dunnettreader + macroeconomics   197

Paul Krugman Looks Back at the Last Twenty Years of the Macroeconomic Policy Debate
Everybody interested in macroeconomics or macroeconomic policy should know this topic backwards and forwards by heart. My problem is that I do not see how I can…
paper  downloaded  macroeconomics  from instapaper
february 2018 by dunnettreader
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
Finance
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.

Download
financial_system  downloaded  macroeconomics  economic_policy  economic_theory  economic_models 
april 2017 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
Thomas Palley » A Theory of Economic Policy - Lock-in and Lock-out via Hysterisis (WP October 2016)
A Theory of Economic Policy Lock-in and Lock-out via Hysterisis: Rethinking Economists’ Approach to Economic Policy
This paper explores lock-in and lock-out via economic policy. It argues policy decisions may near-irrevocably change the economy’s structure, thereby changing its performance. That causes changed economic outcomes concerning distribution of wealth, income and power, which in turn induces locked-in changes in political outcomes. That is a different way of thinking about policy compared to conventional macroeconomic stabilization theory. The latter treats policy as a dial which is dialed up or down, depending on the economy’s state. Lock-in policy is illustrated by the euro, globalization, and the neoliberal policy experiment. - downloaded via iPhone to DBOX
inequality-wealth  political_economy  inequality  neoliberalism  downloaded  economic_policy  elites-political_influence  distribution-wealth  macroeconomics  paper  path-dependency  business_cycles 
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
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
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
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
Brad DeLong - No: We Can't Wave a Magic Demand Wand Now and Get the Recovery We Threw Away in 2009 - Feb 2016
The estimable Mike Konczal writes: Mike Konczal: Dissecting the CEA Letter and Sanders's Other Proposals: "I would have done Gerald Friedman’s paper…
Instapaper  Great_Recession  macroeconomic_policy  macroeconomics  economic_growth  economic_models  hysterisis  elections-2016  from instapaper
february 2016 by dunnettreader
Hiroshi Yoshikawa, Hideaki Aoyama, Yoshi Fujiwara, Hiroshi Iyetomi - Deflation and money | VOX, CEPR’s Policy Portal - 05 September 2015
Deation and inflation are macroeconomic phenomena. However, we cannot fully understand them by only exploring macro data because the behavior of aggregate prices such as the Consumer Price Index depends crucially on the interactions of micro prices. On the other hand, all in all, the results we obtained have confirmed that aggregate prices significantly change, either upward or downward, as the level of real output changes. The correlation between aggregate prices and money, on the other hand, is not significant. The major factors affecting aggregate prices other than the level of real economic activity are the exchange rate and the prices of raw materials represented by the price of oil. Japan suffered from deflation for more than a decade beginning at the end of the last century. More recently, Europe faces a threat of deflation. Our analysis suggests that it is difficult to combat deflation only by expanding the money supply.
paper  prices  deflation  economic_growth  recessions  monetary_policy-effectiveness  QE  central_banks  Japan  FX-rate_management  oil_price  macroeconomics  unemployment 
september 2015 by dunnettreader
Aida Caldera, Mikkel Hermansen, Oliver Röhn - Economic resilience: A new set of vulnerability indicators | VOX, CEPR’s Policy Portal - 19 September 2015
The Global Crisis and its high costs have revived interest in early warning indicators of economic risks. This column presents a new set of indicators to detect vulnerabilities and assess country-specific risks of suffering a crisis. The empirical evidence confirms the usefulness of the vulnerability indicators in warning of severe recessions and crises in OECD countries. But indicators are no silver bullet and should be complemented with other monitoring tools, including expert judgement. -- paper giving overview of OECD Program working on indicators of upcoming crises and macro policies that could be adopted to head off crises -- stress on linkages across 6 clusters of economic activity and potential vulnerabilities -- in tuning indicators, looking at trade off between false positives and insufficient strength of negative signals, and the costs of responding to false positives vs failing to respond to warning flags -- also trying to see how, via linkages, prudential measures in one area might reduce vulnerabilities in other areas, so not left with only the blunt instrument of monetary policy
paper  OECD  OECD_economies  BRICS  business_cycles  recessions  macroeconomic_policy  macroeconomics  macroprudential_policies  financial_system  financial_crisis  credit_booms  fiscal_policy  FX-misalignment  capital_flows  housing  FDI  forecasts 
september 2015 by dunnettreader
Economic resilience - OECD Program with Working Papers and data sets on vulnerability ibdicators
Reducing the vulnerability of economies to crises and strengthening their capacity to absorb and overcome severe shocks while supporting strong growth -- that is strengthening economic resilience -- is a key policy priority. The Economic Resilience work stream aims at providing a systematic and holistic framework, including a set of indicators, to help governments identify vulnerabilities to shocks and crises early on so as to reduce their likelihood and economic cost. The findings arising from this work stream will be used to strengthen macro and structural policies surveillance.
