New Frontiers

Explaining 'New Economics' with Two Diagrams

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

 vs.  Read more

Heterodoxy and The Economist

When I started this blog, almost exactly one year ago today, my thought was to provide commentary on the financial events of the day, using the Financial Times as my primary source of information about those events.  I felt, as Mr Skinner writes in his letter today, that the public does not know much about banking.  He recommends starting from the text "Where Does Money Come From?", which seems to me fine advice.  But the hard thing, as always, is applying such textbook knowledge to the real world events of the day; that's what I was determined to do in the blog. Read more

Making Markets

Plumbing Matters

The last few days have brought a remarkable, but as of yet unremarked, convergence of attention to the matter of making markets.   

We hear about the difficulty of implementing the so-called Volcker Rule, which requires drawing a bright line of some kind between proprietary trading (not allowed) and market making (allowed).  

We hear about banks getting out of the market making business, leading to unusually large spreads in corporate bond markets, large enough possibly to tempt others into the business. Read more

Bretton Woods, Past and Present: 1. Ethics in Economics

Our interviews in the halls of the Mount Washington Hotel, covered the range of opinion about the severity of conflicts of interest in economics: we are alright; economics is no more corrupted than other sciences; corruption is substantial; it is rotten to the core. Scholars who have working relationships, who read the same journals and newspapers, debate in seminars, chat in cocktail parties and testify to Congressional hearings, cannot agree on the status of their science. One explanation is that economists have never thought hard about conflicts of interest and the role that patrons play in knowledge production. There have been plenty of invitations to do so, but all have been rejected. Even economists writing on the economics of science, framing knowledge as an output of a production function, elide the question: if scientists are inputs, who is designing the product? Read more

Randall Wray: Heterodox Thinking and a New Economic Paradigm

In the current post-crisis climate, some heterodox thinkers who were long neglected are being looked at again to inform new economic thinking. One of these thinkers is Hyman Minsky, who even in past times of relative stability thought that there were some fundamental problems with contemporary economics. Read more

J. Doyne Farmer: On the Scientific Method, Computers, and other Revolutions in Economics

Much of today’s economics is based on abstract modeling of complex systems – but a lot of the theories behind the models are overly simplistic, and do not have predictive capabilities. The economics field can do much, much more, according to J. Doyne Farmer, professor at the Santa Fe Institute. Read more

The Financial Crisis as Seen Through a Blogger’s Lens

How Financial Blogs Framed the Financial Crisis and its Underpinnings – and What Will Happen Next

Read more

Neuroeconomics: Fusing Psychology with Economics - David Hale

In part 4 of INET's interview with David Hale, he says that although we are all generally convinced that we are right (even when we are wrong,) the crisis has lead to new thinking and new strategies

Economic Thinking and Buddhist Thinking

Project Leader: 

My goal is to understand Buddhist thinking in rational choice terms, and apply that to some important contemporary economic problems. In both Buddhism and economics the central question is human happiness or the relief of human suffering. But the answers in Buddhism and economics are opposite. In Buddhism, desires are like addictions. Read more