Archive
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Article
Crisis Averted: Understanding LTRO2
Feb 29, 2012
Fundamentally, the ECB is trying to keep the ongoing sovereign debt crisis from turning into a full-fledged bank credit crisis.
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Article
Three Questions to Judy Klein
Feb 27, 2012
Judy Klein is Professor of Economics at Mary Baldwin College in Virginia. She is the author of Statistical Visions in Time: A History of Time Series Analysis 1662-1938, (Cambridge 1997) and co-editor of The Age of Economic Measurement (Duke 2001), and co-author of The Strange Career of Cold War Rationality (in preparation)
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News
Sovereign Debtors in Distress: Are Our Institutions Up to the Challenge?
Feb 24, 2012
In Europe and the United States, political and economic breakdowns have become untenable.
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Article
Fed, ECB balance sheet update
Feb 23, 2012
Perry and I extend our apologies for the unplanned hiatus. By way of breaking radio silence, it seems appropriate to check in on our two favorite banks.
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Video
Growth and Crisis: The Two Faces of Credit
Feb 20, 2012
At least since Joseph Schumpeter we know that credit is good for economic growth. At least since 2007 we know that too much credit foreshadows financial turmoil.
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Video
Inequality in Asia: The Local Effects of Global Capitalism
Feb 16, 2012
Inequality did not increase during the early stages of economic development in Japan and the East Asian Tigers. But in India and China it did. Why is that?
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Article
Professor Ponzi, or thinking about the methodology, the sociology and the economics of economics
Feb 8, 2012
I am writing from my notes. The event I want to report took place some two months ago, I have since been preoccupied, then occupied, and now increasingly overwhelmed.
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Video
Why New Technologies Do Not Make Poor Countries Rich
Feb 7, 2012
Over the past two hundred years, poor countries have become faster at adopting the technologies of rich countries. So why is it, the economist asks, that poor countries have remained poor, by and large?
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News
Suresh Naidu - Property Rights and Growth: Lessons from Slavery
Feb 1, 2012
A new angle on the link between property rights and economic growth
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Video
Property Rights and Growth: Lessons from Slavery
Jan 31, 2012
Strong enforcement of property rights is good for economic growth, says the conventional wisdom. The link may not be as clear cut, says Suresh Naidu
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Article
Bank or no bank?
Jan 30, 2012
A money view of SDRs
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Video
Credit Booms Gone Bust
Jan 24, 2012
Carmen Reinhart and Kenneth Rogoff tell the history of financial crisis as a tale of excessive public debt. But what more commonly drives financial instability, says Moritz Schularick, is excessive private debt.
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Article
Why did the ECB LTROs help?
Jan 22, 2012
From a money view perspective, the central issue is settlement of TARGET balances between national central banks within the Eurozone, and the key is to understand TARGET balances as a kind of interbank correspondent balance.
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News
Robert Johnson in Time Magazine about the Failures of the Economics Profession
Jan 18, 2012
What can be done to repair economics so economists can play a productive role in helping society?
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News
INET in Berlin: The Conference Program
Jan 17, 2012
We are pleased to announce the program of INET’s annual plenary conference in Berlin.
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Article
Delicate balance
Jan 17, 2012
The current account still matters, but other things do too, and maybe more. In light of recent focus on gross flows, here and elsewhere, I want to argue for the language of the balance of payments.
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Article
Marion Fourcade and historians of economics: a quiet revolution?
Jan 15, 2012
In recent years, an increasingly significant part of the history of economics has modeled itself after the methodologies developed by Science and Technology Studies (STS) scholars.
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Article
Does the Current Account Still Matter?
Jan 12, 2012
The title is the same as that of Maury Obstfeld’s Ely Lecture, delivered Jan 6 at the AEA meetings in Chicago. Yours truly was at the meetings mainly to deliver a paper on “Three Principles for Market-Based Credit Regulation”, about which more in a later post. And for most of the rest of the time I was locked in a hotel room interviewing candidates for an assistant professor slot at Barnard College (which gave me a good overview of the current state of macroeconomics, again fodder for a later post).
