30 Ways to Be an Economist

What Financial Regulators Can Learn from Network Theory

When regulators seek to identify systemically important financial institutions (SIFIs), they tend to focus on an institution’s size and connectedness. But this approach mises an important dimension of systemic risk, according to Imre Kondor, Stefano Battiston, Giorgio Fagiolo, and Alan Kirman. Read more

Ajit Sinha - Piero Sraffa’s Price Theory Without Equilibrium

Piero Sraffa’s classic work Production of Commodities by Means of Commodities has been variously interpreted as a special case of modern neoclassical general equilibrium or a foundation stone for the revival of the classical tradition of Smith and Ricardo.

Ajit Sinha breaks new ground by viewing the book through the eyes of Sraffa himself, using archival resources to uncover the philosophical underpinnings of the book in the work of Wittgenstein and others. Read more

Roger Guesnerie – The Next Economic Frontier and the Wild World of Non-Rational Expectations

One of the fundamental ideas of modern economics – that people have rational expectations, an unbiased, statistically correct view of the future – is, in reality, a simple hypothesis. And despite its prominence in recent economic thought, this hypothesis and the economic models that rely on it have been the subject of serious debate since the advent of the Great Recession. Read more

Janine Wedel - Behind the Scenes of International Banking Regulation

Five years into the Great Recession, discussion and political fights continue about the right approach to international banking supervision. How to avert the next financial crisis or at the very least lessen its damage?

Given the topic's importance, surprising little research exists on the two institutions that actually set banking standards in practice: the Basel Committee and the International Swaps and Derivatives Association (ISDA) operate at the heart of the system, setting capital requirements and standardizing derivative contracts.

Read more

Giovanni Dosi - The Survival of the Riskiest

Financial fragility does not fall from the sky. That's why treating risk as if it comes from exogenous shocks can't capture the reality of financial markets.

In Giovanni Dosi's models, systemic risk is inherent to the financial system and is the outcome of the interactions of heterogeneous agents, who in the pursuit of short-term profit may end up driving the system towards financial abyss. Dosi investigates if and under what conditions financial innovation, like derivatives that allow for increased risk taking, exacerbates the buildup of systemic risk and moves the market to ever more fragile equilibria.

Karine van der Beek: Human Capital in the Industrial Revolution

Did the industrial revolution increase the relative demand for skilled labor, or decrease it? Read more

D'Maris Coffman – The Corn Laws: Seeing through the Eyes of Ricardo and Malthus

The British Corn Returns data provided the empirical basis for the fierce debate around the introduction and repeal of the 19th century British Corn Laws. Contemporary readers, like David Ricardo and Thomas Malthus, followed them as closely as stock market prices of today. Much of 19th century political economy rested on contemporaries' interpretations of this data. Read more

Ross McKitrick – Breaking the Climate Change Stalemate

Climate change policy is caught in a stalemate between those who fear the environmental consequences of not doing enough and those who fear the economic consequences of overreacting. But controversy over the extent and sources of climate change need not stand in the way of a positive economic policy response. Read more

Judy Klein – The Rules of War and the Development of Economic Ideas

Sometimes navigating through the field of economics can feel like dodging bullets in a metaphorical war.

But to INET grantee Judy Klein, a professor at Mary Baldwin College, this is no metaphor. Rather, Klein believes that understanding the protocols of war developed during World War II is at the core of understanding modern economics.

In her forthcoming book, Klein will delineate how models and modeling strategies established for the practical needs of war eventually wound up in economic research. As it turns out, the rules of combat and the rules for thinking about financial, economic, and monetary policy have deeply similar roots. Read more

Frydman, Goldberg, Johansen, and Juselius – Modeling Imperfect Knowledge and Non-Routine Change

How do you model the unmodelable? By taking seriously the idea of non-routine change. Simply put, change in capitalist economies is to a significant degree non-routine, and thus cannot be adequately forecasted or represented in advance with mechanical rules and procedures. In this groundbreaking area of inquiry, four INET grantees lead the way. Read more