dunnettreader + economic_theory   337

Paul Pfleiderer a Chameleons: The Misuse of Theoretical Models in Finance and Economics (2014) | Stanford Graduate School of Business
Chameleons: The Misuse of Theoretical Models in Finance and Economics
By Paul Pfleiderer
March 2014Working Paper No. 3020
In this essay I discuss how theoretical models in finance and economics are used in ways that make them “chameleons” and how chameleons devalue the intellectual currency and muddy policy debates. A model becomes a chameleon when it is built on assumptions with dubious connections to the real world but nevertheless has conclusions that are uncritically (or not critically enough) applied to understanding our economy. I discuss how chameleons are created and nurtured by the mistaken notion that one should not judge a model by its assumptions, by the unfounded argument that models should have equal standing until definitive empirical tests are conducted, and by misplaced appeals to “as-if” arguments, mathematical elegance, subtlety, references to assumptions that are “standard in the literature,” and the need for tractability.

financial_system  downloaded  macroeconomics  economic_policy  economic_theory  economic_models 
april 2017 by dunnettreader
Antonella Alimento - Beyond the Treaty of Utrecht: Véron de Forbonnais's French Translation of the British Merchant (1753): History of European Ideas: Vol 40, No 8
Pages 1044-1066 | Published online: 06 Nov 2014
This study focuses on the cultural and political context from which stemmed the French translation of the British Merchant. The paratextual and macrostructural interventions that characterised Le négotiant anglois clearly demonstrate that the translator, Véron de Forbonnais, used his work to set out his own epistemological method and his way of looking at inter-state relations. With the book, Forbonnais had distanced himself from Gournay by rejecting the idea that in order for France to prosper in a situation of international competition the government needed to adopt a muscular strategy that included the adoption of a navigation act modelled on the one enacted by Britain in 1660. At the same time, Forbonnais warned French decision-makers that signing commercial treaties with the maritime powers might also be prejudicial to national economic interests. Forbonnais supplied qualified French readers not only with an annotated edition of the British Merchant but also with a translation of Davenant's Of the Use of Political Arithmetick. In so doing, he proposed to his audience a type of governance based on a competent use of statistics. In conclusion, I will argue that in Le négotiant anglois Forbonnais anticipated the key political and economical tenets of his project of ‘monarchie commerçante’, which he later set out in the Principes et observations æconomiques (1767) in order to counter the rise of the epistemology and plans for a ‘royaume agricole’ put forward by the physiocratic movement.
Keywords: British Merchant, Gournay, Davenant, navigation act, treaties of commerce, ‘balance du commerce’
article  paywall  18thC  intellectual_history  political_economy  international_political_economy  France  British_foreign_policy  economic_theory  economic_policy  Physiocrats  commerce  mercantilism  competition-interstate  Navigation_Acts  trade-agreements  trade-policy  Gournay  Davenant  translation  reception_history  French_government  enlightened_absolutism  balance_of_power  statistics  government-data 
december 2016 by dunnettreader
Ida Nijenhuis - For the Sake of the Republic: The Dutch Translation of Forbonnais's Elémens du commerce | History of European Ideas: Vol 40, No 8 (2014)
History of European Ideas
Volume 40, 2014 - Issue 8: Translation, reception and Enlightened Reform: The case of Forbonnais in eighteenth-century political economy
For the Sake of the Republic: The Dutch Translation of Forbonnais's Elémens du commerce
Ida Nijenhuis
Pages 1202-1216 | Published online: 03 Nov 2014
The open access article from the special issue on Forbonnais - downloaded to Tab S2
article  downloaded  political_economy  intellectual_history  18thC  French_Enlightenment  economic_theory  economic_policy  translation  Dutch  commerce  commerce-doux  mercantilism  Bolingbroke  maritime_powers 
december 2016 by dunnettreader
Larry Summers
The Permanent Effects of Fiscal Consolidations
Antonio Fatás, Lawrence H. Summers
NBER Working Paper No. 22374
Issued in June 2016
NBER Program(s):   EFG
The global financial crisis has permanently lowered the path of GDP in all advanced economies. At the same time, and in response to rising government debt levels, many of these countries have been engaging in fiscal consolidations that have had a negative impact on growth rates. We empirically explore the connections between these two facts by extending to longer horizons the methodology of Blanchard and Leigh (2013) regarding fiscal policy multipliers. Our results provide support for the presence of strong hysteresis effects of fiscal policy. The large size of the effects points in the direction of self-defeating fiscal consolidations as suggested by DeLong and Summers (2012). Attempts to reduce debt via fiscal consolidations have very likely resulted in a higher debt to GDP ratio through their long-term negative impact on output.
austerity  fiscal_policy  macroeconomics  NBER  paper  fiscal_multipliers  economic_theory  Great_Recession  hysterisis  paywall 
november 2016 by dunnettreader
Barry Eichengreen - The Political Economy of the Smoot-Hawley Tariff (1986) - NBER
The Political Economy of the Smoot-Hawley Tariff
Barry Eichengreen
NBER Working Paper No. 2001
Issued in August 1986
NBER Program(s):   ITI   DAE   IFM
Economic histories of the interwar years view the Great Depression and the Smoot Hawley Tariff as inextricably bound up with one another. They assign a central role to the Depression in explaining the passage of the 1930 Tariff Act and at the same time emphasize the role of the tariff in the propogation of the Depression. This paper argues that popular accounts have conveyed what is at best an incomplete and at worst a misleading impression of the relationship between the tariff and the Depression. Rather than simply strengthening the hand of a Republican Executive predisposed toward protection or increasing the burden borne by a depressed agricultural sector, the uneven impact of the Depression occasioned the birth of a new protectionist coalition comprised of producers particularly hard hit by import competition: border agriculture and small-scale industry engaged in the production of speciality goods. Rather than leading to a dramatic across-the-board decline in the volume of U.S. imports, the tariff had very different effects across sectors. Rather than worsening the Great Depression by reducing foreign demands for U.S. exports, the direct macroeconomic effect of the tariff is likely to have been expansionary. This remains true even when feedbacks to the United States and foreign retaliation are analyzed. In any case, relative to the Depression, the direct macroeconomic effects of the tariff were small. If Smoot-Hawley had significant macroeconomic effects, these operated instead through its impact on the stability of the international monetary system and the efficiency of the international capital market.
competition-interstate  trade-agreements  economic_history  Great_Depression  NBER  trade  trade-policy  protectionism  economic_theory  20thC  entre_deux_guerres  revisionism  paywall  paper  Smoot-Hawley  race-to-the-bottom 
october 2016 by dunnettreader
Professor Rod O’Donnell - Keynes: the partly-known Colossus of economics - crowd-sourcing promo
Professor Rod O’Donnell , University of Technology Sydney, Australia Alongside Smith and Marx, Keynes is one of the triumvirate of economists on whom more ink…
Keynes  intellectual_history  20thC  WWI  pre-WWI  entre_deux_guerres  economic_history  economic_theory  crowd-sourcing  from instapaper
october 2016 by dunnettreader
Joan Robinson - The Second Crisis of Economic Theory (1972 Ely Lecture) | American Economic Review - JSTOR
The Second Crisis of Economic Theory
Joan Robinson
The American Economic Review
Vol. 62, No. 1/2 (Mar. 1, 1972), pp. 1-10
The Richard T. Ely Lecture 1972 - JK Galbraith was AEA Pres - The Chicago boyz have spent every year since "proving" loudly that JKG was nothing but a failed dilettante and Joan was just an hysterical girl
article  political_economy  1960s  economic_theory  downloaded  1970s  Keynesianism  macroeconomics  Robinson_Joan  Galbraith_JK 
september 2016 by dunnettreader
James Tobin - The Monetarist Counter-Revolution Today - An Appraisal (1981) | The Economic Journal on JSTOR
The Monetarist Counter-Revolution Today-An Appraisal
James Tobin
The Economic Journal
Vol. 91, No. 361 (Mar., 1981), pp. 29-42
Published by: Wiley on behalf of the Royal Economic Society
DOI: 10.2307/2231692
Stable URL: http://www.jstor.org/stable/2231692
Via Anne @ Thoma re Krugman returning to Tobin and seeing his counterblast as not the last feeble defense against the new kids on the block - Tobin was right!