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News
INET in Berlin: The Annual Plenary Conference to Take Place on April 12-14, 2012
Jan 11, 2012
The Institute for New Economic Thinking will host its third annual plenary conference in Berlin fromApril 12 to 14, 2012.
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Video
Facts and Values Are Entangled: Deal with It
Jan 9, 2012
Are there more poor people on our planet today than there were last year? Many economists would approach this question as mainly a technical problem, a matter of counting.
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Article
How God, Adam Smith, and the invisible hand changes over time
Jan 5, 2012
So with a suitably provocative title I think we can declare 2012 open.
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Article
How God, Adam Smith, and the invisible hand changes over time
Jan 5, 2012
So with a suitably provocative title I think we can declare 2012 open.
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Article
Nobody understands money
Jan 4, 2012
A correspondent sends us to a column of Paul Krugman’s that asserts that “nobody understands debt”. Fair enough.
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Article
Heterodoxy and The Economist
Jan 3, 2012
When I started this blog, almost exactly one year ago today, my thought was to provide commentary on the financial events of the day, using the Financial Times as my primary source of information about those events.
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Grant
Years granted: 2011, 2012English Agricultural Markets and the State: The Corn Returns, 1685-1864
This research project offers a radical reconsideration of the centrality of the Corn Returns to the development of classical liberal political economy and shows how much the Corn Laws enriched agrarian interests and how their repeal represented a boost to British manufacturing.
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Grant
Years granted: 2011, 2012Protocols of War and the Driving Force of Modeling Strategy
This research project examines how US military needs during World War II and the Cold War steered engineers and applied mathematicians to an economic way of thinking about scarce resources, including limited computational resources, and how economists subsequently incorporated that into mathematics.
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Grant
Years granted: 2011, 2012The Evolutionary Paths Toward the Financial Abyss and the Endogenous Spread of Financial Shocks into the Real Economy
This research project studies the endogenous emergence of systemic risk and bubble-and-burst dynamics and the transmission of financial shocks to the real economy.
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Grant
Years granted: 2011, 2012Emergency Preservation of Federal Bankruptcy Court Records, 1940-2000
This research project documents long-run trends in personal bankruptcy, with special emphasis on the use of the bankruptcy law at the local level and among women.
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Grant
Years granted: 2011, 2012The Global Finance and Law Initiative: Retheorizing the Relationship Between Law and Markets
This research project constructs a new theory of the relationship between law and finance through using case studies drawn from the global financial crisis as analytical windows for determining deficiencies of established theoretical frameworks
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Grant
Years granted: 2011, 2012Drivers of Technology Adoption and Consequences of the Dynamics of Technology Adoption for Economic Growth
This research project studies the drivers of technology adoption as well as the consequences of the dynamics of technology adoption for economic growth.
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Grant
Years granted: 2011, 2012The Stock Market and Innovative Enterprise
This research project analyzes the ways in which an important financial institution, the stock market, affects the economic performance of the industrial corporations that are listed on it.
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Grant
Years granted: 2011, 2012Reorienting Fiscal Policy: A Bottom Up Approach
This research project offers a theoretical and empirical reassessment of alternative fiscal policy actions to tease out their advantages and disadvantages.
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Grant
Years granted: 2012Green Economic Macro-Model and Accounts (GEMMA)
This research project analyses the possibility of achieving economic and financial stability, high employment, and good social outcomes, in the presence of clearly defined resource and environmental limits, even if these mean some limits to economic growth.
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Grant
Years granted: 2011, 2012Economic Thinking and Buddhist Thinking
This research projects aims to understand Buddhist thinking in rational choice terms and apply that to some important contemporary economic problems.
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Grant
Years granted: 2012Sustainable Finance Lab Research Program
This research project develops a comprehensive research agenda to formulate proposals that will help make the financial sector sustainable and facilitate a transition to sustainable economic development.
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Grant
Years granted: 2012Expanding Ethical Thinking on the Economics of Climate Change
This research project explores the implications for the economics of gender stereotypes that consider self-interested economic behavior and risk-taking to be masculine and care and caution to be feminine.
