Archive
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News
Joseph Stiglitz, Anya Schiffrin Celebrate Book Releases
May 20, 2012
Attendees at the book party were treated to an assortment of wine, sushi, and intriguing conversation on the rooftop of Schiffrin’s parents’ Upper West Side apartment.
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Working Paper
Grantee paperState-Dependent Effects of Fiscal Policy
May 2012
We investigate the effects of government spending on U.S. economic activity using a threshold version of a structural vector autoregressive model.
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News
How to Kill Financial Regulation…and the Global Economy
May 14, 2012
“While it’s incredibly difficult to get a regulatory reform passed, it’s far easier – and more profitable to politicians – to kill it.
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News
Regulation? What Regulation?
May 13, 2012
Being the smartest guys in the room doesn’t prevent you from making bad decisions.
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Article
Insights from Bagehot, for these Trying Times
May 11, 2012
Here is a talk I gave recently at Wake Forest University.
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Article
Let me tell you everything
May 7, 2012
Our usual problem in history (of economics) is a lack of information.
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News
NH Media Features INET Imperfect Knowledge Economics Project
May 1, 2012
Human beings aren’t mechanical. And mechanistic economic theories can’t account for uncertainty or political instability and individual creativity.
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Working Paper
Grantee paperDoes the Effectiveness of Fiscal Stimulus Depend on Economic Context?
Apr 2012
The topic of this session of the INET conference is a question: does the effectiveness of fiscal policy in stabilizing an economy depend on the underlying economic context in which the policy is implemented?
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Working Paper
Grantee paperOld Lady Charm: Explaining the Persistent Appeal of Chicago Antitrust
Apr 2012
The paper deals with the mysterious persistence of the Chicago approach as the main analytical engine driving antitrust enforcement in the US.
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Article
Banks as creators of money
Apr 30, 2012
In conversation recently, I was called upon to defend the claim that banks are in the business of creating and destroying private money.
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News
A Berlin Consensus?
Apr 29, 2012
The Washington Consensus is dead.
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Article
The Clash of Economic Ideas: A Review
Apr 25, 2012
When Paul Krugman paints John Maynard Keynes as a pioneering critic of dominant free-market economics, he exaggerates wildly, both about the rigidity of orthodoxy and about the pioneering character of Keynes’ critique.
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News
INET Responds to L.A. Times Op-Ed Comments
Apr 25, 2012
New economic thinking is no passing fad. The movement for new economic thinking is here to stay - with broad-based, worldwide support from undergraduate and graduate students as well as both young and established professors and Nobel laureates.
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News
Young People Tire of Old Economic Models
Apr 23, 2012
how economics students have begun to push back against the stale ideas that were proven wrong during the recent financial crisis.
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Article
Relativist versus absolutist history of economics
Apr 22, 2012
I don’t seem to be able to fully grasp Mark Blaug’s distinction between a relativist and an absolutist approach to the history of economics – first introduced in Economic Theory in Retrospect (1962) – and that is a source of much frustration.
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News
Huffington Post Features INET Financial Stability Documentary, With Introduction by Rob Johnson
Apr 22, 2012
The Huffington Post spotlights the INET financial instability video, produced by Four Corners Media, accompanied by an extensive written introduction fromINET Executive Director Robert Johnson.
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Article
Life Among the Econ: Talking history with Axel Leijonhufvud
Apr 18, 2012
Like many economists, I have enjoyed Axel Leijonhufvud’s “Life among the Econ” and nodded appreciatively when he described the social classifications of the Econ as “Grads, Adults and Elders” and chuckled when the young grad tries to impress the elders of the ‘dept’ through adept ‘modl’ building; so when the man himself was holding a glass of champagne and chatting with me at the INET conference, I had to ask how he got that paper started.
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Article
Opening Models of Asset Prices and Risk to Non-Routine Change
Apr 17, 2012
Paper revised for the Institute’s Plenary Conference in Berlin
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Article
Mehrling on Soros
Apr 16, 2012
The text below is the comment I offered on Mr. Soros’ opening speech at INET’s Berlin Conference April 12, 2012. The text of Mr. Soros’ own speech is here. Video of the entire session is below—my bit starts at 55:00.
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Article
Feelings Offstage
Apr 15, 2012
INET Berlin 2012 - back home again. On stage, it’s been a huge amount of claims, assertions, and arguments about what went wrong, about what exactly happened, about why this time was different, about what will certainly happen, and about what remains deeply uncertain, about what “we” shall do about it, about what “we” could do better.