website  OECD  business_cycles  forecasts  economic_indicators  financial_system  recessions  financial_crisis  macroeconomics  macroprudential_policies  macroprudential_regulation  housing  credit_booms 
september 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
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 - 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
'Mark Thoma - The Triumph of Backward-Looking Economi - cs'
In response to Paul Krugman’s recent post, “The Triumph of Backward-Looking Economics” — no surprise here — there is disagreement from Steve Williamson. So let… Thoma replays what the history shows - and as Krugman notes, it's insane that at the very time Volker was demonstrating Tobin's Keynesianism was right and the freshwater guys were all wet, the academic macroeconomists were letting the Chicago folks declare victory over the hated Keynes and his fellow travelers. We should add Friedman to the list of those whom Volker proved wrong. And yet Friedman and the freshwater folks are considered giants by all bien pensants. There's something uncanny about how successful the Right is in rewriting history and have their phony claims become generally accepted "knowledge" (e.g. Reconstruction or Reagan win the Cold War) Most astonishing are the generations of academic economists who came up post1980 and have bought the death-of-failed-Keynes story. When with a moment's reflection the most unsophisticated would note the prima facia disconnect between freshwater and monetarist claims to have defeated Keynes at precisely the moment, when, between Volker and Reagan, Friedman's monetary policy was proven worse than useless in practice, supply side was indeed voodoo, and the major macro variables tracked the Keynesian framework. The history that economists tell each other is mostly right-wing propaganda.
social_sciences-post-WWII  Tobin  Romer  Volker  RBC  macroeconomic_policy  Keynesian  New_Keynesian  monetary_policy  macroeconomics  Instapaper  bad_history  Krugman  bad_economics  neoclassical_economics  monetary_theory  Lucas 
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
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
Thomas Palley » The US Economy: Explaining Stagnation and Why It Will Persist - August 2015
The US Economy: Explaining Stagnation and Why It Will Persist
This paper examines the major competing interpretations of the economic crisis in the US and explains the rebound of neoliberal orthodoxy. It shows how US policymakers acted to stabilize and save the economy, but failed to change the underlying neoliberal economic policy model. That failure explains the emergence of stagnation, which is likely to endure. Current economic conditions in the US smack of the mid-1990s. The 1990s expansion proved unsustainable and so will the current modest expansion. However, this time it is unlikely to be followed by financial crisis because of the balance sheet cleaning that took place during the last crisis. -- downloaded pdf to Note
paper  US_economy  stagnation  macroeconomics  financial_crisis  Great_Recession  neoliberalism  downloaded 
august 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
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
David Lipton - The Key to Raising Business Investment: Keep Pushing the Accelerator | iMFdirect - The IMF Blog - July 2015
By David Lipton Why have businesses in advanced economies not been investing more in machinery, equipment and plants? Business investment is the largest…
Instapaper  Great_Recession  economic_growth  investment  fiscal_policy  demand-side  Keynesianism  macroeconomics  from instapaper
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
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
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
Markus Brückner, Daniel Lederman - Effects of income inequality on economic growth | VOX, CEPR’s Policy Portal - 07 July 2015
The relationship between aggregate output and income inequality is central in macroeconomics. This column argues that greater income inequality raises the economic growth of poor countries and decreases the growth of high- and middle-income countries. Human capital accumulation is an important channel through which income inequality affects growth.