Downloaded via iPhone to DBOX
RBC  20thC  downloaded  central_banks  Volker  article  social_sciences-post-WWII  wages  monetarism  Friedman_Milton  intellectual_history  economic_theory  monetary_policy  Tobin  inflation  interest_rates  oil_price  Fed  unemployment  post-WWII  Keynesianism 
september 2016 by dunnettreader
Harry Garretsen and Ron Martin - Rethinking (New) Economic Geography Models: Taking Geography and History More Seriously | Spatial Economic Analysis: Vol 5, No 2 (2010)
Harry Garretsen and Ron Martin -- Spatial Economic Analysis, Vol. 5 , Iss. 2, 2010 -- Two aspects of New Economic Geography models are often singled out for criticism, especially by geographers: the treatment of geography, typically as a pre-given, fixed and highly idealized abstract geometric space; and the treatment of history, typically as ‘logical’ time (the movement to equilibrium in a model's solution space) rather than real history. In this paper we examine the basis for these criticisms, and explore how far and in what ways NEG models might be made more credible with respect to their representation of geography and history, and particularly whether and to what extent the work of geographers themselves provides some insights in this regard. We argue that the conceptualization of space and time is in fact a challenge for both NEG theorists and economic geographers, and that, notwithstanding their ontological and epistemological differences, both groups would benefit from an interchange of ideas on this front. -- downloaded to Tab S2
article  downloaded  economic_theory  economic_sociology  geography-and-economics  geography  economic_models  philosophy_of_social_science  historical_sociology  historiography 
august 2016 by dunnettreader
Thomas Palley » Blog Archive » Why ZLB Economics and Negative Interest Rate Policy (NIRP) are Wrong: A Theoretical Critique
NIRP is quickly becoming a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian economic logic that asserts interest rate adjustment can ensure full employment. That pre-Keynesian logic has been augmented by ZLB economics which claims times of severe demand shortage may require negative interest rates, which policy must deliver since the market cannot. Regarding policy assessment, NIRP turns a blind eye to the possibility that negative interest rates may reduce AD, cause financial fragility, create a macroeconomics of whiplash owing to contradictions between policy today and tomorrow, promote currency wars that undermine the international economy, and foster a political economy that spawns toxic politics. Worst of all, NIRP maintains and encourages the flawed model of growth, based on debt and asset price inflation, which has already done such harm. Downloaded to Tab S2
paper  downloaded  macroeconomics  monetary_policy  interest_rates  central_banks  demand-side  zero-bound  FX-rate_management  economic_growth  economic_theory  financial_crisis  capital_flows  asset_prices  leverage  debt-overhang 
july 2016 by dunnettreader
Michael T. Kiley - Macroeconomic Modeling of Financial Frictions for Macroprudential Policymaking: A Review of Pressing Challenges | FRB: FEDS Notes: May 2016
Structural macroeconomic modeling plays a central role economic policy discussions. Over the past fifty years, the overwhelming majority of such efforts have focused on the structural features of household, firm, and government behavior that lead to cyclical fluctuations in employment and inflation and the roles of monetary and fiscal policy in ameliorating undesirable volatility in economic performance. In recent years, the potential role of macroprudential policies in limiting excessive volatility in the financial sector and the consequent effects on economic performance has risen to the fore in academic and policy discussions. While progress in modeling for macroprudential policy analysis has been substantial, there remain many important challenges, and consensus on a core modeling framework remains far away. This note reviews some of the progress witnessed in recent years and challenges that remain. - downloaded to Tab S2
paper  Fed  macroprudential_policies  macroeconomics  economic_models  economic_theory  financial_stability  Great_Recession  bank_runs  money_market  housing  households  house_prices  leverage  intermediation  non-linear_models  downloaded 
july 2016 by dunnettreader
Eggertsson, Mehrotra, Singh & Summers - A Contagious Malady? Open Economy Dimensions of Secular Stagnation | NBER June 2016
Gauti B. Eggertsson, Neil R. Mehrotra, Sanjay R. Singh, Lawrence H. Summers - Conditions of secular stagnation - low interest rates, below target inflation, and sluggish output growth - characterize much of the global economy. We consider an overlapping generations, open economy model of secular stagnation, and examine the effect of capital flows on the transmission of stagnation. In a world with a low natural rate of interest, greater capital integration transmits recessions across countries as opposed to lower interest rates. In a global secular stagnation, expansionary fiscal policy carries positive spillovers implying gains from coordination, and fiscal policy is self-financing. Expansionary monetary policy, by contrast, is beggar-thy-neighbor with output gains in one country coming at the expense of the other. Similarly, we find that competitiveness policies including structural labor market reforms or neomercantilist trade policies are also beggar-thy-neighbor in a global secular stagnation.
