Archive for the ‘Blogs to Read’ Category

Bank of England and Financial Times schools blogging competition…

May 10, 2019

BoE and FT organised a blogging competition (it was second edition).

They have put up the winners essays on the Bank Underground Blog:

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Intelligent Economist’s 100 economics blogs of 2019

May 9, 2019

Intelligent Economist released the rankings for 2019.

Welcome to the 4th Annual Top Economics Blogs list. For the 2019 edition, we’ve added many newcomers, as well as favorites which continue to provide quality insight year after year. Like lists in previous years (201820172016), the new 2019 list features a broad range of quality blogs in practically every economic discipline. Whether you are interested in general economics or prefer more specific topics such as finance, healthcare economics, or environmental economics; there is something here for you.  You will also find blogs which focus on microeconomics, macroeconomics, and the economics of specific geographical regions.

Whether you are a student, economics professional, or just someone with a general interest in how economic issues affect the world around you, you’re certain to find the perfect blog for your specific needs.

Candidates for this year’s list were chosen based on the quality of their posts, not on their specific school of thought, political belief system, or mainstream popularity. High-quality blogs with a lower number of subscribers were given the same treatment as those with large followings. In addition, every effort has been made to create a well-balanced list, with many different economic disciplines and beliefs represented. So here are the top 100 economics blogs of 2019, listed in no particular order.

Humbled to feature again in 2019 (in regional economics category). Thanks to all the visitors and supporters.

It is really nice to see blogs written by women economists in the list.

Understanding the development of contemporary economics through major controversies

April 24, 2019

Really nice post by Beatrice Cherrier, who Undercover Historian:

This Spring I taught a history of recent economics course to undergraduate students majoring in mathematics and economics. The syllabus is here. I have reproduced the reading list with some links to papers and twitter summaries of my lectures below. Here are also a few comments on what I wanted to do with this type of course, what worked and what did not. Comments and suggestions to improve the course and set up new debates are much welcomed.

Though the course is tailored to a specific audience, I believe how the general narrative is conveyed through re-enacting landmark controversies in the history of economics can  appeal to many types of students. My goal was to highlight several characteristics of economics as a discipline:

(1) a contested science: economics is often perceived as contested from the inside (economists constantly arguing with each other)  as well as from the outside ( medias, politicians and civil society criticizing economics for being insular, neoliberal, cut from reality, useless, etc). Presenting how economists themselves have debated the foundations of their current practices (writing mathematical models using simplified behavioral hypotheses and confronting them with data) seemed a more fruitful window than the endless stream of post-crisis attacks and defense op-eds.

(2) a set of practices: students are introduced to what economists do through textbooks. By definition, a textbook presents a linear set of models which, in retrospect, seem obvious, crystal-clear, and deemed to win the battle of ideas. Teaching the history of economics through debates enable them to recover the messiness, the failures, the dissent, the disagreements, the trials and errors and the confusion that are essential characteristics of scientific endeavors.

(3) permanence and change, progress and choices: textbooks also nurture a sense that, because economics is a science, economists’ practices are no social endeavors, not influenced by historical contexts, and that “progress” will eventually help replace shaky practices with better ones (see for instance the current shared hope that better data, more powerful computers and advances in empirical techniques will eventually take ideology out of economics). Interestingly, studying decades-old debate raises awareness both to permanence and change in economics: on the one hand, the rise of mathematical and empirical economics are embedded in specific places, communities and contexts (a World war then a Cold war), policy debates, etc. To me, economic practices are born out of the interaction of contexts and technical affordances and constraints (available data and mathematical tools, for instance.  At the same time, it seems that fundamental questions on induction vs deduction, the use of mathematics, realism and objectivity resurface every 20 years or so, that many debates of the 1950s are being re-enacted in the 2010s, sometimes verbatim. My hope is that comparing 1950s and 2010s debates would help each student decide for her/himself how much permanence and how much change, how much of their future practice will be about harnessing progress and how much about making epistemological choices that no amount of scientific progress will wash away.

Wow. Hope Beatrice puts up her course lectures on Youtube! I mean likes of Richard Thaler tweeted can they attend this?!

Arthur Burns and how things fell apart in the 1970s

April 2, 2019

David Glasner in his Uneasymoney blog revisits Fed Chair Arthus Burns’s policies:

I discussed the horrible legacy of Nixon’s wage-and-price freeze and the subsequent controls in one of my first posts on this blog, so I needn’t repeat myself here about the damage done by controls; the point I do want to emphasize is, Karl Smith to the contrary notwithstanding, how incoherent Burns’s thinking was in assuming that a monetary policy leading aggregate spending to rise by a rate exceeding 11% for four consecutive quarters wasn’t seriously inflationary.

