Archive

We want an economy that generates stable and equitable growth—or what I call “sustainable prosperity.” We want productivity growth that makes it possible for the population to have higher living standards over time. We want an equitable sharing of the gains from productivity growth among those whose work efforts and financial resources contribute to that growth. And we want sufficient job stability to enable workers to remain in productive employment for some four decades at work while providing them with enough savings to provide them with adequate incomes over some two decades of retirement.

Can a Policy of Guaranteed Basic Income Return Mature Market Economies to les Trente Glorieuses?

Building symbiotic public-private partnerships

What can policy do to remedy the spread of dual economies in the developed world?

Decomposition by such an important category as gender helps us understand the economy at the macro level, and design macroeconomic policy, better. It also provides the foundation for advocating equal gender rights and outcomes. But, where gendered policy issues arise in mainstream macroeconomics (income maldistribution, labour market composition, etc.) the subject matter is narrowed by its microfoundations, by focusing on GDP growth and on suboptimal outcomes being explained by market imperfections.

What would it look like if women and other marginalized groups could fully participate in our economy and society?

This article originally appeared on insider.co.uk

Commission on Global Economic Transformation member Joseph Stiglitz argues that an independent Scotland in the EU would “resolve a lot of the uncertainties” of Brexit at INET’s Reawakening conference in Edinburgh

INET Chairman Adair Turner and Grantee Mariana Mazzucato comment on the Friends of the Earth Scotland event and a green economic transition.

Untangling the Facts about Immigration in the World Economy.

Coping with the dysfunction of advanced economies, and developing strategies for economic development.

The Role These Factors Play in Shaping Economic Knowledge and Behavior

This paper examines the value of connections between German industry and the Nazi movement in early 1933. Drawing on previously unused contemporary sources about management and supervisory board composition and stock returns, we find that one out of seven firms, and a large proportion of the biggest companies, had substantive links with the National Socialist German Workers’ Party. Firms supporting the Nazi movement experienced unusually high returns, outperforming unconnected ones by 5% to 8% between January and March 1933. These results are not driven by sectoral composition and are robust to alternative estimators and definitions of affiliation. 

After re-iterating five well-known theorems about the properties of conditional expectations in stationary settings—such as providing unbiased minimum mean square error predictions despite in- complete information, and the law of iterated expectations—we clarify unpredictability and illustrate its prevalence empirically.

In the paper that we present this afternoon, Soren Johansen, Anders Rahbek, Morten Tabor, and I introduce the Qualitative Expectations Hypothesis (QEH) as a new approach to modeling macroeconomic and financial outcomes.

“The Failure of Democracy” – “The weaknesses of Weimar” Do headlines such as these suggest that the whole architecture of the first German republic was wrong, that it was doomed right from the start, that the “collapse” was unavoidable?

Stock Market Returns and Corporate Networks 

A look at how liberal democracies have disintegrated amid economic crises. Speakers: Thomas Ferguson, Tiziana Foresti, Nadia Garbellini, Peter Langer, Joachim Voth, Ariel Wirkierman Discussant: James Kurth Chair: Thomas Ferguson

How we can create useful economic theory that recognizes that the future is radically uncertain?

On 23 June 2016, the British electorate voted to leave the European Union (EU). We analyse vote and turnout shares across 380 local authority areas in the United Kingdom.

Different accounts trace populism to cultural reactions, racial or gender animosity, and/or economics. What does the empirical evidence suggest?

This paper discusses household debt as a long term phenomenon that influences economies beyond crises.1 In other words, rather than look at how household indebtedness can lead to crises, I will focus on its surprising persistence at very high levels, and its interactions along the way with other key variables, such as public policies and spending. The first section describes some stylized facts and the final section explores the macroeconomic consequences.

Support for populism is often attributed to xenophobia, racism, sexism; to anger and resentment at immigrants, racial or ethnic minorities, or “uppity” non-traditional women. According to these accounts , people who feel socially resentful may reject established politicians as favoring those “others” over people like themselves, and turn to outsider populistic leaders.

The debt-growth relationship is complex, varying across countries and being affected by global factors. While there is no simple universal threshold above which debt-to-GDP becomes a significant brake on growth, based on data from the last four decades we show that high and rising public debt burdens slow down growth in the long term.