economic_theory  interest_rates  stagnation  economic_growth  OECD_economies  paywall  capital_flows  paper  international_finance  global_economy  contagion  monetary_policy  FX-rate_management  international_political_economy  competition-interstate  fiscal_policy  fiscal_multipliers  trade-policy  Labor_markets  austerity  competiveness-labor  wages  labor_standards 
july 2016 by dunnettreader
Dani Rodrik and Arvind Subramanian - Why Did Financial Globalization Disappoint? | IMF Staff Papers - Jan 2009
IMF Staff Papers (2009) 56, 112–138. doi:10.1057/imfsp.2008.29; published online 6 January 2009 -- The stylized fact that there is no correlation between long-run economic growth and financial globalization has spawned a recent literature that purports to provide newer evidence and arguments in favor of financial globalization. We review this literature and find it unconvincing. The underlying assumptions in this literature are that developing countries are savings-constrained; that access to foreign finance alleviates this to boost investment and long-run growth; and that insofar as there are problems with financial globalization, these can be remedied through deep institutional reforms. In contrast, we argue that developing economies are as or more likely to be investment- than savings-constrained and that the effect of foreign finance is often to aggravate this investment constraint by appreciating the real exchange rate and reducing profitability and investment opportunities in the traded goods sector, which have adverse long-run growth consequences. It is time for a new paradigm on financial globalization, and one that recognizes that more is not necessarily better. Depending on context and country, the appropriate role of policy will be as often to stem the tide of capital inflows as to encourage them. Policymakers who view their challenges exclusively from the latter perspective risk getting it badly wrong. - downloaded pdf to Note
paper  downloaded  IMF  international_political_economy  international_finance  global_economy  emerging_markets  LDCs  capital_flows  investment  investment-government  development  economic_growth  economic_policy  economic_reform  access_to_finance  capital_controls  FX-misalignment  FX-rate_management  economic_theory  macroeconomics  international_economics  financial_economics  financial_sector_development 
may 2016 by dunnettreader
Diane Coyle - Adam Ozanne's "Power and economics" - April 2016
My esteemed colleague Adam Ozanne has written a very interesting, short book on the strange absence of the concept of power from mainstream modern economics.… [unfortunately Palgrave has been idiots again and have priced both the paper and ebook editions for libraries not for people who'd actually be interested and would boost sales by word of mouth - not clear that this is likely to find many library buyers either]
Instapaper  books  economic_theory  sociology_of_knowledge  social_sciences  political_economy  power  from instapaper
may 2016 by dunnettreader
Robert Waldmann - DeLong on Hayek, Smith, and Smith - May 2016
Brad answers a question raised by Noah with thoughts on Friedrich and Adam. I totally lost all self control in his comments section and waste even more pixels…
Instapaper  economic_theory  macroeconomics  markets  market_fundamentalism  Hayek  Friedman_Milton  Keynes  Smith  emergence  knowledge  information-markets  prices  Popper  from instapaper
may 2016 by dunnettreader
Bond Economics: review, "Capitalism" - By Anwar Shaikh - April 2016
Capitalism: Competition, Conflict, Crises is a comprehensive overview of economics published by the noted heterodox economist Anwar Shaikh. This article is…
Instapaper  books  reviews  economic_theory  heterodox_economics  macroeconomics  capitalism  business_cycles  competition  capitalism-systemic_crisis  financial_crisis  emergence  econophysics  economic_models  from instapaper
may 2016 by dunnettreader
Geoffrey M. Hodgson - Conceptualizing Capitalism (summary) - Books & ideas - May 2015
Conceptualizing Capitalism: How the Misuse of Key Concepts Impedes our Understanding of Modern Economies -- One of the most commonly used concepts in modern humanities and social sciences, capitalism is also one of the most misunderstood. Away from politically biased takes on the subject, Geoffrey M. Hodgson proposes a new, law-based framework for understanding capitalism. Downloaded pdf to Note
books  kindle-available  intellectual_history  economic_theory  economic_models  economic_sociology  political_economy  legal_theory  philosophy_of_social_science  capitalism  downloaded 
april 2016 by dunnettreader
Palley, Rochon and Vernengo » The Relevance of Keynes’s General Theory after 80 years - Review of Keynesian Economics 2016
Thomas Palley, Louis-Philippe Rochon and Matías Vernengo -- The Relevance of Keynes’s General Theory after 80 years -- This year marks two important anniversaries in macroeconomics: the 80th anniversary of the publication of Keynes’s The General Theory of Employment, Interest and Money, and the 70th anniversary of Keynes’s premature death, at the age of 63. To mark these anniversaries, the first issue of the fourth year of the Review of Keynesian Economics is dedicated to Keynes -' downloaded pdf to Note
article  economic_theory  intellectual_history  20thC  21stC  Keynesianism  Keynes  downloaded 
february 2016 by dunnettreader
Stefan Linder, Nicolai J. Foss - Agency Theory :: SSRN April 23, 2013
Stefan Linder, ESSEC Business School -- Nicolai J. Foss, Copenhagen Business School - Department of Strategic Management and Globalization *--* Agency theory studies the problems and solutions linked to delegation of tasks from principals to agents in the context of conflicting interests between the parties. Beginning from clear assumptions about rationality, contracting and informational conditions, the theory addresses problems of ex ante (“hidden characteristics”) as well as ex post information asymmetry (“hidden action”), and examines conditions under which various kinds of incentive instruments and monitoring arrangements can be deployed to minimize the welfare loss. Its clear predictions and broad applicability have allowed agency theory to enjoy considerable scientific impact on social science; however, it has also attracted considerable criticism. -- PDF File: 35 -- Keywords: adverse selection, agency costs, compensation, conflict of interest, contracting, corporate governance, delegation, hidden action, hidden characteristics, incentive intensity, information asymmetry, informativeness, monitoring, moral hazard, motivation, nexus of contracts, pay-for-performance -- downloaded pdf to Note
paper  SSRN  economic_theory  social_sciences-post-WWII  microeconomics  microfoundations  behavioral_economics  incentives  incentives-distortions  agency  agents  game_theory  rational_choice  rationality-economics  rationality-bounded  information-asymmetric  adverse_selection  delegation  moral_psychology  moral_hazard  contracts  principal-agent  downloaded 
january 2016 by dunnettreader
M. Ali Khan, The Irony in/of Economic Theory | JSTOR - MLN Vol. 108, No. 4 (Sep., 1993)
MLN, Vol. 108, No. 4, French Issue (Sep., 1993), pp. 759-803 -- DOI: 10.2307/2904961 -- via Eric Schliesser, attack on lack of reflexive thought by economists about the nature of their own enterprise and the assumptions undergirding their work -- starts with Samuelson's justification of the language of mathematics, and includes discussion of Kenneth Boulding's attack on his own profession for its failure to engage in philosophy of science, referring back positively to Veblen's critique -- downloaded pdf to Note
article  jstor  philosophy_of_science  philosophy_of_social_science  economic_theory  economic_models  history_of_science  history-and-social_sciences  economic_history  sociology_of_knowledge  sociology_of_science  mathematization  Methodenstreit  Samuelson  downloaded 
january 2016 by dunnettreader
Guillaume Calafat & Éric Monnet - Le retour de l’histoire économique ? - La Vie des idées - 5 janvier 2016
Le récent succès d’ouvrages d’histoire économique, alors même que cette spécialité paraît souvent négligée à l’université, ainsi que des évolutions disciplinaires simultanées, font espérer de nouveaux rapprochements entre l’histoire et l’économie. -- downloaded pdf to Note
economic_history  economic_theory  Great_Divergence  Industrial_Revolution  trade  trade-cultural_transmission  networks-information  networks-business  development  sociology_of_knowledge  economic_sociology  economic_culture  econometrics  consumer_revolution  downloaded 
january 2016 by dunnettreader
Cédric Rio, review - Pierre Crétois, Le Renversement de l’individualisme possessif: de Hobbes à l’État social Droit de propriété et intérêt collectif - La Vie des idées - 24 août 2015
Recensé : Pierre Crétois, Le Renversement de l’individualisme possessif : de Hobbes à l’État social, Paris, Classiques Garnier, 2014, 356 p.-- Mots-clés : propriété | libéralisme | solidarité | républicanisme -- En France l’idée que la propriété est un droit naturel émerge et triomphe au XVIIIe siècle, sous l’impulsion des physiocrates. C’est une telle conception que le mouvement solidariste critiquera un siècle plus tard afin de promouvoir l’État social. -- downloaded pdf to Note
