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Reinhart and Rogoff’s 2010 paper “Growth in a Time of Debt” has recently come under scrutiny

INET Advisory Board members Carmen Reinhart and Kenneth Rogoff today issued a response to recentcriticism of their paper “Growth in a Time of Debt.” Their response in full is below.

It is often argued that in recent years the question of the ‘dissemination’ of economic knowledge has been increasingly addressed by historians of economics.

A minimum wage is a small minnow in an ocean of deficient aggregate demand

At dinner yesterday Niall Ferguson made the argument that China (or the East) were perhaps no longer looking to how Western countries had built their social institutions and formed their empires, and were instead now doing their own thing as the Western approach was shown to be flawed

Imperfect knowledge economics, or IKE to their friends, is popular with all the popular kids. George Soros, Bill Janeway and Anatole Kaletsky were in attendance as Roman Frydman and Michael Goldberg - or more properly, their students - showed the latest work in progress.

Japan is going to double its money supply, according to today’s front page of the Financial Times (5 April 2013), and a salient question might be what we should compare that to. It sounds like a lot, but is it?

Having lunch next to Edward Fullbrook he told me the story of how the post-autistic economic review got its start, leading to what we today know as the World Economic Association and all the great work coming from this community.

Some personal touches to hospitality at the INET conference, although I feel for the people who have been holding that sign all day.

In his opening remarks, Robert Johnson said that this “is not the institute of anything goes” with INET now getting to a point where it needs to stop criticising the mainstream and should instead “create a new vision.”

What is the purpose of economics?

The INET conference in Hong Kong is serious business.

All of a sudden, tiny Cyprus is making headlines. How could such a small country, with an economy approximately the size of the State of Maranhao, create such big problems?

Further system reforms will enable China to overcome middle-income trap and push forward social progress

What happens when there’s no leader in the global economy?

There is a certain rich irony attached to the sight of corrupt Russian oligarchs now posing as liberal champions of the rule of law as they find themselves sucked into the maelstrom of Cyprus’s ongoing financial crisis.

Why all of the fuss about a nonexistent emergency?

There has been an important movement towards making available on the web a host of open courses.

That’s the question that Adair Turner, Chair of the UK Financial Services Authority, was addressing in his lecture to Cass Business School this week.

The notion of “field” is so pervasive that economists hardly pay conscious attention to it.

Although the objectivity-Grail Quest has ended with total success decades ago (so economists say), the question of the possibility and consequences of economists’ values smuggling into their daily practice still periodically surfaces, and crises make good times for such debates.

Paul Samuelson is well-known to have been a compulsive citer and for having a particular Whig program for the history of economics

Economists and historians of economics have related differently over time, and the past of the discipline has then served for varied purposes.

Eric Beinhocker and Tony Dolphin argue that lasting reform to the financial sector will not be achieved without tackling the price rigging and anti-competitive behaviour that is rife in the industry.

The History of Economics Society (HES) held four sessions at the Allied Social Science Associations (ASSA) 2013 meeting, in San Diego, Jan. 4-6: “Keynes and the International Monetary System” (co-organized by Robert Dimand and Rebeca Gomez Betancourt), “Writing MIT’s History” (organized by E. Roy Weintraub and having our blog fellow Yann Giraud presenting), “Looking for Best Practices in Economic Journalism: Past and Present” (organized by our blog fellow Tiago Mata), and “Real Business Cycle after Three Decades: Past, Present and Future” (a panel discussion co-organized by Warren L. Young and Sumru Altug).

INET has chosen the label “openness” to describe New Economic Thinking - “open” for other disciplines, for other methods, for other questions, for other interpretations, etc. It’s easy to hurrah.

INET researchers have continued their innovative work and are finding larger platforms and eager audiences for it.

Economics is very theoretically comfortable with what may be termed `Keynesian’ waste.

The Risk Society

In a previous post we queried whether the theory of the consumer as developed in the first three chapters of Mas-Colell, Whinston and Green (and indeed other comparable texts) provides anything by way of content beyond what is implied by the abstract description of consumers as agents who are maximizing something. [We did not discuss chapter four, on aggregation of demand, to which we may return later]. As we noted then, a comparable point can be made about the theory of the firm.

For one more time traveling closer to home – Mainz! It’s been the annual meeting of the German Society of the History of Science (the kind of academic club one has to be nominated for membership).

For nineteenthth century figures such as Bentham and Jevons, the concept of utility was associated with satisfaction or pleasure experienced.

So, my new students’ training is essentially about understanding urban “territories” and “societies” through fieldwork. And my contribution is, supposedly, to highlight the economic dimension of all this.

