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INET presents you a paper that deals with the relationship between economics and the world we live in. John Kay spells out methodological critiques of economic theory in general, and of DSGE models and rational expectations in particular. The paper builds on two articles that Kay, Fellow at St. John’s College of Oxford University and Visiting Professor at the London School of Economics, recently published in the Financial Times (scroll down to find the links). It is concerned with the relation of quantitative models to the world in which we live, and with evergreens such as the implications of unrealistic assumptions in economic theory. Highly recommended reading. INET forwarded Kay’s paper to a handful economists and invited them to respond. In the following days, we are going to publish direct responses to the paper by a handful of prominent economists. Follow the INET Blog and stay tuned to what is going to be a healthy discussion.

This one is different. Tiago, Benjamin and Floris have asked a dozen economists in the Bretton Woods hotel hall to reflect on the way their teaching has been affected by the current economic crisis and their answers, taken collectively, are quite puzzling.

Forget the G7, Watch the C5

At its core, this rolling crisis is really about financial globalization.

Financial Globalization versus the Nation State

I cannot resist but to start quoting Mary Morgan’s second entry to the second edition of the New Palgrave: “Modeling became the dominant methodology of economics during the 20th century.”

While waiting for TALF

A story about the rise of the modern Think Tank and how in a very strange way they have made thinking impossible.

Can the renminbi displace the dollar as the world’s international money?

I thought I could use some of my illegitimate blog administrator’s privileges to participate in the discussion on the “progress in economics” post by Floris without being lost in the midst of other users’ comments.

Understanding QE3

Ok, time to deal with the elephant in the room: when is one theory better than the other? What is progress in economics?

The transatlantic conference has been moving targets: sociology went first, then economics, then history, today it was political science and international relations.

It’s not everyday that one finds economists using history as not just the right way but the only way to answer a question.

Reminder