Lisa Cook: Who Wins and Loses From Innovation?

By Marshall Auerback

The concept of innovation as a “good thing” is seldom questioned. After all, there is no doubt that innovation and invention create the foundations for much of our growth and economic prosperity. 

But what about the distributional benefits?  Who wins? Who loses?  Among women and African Americans, what are the patterns and determinants in terms of patents, commercialization, and overall economic success relative to other groups in American society? Are there social and professional networks that are more salient for commercial activity than others?  If so, do these vary by gender and race? Read more

ECB’s Coeure Supports Student Curriculum Reform Movement

The global student movement to transform the economics curriculum received some unexpected high-level support this week from Benoit Coeure, a member of the Executive Board of the Europen Central Bank.

In remarks Tuesday at a panel discussion held by the ECB’s Macro-Prudential Network, Coeure said, “The typical economics curriculum tends to emphasize the frictionless benchmark more than the realistic variants. Shifting the academic focus to a world with frictions would have a welcome impact on teaching, allowing central banks to hire from a pool of young economists better equipped with methods and tools to address policy challenges.” Read more

U.S. Economic Figures Show Recovery Starting, Slowly But Surely

By Marshall Auerback

The United States economy is stuck in a good news/bad news cycle. 

As the recent downwardly revised first quarter Gross Domestic Product figures indicate, the U.S. economy still is operating well below capacity. This was in part caused by U.S. consumers continuing to feel the pinch of fiscal restrictions, as well as adverse weather conditions, which created inventory overhangs that still need to be worked off.  Read more

The Nature of Invention

The Institute for New Economic Thinking at Oxford researchers and collaborators data mine 200 years of US Patent Office records to uncover the true nature of innovation.
 

Inequality and the Future of Capitalism

The Research Network Macroeconomics and Macroeconomic Policies (FMM) organises its 18th annual conference on Inequality and the Future of Capitalism with introductory lectures on heterodox economics for graduate students. Read more

Why Standard Macro Models Fail During Crises

David Hendry and Grayham Mizon show why the models used by many policymakers perform so poorly in the face of uncertainty
 
The standard macroeconomic model used by most central banks and other policymakers are "dynamic stochastic general equilibrium models" or "DSGE" as they are known (economists have a knack for catchy branding).  There has been much discussion and debate about why these models performed so poorly during the 2008 financial crisis.  Not only did these models fail to anticipate the crisis, but during the crisis itself - when they were most needed by policymakers - they often failed to give useful or correct advice.

Why the Economics Curriculum Needs the Context of History

Reforming the economics curriculum is emerging as a hot topic in academic circles.

Critics of the current approach to economics have cited numerous flaws in the way the discipline is taught. But one key area of focus must be to return the study of history to the standard economics text. Because the way economics is taught now, decontextualized from history, fails to explain the selective economic models that it is teaching appropriately and fairly. Read more

Upcoming Grant Round to Highlight Curriculum

The Institute for New Economic Thinking will issue a request for proposals for grants in September 2014 with awards to be announced in March 2015. 
 
Priority research themes emphasized by the governing board of the Institute of New Economic Thinking will be presented at the time of the announcement, along with a finalized application timeline.
 
This year, the Institute is additionally interested in grant applications for the provision of a wider range of curricular materials designed to support better economic thinking and teaching.
 

Inequality as a cause of the financial crisis and current account imbalances

Thomas Piketty’s Capital in the 21st Century has spurred an intense debate over the macroeconomic causes of income and wealth inequality. Meanwhile, a growing amount of research suggests that inequality itself is an important cause of macroeconomic instability.

In the short interview with Deutsche Welle, Institute grantee Till van Treeck explains how inequality can contribute to macroeconomic instability.

Read more

Eric Weinstein: Economic Thinking In A Fallible World

By Marshall Auerback

The philosopher Karl Popper argued that we cannot know empirical truths with absolute certainty.

According to Popper, even scientific laws can’t be verified beyond a shadow of a doubt. They can only be falsified by testing. One failed test is enough to falsify, but no amount of conforming instances are sufficient to verify. Scientific laws are hypothetical in character and their truth remains subject to testing. Ideologies that claim to be in possession of the ultimate truth are making a false claim; therefore, they can be imposed on society only by force.  Read more