When they told me I was expected to teach “Introduction à l’économie” this year, I thought, OK, this is straight. Every economist knows how to do that.

The Eurocrisis has many dimensions—bank solvency crisis, sovereign debt crisis, political unity crisis, and economic/unemployment crisis—but time after time it has been the liquidity crisis dimension driving events, and ECB response to the liquidity crisis driving institutional evolution. The reason is simple. Liquidity kills you quick.

Mathematics and the ‘Whiz Kids’

Two Nobel laureates, an election, and a shaky economy. The message? We can do a whole lot better.

China released quarterly GDP figures this week. Wen Jiabao emphasized the parts of the release that pointed toward stabilization, and one can certainly find some logic to that view.

MWG introduces the theory of consumer behavior by presenting two distinct approaches to modeling consumer behavior, the preference-based approach (based upon unobservable preferences generating a utility function) and the choice-based approach (based upon observable choice behavior), and attempting to establish connections between the two.

What makes a good model?

In this post, I would like to explore the views of preferences and behavior outlined in MWG Ch.1, and specifically the view of rationality developed in this first chapter.

Everyone wants to ring-fence something, but they can’t agree on what: Vickers, Liikanen, Volcker.

Everyone wants to ring-fence something, but they can’t agree on what:

In this initial blog post we wish to situate microeconomics as a field of social enquiry.

Can economics be morally centered? And perhaps more importantly, should it be?

The blog is intended for any student taking an advanced microeconomics course, any faculty member teaching such material, or indeed anyone interested in microeconomics and its role in the discipline.

Excerpts from a draft introduction of Till Düppe’s and Roy Weintraub’s new book, under revision for Princeton University Press, presently carrying the working title “Finding Equilibrium: Arrow, Debreu, McKenzie and the Transformation of Economic Theory

“The aim would not be to unravel a hidden coherent structure of the philosophical, theoretical, political dimensions of his work, but to give a sense of the contingencies that his work was subject to – both in terms of its origins and its receptions. Don’t make up an Arrow that he himself was not aware of.” -Till to me, email conversation on Kenneth Arrow, summer 2012

Last Thursday, the Fed announced its anticipated third round of balance-sheet expansion, at a fixed rate of about $40B per month “until [substantial] improvement [in unemployment] is achieved in a context of price stability”.

Excerpts from “Retrospect and Prospect,” the concluding remarks Bob Coats presented at (or maybe wrote after) the History of Economics conference held in 1972 at Bellagio to commemorate and reassess the 1870s “marginal revolution” (full proceedings here).

Robert Solow, “Notes on Coping.” In Szenberg ed. Eminent Economists: their Life Philosophy, 1992, p270

Yesterday, I had my first introductory economics seminar with my new students.

I thought I was on to an inside reference when re-reading the General Theory when Keynes calls Marx, Edgeworth and others simply by name, but refers to “Professor Pigou” in several instances.

Mid August, with the Olympics over, Paralympics and Premiership starting (that’s Soccer for the American readership), it is well and truly the quiet period for most of academia.

A Response to Heiner Flassbeck’s questions about the Institute’s Council on the Euro Crisis

Where’s the next economic crisis?

Paul De Grauwe raises very important questions on the institutional structure of Europe and how it must be modified to fortify the euro zone.

In what sense are central banks really independent? From whom are they independent? For whom in society do they deliver?

How must the European institutional structure be modified to fortify the euro zone?

In Friday’s FT, former Morgan Stanley trader Douglas Keenan traces banks’ LIBOR manipulations back to 1991, when he observed, from the futures desk, LIBOR fixings come in at levels different from where he new the market to be.

If the meetings of European historians of economics are urbane and cosmopolitan, the meetings of American historians are, by contrast, frank and toilful.

The International Human Dimensions Programme on Global Environmental Change (IHDP) recently published the Inclusive Wealth Report 2012, in which the authors propose a measure of wealth based on the stock of capital present in a country, as opposed to the flow measure of GDP.

Has the servant’s servant become the master’s master?

A few weeks ago, I attended the H2S 4th workshop on “Cross disciplinary ventures in postwar American Social Sciences,” (research program outline here).

Last weekend, I was in Tübingen - very close to my home town: the same smell, the same surreal Swabian idyll that makes you think of Hölderlin and Hesse rather than DSGE.

A few days ago, I began researching on the history of a subfield of economics which was born in the sixties, then thrived and institutionalized itself in the early seventies.

[We are inaugurating something new in this blog: a jointly written post!]

How representation of data can contribute to, or dispel the false certainty of statistical and econometric technique.

“We choose this stochastic structure for computational reasons. This reduces the dimension of the variables. With (such and such) alternative, the computational burden would have dramatically increased.”