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Video
Financial Instability Mini-Documentary
Apr 14, 2012
Financial stability, or the lack thereof.
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Article
@INET Berlin: Paradigm Regained
Apr 14, 2012
The title of the conference, “Paradigm Lost,” is an obvious combination of two references.
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Working Paper
Conference paperRevitalizing the Eurozone without Fiscal Union
Apr 2012
The ongoing eurozone crisis has prompted many to argue that monetary union withoutfiscal union was bound to fail.
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Conference Session
Overhangs, Uncertainty and Political Order: Where Do We Go From Here?
Apr 13, 2012 | 03:15—05:15
Leading thinkers from outside the developed countries look to the future, spotlighting the pitfalls and opportunities thatawait us.
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Working Paper
Conference paperFinancial Instability after Minsky:Heterogeneity, Agent Based Models and Credit Networks
Apr 2012
Albeit the majority of the profession either ignores Minskyís Financial Instability Hypothesis (FIH) or considers it plainly wrong, at least since the mid-80’s a few influential economists —who have certainly not embraced any unorthodoxcredo —have grown more receptive to this idea and eager to incorporate it in their models, even if diluted and sometimes disguised in order to make it more palatable to the conventional “representative” macroeconomist
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Working Paper
Conference paperTaking Stock of Complexity Economics: A Comment
Apr 2012
I am supposed to speak about Complexity Economics and the issues this theoretical approach is able to illuminate. Defined as such, it appears as if I should discuss methodology and I am reminded of Paul Krugman’s quote: “It is said that those who can, do, while those who cannot, discuss methodology”. So, having a discussion centered on methodology may give the impression that the panelists in this session are unable to make scientific progress.
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Working Paper
Conference paperAndrew Haldane: Financial Arms Races
Apr 2012
Elephant seals have got too big for their beaches. A large specimen might weigh over 8000 lbs (3700 kg).Their size has a simple evolutionary explanation. Large males fight for the right to mate with a whole beach full of females. For elephant seals it is, quite literally, winner-takes-all. And the key to winning is simple – size.
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Working Paper
Conference paperReal vs. Imagined Financial Markets The Regulatory Challenge
Apr 2012
We have grown accustomed to regulating financial markets based on imagined, not real markets. Real markets are shaped by and co-evolve with institutional arrangements within two fundamental constraints: Imperfect knowledge and the threat of illiquidity.
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Working Paper
Conference paperFinance and Growth: When Credit Helps, and When it Hinders
Apr 2012
The financial sector can support growth but it can also cause crisis. The present crisis has exposedgaps in economists’ understanding of this dual potential.
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Working Paper
Conference paperInstability in Financial Markets: Sources and Remedies
Apr 2012
In the seemingly never-ending aftermath to the economic crisis that began in 2007, there is little disagreement that financial markets are characterized by instability rather than stability.
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Conference Session
How Can We Create a Financial System That Is Socially Useful?
Apr 13, 2012 | 06:55—08:45
Many feel that due to its size and scale the financial system has become a burden on society rather than a servant to it. What are the key elements of a productive financial sector?
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Conference Session
Taking Stock of Complexity Economics: Which Problems Does it Illuminate?
Apr 13, 2012 | 06:55—08:45
Complexity economics represents a different vision of the economic process and has the capacity to illuminate different systems of behavior.
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News
Day 2 Wrap Up - Berlin Conference
Apr 13, 2012
Read how did the second day of the Berlin conference go
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News
Mark Thoma Excited about Student Presence at INET Berlin Conference
Apr 13, 2012
Mark Thoma has picked up on a significant aspect of this year’s INET annual conference
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News
Institute for New Economic Thinking (INET) Announces Major Fund-Raising Initiatives
Apr 13, 2012
The Institute for New Economic Thinking (INET) today announced a significant infusion of funding that over the coming years will make the organization self-sustaining and enable INET to dramatically expand its global reach, scale, and scope.
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Article
Explaining 'New Economics' with Two Diagrams
Apr 13, 2012
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:
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Article
How to spend the $75m Janeway and Soros just gave to INET!?!
Apr 13, 2012
Lunch was just interrupted Bill Janeway standing up to announce that this morning he decided to give $25m to INET and the board will fund-raise this up to $100m over ten years, but then George Soros added $50m in unconditional funding for INET.
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Working Paper
Conference paperInstability in Financial Markets: Sources and Remedies The View from Economic History
Apr 2012
Taking a long‐run view from economic history, I make three points about instability in financial markets. First, I argue that economic historians have a relatively good understanding of the proximate causes of financial crises.
