying who is poor and who is not that is consistent and meaningful.

Economists’ assumptions, even about seemingly “small” matters, make an enormous difference to global poverty estimates but their impact often goes unnoticed, and the choices made have been badly justified. We must stop pretending that the World Bank’s “$1 per day” estimates are at all reliable.

Hot on the heels of the BIS, now comes the IMF Global Financial Stability report, “Corporate Leverage in Emerging Markets–A Concern?”. Yes, a concern, and just in time for the annual meeting in Peru next week.

A student of microeconomics learns that any competitive equilibrium leads to a Pareto efficient outcome (First Fundamental Theorem of Welfare Economics). What do we mean by the efficiency or inefficiency of markets?