A poem seems to be an almost perfect metaphor for the modern corporate world.

The University of Chicago is well-known for as the place where a famous group of economists, including Milton Friedman, Georges Stigler, Gary Becker, among others, developed a method for analyzing economic facts based on Marshallian price theory, a vision of the evolution of macroeconomic aggregates called monetarism, and an approach to individual liberties and the role of the state known as (neo)liberalism.

I always think of Adam Smith when I hear the term ‘division of labour’ - but I’m being cured of this by reading a bit more about Britains late 18th century in Jenny Uglow’s The Lunar Men.

At the heart of the Eurocrisis lies a vicious circle where once there was a virtuous one.

After the recent election brought a center-right coalition to power, what’s next in the Greek crisis? Are we finally in the clear? Not so fast, Greek economist Yanis Varoufakis says. Varoufakis explains the real outcome we can except after Greek voters’ “contradictory verdict,” where 55% voted for anti-bailout parties yet a pro-bailout government resulted due to the nature of Greece’s electoral system.

In a recent post I wrote: “I am sure it will not take long before Journal of the History of Economic Thought (Cambridge Uni. Press) makes that list [Thompson Reuters, Social Science Citation Index].”

Last Friday, philosophers from the University of Leiden hosted the symposium ‘Between Science and History,’ in an attempt to figure out what the differences are between practicing scientists’ use of history and historians use of history.

Since September 2011, the Swiss National Bank has held a floor of 1.20 francs per euro.

Ivan Moscati is one of the most exciting voices in the historiography of decision theory.

Steven Shapin is visiting the UK. For those unfamiliar with the history and sociology of science, he is one of the giants of the field.

My attempt at a double riddle. “I find familiar faces only in unfamiliar places. Who am I? And whom are the faces?” The answer to the first is, I am an academic, to the second, my conference buddies.

Below is a revised version of a talk I gave at the New School University, at a conference to launch Lance Taylor’s latest book. The date of the event was April 28, 2011, more than a year ago, and the delay in revision was entirely my fault—overcommitment and pressing deadlines on many fronts. Sorry about that.

The Collapse of Free Market Macroeconomics

Here is a talk I gave recently at Wake Forest University.

Our usual problem in history (of economics) is a lack of information.

In conversation recently, I was called upon to defend the claim that banks are in the business of creating and destroying private money.

When Paul Krugman paints John Maynard Keynes as a pioneering critic of dominant free-market economics, he exaggerates wildly, both about the rigidity of orthodoxy and about the pioneering character of Keynes’ critique.

I don’t seem to be able to fully grasp Mark Blaug’s distinction between a relativist and an absolutist approach to the history of economics – first introduced in Economic Theory in Retrospect (1962) – and that is a source of much frustration.

Like many economists, I have enjoyed Axel Leijonhufvud’s “Life among the Econ” and nodded appreciatively when he described the social classifications of the Econ as “Grads, Adults and Elders” and chuckled when the young grad tries to impress the elders of the ‘dept’ through adept ‘modl’ building; so when the man himself was holding a glass of champagne and chatting with me at the INET conference, I had to ask how he got that paper started.

Paper revised for the Institute’s Plenary Conference in Berlin

The text below is the comment I offered on Mr. Soros’ opening speech at INET’s Berlin Conference April 12, 2012. The text of Mr. Soros’ own speech is here. Video of the entire session is below—my bit starts at 55:00.

INET Berlin 2012 - back home again. On stage, it’s been a huge amount of claims, assertions, and arguments about what went wrong, about what exactly happened, about why this time was different, about what will certainly happen, and about what remains deeply uncertain, about what “we” shall do about it, about what “we” could do better.

The title of the conference, “Paradigm Lost,” is an obvious combination of two references.

I think I am on the track of what ‘New Economics’ is, and one could roughly sum up two days of presentations in two diagrams:

Lunch was just interrupted Bill Janeway standing up to announce that this morning he decided to give $25m to INET and the board will fund-raise this up to $100m over ten years, but then George Soros added $50m in unconditional funding for INET.

Just as the agricultural share of employment has fallen from 40% in the 1920s to less than 2% of the workforce in Europe today, manufacturing’s share of employment will fall to less than 5% of employment.

While yesterday presented a number of frontrunning scientists discussing current economics and state of the economy in general, academic terms, today starts with ECB executive board member Asmussen.

Behind all the technical language and the common theme of bashing bankers, there remains the Great Divide between Germans and the rest.

On my way back home from the Brandenburger Tor, I recalled that I already have been there, it must have been in 1988.

A suprisingly large number of talks refer to the issue of human decision making.

Dinner has already rolled around on what has been a quick day.