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Working Paper
Conference paperInequality and Employment
Apr 2012
“Natural rate theory” has dominated interpretations of economic trends and policy prescriptions over many decades. European-type welfare state institution were claimed to cause a compressed wage distribution that distorts otherwise well functioning labor markets.
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Working Paper
Conference paperMaterial intensity, productivity and economic growth
Apr 2012
Many models of economic growth exclude materials from the production function. Growing environmental pressures and resource prices suggest that this may be increasingly inappropriate.
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Working Paper
Conference paperDoes the Effectiveness of Fiscal Stimulus Depend on Economic Context?
Apr 2012
The topic of this session of the INET conference is a question: does the effectiveness of fiscal policy in stabilizing an economy depend on the underlying economic context in which the policy is implemented?
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Working Paper
Conference paperMoving Towards Climate Justice: Overcoming Barriers to Change
Apr 2012
The present paradox, as ecological economist Bill Rees is fond of putting it, is simple yet profoundly troubling: “The ecologically necessary is politically infeasible, but the politically feasible is ecologically irrelevant.”
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Conference Session
Does The Effectiveness of Fiscal Stimulus Depend on The Context? Balance Sheet Overhangs, Open Economy Leakages, and Idle Resources
Apr 13, 2012 | 10:15—12:05
The effectiveness of fiscal stimulus in promoting economic recovery appears to depend upon many factors.
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Conference Session
Instability in Financial Markets: Sources and Remedies
Apr 13, 2012 | 10:00—12:05
What creates instability in financial markets? How does the weight of debt, the structure of expectations, or radical uncertainty contribute to instability?
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Conference Session
Inequality and The Challenge of Employment
Apr 13, 2012 | 12:25—02:15
Inequality has been growing and destabilizing confidence in many countries in recent years.
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Conference Session
New Economics, Climate Change, and New Models of Growth
Apr 13, 2012 | 10:15—12:05
Evidence of climate change is widely accepted by scientists.
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Working Paper
Conference paperTowards an Ecological Macroeconomics
Apr 2012
Three major crises are confronting the world. The first is the increasing and uneven burden of humans on the biosphere, and the observation that we have already surpassed the ‘safe operating space’ for humanity with respect to three planetary boundaries: climate change, the nitrogen cycle and biodiversity loss.
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Working Paper
Conference paperEconomics Needs to Treat The Economy as a Complex System
Apr 2012
The path to better understanding the economy requires treating the economy as the complex system that it really is. We need more realistic behavioral models, but even more important, we need to capture the most important components of the economy and their most important interactions, and make realistic models of institutions.
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Working Paper
Conference paperReconstructing Economics: Agent Based Models and Complexity
Apr 2012
In 1803 Louis Poinsot, a French physicist, wrote a book of great success, Elements de Statique, which was destined to have practical and social influences unimaginable to the same author.
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Working Paper
Conference paperThe Impact of Inequality on Macroeconomic Dynamics
Apr 2012
In the last few years the impact of income distribution on macroeconomic dynamics has received growing academic attention.
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Conference Session
Managing the Global Commons: Growth, Inequality, and New Thinking for Sustainable Economics
Apr 13, 2012 | 03:45—05:35
How can we distribute growth globally when the developed world needs growth to emerge from debt overhangs and inequality between nations is still quite formidable?
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Working Paper
Conference paperLeveraging Inequality
Apr 2012
Long periods of unequal incomes spur borrowing from the rich, increasing the risk of major economic crises
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Working Paper
Conference paperUnequal=Indebted
Apr 2012
Higher income inequality in developed countries is associated with higher domestic and foreign indebtedness
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Conference Session
The Impact of Inequality on Macroeconomics Dynamics
Apr 13, 2012 | 06:55—08:45
Does greater inequality produce more fragile economic dynamics? Does concentration of wealth and income make societies more prone to crisis? If so, why?
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Video
The Future of Europe
Apr 12, 2012
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News
George Soros's Speech at Opening Session - INET Berlin
Apr 12, 2012
Soros’s remarks about the 2008 crash
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Conference Session
What Matters: Fundamental Challenges and Self inflicted Wounds
Apr 12, 2012 | 03:30—05:10
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Working Paper
Conference paperDebt Overhang and Capital Regulation
Apr 2012
We analyze shareholders’ incentives to change the leverage of a firm that has already borrowed substantially. As a result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer.