books  reviews  French_language  intellectual_history  political_philosophy  18thC  19thC  French_Enlightenment  Physiocrats  Hobbes  Locke-2_Treatises  Rousseau  property  property_rights  individualism  individualism-possessive  republicanism  common_good  solidarity  socialism  socialism-19thC  social_contract  social_movements  political_economy  political_press  economic_theory  liberalism  liberalism-19thC  welfare_state  natural_law  natural_rights  downloaded 
october 2015 by dunnettreader
Ravi Kanbur, Joseph Stiglitz - Wealth and income distribution: New theories needed for a new era | VOX, CEPR’s Policy Portal - 18 August 2015
Growth theories traditionally focus on the Kaldor-Kuznets stylised facts. Ravi Kanbur and Nobelist Joe Stiglitz argue that these no longer hold; new theory is needed. The new models need to drop competitive marginal productivity theories of factor returns in favour of rent-generating mechanism and wealth inequality by focusing on the ‘rules of the game.’ They also must model interactions among physical, financial, and human capital that influence the level and evolution of inequality. A third key component will be to capture mechanisms that transmit inequality from generation to generation. -- short and sweet summary of the various gaps in standard models and where both new explanatory and normative work needed -- also see references -- downloaded as pdf to Note
paper  economic_growth  economic_theory  economic_models  capital  productivity-labor_share  production  macroeconomics  distribution-wealth  distribution-income  inequality  inequality-wealth  labor_share  wages  inequality-opportunity  downloaded 
september 2015 by dunnettreader
Objective Principles of Economics by Egmont Kakarot-Handtke :: SSRN - April 2014, update March 2015
University of Stuttgart - Institute of Economics and Law -- Economists have the habit of solving the wrong problem. They speculate circumstantially about the behavior of agents and do not come to grips with the behavior of the monetary economy. This is the consequence of the methodological imperative that all explanations must run in terms of the actions and reactions of individuals. The critical point is that no way leads from the understanding of the interaction of the individuals to the understanding of the working of the economy as a whole. The solution consists in moving from subjective-behavioral axioms to objective-structural axioms, i.e., from proto-scientific past to scientific future. -- Pages in PDF File: 19 -- Keywords: new framework of concepts, structure-centric, axiom set, methodology, complex adaptive system, profit -- for references downloaded pdf to Note
paper  SSRN  economic_theory  macroeconomics  microfoundations  methodological_individualism  behavioralism  complex_adaptive_systems  sociology_of_knowledge  sociology_of_science_&_technology  Kuhn  Laktos  scientific_method  bibliography  downloaded 
september 2015 by dunnettreader
Egmont Kakarot-Handtke - Make a Bubble, Take a Free Lunch, Break a Bank by :: SSRN - Oct 2012, update May 2015
University of Stuttgart - Institute of Economics and Law -- Standard economics is known to be incapable of integrating the real and the monetary sphere. The ultimate reason is that the whole theoretical edifice is built upon a set of behavioral axioms. Therefore, the formal starting point is moved to structural axioms. This makes it possible to formally track the complete process of value creation and destruction in the asset market and its consequences for the household and business sector. From the set of structural axioms emerge the well-known phenomena of a bubble from free lunches through appreciation to defaults due to a lack of potential next buyers. -- Pages in PDF File: 35 -- Keywords: new framework of concepts, structure-centric, axiom set, profit, rate of interest, liquidity preference, primary market, secondary market, parrot economics, theory of value, valuation price, appreciation, depreciation, net worth, debt/income ratio -- didn't download
paper  SSRN  economic_theory  macroeconomics  financial_system  markets-structure  bubbles  asset_prices  leverage  primary_markets  secondary_markets  liquidity  interest_rates  credit_booms  capital_markets  money_market 
september 2015 by dunnettreader
Egmont Kakarot-Handtke - Essentials of Constructive Heterodoxy: Financial Markets :: SSRN - June 2015
University of Stuttgart - Institute of Economics and Law -- What stands before all eyes as failed Orthodoxy is ultimately caused by the wrong answer to Mill's Starting Problem. It is now pretty obvious that one cannot put utility maximization, equilibrium, well-behaved production functions, ergodicity or any other physical or psychological or sociological or behavioral assumption into the premises. No way leads from such premises to the explanation of how the actual market economy works. The logical consequence is to discard them. Having first secured a superior formal starting point, the present paper addresses the question of how the various types of financial markets emerge from the elementary monetary circuit. -- Pages in PDF File: 33 -- Keywords: new framework of concepts, structure-centric, Law of Supply and Demand, Profit Law, IOU, complementarity of retained profit and saving, securities, bonds, common stock, mortgages, consumer financing, helicopter money -- didn't download
paper  SSRN  economic_theory  financial_system  capital_markets  money  profit  credit  asset_prices  investment  mortgages  leverage  consumer_finance  savings  equity-corporate  equity_markets  bond_markets 
september 2015 by dunnettreader
Primary and Secondary Markets by Egmont Kakarot-Handtke :: SSRN - Aug 2011, update March 2015
Also Dec 2012 Levy Economics Institute of Bard College Working Paper No. 741 -- University of Stuttgart - Institute of Economics and Law -- This paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. These stocks constitute the demand and supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Realized appreciation in the secondary markets is different from income or profit. To treat primary and secondary markets alike is therefore a category mistake.-- Pages in PDF File: 26 -- Keywords: new framework of concepts, structure-centric, axiom set, residuals, real and monetary stocks, money, credit, financial saving, nonfinancial saving, net worth, financial profit, nonfinancial profit, retained profit, appreciation, wealth -- downloaded pdf to Note
paper  SSRN  economic_theory  macroeconomics  financial_system  markets  markets-structure  primary_markets  secondary_markets  asset_prices  profit  investment  interest_rates  savings  capital_gains  money  wealth  credit  liquidity  downloaded 
september 2015 by dunnettreader
Egmont Kakarot-Handtke - Schumpeter and the Essence of Profit :: SSRN - May 2011, update May 2015
University of Stuttgart - Institute of Economics and Law -- Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of generality entails that it should be possible to free Schumpeter’s approach from its irksome Walrasian legacy and to give a consistent formal account of the elementary circular flow that served him as a backdrop for the analysis of the entrepreneur-driven market system. -- Pages in PDF File: 28 -- Keywords: new framework of concepts, structure-centric, axiom set, profit, money, credit, structural stress, catching-up process, monopoly -- downloaded pdf to Note
paper  SSRN  economic_theory  economic_history  intellectual_history  19thC  20thC  Schumpeter  economic_growth  economic_sociology  entrepreneurs  profit  investment  Innovation  creative_destruction  money  markets-structure  monopoly  prices  firms-theory  neoclassical_economics  equilibrium  downloaded 
september 2015 by dunnettreader
Egmont Kakarot-Handtke - Economics for Economists :: SSRN - update April 2015
University of Stuttgart - Institute of Economics and Law -- The characteristic capability of science – to turn whatever it might touch into knowledge – seems to have eluded economics. Currently, economists do not understand how the economy works. To get out of the cul-de-sac requires a paradigm shift. It consists in replacing behavioral axioms by structural axioms. The subject matter of theoretical economics is not human behavior but systemic behavior. From the structural analysis follows a new Law of Supply and Demand and a new Profit Law for the economy as a whole. The conventional supply-demand-equilibrium approach is refuted. This implies that the reliance on the spontaneous order metaphor is unfounded. -' Number of Pages in PDF File: 29 -- downloaded pdf to Note
paper  economic_theory  macroeconomics  profit  equilibrium  behavioralism  agency-structure  agent-based_models  downloaded 
september 2015 by dunnettreader
Noah Smith - Economics Has a Math Problem - Bloomberg View - September 2015
A lot of people complain about the math in economics. Economists tend to quietly dismiss such complaints as the sour-grapes protests of literary types who lack…
Instapaper  economic_theory  economic_models  mathematization  statistics  big_data  machine_learning  from instapaper
september 2015 by dunnettreader
Jeet Heer - Sex, Economics, and Austerity | The American Prospect - 2013
John Maynard Keynes was the sexiest economist who ever lived. This might seem like half-hearted praise since in our mind’s eye the typical economist appears as… On the decades of right-wing attacks on Keynes and Keynesianism using sexual "immorality" as linked to purported moral failings of Keynes' policy responses from Versailles onward.