economic_growth  economic_models  macroeconomics  inequality  inequality-wealth  trickle-down  LDCs  OECD_economies  human_capital 
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
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
Understanding the Modern Monetary System by Cullen O. Roche :: SSRN - revised April 1, 2013
Orcam Financial Group, LLC -- August 5, 2011 -- This paper provides a broad understanding of the workings of the modern fiat monetary system in the United States. The work is primarily descriptive in nature and takes an operational perspective of the modern fiat monetary system using the understandings of Monetary Realism. -- Pages in PDF File: 40 -- downloaded pdf to Note
macroeconomics  financial_economics  monetary_policy  monetary_theory  central_banks  banking  interest_rates  financial_system  financialization  demand-side  investment  economic_models  downloaded 
june 2015 by dunnettreader
Ching-Wai (Jeremy) Chiu, Haroon Mumtaz and Gabor Pinter - Forecasting with VAR models: fat tails and stochastic volatility | Bank of England Working Paper No. 528: May 29 2015
In this paper, we provide evidence that fat tails and stochastic volatility can be important in improving in-sample fit and out-of-sample forecasting performance. Specifically, we construct a VAR model where the orthogonalised shocks feature Student’s t distribution and time-varying variance. We estimate this model using US data on output growth, inflation, interest rates and stock returns. In terms of in-sample fit, the VAR model featuring both stochastic volatility and t-distributed disturbances outperforms restricted alternatives that feature either attributes. The VAR model with t disturbances results in density forecasts for industrial production and stock returns that are superior to alternatives that assume Gaussianity, and this difference is especially stark over the recent Great Recession. Further international evidence confirms that accounting for both stochastic volatility and Student’s t-distributed disturbances may lead to improved forecast accuracy. -- didn't download
paper  macroeconomics  economic_models  financial_crisis  probability  Great_Recession 
may 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
Charles A.E. Goodhart, Philipp Erfurth - Monetary policy and long-term trends | VOX, CEPR’s Policy Portal - 03 November 2014
There has been a long-term downward trend in labour’s share of national income, depressing both demand and inflation, and thus prompting ever more expansionary monetary policies. This column argues that, while understandable in a short-term business cycle context, this has exacerbated longer-term trends, increasing inequality and financial distortions. Perhaps the most fundamental problem has been over-reliance on debt finance. The authors propose policies to raise the share of equity finance in housing markets; such reforms could be extended to other sectors of the economy. -- downloaded page as pdf to Note
macroeconomics  global_economy  globalization  labor_share  Labor_markets  inequality-global  inequality  inequality-wealth  OECD_economies  wages  housing  mortgages  debt  debt-overhang  asset_prices  interest_rates  bubbles  real_estate  equity-corporate  equity_markets  central_banks  monetary_policy  financial_system  financial_crisis  LTV  downloaded 
may 2015 by dunnettreader
Toby Nangle - Labour power sets the neutral real rate | VOX, CEPR’s Policy Portal - 09 May 2015
The recent remarkably low interest rates have puzzled economists. The standard explanation rests on the extraordinary manoeuvres of the world’s largest central banks. This column argues, however, that it is due to economic developments, specifically globalisation and the collapse in labour power in the west. -- downloaded page as pdf to Note
macroeconomics  global_economy  globalization  labor_share  Labor_markets  inequality-global  inequality  OECD_economies  interest_rates  asset_prices  investment  capital  stagnation  central_banks  capital_markets  China-economy  off-shoring  downloaded 
may 2015 by dunnettreader
Dietz Vollrath - Mathiness versus Science in Growth Economics | Growth Economics - May 2015
Paul Romer created a bit of a firestorm over the last week or so with his paper and posts regarding “Mathiness in the Theory of Economic Growth”. I finally was… -- he talked with Moll re the Lucas and Moll paper that Romer has been going ballistic about -- Vollrath seems to think that theoretical models addressing growth-enducing technologies may need to consider monopolistic style competition in some markets, but in, e.g. peasants adopting higher yield techniques, a "price-taker" model might be appropriate -- but the crucial point is not the key assumption underpinning a model, but that it be framed and specified in a fashion that empirical research can be done to rule out some factors and gradually adjust and refine both theoretical explanation and empirical evidence -- very Popperian approach to interplay between theory and "falsification"
economic_theory  economic_growth  macroeconomics  scientific_method  technology  technology_transfer  technology-adoption  competition  monopolies  increasing_returns  Chicago_School  Romer  Instapaper  from instapaper