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Working Paper
Conference paperThe Austerity Trap: A Century of Unrest and Budget Cuts
Apr 2012
Budget cuts can be dangerous. Inspired by the wrenching experience in Greece, increasing attention is now being paid to the fact that austerity may fail to reduce the government deficit if the economy declines in response, as is likely in a liquidity trap (Delong and Summers 2012).
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Conference Session
Is Mercantilism Doomed to Fail? China, Germany, and Japan and the Exhaustion of Debtor Countries
Apr 12, 2012 | 10:00—12:10
A country that produces goods of high quality at a competitive price is likely to be rewarded for its ingenuity with a trade surplus. Small countries often achieve great development success through export-led growth. At the same time, the entire economic system must be balanced.
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Working Paper
Conference paperThe Culprit of the Global Crisis – German Mercantilism!
Apr 2012
These are truly testing times. The world economic order – capitalism – is being called into question following the Lehman crisis. The world’s best form of societal organization – democracy – is being challenged by the economic success of autocratic countries such as China and Singapore.
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Conference Session
The Challenge of De-Leveraging and Debt Overhangs II : The Politics and Economics of Restructuring
Apr 12, 2012 | 06:15—08:05
When the very fabric of society is threatened by prolonged austerity or a financial sector collapse, a deliberate re-structuring of debt may be necessary to restore the hopes of renewed prosperity.
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Conference Session
The Challenge of De-leveraging and Overhangs of Debt I : Inflation and Austerity
Apr 12, 2012 | 03:45—05:55
After an era of vigorous expansion a downturn can reveal a large stock of debt relative to the economy’s capacity to service it.
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Conference Session
The Future of Europe
Apr 12, 2012 | 12:30—02:40
What has been learned now that the Euro zone’s fault lines have been revealed? Where are Europe and the Euro zone today?
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Conference Session
Reflections on the Politics of Deficit Reduction
Apr 12, 2012 - Apr 12, 2013 | 09:35—11:00
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Video
The Future of Europe
Apr 12, 2012
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News
Berlin Conference in the News
Apr 12, 2012
INET’s Berlin Conference, “Paradigm Lost: Rethinking Economics and Politics,” opened yesterday and continues to receive enthusiastic coverage from both local and international press.
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Article
Manufacturing jobs will disappear - no matter where you are
Apr 12, 2012
Just as the agricultural share of employment has fallen from 40% in the 1920s to less than 2% of the workforce in Europe today, manufacturing’s share of employment will fall to less than 5% of employment.
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Article
@INET Berlin: Doing the actual work
Apr 12, 2012
While yesterday presented a number of frontrunning scientists discussing current economics and state of the economy in general, academic terms, today starts with ECB executive board member Asmussen.
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Article
@INET Berlin: The Great Divide
Apr 12, 2012
Behind all the technical language and the common theme of bashing bankers, there remains the Great Divide between Germans and the rest.
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News
Mark Thoma Weighs in on INET Berlin and IKE
Apr 12, 2012
Mark Thoma offers a thorough, nuanced take on Roman Frydman’s theory of Imperfect Knowledge Economics (IKE) and George Soros’s ideas on the inability of people to predict the outcomes of financial and social change, which Soros calls “fallibility” and “reflexivity.”
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Article
Kids Behind the Wall
Apr 12, 2012
On my way back home from the Brandenburger Tor, I recalled that I already have been there, it must have been in 1988.
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Article
@INET Berlin: Decisions
Apr 12, 2012
A suprisingly large number of talks refer to the issue of human decision making.
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Webinars and Events
Paradigm Lost
PlenaryNew Economic Thinking 2012
Apr 12–15, 2012
The Institute joined the Centre for International Governance Innovation, and the Mercator Research Institute on Global Commons and Climate Change in hosting its third-annual plenary conference in Berlin from April 12-15, 2012.
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Working Paper
Conference paperChange and Expectations in Macroeconomic Models: Recognizing the Limits to Knowability
Apr 2012
In modern economies, individuals and companies engage in innovative activities, discovering new ways to use existing physical and human capital, and new technologies in which to invest. The institutional and broader social context within which these activities take place also changes in novel ways.
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Working Paper
Conference paperSovereignty Effects
Apr 2012
With my remarks today on financial markets and the financial crisis, I do not make any claims to originality. Rather, they are intended as a reminder of certain circumstances that are already familiar to us, in one form or another.