article  Instapaper  intellectual_history  intellectual_history-distorted  20thC  21stC  Keynes  Keynesianism  economic_history  economic_theory  macroeconomics  Great_Depression  right-wing  neoconservatism  fiscal_policy  budget_deficit  austerity  economics-and-morality  from instapaper
august 2015 by dunnettreader
Peter Radford - Economics as storytelling: McCloskey again | Real-World Economics Review Blog - August 2015
from Peter Radford
This is not new to most of you of course. You are already steeped in McCloskey’s Rhetoric. Or you ought to be. After all economists are…
rhetoric-moral_basis  economic_culture  market_fundamentalism  Instapaper  rhetoric-political  economic_theory  from instapaper
august 2015 by dunnettreader
Brad DeLong - "We Always Thanked Robert Lucas for Giving Us a... Monopoly" Over Valuable Macroeconomics - August 2015
Brad collects a host of links (articles and Mankiew paper) on Lawrence Meyer's career from the central bank to his macro modeling firm, where he claims that macro theory got sidetracked by Lucas and co. for decades. And the workhorses for both private sector and central bank forecasting was building out the Keynesianism circa 1970. And he made a fortune since the academic economists had disappeared down the rabbit hole. Downloaded Greg M's paper which is brutally blunt about the intellectual waste - even New Keynesian models he works on got excessively diverted with the rational expectations, etc nonsense.
Pocket  paper  macroeconomics  economic_theory  neoclassical_economics  Lucas_critique  rational_expectations  Keynesianism  links  intellectual_history  20thC  post-WWII  bad_economics  downloaded  from pocket
august 2015 by dunnettreader
Paul Romer - Solow’s Choice ("After the Phillips Curve" Conference) | August 2015
Several economists, including Brad DeLong and Paul Krugman, have commented on how macroeconomics developed in the late 1970s. There are many points on which we… Romer's post us a very useful illustration of how the myths of the New Classical "Revolution" by Lucas and Sargent were formulated and maintained. Even Romer, who has only recently seen the light that the "freshwater" folks are not playing by the rules of scientific inquiry, can still place the "who started it" blame on the "saltwater" folks by singling out Solow’s refusal to accept the starting assumptions of Lucas et al, since he found them (as they have proven to be after 3+decades) prima facia absurd. The text Romer highlights as Solow’s failure to follow "the rules of Science" by being sarcastic, is for anyone who didn't believe the "freshwater" version of history, not appallingly dismissive, but a mild and mostly respectful response to the hysterical attacks that were even at the time demonstrably false (and enormously disrespectful). It's Romer's "critical moment" when the "freshwater" guys left the path of scientific integrity. But it was precisely the extreme denigration and open rejection of the macroeconomic mainstream that the "freshwater" school used as its rhetorical stance in order to launch its attempt to monopolize macroeconomics -- their insistence on their own purity, untainted by mainstream macro. It was exclusive and cultish from the get-go. And though Romer is reporting on his "close reading" of the texts from the conference where the Revolution was announced and Solow pushed back, Romer can't see what he's reading because he filters it all through the myth. Downloaded pdf of conference papers to Note
Instapaper  conference  sociology_of_knowledge  sociology_of_science_&_technology  intellectual_history-distorted  intellectual_history  20thC  post-WWII  macroeconomics  economic_theory  neoclassical_economics  Lucas_critique  rational_expectations  Keynesianism  Kuhn  myth  scientific_method  Romer  downloaded  from instapaper
august 2015 by dunnettreader
David Glaser - Romer v. Lucas | Uneasy Money - August 13 2015
If the social functions of science were being efficiently discharged, this rather obvious replacement of problem solving by question begging would not have escaped effective challenge and opposition. But Lucas was able to provide cover for this substitution by persuading the profession to embrace his microfoundational methodology, while offering irresistible opportunities for professional advancement to younger economists who could master the new analytical techniques that Lucas and others were rapidly introducing, thereby neutralizing or coopting many of the natural opponents to what became modern macroeconomics. So while Romer considers the conquest of MIT by the rational-expectations revolution, despite the opposition of Robert Solow, to be evidence for the advance of economic science, I regard it as a sign of the social failure of science to discipline a regressive development driven by the elevation of technique over substance.
prices  sociology_of_knowledge  sociology_of_science  neoclassical_economics  Keynesianism  RBC  economic_models  macroeconomics  Kuhn  Romer  Laktos  economic_theory  Solow  New_Keynesian  sociology_of_science_&_technology  equilibrium  microfoundations  rational_expectations  mathematization  from instapaper
august 2015 by dunnettreader
John Dunn, ed. - The Economic Limits to Modern Politics (1992) | Cambridge University Press
The central problem of modern government and political action is how to choose and implement effective economic policies. For this reason, the economic considerations of public policy have assumed a more prominent place in contemporary political thought. Despite efforts among political scientists, economists, and sociologists to fathom the complexities of this added dimension, none of these solid sciences offers a satisfying approach to the problem. This volume attempts to display the historical novelty and intellectual importance of this dilemma, to uncover its origins, and to procure a remedy through a clearer and steadier focus. The book's contributors range from historians of ideas to economic theorists, who bring the approach of their own intellectual discipline to bear upon the issue. **--** Introduction, John Dunn *-* 1. The economic limits to modern politics, John Dunn *-* 2. The wealth of one nation and the dynamics of international competition, Istvan Hont *-* 3. The political limits to pre-modern politics, J. G. A. Pocock *-* 4. The economic constraints on political programs, Frank H. Hahn *-* 5. International liberalism reconsidered, Robert O. Keohane *-* 6. Capitalism, socialism, and democracy: compatibilities and contradictions John Dunn. -- ebook Adobe Reader - not clear whether in kindle format -- excerpt (10 ogs Intro) downloaded pdf to Note
books  kindle-available  17thC  18thC  19thC  20thC  intellectual_history  economic_history  political_history  political_philosophy  political_economy  judgment-political  public_policy  capitalism  competition-interstate  economic_growth  development  raison-d'-état  British_history  British_politics  British_Empire  trade  trade-policy  Great_Divergence  economic_theory  political_culture  economic_culture  macroeconomic_policy  Innovation  innovation-government_policy  collective_action  property_rights  Labor_markets  redistribution  fiscal_policy  fiscal-military_state  Davenant  Smith  social_order  social_democracy  liberalism  elites-political_influence  IR_theory  globalization  international_political_economy  public_finance  public_goods  class_conflict  downloaded 
august 2015 by dunnettreader
Cormac Ó Gráda - Eating People Is Wrong, and Other Essays on Famine, Its Past, and Its Future | Princeton University Press
Famines are becoming smaller and rarer, but optimism about the possibility of a famine-free future must be tempered by the threat of global warming. (...) this wide-ranging book, which provides crucial new perspectives on key questions raised by famines around the globe between the 17thC and 21stC. The book begins with a taboo topic. Ó Gráda argues that cannibalism, while by no means a universal feature of famines and never responsible for more than a tiny proportion of famine deaths, has probably been more common during very severe famines than previously thought. (...) new interpretations of two of the 20thC’s most notorious and controversial famines, the Great Bengal Famine and the Chinese Great Leap Forward Famine. Ó Gráda questions the standard view of the Bengal Famine as a perfect example of market failure, ...primary cause was the unwillingness of colonial rulers to divert food from their war effort. (...) the role played by traders and speculators during famines more generally, invoking evidence from famines in France, Ireland, Finland, Malawi, Niger, and Somalia since the 1600s, and overturning Adam Smith’s claim that government attempts to solve food shortages always cause famines. Cormac Ó Gráda is professor emeritus of economics at University College Dublin. His books include Famine: A Short History and Black '47 and Beyond: The Great Irish Famine in History, Economy, and Memory (both Princeton). -- introduction downloaded as pdf to Note
books  economic_history  economic_theory  markets-failure  markets-structure  markets-psychology  famine  agriculture  Ireland  Chinese_history  China-economy  India  British_Empire  imperialism-critique  downloaded 
july 2015 by dunnettreader
David Glaser - Neo-Fisherism and All That | Uneasy Money
A few weeks ago Michael Woodford and his Columbia colleague Mariana Garcia-Schmidt made an initial response to the Neo-Fisherian argument advanced by, among… re Nick Rowe carefully explaining how you can't get from one equilibrium to the other that the Neo-Fischerites think the central bank should get to, but Glaser is less respectful about their nonsense. It's truly mind-boggling how the entire RBC research program, which was embraced because you could have dterminate truth without having to match the real world because the world would match your model, has reached the ultimate absurdity of the model reduced to a single variable in comparative statics with no way to get between them.