may 2015 by dunnettreader
Roger Backhouse, Mauro Boianovsky - Secular Stagnation: The History of a Macroeconomic Heresy :: SSRN - May 5, 2015
Roger Backhouse, University of Birmingham - Department of Economics -- Mauro Boianovsky, Universidade de Brasilia. *--* This paper covers the history of secular stagnation from Alvin's Hansen's AEA Presidential address in 1938 to the recent re-discovery of the idea by Lawrence Summers. It is argued that the story of secular stagnation is more complicated than the simple version usually told: the theory changed in ways that meant that, though its immediate relevance might be less, postwar prosperity left open the possibility that it might one day become relevant. It is also pointed out that the history of the term has never been free of political concerns, and it is suggested that changing conceptions of economic theory played an important role in the fate of secular stagnation -- Pages in PDF File: 36 -- Keywords: secular stagnation, unemployment equilibrium, Keynesian economics, Hansen -' downloaded to Note
paper  SSRN  economic_theory  intellectual_history  economic_history  US_economy  US_politics  20thC  Great_Depression  post-WWII  Keynesianism  stagnation  macroeconomics  institutional_economics  prices  competition  deficit_finance  downloaded 
may 2015 by dunnettreader
Piketty Interview - Potemkin Review - 2015
(Deutsch ) Photo: Potemkin Review Potemkin Review met with Thomas Piketty at his Paris office and talked to him about his book Capital in the 21st Century ,… The more interesting sections deal with critique from the left, and his use of wealth in lieu of classic definitions of capital -- most critiques are answered with "I don't believe in the neoclassical framework that I used to illustrate the problem, but it's the only way that most trained economists can be communicated with -- I see myself as more of an historian and sociologist"
economic_theory  macroeconomics  economic_sociology  social_theory  economic_history  inequality  capital  capitalism  1-percent  Piketty  Instapaper  from instapaper
may 2015 by dunnettreader
Xavier Giroud, Holger M. Mueller - Firm Leverage and Unemployment during the Great Recession | NBER April 2015
NBER Working Paper No. 21076 -- We argue that firms’ balance sheets were instrumental in the propagation of shocks during the Great Recession. Using establishment-level data, we show that firms that tightened their debt capacity in the run-up (“high-leverage firms”) exhibit a significantly larger decline in employment in response to household demand shocks than firms that freed up debt capacity (“low-leverage firms”). In fact, all of the job losses associated with falling house prices during the Great Recession are concentrated among establishments of high-leverage firms. At the county level, we find that counties with a larger fraction of establishments belonging to high-leverage firms exhibit a significantly larger decline in employment in response to household demand shocks. Thus, firms’ balance sheets also matter for aggregate employment. -- paywall
paper  paywall  NBER  Great_Recession  financial_crisis  corporate_finance  leverage  unemployment  macroeconomics  economic_models  economic_shocks-propagation  networks-business  demand-side  housing  business_practices  business_cycles 
may 2015 by dunnettreader
Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi - Managing Capital Flows in Frontier Economies | IMF Direct - April 2015
By Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi  There has been a remarkable increase in financial flows to frontier economies from private… Enfin! Just 20+ years late. Nice roundup of various people (like Rodrik) thinking about all the variables, including what sorts of local institutional capacity (government and financial markets and institutions) are required for (1) absorbing different types of capital flows or (2) if a country wants to restrict flows in some fashion, to manage different types of restrictions. Additionally, there are challenges to the basic premise of encouraging capital flows to frontier markets -- these countries are more likely to be investment constrained than the unproven assumption that they're savings constrained. Macroeconomic impacts are also getting a closer look, not only the dilemmas of managing monetary policy and exchange rates -- e. g., FDI can be defeated if inflows raise the rate to reduce trade advantages. Since the biggest issuers from frontier markets tend to be the state, there's a big potential impact on sustainability of fiscal policy (to say nothing of corruption), and again the exchange rate impacts can be severe in both directions. The post is mainly an outline of an ambitious, multidimensional research program that's emerging among development economists, financial economists, macroeconomics in both the OECD countries and think tanks in emerging markets and the IFIs. -- finally the discussion has moved off the obsession with flight capital that took root in the 1980s and was the trump played anytime anyone questioned the happy-happy conventional wisdom of capital liberalization promoters.