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Conference Session
Which Way Forward? Reflections on Global Turmoil and the Role of Markets, Governments, and Civil Society
Apr 11, 2012 | 09:20—11:30
The global economy is in turmoil. Societies are unstable and not anchored by faith in the system or social order.
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Conference Session
What Can Economists Know? Rethinking the Foundations of Economic Understanding
Apr 11, 2012 | 11:00—02:00
The economics profession stands on the fragile foundation of presuppositions adopted by professional agreement rather than as a result of empirical observation.
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Conference Session
Human Decisions
Apr 11, 2012 | 03:00—04:45
The human brain relies on three devices for its decisions: emotion controls; addictive learning; and intellectual processing. Understanding the conditions under which the three devices are engaged is essential for conscious decision-making.
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Conference Session
Challenging the Foundations of Economic Thinking
Apr 11, 2012 | 06:25—07:45
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Conference Session
Paradigm Lost
Apr 11, 2012 | 09:15—10:15
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Video
Challenging the Foundation
Apr 11, 2012
George Soros, Axel Leijonhufvud and Perry Mehrling in Berlin, Germany (2012).
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Conference Session
Welcome Remarks
Apr 11, 2012 | 07:00—07:25
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News
Day 1 Wrap Up - Berlin Conference
Apr 11, 2012
Read how did the day of the Berlin conference go
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News
INET at Oxford Interdisciplinary Research Center Announced
Apr 11, 2012
A new interdisciplinary research center to explore and challenge conventional economic thinking has been created by the Oxford Martin School in collaboration with the Institute for New Economic Thinking (INET).
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Article
Asking questions about paradigms and INET
Apr 11, 2012
Dinner has already rolled around on what has been a quick day.
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Article
Blogging Live from Berlin - Any Requests?
Apr 11, 2012
Just wanted to let you all know that amongst the distinguished, distinguishable and disturbing people at the INET conference we have inserted ourselves in the middle to do some interviews, attend talks and blog about what is going on.
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Article
Economics as a doctrinal discipline
Apr 11, 2012
In science, empirical disciplines such as physics, chemistry, history, and parts of sociology and political science, reason from facts.
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Article
World Without Money Reconsidered
Apr 7, 2012
FT Alphaville has picked up on my friend James Sweeney’s latest, and since James cites the latest writings by other friends Zoltan Pozsar, Manmohan Singh, as well as my own most recent, the piece reads like a discussant’s comments on a shadow banking symposium.
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Article
From 1000AD to 1970 the History of World Trade is Based on Fact, After 1970, Fiction?
Mar 28, 2012
Having just started Findlay and O’Rourke’s mammoth history of world trade in the second millenia, I have been struck by a strange incongruity
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Article
Renminbi Swap Lines
Mar 28, 2012
Last week the central banks of China and Australia announced the creation of a $31bn currency swap line
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News
Registration Opens for YSI Commons in Berlin
Mar 22, 2012
Registration is now open for YSI Commons, at INET’s Plenary Conference, Berlin April 12-15.
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Article
UK Budget Appeals to Adam Smith's Approach to Taxes... Sort of
Mar 22, 2012
Yesterday the Chancellor of the Exchequer (or UK ‘finance minister’) gave his annual budget speech where UK fiscal policy is set for the coming years.
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News
Overwhelming Response to YSI in Berlin: INET’s Class of 2012
Mar 14, 2012
We reserved 25 slots, but we got 563 applications. Something had to be done.
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Article
Eurocrisis Redux
Mar 12, 2012
Entangling alliances or entangling leagues are nothing to the entanglements of cash owing—Keynes
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News
How to Tackle the Challenge of Sovereign Debt
Mar 7, 2012
The G20 must address the problem of sovereign debt.
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News
Demise of Chinese Exports Greatly Exaggerated
Mar 7, 2012
Is China’s manufacturing sector in decline?
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Article
The Dynamics of the Chicago / MIT Dispute (in the Archives)
Mar 4, 2012
In his notorious “How Did Economists Get It So Wrong” NYT article in 2009, Paul Krugman relied on the freshwater/saltwater distinction to explain that the economists’ inability to predict and solve the current economics crisis was due to the fact that MIT/Harvard economics lost their long dispute against their Chicagoan counterparts.
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Article
The Dynamics of the Chicago / MIT Dispute (in the Archives)
Mar 4, 2012
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Article
Liquidity: Not Like Water (part 1 of many)
Mar 4, 2012
Discussion of the results of the ECB’s LTRO2 has revolved around the question of hoarding, specifically whether banks are using the newly-created reserves to fund new lending.