Archive for January 4th, 2010

The flow of economic thought – Jan Tinbergen vs Milton Friedman

January 4, 2010

Hendrik P. van Dalen and Arjo Klamer have written an excellent paper (as part of this book) on history of economic thought. In particular, how Jan Tinbergen (the first co-Nobel Prize Winner) and Milton Friedman had different ideas and approach on economics.

Jan Tinbergen and Milton Friedman were both very much inspired making economic theory work, applying it in service of society. The Tinbergen approach – the economist as Social Engineer – was exported to Chicago in the 1940s where one of Tinbergen’s students – Tjalling Koopmans – became a prominent member of the Cowles Commission, where his method and style clashed with the Economics Department dominated by Milton Friedman who was a public intellectual.

Koopmans preferred the Walrasian method of looking at economics whereas Friedman relied on a Marshallian, partial equilibrium approach. With Friedman’s departure from Chicago in 1977 his method and approach disappeared. The work of Koopmans and the Cowles Commission more generally formed the basis for New Classical Economics and came to dominate the practice of economics. The irony of these two icons of economics is that they produced disciples who carried their initiative too far. 

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Globalization in labor markets

January 4, 2010

GLobalization is seen as movement of all these four factors – goods, services, capital and labour. There is a large literature on globalization of goods, service and capital but very little on labor. So, it is good to read this research note from Dallas Fed. Dallas Fed also has a Globalization and Monetary Institute, so keep coming out with stuff on globalization.

In this letter the authors draw comparison between physical immigration and virtual immigration.

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