economic_theory  macroeconomics  capital_flows  FDI  IFIs  IMF  capital_controls  fiscal_policy  monetary_policy  FX  FX-misalignment  neoliberalism  globalization  emerging_markets  frontier_markets  competitiveness  technology_transfer  infrastructure  development  financial_system  financial_regulation  financial_sector_development  financial_stability  banking  interest_rates  institutional_investors  institutional_capacity  institution-building  central_banks  governance  bibliography  Instapaper  from instapaper
may 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Is 2% still the solution? — Money, Banking and Financial Markets - March 2015
Finally, as we discussed in an earlier post, the move to a common inflation target across countries is a useful form of international monetary policy coordination. It is highly doubtful that the leading central banks would simultaneously agree to shift to a new common target in a relatively narrow time frame. Our bottom line: If policymakers had it to do over again, they could very well opt for a higher inflation target. But, given where we stand today, such a fundamental change in the policy framework, both nationally and internationally, is very unlikely. Rather, the belief that academic economists and central bankers can convince their elected officials and publics that 3% or 4% – rather than 2% – is the solution may be the real delusion. -- copied to Pocket
economic_theory  macroeconomics  monetary_policy  economic_policy  central_banks  QE  ZLB  inflation  inflation-expectations  interest_rate-natural  interest_rates  Pocket 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Zero matters — Money, Banking and Financial Markets - April 2015
What to conclude? Fears of deflation can surely be overdone: the economic impact of annual price changes of -0.1% would be difficult to distinguish from changes of +0.1%. It would take nearly 700 years for the price level to halve or to double at this pace! Yet, policymakers are warranted in taking the view that even mild deflations of 1% or 2% annually are meaningfully different from comparable inflations. Conventional monetary policy tools – adjusting nominal interest rates – are ill-suited to restoring price stability in the face of modest single-digit deflation. And the presence of downward wage rigidities makes things even worse. -- nice collection of historical and comparative data -- copied to Pocket
economic_theory  macroeconomics  monetary_policy  ZLB  wages  wages-sticky  inflation  inflation-expectations  deflation  interest_rates  economic_growth  economic_culture  Labor_markets  Great_Recession  Pocket 
april 2015 by dunnettreader
Lars Syll - The Bernake-Summers Imbroglio | RWER April 2015
As no one interested in macroeconomics has failed to notice, Ben Bernanke is having a debate with Larry Summers on what’s behind the slow recovery of growth rates since the financial crisis of 2007. To Bernanke it’s basically a question of a savings glut. To Summers it’s basically a question of a secular decline in the level of investment. To me the debate is actually a non-starter, since they both rely on a loanable funds theory and a Wicksellian notion of a “natural” rate of interest — ideas that have been known to be dead wrong for at least 80 years … Let’s start with the Wicksellian connection and consider what Keynes wrote in General Theory: -- helpful re Keynes' rejection of "natural rate" (in effect there's a different natural rate for each level of employment - income, so it's comparative statics that blows up when savings or investment change, rather than being able to derive new equilibrium natural rate) -- and the problems with loanable funds theory - looks especially at Minsky and Kalecki - credit creation isn't result of increased savings but increased investment. Good snips and links -- saved to Pocket
economic_theory  macroeconomics  stagnation  savings_glut  global_imbalance  interest_rate-natural  monetary_policy  monetary_theory  central_banks  credit  financial_system  financial_economics  loanable_funds  investment  accounting_IDs  equilibrium  economic_models  Keynes  Minsky  Kalecki  links  Instapaper 
april 2015 by dunnettreader
Giovanni Dosi, et al -Fiscal and Monetary Policies in Complex Evolving Economies -- 2013 :: SSRN
