Archive

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?

A student of microeconomics learns that any desirable efficient market allocation can be sustained by a competitive equilibrium (the Second Theorem of Welfare Economics), given appropriate lump-sum wealth redistributions. This is typically understood as a means to correct unfair market outcomes. What are the real world implications of the second theorem? How well does it address distributional concerns?

The best-known China bear says the emperor is not yet naked, but getting there.

Have economists fallen in love with an idealized vision of an economy in which rational individuals interact in perfect markets? To what extent is standard microeconomics responsible for this state of affairs?

As Greece heads to the polls, a look back at the crisis and what the future will bring.

Institute for New Economic Thinking at Oxford researcher Max Roser recently collaborated with world famous Swedish statistical showman Hans Rosling on the upcoming documentary ‘Don’t Panic: How To End Poverty In 15 Years’.

News about a wonderful workshop, “Knowledge Transfer and Its Contexts”

A little-understood rule in the tax code is making headlines. What’s all the fuss?

If anything, it points to a better managed global financial system and a more resilient Chinese economy.

Economist Alicia Girón explains why a feminist perspective is crucial to new economic thinking.

The latest austerity deal is terrible for Greece and Europe.

In the last couple of months, Greece has once again become the center of attention of politicians, academics, and the general public. The debate has, for a large part, focused on Greece’s fiscal deficit as if it were just a self-inflicted Greek problem. But is it?

Comparing outcomes for biological and adopted children sheds light on the intergenerational transmission of wealth.

Archival artifacts from the history of economics.

Dubious transactions and flimsy accounting standards need scrutiny.

Tony Atkinson’s new book points the way forward.

The unprecedented intervention by China’s authorities to backstop China’s stock market reveals widening policy tensions in China’s leaderships financial reform agenda.

The sharp and sudden plunge scared everyone. Can the Chinese government get control of the market?

The recent financial crisis has impressively illustrated the dangers of rapid credit growth in a painful way.

As I write this it would be appear that the Greek crisis is finally coming to an end. In this report I would like to discuss why the negotiations were so fraught and what an agreement actually means. In a nutshell, the EU sought to address matters with the same kinds of measures that had been tried in the past, while Greece argued that doing so would not make things any better—and would in fact make them far worse.

The Institute for New Economic Thinking has awarded $2 million in grants to fund 21 different projects as part of the latest round of its research grant program.

A four percent growth goal for first term of the next president is not only possible, but is what we should strive to achieve.

The financial crisis of 2008 was unforeseen to a significant extent. One reason is that the dominant academic theories influencing political decision makers ignore recent advances and instead rely largely on models and decision science dating back to the Second World War.

A look behind the scenes of the Greek referendum and what could happen next.

The thunder from the Greek “No” vote in the referendum on Sunday, July 5 continues to roll around the world.

A survey on behalf of the Sueddeutsche Zeitung indicates that German economists are much more American in their thinking than is presumed – with a rising trend.

It is a shame that Greece was unable to manage its finances and is now slipping into chaos. But this outcome was inevitable and could not be permanently averted with loans from the international community.

It is time for Greece to make a daring leap and adopt its own currency, says Ifo President Hans-Werner Sinn. “The drachma should be introduced immediately as a virtual currency,” Sinn said in Munich.

The ECB has decided to maintain its current level of emergency liquidity to Greece (ECB 2015). By refusing to extend additional emergency liquidity, the ECB has decided that Greece must leave the Eurozone. This may be a legal necessity or a political judgement call, or both. Anyway, it raises a host of unpleasant questions about the treatment of a member country and about the independence of the central bank.

The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

Inequality, racism, and violence are the real killers in America.

The (very) recent rise of quantitative analysis in history of economics working papers calls for a closer examination of the prospects and limitations of this approach, and of the impediment to its large-scale development.

The International Monetary Fund’s chief economist, Olivier Blanchard, recently asked a simple and important question: “How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?” But that raises two more questions: How much of an adjustment has Greece already made? And have its creditors given anything at all?

It doesn’t make sense to pay someone to rob you.