If monetary policy is such that nominal GDP is growing at an 11% rate, while real GDP grows at a 4% rate, the difference between those two numbers will necessarily manifest itself in 7% inflation. If wage-and-price controls suppress inflation, the suppressed inflation will be manifested in shortages and other economic dislocations, reducing the growth of real GDP and causing an unwanted accumulation of cash balances, which is what eventually happened under wage-and-price controls in late 1973 and 1974. Once an economy is operating at full capacity, as it surely was by the end of 1973, there could have been no basis for thinking that real GDP could increase at substantially more than a 4% rate, which is why real GDP growth diminished quarter by quarter in 1973 from 7.6% in Q1 to 6.3% in Q2 to 4.8% in Q3 and 4% in Q4.

Thus, in 1973, even without an oil shock in late 1973 used by Burns as an excuse with which to deflect the blame for rising inflation from himself to uncontrollable external forces, Burns’s monetary policy was inexorably on track to raise inflation to 7%. Bad as the situation was before the oil shock, Burns chose to make the situation worse by tightening monetary policy, just as oil prices were quadrupling, It was the worst possible time to tighten policy, because the negative supply shock associated with the rise in oil and other energy prices would likely have led the economy into a recession even if monetary policy had not been tightened.

I am planning to write another couple of posts on what happened in the 1970s, actually going back to the late sixties and forward to the early eighties. The next post will be about Ralph Hawtrey’s last book Incomes and Money in which he discussed the logic of incomes policies that Arthur Burns would have done well to have studied and could have provided him with a better approach to monetary policy than his incoherent embrace of an incomes policy divorced from any notion of the connection between monetary policy and aggregate spending and nominal income. So stay tuned, but it may take a couple of weeks before the next installment.

Hmm..Looking forward to more such posts..

Reflections of an economics textbook author: Greg Mankiw

March 18, 2019

Nice essay by Prof Greg Mankiw. He recently stepped down as the instructor of Harvard’s EC10 course (introductory economics). This is a huge moment in economic teaching as people believe this would give an opportunity for other textbooks such as Core economics to get their dues.

In the essay, Mankiw takes one through what led him to write a book on economics. Also how should one write write a book and the changes brought to the books world by digital technologies:

In this essay I reflect on textbook writing after three decades participating in the activity. I address the following questions: What perspective should textbooks take? What is the best approach to teaching microeconomics? What is the best approach to teaching macroeconomics? How does the content of the introductory course evolve? How much material should textbooks include? Are textbooks too expensive? How is digital technology changing the market for
textbooks? Who should become a textbook author?

Some more from Prof Tim Taylor on Mankiw’s essay and his own experiences..

Friedman and Schwartz, Eichengreen and Temin, Hawtrey and Cassel on Great Depression

January 24, 2019

Fascinating post by David Glasner on how works of Hawtrey and Cassel on great depression have largely been ignored.

Glasner should clearly blog a lot more than he does. One of its kind blog…

Does better mathematics lead to making more money in financial markets? (remembering Fischer Black as well)..

December 7, 2018

Prof JR Varma of IIMA in this new post reflects on whether better math skills lead to making more money in the markets. The experience is mixed.

The purpose of this blog post is to ask a different question: how common is it for traders make money simply by better knowledge of the mathematics than other participants. My sense is that this is relatively rare; traders usually make money by having a better understanding of the facts.

….

Using unpublished mathematical results to make money often has the effect of destroying the underlying market. Nasdaq (which owned IDCH) delisted the swap futures contract within months of DRW unwinding its profitable trade. Similarly, Fischer Black effectively destroyed the Value Line index contract through his activities. Markets work best when the underlying mathematical knowledge is widely shared. It is very unlikely that the option markets would have grown to their current size and complexity if the option pricing formulas had remained the secret preserve of Ed Thorp. Mathematics is at its best when it is the market that wins and not individual traders.

Prof Varma also looks at whether Black’s math skills helped him win.

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The Calculus of Consent: Why do we vote?

December 3, 2018

Nice post by Raisa Sheriff and Lekha Chakraborty of NIPFP.