Giovanni Dosi, Giorgio Fagiolo, Mauro Napoletano, Andrea Roventini, Tania Treibich -- In this paper we explore the effects of alternative combinations of fiscal and monetary policies under different income distribution regimes. In particular, we aim at evaluating fiscal rules in economies subject to banking crises and deep recessions. We do so using an agent-based model populated by heterogeneous capital- and consumption-good firms, heterogeneous banks, workers/consumers, a Central Bank and a Government. We show that the model is able to reproduce a wide array of macro and micro empirical regularities, including stylised facts concerning financial dynamics and banking crises. Simulation results suggest that the most appropriate policy mix to stabilize the economy requires unconstrained counter-cyclical fiscal policies, where automatic stabilizers are free to dampen business cycles fluctuations, and a monetary policy targeting also employment. Instead, "discipline-guided" fiscal rules such as the Stability and Growth Pact or the Fiscal Compact in the Eurozone always depress the economy, without improving public finances, even when escape clauses in case of recessions are considered. Consequently, austerity policies appear to be in general self-defeating. Furthermore, we show that the negative effects of austere fiscal rules are magnified by conservative monetary policies focused on inflation stabilization only. Finally, the effects of monetary and fiscal policies become sharper as the level of income inequality increases. -- Pages in PDF File: 38 -- Keywords: agent-based model, fiscal policy, monetary policy, banking crises, income inequality, austerity policies, disequilibrium dynamics -- downloaded pdf to Note
paper  SSRN  macroeconomics  fiscal_policy  fiscal_drag  austerity  Eurozone  EU_governance  EU  equilibrium  financial_crisis  bank_runs  inequality  countercyclical_policy  agent-based_models  complexity  recessions  dynamic_attractors  complex_adaptive_systems  downloaded 
april 2015 by dunnettreader
Xavier Gabaix - The Granular Origins of Aggregate Fluctuations - August 17, 2009 :: SSRN
New York University - Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) -- This paper proposes that idiosyncratic firm-level fluctuations can explain an important part of aggregate shocks, and provide a microfoundation for aggregate productivity shocks. Existing research has focused on using aggregate shocks to explain business cycles, arguing that individual firm shocks average out in aggregate. I show that this argument breaks down if the distribution of firm sizes is fat-tailed, as documented empirically. The idiosyncratic movements of the largest 100 firms in the US appear to explain about one third of variations in output and the Solow residual. This "granular" hypothesis suggests new directions for macroeconomic research, in particular that macroeconomic questions can be clarified by looking at the behavior of large firms. This paper's ideas and analytical results may also be useful to think about the fluctuations of other economic aggregates, such as exports or the trade balance. -- Pages in PDF File: 44 -- Keywords: Business cycle, idiosyncratic shocks, productivity, Solow residual, granular residual, comovement -- didn't download
paper  SSRN  economic_theory  macroeconomics  microeconomics  business_cycles  economic_growth  productivity 
april 2015 by dunnettreader
Franck Bessis , review essay - André Orléan, L’empire de la valeur - Vers un changement de paradigme en économie ? | June 2012 - La Vie des idées
Recensé : André Orléan, L’empire de la valeur. Refonder l’économie, Paris, Seuil, collection « La couleur des idées », 340 p., 23 €. -- Spécialiste des questions monétaires et financières, André Orléan fournit à travers la synthèse de ses recherches un ouvrage de référence pour renouveler l’analyse économique. Sa démarche invite également à repenser la place de l’économie au sein des sciences sociales et son rapport au politique. -- also available in English, downloaded French pdf to Note
books  reviews  economic_theory  intellectual_history  classical_economics  neoclassical_economics  labor_theory_of_value  marginalists  utility  financial_economics  monetary_theory  macroeconomics  political_economy  social_theory  ontology-social  social_sciences  downloaded 
april 2015 by dunnettreader
Òscar Jordà, Moritz Schularick, and Alan M. Taylor - Mortgaging the Future? | The Big Picture - Guest Post - March 27th, 2015
In the six decades following World War II, bank lending measured as a ratio to GDP has quadrupled in advanced economies. To a great extent, this unprecedented expansion of credit was driven by a dramatic growth in mortgage loans. Lending backed by real estate has allowed households to leverage up and has changed the traditional business of banking in fundamental ways. This “Great Mortgaging” has had a profound influence on the dynamics of business cycles. -- update of their 2012 article that goes back to 19thC and does more breakdown of the changes in the financial services industry -- downloaded page as pdf to Note
US_economy  economic_history  macroeconomics  financial_system  financial_innovation  financial_crisis  housing  mortgages  credit  debt  debt_crisis  business_cycles  financialization  NBFI  real_estate  banking  macroprudential_policies  macroprudential_regulation  macroeconomic_policy  downloaded 
march 2015 by dunnettreader
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." - The Journal of Libertarian Studies (1985) | Mises Institute