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Article
Fixed exchange rates
Dec 23, 2011
As we prepare to digest the implications of this week’s ECB move, it seems worthwhile to take a look at the monetary economics of fixed exchange rates.
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News
2011 and Beyond: What lies Ahead for the Global Economy?
Dec 12, 2011
INET Advisors Help Answer
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Article
John Whittaker: Eurosystem balances explained
Dec 12, 2011
[The following guest post is by John Whittaker, from whom we have learned much of what we know about how the European payments system works. See his terrific papers here and here, both of which reward close study. He has been looking over the last couple Money View posts, and the comments to those posts, and has this to say.]
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Video
Bottom Up Fiscal Policy: Direct Employment of the Unemployed
Dec 11, 2011
To cure unemployment, mostly we prime the pump: we devise fiscal strategies on the presumption that jobs follow economic growth. But the strategies have not worked, unemployment remains high.
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Article
The IMF and the Collateral Crunch
Dec 9, 2011
Why is the IMF getting involved in the Eurocrisis, and why is its involvement taking the form of lending to individual member states of the Eurozone?
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Article
Is there an ECB?
Dec 8, 2011
The ECB has always been the protagonist of the eurozone crisis story.
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Article
First the ECB, then the IMF, Part One
Dec 5, 2011
The fact of the matter is that European bank funding markets are collapsing onto the ECB balance sheet.
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Video
The Next Convergence
Dec 1, 2011
The Future of Economic Growth in a Multispeed World
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Article
At Home in Economics
Nov 29, 2011
My friend read somewhere that the experience of death makes people think in philosophical terms. He might have thought of religion rather than philosophy, I replied. We agreed, and wandered off talking about our crypto-religious experiences in good old secular Europe.
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Video
Irish Crisis Demands New Economic Thinking
Nov 28, 2011
Most “state of the art” macro models trivialize financial flows and largely neglect the interaction between finance and industry. That is why they failed at predicting and illuminating the collapse of the Irish economy.
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Article
What a liquidity crisis looks like
Nov 28, 2011
Bloomberg’s reporters continue their diligent work looking back on the Fed’s lending in the subprime crisis.
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Article
Financial (De)Globalization and the European Experiment
Nov 22, 2011
Europe is embarked on a grand experiment, managing modern financial crisis without a dealer of last resort, so refusing to follow the lead of the 2008 Fed.
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Article
Student discontent, teaching economics, and Robin Wells's suggestions for shifting our perspective: A historical case
Nov 20, 2011
On November 2nd, I was sitting in the Hayden Library Special Collection reading room at MIT, browsing archives on the undergraduate and graduate students’ discontent during the early 70s and the response of the economics department faculty.
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Article
We Are Greg Mankiw… or Not?
Nov 19, 2011
Amid mass unemployment and economic turmoil, instructors who lecture on the superiority of free markets without acknowledging the dysfunction in the wider economy are at risk of appearing out of touch and exacerbating antipathy towards economics.
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Video
Why Economics Needs Data Mining
Nov 17, 2011
Cosma Shalizi urges economists to stop doing what they are doing: Fitting large complex models to a small set of highly correlated time series data.
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Article
A Response to John Kay: Elements of an Evolutionary Paradigm
Nov 17, 2011
INET published a paper, written by John Kay, that deals with the relationship between economics and the world we live in. The Map Is Not the Territory: An Essay on the State of Economics spells out methodological critiques of economic theory in general, and of DSGE models and rational expectations in particular.
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Article
Liquidity, Public and Private
Nov 15, 2011
A week ago, Mark Carney, chairman of the Financial Stability Board, warned of emerging global consequences of the escalating eurozone crisis.
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Article
Does econ blogging open new conversations (part II): lessons from Mike Konczal, Noah Smith, Mark Thoma and Milton Friedman
Nov 15, 2011
The INET roundtable on “new conversations and the academy” took place a week ago. Most panelists were bloggers, including Mike Konczal from RortyBomb and Noah Smith from Noahopinion.
