The Future of Financial Reform: Conceiving the Financial System of the 21st Century

Mark Carney, Governor of the Bank of England (BoE) and Chairman of the Financial Stability Board (FSB), may well be the man of the hour. When he gives a speech entitled “The Future of Financial Reform” as he recently did at the Monetary Authority in Singapore, people listen. Read more

By the Way, Why Does the History of the JEL Codes Matter ?

Full paper is here. Comments are much welcome.And because it’s an epic story (and because I suck at writing abstracts), here is an audio trailer. I thank Paul for his beautiful Memphis accent. 











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A sparsity based model of bounded rationality

The basic microeconomics textbook teaches that, when making a decision, people “maximize.” That is, they do the best they can in a very rational way.

Of course, this is at best a crude rendition of what real people do. Instead, people “sparsely maximize” and pay less or no attention to some features of the problem, such as prices. Read more

Joseph Stiglitz: Economics Has to Come to Terms with Wealth and Income Inequality

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Cited in Wikipedia entry “Tendency of the rate of profit to fall

Nobel laureate Joseph Stiglitz has been writing about America’s economically divided society since the 1960s. His recent book, The Price of Inequality, argues that this division is holding the country back, a topic he has also explored in research supported by the Institute.  On December 4th, he chaired the eighth Institute for New Economic Thinking Seminar Series at Columbia University, in which he presented a paper, "New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals.” In the interview that follows, Stiglitz explores the themes of this paper, the work of Thomas Piketty, and the need for the field of economics to come to terms with the growing gulf between haves and have-nots. Read more

From Reflexivity to the Wu-Tang Clan

Mathematics as a Common Language

A recurrent criticism made about the economics profession is that it has become overly mathematicised, to the extent of allowing “elegant” models crowd out reality. So the advocacy of mathematics as a common language for the economics profession undoubtedly fills many with horror. Read more

Inequality Hurts Economic Growth, for All of Us

It’s official, at least according to the OECD.

Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico, New Zealand, Sweden, Finland and Norway over the past two decades. In Italy, the United Kingdom and the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened. On the other hand, greater equality helped increase GDP per capita in Spain, France and Ireland prior to the crisis. Read more

William Lazonick: How Superstar Companies Like Apple Are Killing America’s High-Tech Future

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Few would argue that America’s fortunes rise and fall on its ability to generate technological innovations — to put bold ideas to work and then bring them to market. William Lazonick, professor of economics at the University of Massachusetts Lowell, and Matt Hopkins, research associate at the Academic-Industry Research Network, have investigated how the technology knowledge base gets created, what has gone wrong in America’s approach to innovation, and why the truth about who invests in the process is poorly understood. In the interview that follows, Lazonick shares findings from two recent papers that are part of the Institute for New Economic Thinking’s project on the “Political Economy of Distribution.” He explains why successful companies like Apple need to make fundamental changes to the way they allocate resources and stop throwing away America’s most valuable asset for future innovation — you. Read more

They called it a sunspot

Coauthored with Aurélien Saidi.

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A History of the JEL Codes : the Making of the "Microeconomics" and "Macroeconomics" Categories [Part 3]

During the 1930s, members of the Econometric Society such as Tinbergen or Fleming, increasingly came to use a slightly transformed version of a pair of words coined by Ragnar Frisch around 1933: “macrodynamics” and “microdynamics.” Yet, it was only in 1990 that Microeconomics and Macroeconomics were established as independent JEL categories.

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Steven Fazzari & Barry Cynamon: Why is the U.S. Economy Underperforming? Rising Inequality is the Key.

Featured: Huffington Post | Salon | AlterNet | Mike Norman Economics

Steven M. Fazzari and Barry Z. Cynamon, researchers long interested in consumer behavior, wrote an op-ed for the St. Louis Post Dispatch in October, 2007 in which they predicted that an end to the relentless trend of rising household debt and a subsequent crash in household spending could lead to a surprisingly deep U.S. recession. Soon after, their prediction came true in the aftermath of the global financial crisis.

Fazzari and Cynamon’s current work, which examines how high and rising inequality is holding back the American economy, is part of the Institute for New Economic Thinking’s project on the “Political Economy of Distribution.” In two papers, “Inequality, the Great Recession, and Slow Recovery” and “Household Income, Demand, and Saving: Deriving Macro Data with Micro Data Concepts,” they explore how the massive debt which led to the Great Recession, the spending collapse that followed, and the stagnation that persists are all linked to income inequality. In the following interview, they discuss how their findings challenge conventional economic views. (Click here for an extended version of the interview). Read more