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." Journal of Libertarian Studies 7, No. 2 (1985): 249–257. -- Professor Spengler's, "Richard Cantiilon: First of the Modems," published in 1954, remains the classic survey article of Cantillon's contributions to economic thought. These contributions consist of views on population and related matters, theory of value, monetary theory, and international trade and finance. Many of his ideas became a part of the economic thought of the closing years of the eighteenth century, and, as Professor Spengler points out, unfortunately, Cantillon's name had been stripped from most if not all of his ideas. Professor Spengler, then, has done both Cantillon and the economics profession a service by restoring to Cantillon his rightful place in the history of economic thought. -- downloaded pdf to Note
article  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  economic_sociology  macroeconomics  value-theories  monetary_theory  demography  trade-theory  trade_finance  trade_deficits  FX  capital_flows  banking  financial_system  downloaded 
february 2015 by dunnettreader
Janet L. Yellen, “Behavioral Economics and Economic Policy in the Past and Future” (September 2007 speech) - President and CEO, Federal Reserve Bank San Francisco
Panel on: “Behavioral Economics and Economic Policy in the Past and Future”
Federal Reserve Bank of Boston Conference: “Implications of Behavioral Economics for Economic Policy”, Boston, Massachusetts, September 28, 2007 -- linked to as good literature overview for behavioral_economics and its uses -- downloaded pdf to Note
speech  Yellen  Fed  central_banks  monetary_policy  fiscal_policy  economic_policy  behavioral_economics  economic_theory  economic_sociology  macroeconomics  microfoundations  incentives  incentives-distortions  lit_survey  bibliography  downloaded 
february 2015 by dunnettreader
Rajiv Sethi: The Agent-Based Method - August 2014
It's nice to see some attention being paid to agent-based computational models on economics blogs, but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good. -- Useful discussion of both DSGE and agent-based modeling approaches plus links. Chris House, for a highly touted "expert", keeps exposing his combination of ignorance and bias ("facts have a conservative bias"!!) Apparently since he already knows what the facts are going to tell him, he doesn't actually have to learn something about which he is ignorant but feels free to spout what "must" be the case. Extraordinary indictment of the upper levels of the economics professoriate. Seth's post is a fine description of what agent-based models are about, and the dilemmas of coming up with criteria for evaluating robustness of research results -- a problem which DSGE papers don't seem to have, apparently because of the agreed upon math and that most of the variables are exogenous chosen by the modeler, and theoretical papers which can be judged on the coherence of their mathematical logic. Links to some agent-based work - Seth himself working on market structure and trading practices (e.g. GFT) within a "market ecology" framework
economic_theory  macroeconomics  economic_models  rationality-economics  markets  markets-structure  ecology  ecology-economic  agent-based_models  evolution-as-model  evolution-social  links 
february 2015 by dunnettreader
Josh Bevins - Macroeconomic effects of regulatory changes in economies with large output gaps: The ‘toxics rule’ as an example | Economic Policy Institute - 2012
This paper uses the “toxics rule” issued by the Environmental Protection Agency (EPA) in December 2011 to sketch out a macroeconomic framework for thinking about the impact of regulatory changes on jobs. The paper’s major findings are: * (1) Even during normal economic times the effect of regulatory changes that increase the input cost of some businesses is most likely to shrink the measured “output gap” (the difference between what the economy is actually producing and what it could be producing if all resources were fully employed). * (2) During normal economic times, the effect of the downward pressure on output gaps will be fully offset by a Federal Reserve that is trying to maintain a constant inflation target. * (3) During times of significant economic slack, the downward pressure on the output gap caused by cost-raising regulatory changes is unlikely to be fully neutralized by a Federal Reserve that puts any weight at all on unemployment. * (4) When significant economic slack persists even when the interest rates controlled by the Federal Reserve are held at zero, the overall effect of cost-raising regulatory changes is almost surely expansionary. ... the list of neutral to benign macro effects continues -- downloaded pdf to Note
regulation-costs  regulation-environment  macroeconomics  monetary_policy  economic_growth  economic_models  unemployment  interest_rates  Fed  cost-benefit  downloaded  EF-add 
january 2015 by dunnettreader
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