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Article
These dangerous postmodern relativists, Part I: Merchants of doubt
Nov 14, 2011
A recent e-mail conversation I had with Harro Maas concerning one of my latest drafts (shameless self-promotion) made me buy and read Naomi Oreskes and Erik Conway’s, Merchants of Doubts.
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Article
Roger Backhouse and Bradley Bateman: How can history stimulate new economic thinking?
Nov 11, 2011
The following text was sent to us by Roger Backhouse and Bradley Bateman, we reproduce it in its entirety.
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Article
Backhouse and Bateman want Worldly Philosophers, not only dentists; not everyone agrees
Nov 9, 2011
Professors Roger Backhouse and Brad Bateman wrote an op-ed for the New York Times a few days ago, arguing that “thanks to decades of academic training in the “dentistry” approach to economics, today’s Keynes or Friedman is nowhere to be found” - we have stopped thinking big they say.
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Article
Toxic Textbooks
Nov 7, 2011
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Article
Toxic Textbooks
Nov 7, 2011
The Toxic Textbooks movement devotes energy to curriculum reform as well. Its purpose is to galvanize student protests and “encourage schools and universities to use economics textbooks that engage honestly with the real world.”
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Article
Does Economics blogging open new conversations ? (Part I)
Nov 3, 2011
This is the question I’m supposed to answer for an experimental INET conference aimed at inspiring new thinking through interdisciplinary conversation and collective reflection without rules.
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Article
Imagining a New Intro Economics
Nov 2, 2011
Yesterday, Harvard students of Ec 10 staged a walkout to draw attention to the bias they detect in the course.
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Article
Economics in Uncertain Times
Nov 2, 2011
My first TV chat show performance:
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Article
What's in a name?
Nov 2, 2011
In the case of utility, it’s all in the name.
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Working Paper
Grantee paperWords to the Wise: Stock Flow Consistent Modeling of Financial Instability
Oct 2011
The crisis has exposed the failure of economic models to deal sensibly with endogenously generated crises propagating from the financial sectors to the real economy, and back again.
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Article
Euro Summit Statement Explained
Oct 27, 2011
Okay, so here is the statement, but what does it mean? Felix Salmon offers an unnamed advisor’s flowchart. Let’s see if Money View thinking can do better.
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Article
NGDP target, in practice
Oct 25, 2011
Last week Goldman Sachs published a note in favor of the Fed’s adopting a formal nominal GDP target, while Fed-watchers caught a whiff of a possible change in policy in the works.
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Article
Nobel Prize Tasseology
Oct 25, 2011
Till is right. It’s not the historian’s task to question the legitimacy of the decisions of the Nobel Committee.
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News
Charles Goodhart: Europe After the Crisis
Oct 20, 2011
Goodhart brings back on the table the 2% minimalist federal fiscal counterpart to monetary union: “As has been exemplified in the recent crisis, it is problematical to try to issue money without the power to support that via taxation. Equally without access to money (notably via taxes), the power to undertake counter-cyclical, or cross-country, stabilisation is limited. So, the second proposal is to revisit the exercise that was done, some twenty years ago, to assess what fiscal changes might be needed to accompany a single currency.”
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Article
“Cause and Effect in the Macroeconomy”
Oct 19, 2011
It’s Nobel Prize time again. And what a beautiful prize this year it is!
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Article
Making Markets
Oct 17, 2011
Plumbing Matters
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News
READING ROOM: Economics has met the enemy, and it is economics
Oct 15, 2011
The Globe and Mail published a long piece about the dismal science, covering a lot of ground from moral philosophy to rational expectations, from Adam Smith to this year’s Nobel laureate Thomas Sargent, from the Post-Autistic Economics movement to the Institute for New Economic Thinking. Excerpts:
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Article
A Response to John Kay's Essay on the State of Economics
Oct 10, 2011
The optimism embedded in the efficient market hypothesis has been one of the main sources of the recent turmoil
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Article
The Price is wrong
Oct 10, 2011
Focus on quantities
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Article
First Liquidity, then Solvency
Oct 6, 2011
First ECB, then EFSF
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Article
A Response to John Kay's Essay on the State of Economics
Oct 5, 2011
The financial crisis of 2007-2009 should have been sufficient empirical evidence to indicate that the axiomatic basis of the mainstream theory needs to be replaced.