Does democracy determine public expenditure decisions? With Nobel laureate Hurwicz’s revelation that it is impossible to have simultaneously a balanced budget, Pareto optimality (“you are better off without making anyone worse off”) and an incentive compatibility between Government and the citizens, we turn to pose a question, what exactly determine public expenditure decisions?1
Can a median voter reflect her preference for public expenditure priorities in her voting decisions? Antony Downs in his historic work (Downs, 1957), explained a moment of “democratic collapse” if the “costs of voting” (C) are higher than the voter’s faith in the probability of her vote changing the outcome (P) and the benefits she derives out of her winning (B). William Riker (1968) later balanced Down’s equation by incorporating a new variable “D” which captures the “civic duty” or “rights of citizen to vote” and pre-empted that magnificent embarrassment of C>P*B.  A test of this theory prior to the elections would be an interesting evidence-based research.  
With the Lok Sabha elections and several state elections lined up in India, we look at the question ‘why do people vote?’ When we posed this to a group of teenagers, they retorted – ‘well, shouldn’t the question be why don’t people vote?’ They were looking forward to exercising their right to vote for the first time and using their agency seemed significant at a very personal level. 
In a democracy, elections offer to provide every citizen an opportunity to choose a representative. Creating, correcting and maintaining a democracy is important for every member in varying degrees, and is in essence a public good. We would like to have a fully functional democracy, but the costs at the individual level are high, and each of us would prefer if the others did it for us. 
Voting, if thought along this line, is comparable to vaccination.2 The costs aren’t limited to taking the time out to vote, finding your polling booth or standing in the winding queues all morning, but also acquiring information about the candidates, their campaign promises, and most importantly, deciding on the merits of different policies based on what is good for you and your fellow constituents. This is a cognitively demanding task and a formidable challenge for most of us.  
Hmm..

Reflections on Bank of Engalnd’s 300 year history…

November 14, 2018

Another superb guest post on Bank of England’s Underground blog. This one is by David Kynaston who wrote Till Time’s Last Sand: A History of the Bank of England 1694-2013.

He points to key lessons from the 300 year history of the bank:

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How did organisations adapt to change in the 18th and 19th century: Case of Bank of England

November 13, 2018

Bank of England recently held an economic history workshop at the St Clere Estate, home of former governor Montagu Norman.

The Bank of England blog – named as Bankunderground – has been reaching out to econ history scholars to wrote guest posts on the blog. This is fabulous as blog is a great medium to disseminate research ideas. There was an earlier guest post by Prof Barry Eichengreen on lessons from Montagu Norman.

There is another superb post from Anne Murphy, Dean of Humanities and a professor at the University of Hertfordshire. She writes on how Bank of England archives can help us learn about organisational changes at Bank of England itself:

Industrialisation was not the only driver of change during the eighteenth century. Recent historiography has revealed more about the financial and organisational revolutions that helped to shape the British state and the country’s economic development. The Bank of England was at the forefront of these revolutions and a pioneer of new modes of business organisation. A business that started out in a small rented space with only seventeen clerks in 1694 was, by 1815, employing nearly 1,000 workers and occupying most of the Threadneedle Street block. Yet it has been sadly neglected as a case study. What might we find in the Bank’s archives to understand how business adapted to rapid and radical change during the eighteenth and nineteenth centuries?

Our first insight actually comes from the extent of that archive. One response to changing organisational priorities was to accumulate information. The need to maintain comprehensive and accurate records meant that the Bank kept nearly everything. So vast was the undertaking that by the 1770s it had to invest in a four-storey fire-proof library. And many of the records preserved there have survived. Look further into the archive and it is possible to gain insights into how a new business model evolves, how a workforce adapts and how an institution conveys trust in a rapidly changing environment.

How the central bank dealt with several challenges such as record keeping, fire, human capital, building bills market and so on…

This one on bank creating trust:

…..the Bank’s directors were keen to signal their connection to the state. Britannia was particularly prominent throughout, stamped on the Bank’s notes, ledgers and letterheads and as a statue over the entrance to the Pay Hall. With her shield and spear signalling defence of the nation and close associations with trade, industry and profit Britannia offered a clear statement of the Bank’s aims and the conflation of those aims with the goals of the state. But this message was an uncomfortable fit with the Bank’s willingness to house a market that was often criticized for its supposed attempts to undermine the nation’s stability and for taking advantage of the exigencies of war.

Britania stamp. Source: Bank of England Archive.

The contradiction was dealt with by the creation of both physical and business separation between the work of managing the public credit and the business of trading the government’s debt. It was not wholly successful, as the transfer clerks’ business sidelines demonstrate. We might ask, therefore, to what extent the Bank could be trusted to serve its two masters: the state, which expected the cost-effective and reliable management of its debt, and the public who lent to the state and expected the Bank to safeguard their investment.