Instapaper  economic_theory  macroeconomics  neoclassical_economics  RBC  monetary_policy  interest_rates  inflation-expectations  from instapaper
july 2015 by dunnettreader
David Beckworth - The Big Lesson of the Eurozone Crisis - July 2015
The Eurozone was a bet on convergence rather than specialization that would push the members further apart - Krugman said the theory would prove specialization -- and he was more right than his worst nightmares
Pocket  economic_theory  monetary_union  convergence-econimic  Eurozone  Eurocrsis  EU_governance  Greece-Troika  European_integration  Krugman  from pocket
july 2015 by dunnettreader
Kevin O'Rourke - Moving on From the Euro | Project Syndicate - July 2915
It's time to face up to the Euro as a failed experiment after 5 years of trying to salvage what was obviously a badly designed plan in the first place. The pain will be vad, but it's only going to get worse going forward
Pocket  macroeconomics  economic_theory  IMF  EU_governance  Eurozone  Eurocrsis  monetary_union  Germany-Eurozone  austerity  ordoliberalism  Greece-Troika  from pocket
july 2015 by dunnettreader
B. Akitoby, Sanjeev Gupta, A. Senhadji - How fiscal policy can support medium- to long-term growth | VOX, CEPR’s Policy Portal - 18 July 2015
Bernardin Akitoby, Sanjeev Gupta, Abdelhak Senhadji -- IMF Research staff -- There has been a heated debate about the effectiveness of fiscal policy as a countercyclical tool but little evidence on how it can support growth. This column shows that fiscal policy can lift medium- and long-term growth in both advanced and developing economies. But all fiscal reforms are not equal in their growth dividend. Successful reforms are often part of a broader reform package and can balance the growth-equity trade-off.
Instapaper  fiscal_policy  fiscal_space  economic_theory  Keynesian  New_Keynesian  macroeconomics  economic_models  economic_growth  economic_policy  reform-economic  inequality  unemployment  countercyclical_policy  from instapaper
july 2015 by dunnettreader
Paul Frijters - An Economic Theory of Greed, Love, Groups, and Networks | Cambridge University Press - March 2013
PaperbackISBN: 9781107678941 $63.95 inc GST --;Why are people loyal? How do groups form and how do they create incentives for their members to abide by group norms? Until now, economics has only been able to partially answer these questions. In this groundbreaking work, Paul Frijters presents a new unified theory of human behaviour. To do so, he incorporates comprehensive yet tractable definitions of love and power, and the dynamics of groups and networks, into the traditional mainstream economic view. The result is an enhanced view of human societies that nevertheless retains the pursuit of self-interest at its core. This book provides a digestible but comprehensive theory of our socioeconomic system, which condenses its immense complexity into simplified representations. The result both illuminates humanity's history and suggests ways forward for policies today, in areas as diverse as poverty reduction and tax compliance.
books  economic_theory  economic_models  economic_sociology  utility  rationality-economics  behavioral_economics  networks  action-theory  self-interest  altruism  power  loyalty 
july 2015 by dunnettreader
Thomas Palley - Inequality, the Financial Crisis and Stagnation: Competing Stories and Why They Matter - June 15 2015
This paper examines several mainstream explanations of the financial crisis and stagnation and the role they attribute to income inequality. Those explanations are contrasted with a structural Keynesian explanation. The role of income inequality differs substantially, giving rise to different policy recommendations. That highlights the critical importance of economic theory. Theory shapes the way we understand the world, thereby shaping how we respond to it. The theoretical narrative we adopt therefore implicitly shapes policy. That observation applies forcefully to the issue of income inequality, the financial crisis and stagnation, making it critical we get the story right.
paper  economic_theory  macroeconomics  stagnation  economic_growth  Keynesianism  economic_sociology  inequality  financial_system  financial_crisis  downloaded 
july 2015 by dunnettreader
Brad DeLomg - German Economic Thought and the European Crisis - Washington Center for Equitable Growth - July 2017
It is a commonplace among Anglo-Saxon economists that Saxon-Saxon “ordoliberalism” was a post-World War II success only because somebody else–the United… DeLong remarks on his link to the article on why the European Crisis was inevitable given German economic theory -- that the German economists have attributed the country's economic success to ordoliberalism and German virtue when it was based on an incredibly favorable environment and policy postures by the US as global hegemon. Instapaper
Instapaper  economic_history  Germany  international_monetary_system  global_economy  post-WWII  trade-policy  global_imbalance  hegemony  Marshall_Plan  sovereign_debt  export-led  Germany-Eurozone  ordoliberalism  Keynesianism  austerity  budget_deficit  FX  FX-misalignment  Greece-Troika  economic_theory  economic_culture  economic_policy  macroeconomics  from instapaper
july 2015 by dunnettreader
Why German Economic Thought Made the Greek Crisis Inevitable – Tropics of Meta
“Contrary to popular misconception, rules were not meant to be broken” Yesterday, after months of negotiations, Greece’s Syriza government relented to the…
Instapaper  Eurozone  EU_governance  Eurocrsis  Greece-Troika  austerity  Germany-Eurozone  ordoliberalism  economic_theory  Keynesianism  from instapaper
july 2015 by dunnettreader
Bassino, Broadberry, Fukao, Gupta, and Takashima - Japan and the Great Divergence, 725 to 1874 | VOX, CEPR’s Policy Portal - 01 July 2015
Jean-Pascal Bassino, Stephen Broadberry, Kyoji Fukao, Bishnupriya Gupta, Masanori Takashima -- Japan was the first Asian nation to achieve modern economic growth. This column discusses new evidence suggesting that Japan’s growth started from a lower level than Britain’s and grew more slowly until the Meiji Restoration. The key to understanding modern economic growth seems to lie in identifying the forces that dampened growth reversals, rather than the forces responsible for growth itself. -- downloaded pdf to Note
paper  economic_history  economic_growth  medieval_history  17thC  18thC  19thC  20thC  economic_theory  economic_sociology  Great_Divergence  Japan  development  UK_economy  downloaded 
july 2015 by dunnettreader
Paul Beaudry, Dana Galizia, Franck Portier - The market economy’s stability | VOX, CEPR’s Policy Portal - 04 July 2015
Whereas some view the macroeconomy as overall stable and on a smooth long-run growth path, others argue it is unstable with repeated periods of booms and busts. This column suggests that the market economy is inherently unstable and booms and busts arise endogenously as the results of market incentives. Monetary policy is then perhaps not the right tool for addressing macroeconomic fluctuations. Instead, policies aimed at changing the incentives would be more appropriate.