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Article
A Response to John Kay's essay on the State of Economics
Oct 4, 2011
The future of macro, he says, may well make “the formation and revision of expectations an object of analysis in its own right.”
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Article
The Map Is Not the Territory: An Essay on the State of Economics
Oct 4, 2011
The reputation of economics and economists, never high, has been a victim of the crash of 2008.
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News
The Map Is Not the Territory: An Essay on the State of Economics
Oct 3, 2011
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.
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Article
Bretton Woods, Past and Present: 4. The Teaching of Economics
Oct 1, 2011
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.
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Article
Lords of Finance Redux
Oct 1, 2011
Forget the G7, Watch the C5
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Article
Financial Globalization versus the Nation State
Sep 29, 2011
At its core, this rolling crisis is really about financial globalization.
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Article
Europe Ground Zero
Sep 29, 2011
Financial Globalization versus the Nation State
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Article
Bretton Woods, Past and Present: 3. Models in Economics
Sep 24, 2011
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.”
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Article
Twisting in the Wind
Sep 24, 2011
While waiting for TALF
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News
READING ROOM: Adam Curtis on the history of economic think tanks in the UK
Sep 22, 2011
A story about the rise of the modern Think Tank and how in a very strange way they have made thinking impossible.
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Article
China as bank of the world?
Sep 19, 2011
Can the renminbi displace the dollar as the world’s international money?
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Article
Progress in Economics: A Comment
Sep 19, 2011
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.
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Article
Bazooka
Sep 17, 2011
Understanding QE3
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Article
Bretton Woods, Past and Present: 2. Progress in Economics
Sep 17, 2011
Ok, time to deal with the elephant in the room: when is one theory better than the other? What is progress in economics?
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Article
@Academia and Public, Berlin: Students as model publics
Sep 17, 2011
The transatlantic conference has been moving targets: sociology went first, then economics, then history, today it was political science and international relations.
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Article
@Academia and Public, Berlin: And then it was all about the history...
Sep 15, 2011
It’s not everyday that one finds economists using history as not just the right way but the only way to answer a question.
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News
Grant application deadline approaching: September 15, 2011
Sep 12, 2011
Reminder
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Article
Bank of the world, three ways
Sep 11, 2011
The U.S., in aggregate, acts as a bank to the rest of the world. The precise role of that bank has evolved over the course of the crisis.
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Article
Bretton Woods, Past and Present: 1. Ethics in Economics
Sep 10, 2011
Our interviews in the halls of the Mount Washington Hotel, covered the range of opinion about the severity of conflicts of interest in economics: we are alright; economics is no more corrupted than other sciences; corruption is substantial; it is rotten to the core.
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Article
Bank of the World
Sep 4, 2011
The first graph shows US financial flows over the past five years.
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Article
A call to arms for Historians and Economists...
Sep 2, 2011
The Marshall Lectures often provide thought provoking talks and one talk in particular spoke to me looking at the relationship between history and economics:
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Video
Macroeconomics From the Bottom Up
Aug 30, 2011
In 2006, the Fed asked its macroeconometric model what would happen if house prices dropped by 20%. The model projected the past into the future and said: “Not much.” Well, the financial crisis proved it wrong.
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Article
Fizzle at Jackson Hole
Aug 28, 2011
One silence, and one silo
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Video
Measuring Systemic Risk To Empower the Taxpayer
Aug 22, 2011
Banks take on excessive risk since they know, in case of failure, the taxpayer will step in to rescue them. That is a form of free insurance, and Ed Kane wants to end it.
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Video
How Government Helps, and Wall Street Hurts, the Innovative Enterprise
Aug 21, 2011
Innovation drives economic growth and welfare, and the industrial corporation drives innovation, says William Lazonick. But just how do corporations innovate?