Unpacking the Effect of Trade on Workers and Voters 

This paper discusses what we have learned about the debt build-up in advanced societies over the past century. It shows that the extraordinary growth of aggregate debt in the past century was driven by the private sector.

What role does debt play in triggering economic crises, and is the problem principally public or private sector debt?

A better set of approaches for the 21st century.

The contemporary literature on neoliberalism has grown so large as to be unwieldy. For some on the left, this has presented an occasion to denounce it altogether.

How far are economists implicated in the rise of ‘fake experts’ and ‘fake news’?

Fake news, propaganda, and “expertise”: What has happened to information in the information age?

Is Comparative Advantage the Ideology of the Comparatively Advantaged? 

The Electoral Consequences of Rising Trade Exposure

Especially in the wake of the Great Recession, calls for more diversity within economics are usually limited to appealing for greater diversity in the economists’ backgrounds, while diversity of opinion and approaches is often neglected.

The Academic and Professional Performance of the Chicago School, 1960-1985

What Do Citations Actually Measure in Economics and How Should Economic Journals and Department Review Committees Use This Data? 

As the old lines continue to shift, what does inequality mean in the modern global economy? And, how does the economy need to evolve to address these changes?

Joseph Stiglitz, Michael Spence and a global team of leading thinkers are calling for new thinking & new rules for the world economy

This article originally appeared in The Sunday Times of London

Stiglitz speaks to Bloomberg about INET’s Commission on Global Economic Transformation

“First Minister Nicola Sturgeon opened a conference attended by some of the world’s leading economists in Edinburgh earlier today explaining some of the economic challenges Scotland faces”

The current crisis is the culmination of a process of integration that has profoundly changed the structure of each member state, their inter-relations and their power relations. One of its side effects was the rediscovery of the terms ‘centre’ and ‘periphery’ to analyse the economic situations of the European countries.

The euro area has been experiencing a prolonged period of weak economic activity and very low inflation.

The wind appears to be back in the sails of the Eurozone economy ….

Some fresh reflections on ECB policy

Can a monetary union without true banking and fiscal union be saved? What remains of the hopes that animated the Treaty of Rome?

A discussion of new economic thinking over the years at Cambridge, and its recent contributions via the Cambridge-INET Institute

Adam Smith and his contemporaries were key figures of the Scottish enlightenment. How much of his real thought survives in modern economics, and has something important been lost?

Given that this is a panel on that quintessential Enlightenment thinker Adam Smith, I can think of no better way to begin my remarks than to invoke that most enlightened of modern economists, Kenneth Boulding, who in 1971 penned the delightful essay, “After Samuelson, Who Needs Adam Smith?” 

When priests and princes lost their monopoly over the big questions of human existence over the course of the Enlightenment, philosophers, poets, and ordinary people struggled to find out the answers on their own. 

Adam Smith’s modern fame as the founding father of economics has, until relatively recently, obscured the fact that he saw himself as a moral philosopher.

The road towards a decent society; lessons from classical political economy

Growing income inequality is threatening the American middle class, and the middle class is vanishing before our eyes. We are still one country, but the stretch of incomes is fraying the unity of our nation.

The Precariat under Rentier Capitalism Guy Standing We are in the midst of a Global Transformation, analogous to Karl Polanyi’s Great Transformation described in his seminal 1944 book. Whereas Polanyi’s Transformation was about constructing national market systems, today’s is about the painful construction of a global market system. To use Polanyi’s term, the ‘dis-embedded’ phase has been dominated by an ideology of market liberalisation, commodification and privatisation, orchestrated by financial interests, as in his model. The similarities also extend to today’s fundamental challenge, how to construct a ‘re-embedded’ phase, with new systems of regulation, distribution and social protection.

In the economic literature, several scholars have addressed the narrative of a two-stage European crisis. In a first stage, the so-called “he-cession”, men would have been hit the most by the economic recession induced by the financial crisis. Shortly thereafter, in the “she-austerity” stage, women would have suffered the heaviest burdens of the fiscal retrenchment measures. If that were the case, the policy response to the crisis would be producing an increase in the – already high pre-existing – gender inequality.