macroeconomics  economic_models  economic_theory  business_cycles  monetary_policy  incentives  macroprudential_policies  non-linear_models  stability  downloaded 
july 2015 by dunnettreader
Werner Plumpe - The hour of the expert - economic expertise over 4 centuries - Eurozine - October 2012
What constitutes economic expertise? Looking at how European politics has answered this question over the last four centuries, Werner Plumpe argues that, at any given time, economic expertise is judged according to its coincidence with the conjuncture. -- Original in German -- Translation by Samuel Willcocks -- First published in Merkur 9-10/2012 (German version); Eurozine (English version) -- quite amusing, but nice overview that isn't excessively Anglo oriented
economic_history  economic_theory  expertise  sociology_of_knowledge  social_sciences  positivism  social_sciences-post-WWII  macroeconomics  economic_models  17thC  18thC  19thC  20thC  21stC  Europe-Early_Modern  intellectual_history  grand_narrative  narrative-contested  political_economy  economic_culture  economic_policy  capitalism  capitalism-varieties  capitalism-systemic_crisis  laisser-faire  cameralism  government-roles  business_cycles  business-and-politics  Keynesianism  neoclassical_economics  Austrian_economics  liberalism-19thC  finance_capital  bank_runs  financial_crisis  regulation  Marxism  public_enterprise  public_goods  infrastructure  market_fundamentalism  downloaded 
july 2015 by dunnettreader
Michael Kwass, review essay - Reassessing Enlightenment Economics - Reinert's "Translating Empire" | Books & ideas - 25 March 2013
Reviewed: Sophus A. Reinert, Translating Empire: Emulation and the Origins of Political Economy. Harvard University Press, 438 pp - Resurrecting the life of John Cary’s Essay on the State of England, a book which travelled all over Europe throughout the 18th century, S.A. Reinert challenges our understanding of Enlightenment economics, while calling for a more nuanced and historically-informed understanding of political economy in general. (..) By resurrecting the life of a text that scholars have dismissed as “mercantilist” and repositioning that work at the center of 18th-century political economy, Reinert challenges our basic understanding of Enlightenment economics, so often reduced to the free-trade doctrines of the physiocrats and Adam Smith. He argues that the diffusion of Cary’s work demonstrates that state-centered approaches to the creation of wealth enjoyed wide resonance at the very moment when discussions of economic policy were expanding beyond state chambers to engage a broader public. Far from being eclipsed by theories of laissez-faire economics, as conventional histories of economic thought would have us believe, such approaches became “the absolute mainstream in Europe” by the late 18th century -- downloaded pdf to Note
books  reviews  kindle  18thC  economic_history  intellectual_history  intellectual_history-distorted  political_economy  Enlightenment  economic_theory  mercantilism  laisser-faire  Physiocrats  Smith  British_history  British_foreign_policy  nation-state  economic_growth  development  public_policy  public_goods  government-roles  Italy  Austria  Germany  readership  history_of_book  print_culture  information-intermediaries  networks-information  networks-business  networks-policy  Republic_of_Letters  downloaded 
july 2015 by dunnettreader
Suzanne J. Konzelmann, Marc Fovargue-Davies - Anglo-Saxon Capitalism in Crisis? Models of Liberal Capitalism and the Preconditions for Financial Stability :: SSRN (rev'd September 2011) Cambridge Centre for Business Research Working Paper No. 422
Suzanne J. Konzelmann, Birkbeck College - Social Sciences, School of Management and Organizational Psychology; Cambridge - Social and Political Sciences -- Marc Fovargue-Davies, U of London - The London Centre for Corporate Governance & Ethics -- The return to economic liberalism in the Anglo-Saxon world was motivated by the apparent failure of Keynesian economic management to control the stagflation of the 1970s and early 1980s. In this context, the theories of economic liberalism, championed by Friederich von Hayek, Milton Friedman and the Chicago School economists, provided an alternative. However, the divergent experience of the US, UK, Canada and Australia reveals two distinct ‘varieties’ of economic liberalism: the ‘neo-classical’ incarnation, which describes American and British liberal capitalism, and the more ‘balanced’ economic liberalism that evolved in Canada and Australia. In large part, these were a product of the way that liberal economic theory was understood and translated into policy, which in turn shaped the evolving relationship between the state and the private sector and the relative position of the financial sector within the broader economic system. Together, these determined the nature and extent of financial market regulation and the system’s relative stability during the 2008 crisis. -- PDF File: 61 -- Keywords: Corporate governance, Regulation, Financial market instability, Liberal capitalism, Varieties of capitalism -- downloaded pdf to Note
paper  SSRN  economic_history  20thC  21stC  post-WWII  post-Cold_War  US_politics  UK_politics  political_economy  political_culture  ideology  neoliberalism  economic_theory  economic_sociology  business_practices  business-and-politics  business-norms  business_influence  Keynesianism  neoclassical_economics  Austrian_economics  Chicago_School  capitalism-systemic_crisis  capitalism-varieties  corporate_governance  corporate_finance  capital_markets  capital_as_power  financialization  finance_capital  financial_regulation  Great_Recession  financial_crisis  policymaking  trickle-down  Canada  Australia  downloaded 
july 2015 by dunnettreader
Mark Buchanan - Paul Romer mis-handles atomic physics | Medium - June 2015
He thinks that some of the core mathematical models of modern economics are every bit as sound and scientific as Niels Bohr’s 1913 model of the atom. It’s not… The tale of Bohr's work within a community of theorists and experimental scientists trying to come up with an explanation for confounding experimental results of electron behavior is the exact opposite of the development of the Arrow-Debreu theorem, and the opposite of how the "midel" was subsequently used by theorists in the given domain. A perfect indictment of how "mathiness" has contaminated the entire field of macroeconomic theory.