The Ukrainian government has committed to implement far-reaching reforms in exchange for the support it is getting from the international community, led by the International Monetary Fund (IMF). Understandably, given Ukraine’s disappointing transition history, there is widespread scepticism on whether the country will live up to its commitments. Three failed IMF programmes later, the fundamental question is: Is it different this time?

Non-mainstream economists are disputing neoclassical ideas about capital.

The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB’s OMT bond-buying programme. This column argues that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into monetary base, and sovereign-default risk into inflation risk. The real question is: What is the non-inflationary limit to money-base expansion? This depends upon the economic situation and is much higher in the current liquidity-trap setting.

The last 30 years has seen a massive rise in the importance of financial instruments in the American economy. But what has been the impact of this shift in corporate investment strategy?

The extremely wise Robert Skidelsky has an excellent rant against Anglo-Saxon economics departments

How do we create a “change in culture”?

New topics and approaches make their way into two recent conferences on the history of economics

Margaret Heffernan on her latest book, A Bigger Prize: Why Competition Isn’t Everything And How We Do Better

Yes, it is a tale of two nations, but in a much broader way than you think. Not just England and Scotland, but an equally salient parallel between Great Britain and Canada.

Remarks from Finance & Society May 6, 2015

Most sociologists believe that formal and informal institutions are more critical in explaining the rising inequality observed in advanced economies. In this light, changing institutions such as the ascendance of shareholder-centered corporate governance model, finance-friendly policies since the late 70s, credentialism, and deunionization all contribute to the earnings dynamics at different parts of the distribution.

Writing the history of economic journals is not merely a way to reconstruct the development of new fields and new approaches to economics. It also recasts current debates on peer-review, retractions, open-access, replicability, and bias in scientific publishing in a wider perspective. It answers important questions on the influence of editors, publishers and referees on the development or marginalization of various economic approaches. But such endeavour requires the preservation of journals’ archives, the recognition of historical expertise, and economists’ adoption of a more relaxed and humble approach to their history.

Economists and historians of economics have constructed different (and sometimes conflicting) narratives about the past of their field. In fact what is history for economists may not be what is history for historians. To celebrate its 125th anniversary, the Economic Journal invited renowned economists to discuss important contributions published in the past by the journal and the works on similar topics by historians of economics are absent from these accounts. History of economics here seems to have the weight of a JEL descriptor attached to an invited contribution, which we ought to agree that it is not much.

It Could Fall On You.

The Institute for New Economic Thinking responds to an evident need for innovative approaches to understanding economic and financial processes.

Emulate Richard Feynman: Lean over backwards so you do not fool yourself, and teach your students the discipline correctly from the start, rather than teaching them things at the start you will have to unteach them later.

At least the Labour Party has only promised to cut day-to-day spending, not public investment.

The best new economic thinking in an age of the dominance of rent-seeking will be Marxian economic thinking

The old political-economic thinking of Karl Polanyi was never properly absorbed into “mainstream” North Atlantic economics: recognizing that land, labor, and finance are not really “commodities” returns institutions and social processes to the center of economic analysis.

The tail risks that may be generated by Mario Draghi’s monetary policy innovations in the Eurozone include even more intense versions of Andrew Haldane’s “Doom Loops”

Welcome to our website, and thus weblog, relaunch.

“The important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.” John M. Keynes, The End of Laissez Faire, 1926 (p. 44)

Rapid private-debt growth threw Japan into crisis in 1991 and did the same to the United States and Europe in 2008. China may be next.

The solutions to Greece’s crisis challenge many existing economic paradigms, including the concept of “money” itself.

Rana Dasgupta shares his view of the contradictions and tensions of India’s economic and political scenes.

My friend and “grown-up kid” Yann Giraud just called my attention to Paul Krugman’s recent column, “Empire of the Institute”, on Roy Weintraub’s recently edited HOPE volume “MIT and the Transformation of American Economics” (to which three Playground kids contributed: Yann, Beatrice Cherrier and myself).

A British national of Bengali origin, novelist Rana Dasgupta recently turned to nonfiction to explore the explosive social and economic changes in Delhi starting in 1991, when India launched a series of profoundly transformative economic reforms.

With the approval of the reform proposals by the Greek government, the Eurozone has returned to calmer waters. But it is only a brief interlude.

Do economists live in a world of their own?

I need a history of policy evaluation.