“Dual Economy” models were developed to explain growth in the developing world. Now they appear necessary to comprehend the high income trap that afflicts the world’s most developed economies.

Rob Johnson kicks off INET’s “Reawakening” conference with his take on how economists can win back the trust of a world that has rejected experts

This paper aims to assess such tendency to return to a supply-determined potential output, independent of aggregate demand, after episodes of demand expansion.

Preliminary draft prepared for INET conference session “A Decade of Stagnation. Why?”

What explains the slow recovery from the financial crisis and great recession in so much of the world?

Nicola Sturgeon covers a range of topics including how economists’ work relates to policymaking, the financial crisis and the dangers of groupthink, how dissatisfaction with stagnating wages and rising inequality played into political shocks like Brexit, the legacy of Adam Smith, why new economic thinking is so important, and what her government is doing to foster and apply it. 

This article originally appeared on Bloomberg

INET gathered hundreds of new economic thinkers in Edinburgh to discuss the past, present, and future of the economics profession.

What can today’s economists learn from the 18th century Scottish thinkers who grappled with societal and economic change?

Animal rights, child welfare, social equality are all a direct legacy of the “cult of feeling” 

The Festival for New Economic Thinking is a collaborative initiative of several organizations, and aims to bring together those who seek to improve how economics is taught, studied and practiced. 

Financial Globalization and its Cryptocurrency Discontents

Once again, an out-of-control industry is threatening public health on a mammoth scale

Why it’s time to repeal the debt ceiling and replace it with a ‘truth in borrowing’ act

The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense

Adair Turner in conversation with Nasser Munjee, moderated by David Webb

The Theory of the Firm, Financial Flows, and Economic Performance

Material from, and related to, INET’s 2017 conference: Reawakening

“Blindly” Engaging in Global Supply Chains Can Erode Developing Nations’ Economic Power

Rather than continue to narrow the field, economists need to ask what they’re missing

It is commonly overlooked that the concept of market efficiency embowers a time-dimension. Illustrating with an example from the class of persistent random walks, we show that a price process can be a martingale on one time-scale but inefficient on another.

The YSI Economics of Innovation Working Group in partnership with the Ragnar Nurkse Department of Innovation and Governance, Tallinn University of Technology is hosting a YSI Conference on “Innovation, Institutions and Governance”.

This paper analyzes the link between Kamakura Risk Information Services (KRIS) data on megabank default probabilities and credit spreads.

Engaging in music, literature and the arts is essential for understanding context and human behavior—which economists so often miss

The path of austerity could spread economic pain and social woes far beyond the Caribbean island, says public debt expert Martin Guzman 

Xavier Gabaix argues that public policies should prioritize alleviating deprivation at the bottom over narrowing the rich-poor gap 

This paper provides a critique of the DSGE models that have come to dominate macroeconomics during the past quarter-century.

Personal connections are key to understanding concentrations of wealth and power

In this episode of Hidden Forces, host Demetri Kofinas speaks with Robert Johnson, about the political economy, inequality, and the failings of our technocratic institutions.

YSI Philosophy of Economics working group is organising a workshop preceding the INEM conference.

An examination of some little-known ways nation states and central banks prop up megabanks

Why we should worry about job quality, not quantity—or robot overlords

New research shows that access to elite colleges varies by parents’ income—reinforcing inequality across generations 

When an economic model fails, it is reality—and the people living in it—who pay the bills while the model lives on, unscathed.

Davis looks at the financialization of non-financial corporations—i.e., firms that traditionally produce goods and services and invest in machinery, buildings and technology rather than trade in financial assets—and asks what it means that they’re taking on large financial investments.

The same angst that Americans and Europeans have about the future of jobs is an order of magnitude higher in Asia.

Robinson explains how natural experiments are done and why they’re useful. He also explains distribution of power and development of state play critical roles in successful economies.

Back-room deals on corporate tax reform won’t increase growth

Economists’ infamous failure at predicting the recent financial crisis has brought new impetus to studies on diversity in the economics profession. Such studies have underlined how diversity plays a prominent role in enriching economic analyses.

The prevailing stock market ideology enriches value extractors, not value creators

If standard economic theory can’t explain a traffic jam, how can it cope with crises?