Instapaper  scientific_method  physics  history_of_science  sociology_of_science_&_technology  sociology_of_knowledge  macroeconomics  economic_theory  economic_models  from instapaper
june 2015 by dunnettreader
Noah Smith - Economics Gets Real - Bloomberg View - June 2015
“It works in practice, but does it work in theory?” This joke is so commonly applied to economists that no one even knows who said it originally. The idea fits… Still too polyanna "both sides do it" and facts only have a modest liberal bias, but nice roundup of interesting papers and research programs on the empirical side that at least puts the kabosh on the Theory leads empirical which can be fitted or handwaved away which dominated the better part of the 1970s to the Great Depression -- and the Great Moderation is being reexaminedas not necessarily all so great
Instapaper  macroeconomics  microeconomics  microfoundations  behavioral_economics  economic_theory  links  from instapaper
june 2015 by dunnettreader
Robert Waldmann - Angry Bear » What Remains of the Keynesian Revolution ? - February 2009
Robert Waldmann I like to criticize financies, financial regulators and fresh water economists. I should defend something for once. It is easy to criticize. So… -- with one outlier, the data still looking Keynesian
Instapaper  economic_theory  economic_models  macroeconomics  Great_Recession  Keynesianism  neoclassical_economics  RBC  rational_expectations  supply-side  demand-side  business_cycles  monetary_policy  fiscal_policy  from instapaper
june 2015 by dunnettreader
Paul Beaudry, Dana Galizia, Franck Portier - Reviving the Limit Cycle View of Macroeconomic Fluctuations | NBER - June 2015
NBER Working Paper No. 21241 --There is a long tradition in macroeconomics suggesting that market imperfections may explain why economies repeatedly go through periods of booms and busts, with booms sowing the seeds of the subsequent busts. This idea can be captured mathematically as a limit cycle. For several reasons, limit cycles play almost no role in current mainstream business cycle theory. In this paper we present both a general structure and a particular model with the aim of giving new life to this mostly dismissed view of fluctuations. We begin by showing why and when models with strategic complementarities—which are quite common in macroeconomics—give rise to unique equilibrium dynamics characterized by a limit cycle. We then develop and estimate a fully-specified dynamic general equilibrium model that embeds a demand complementarity to see whether the data favors a configuration supportive of a limit cycle. Booms and busts arise endogenously in our setting because agents want to concentrate their purchases of goods at times when purchases by others are high, since in such situations unemployment is low and therefore taking on debt is perceived as being less risky. A key feature of our approach is that we allow limit-cycle forces to compete with exogenous disturbances in explaining the data. Our estimation results indicate that US business cycle fluctuations in employment and output can be well explained by endogenous demand-driven cycles buffeted by technological disturbances that render those fluctuations irregular. -- Duh!
paper  paywall  economic_theory  macroeconomics  neoclassical_economics  Keynesianism  economic_models  business_cycles  demand-side  credit  animal_spirits 
june 2015 by dunnettreader
Frank Hahn - Some Adjustment Problems | JSTOR - Econometrica, Vol. 38, No. 1 (Jan., 1970), pp. 1-17
Some Adjustment Problems, F. H. Hahn, Econometrica, Vol. 38, No. 1 (Jan., 1970), pp. 1-17 -- This paper first takes a rather pessimistic look at what has been accomplished in recent years in understanding the "price mechanism." It then takes up two points in some detail. First, it is shown that stationary expectations do not ensure the convergence of all equilibrium paths on to a steady state in a neoclassical model with heterogeneous capital goods (an appendix works an example). Secondly, a tatonnement process is outlined and discussed for an economy with constant returns to scale. -- via Lars Syll -- downloaded pdf to Note
article  jstor  economic_theory  prices  equilibrium  capital  investment  economic_models  macroeconomics  neoclassical_economics  downloaded 
june 2015 by dunnettreader
Diane Coyle - Inventors and manufacturers, and their economics (Version 1.0) | Enlightened Economics - June 2015
Starting from her discovery of writings on new industrialization processes and firms by Babbage, she's collecting cites of works by lesser known authors who were exploring various areas of new economic activity, and inventing new ways of observing, aggregating observations, and analyzing them, including policy recommendations. They include *--* (1) Andrew Yarranton (1619-1684), the metallurgist and civil engineer, has quite an interesting work called “England’s Improvement by Land and Sea: how to Beat the Dutch without Fighting” (2 vols., 1677–81). *--* (2) A lot of people also tend to overlook Richard Price‘s (1723-1791) contributions to economics. They’ve been largely overshadowed by his radical political and theological works. But it was he who originally proposed and then advised on the National Debt sinking fund, as well being the person to promote Bayes’ work on statistics and probabilities. "Observations on Reversionary Payments: On Schemes for Providing Annuities for Widows, and for Persons in Old Age; On the Method of Calculating the Values of Assurances on Lives; And on the National Debt." Also, … a PostScript on the Population of the Kin *--* (3) Another actuarial pioneer, Robert Wallace (1697-1771), was also very prolific writing about demography and political economy. One that sounds quite intriguing is called "Dissertation on the Numbers of Mankind" (1753). -- Her links are to paperback scans, but these should be in Google Books or Internet Archive
books  Google_Books  find  economic_history  economic_theory  political_economy  17thC  18thC  19thC  British_history  mercantilism  Anglo-Dutch  Industrial_Revolution  industrialization  manufacturing  improvement  demography  productivity  sovereign_debt  public_finance  insurance  probability  safety_net  Pocket 
june 2015 by dunnettreader
Magic, maths and money: Finance and Mathematics: where is the ethical malaise?
This is a draft of an article that has been accepted by The Mathematical Intelligencer and offers an argument very similar to Romer’s ‘mathiness’ argument as…
Instapaper  economic_theory  economic_models  mathematization  bad_economics  financial_economics  from instapaper
june 2015 by dunnettreader
K. Vela Velupillai - Conning Variations on the Theme of in :: SSRN - Journal of Economic Surveys, Vol. 21, Issue 3, pp. 466-505, July 2007
K. Vela Velupillai, National University of Ireland, Galway (NUIG) - Department of Economics; Università degli Studi di Trento - Department of Economics and Management. -- The mathematization of economics is almost exclusively in terms of the mathematics of real analysis which, in turn, is founded on set theory (and the axiom of choice) and orthodox mathematical logic. In this paper I try to point out that this kind of mathematization is replete with economic infelicities. The attempt to extract these infelicities is in terms of three main examples and one general discussion: dynamics, policy and rational expectations and learning are the examples; a game theory without subjectivism, based on the axiom of determinateness, is discussed in general terms. The focus is on the role and reliance of standard fixed-point theorems in orthodox mathematical economics. -- Pages in PDF File: 40 -- via Lars Syll -- didn't download -- added to My Briefcase
article  SSRN  philosophy_of_science  philosophy_of_social_science  mathematics  economic_theory  economic_models  deduction  rational_expectations  game_theory  mathematization 
june 2015 by dunnettreader
Zoltan Jakab and Michael Kumhof - Banks are not intermediaries of loanable funds - and why this matters - Zoltan Jakab and Michael Kumhof | Bank of England - Working Paper No. 529 - 29 May 2015
In the intermediation of loanable funds model of banking, banks accept deposits of pre-existing real resources from savers and then lend them to borrowers. In the real world, banks provide financing through money creation. That is they create deposits of new money through lending, and in doing so are mainly constrained by profitability and solvency considerations. This paper contrasts simple intermediation and financing models of banking. Compared to otherwise identical intermediation models, and following identical shocks, financing models predict changes in bank lending that are far larger, happen much faster, and have much greater effects on the real economy. -- downloaded pdf to Note
paper  banking  intermediation  macroeconomics  economic_models  economic_theory  financial_economics  financial_system  credit  loanable_funds  downloaded 
may 2015 by dunnettreader
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