This question is of great importance to historians who seek to understand why the public was willing to lend, throughout the long eighteenth century, to a state so often at war. It has been answered by many scholars with reference to the institutional changes brought about by the Glorious Revolution of 1688.

The role of the Bank in this process was key and the location of the market within its walls did not serve to undermine, but rather to enhance what has been referred to as a ‘credible commitment’ to honour the state’s financial promises. It made the market easy to locate and accessible. It allowed the visitor to the Bank to observe all the processes of providing public credit. Indeed, the Bank was undeniably a space in which public credit was put on display and the financial integrity of the state was demonstrated. From its grand architecture to the open-plan arrangement of the offices to the Rotunda where the brokers and jobbers gathered, visitors were invited to witness public credit at work.

Arguably then, despite all the potential disadvantages of locating the market within the Bank, some wider and more important purposes were realized: those of exposing the functioning of the market in the state’s debt to scrutiny and demonstrating the credibility of public credit. ‘Credible commitment’, therefore, did not just reside in state institutions that might have seemed rather nebulous in the eyes of most public creditors. By the mid-eighteenth century ‘credible commitment’ could be found and observed at the Bank of England. There, credibility lay in the provision of liquidity and a one-stop-shop in which all business relating to the public debt could indeed be done quickly and easily.

Really good stuff..

In the battle between RBI and government, it is high time we look at RBI as an organisation and not just its policies. That will tell us many things we are missing in the debate. After all, RBI is one of the few central banks which has been speaking about lack of independence for a long time. No other central bank complains that much. So is there an organisational design in RBI which has gaps which allows governments to always question the central bank? If yes, how should it be fixed?

Happy Diwali wishes to all!

November 7, 2018

Wishing all the visitors of Mostly Economics Blog a very happy and prosperous Diwali.

Keep visiting the blog and encouraging the blogger to write…

Montagu Norman: learning economic history from his home at St Clere

November 5, 2018

Superb guest post from Prof Barry Eichengreen on Bank of England’s blog.

Last May, the Bank organised an economic history workshop at the St Clere Estate, home of former governor Montagu Norman. In this guest post, one of the speakers, Barry Eichengreen from the University of California Berkeley, looks back at Montagu Norman’s time as governor.

Montagu Norman’s aura is palpable at St. Clere. It is said that Norman spent many of his weekends and holidays at his estate in Kent, overseeing improvements and admiring the vistas. His legacy is, if anything, even more prominent at the Bank of England. Norman supervised the design of the present Bank building. His portrait, along with those of the other members of his Court, was displayed on the first-floor landing in the Bank’s main atrium; he is only a handful of governors so honored. The Bank’s recent St. Clere workshop thus provided an opportunity to ponder some of the enduring themes and legacies of Norman’s quarter-century as governor.

It will not surprise the reader that many of these, to my mind, revolve around the decision to return to the gold standard at the prewar parity in 1925 and abandonment of that arrangement in 1931.

Prof Eichngreen lists several lessons to learn from Norman’s tenure and even suggests writing a new biography of the person…

How and when will the next financial crisis happen? – 26 experts weigh in

November 1, 2018

Humbling to be in the list.

Remembering Albert Hirschman’s tunnel effect

October 31, 2018

Prof Timothy Taylor in his blog remembers Hirshman’s tunnel effect and links it to inequality debate:

Hirschman was focused on issues of economic development. He offers examples of a number of countries where many poor people welcome signs of economic development before it touches them personally in any way–presumably because they are in the position of that driver stuck in the left lane who is taking hope from the movement of the right-hand lane.  He also points out that this tunnel effect can lead to a sense of complacency among leaders, when most people seem to be supportive of the processes that are leading to inequality, so that the leaders are unprepared when people start to denounce those same practices.

“Providential and tremendously helpful as the tunnel effect is in one respect (because it accommodates the inequalities almost inevitably arising in the course of development), it is also treacherous: the rulers are not necessarily given any advance notice about its decay and exhaustion, that is, about the time at which they ought to be on the lookout for a drastically different climate of public and popular opinion; on the contrary, they are lulled into complacency by the easy early stage when everybody seems to be enjoying the very process that will later be vehemently denounced and damned as one consisting essentially in `the rich becoming richer.'”

Writing back in 1973, Hirschman offers examples of “development disasters,” in which those stuck in the left lane have come to strongly suspect that economic development will not benefit them, and thus a high degree of social unrest emerges. and he cites Nigeria, Pakistan, Brazil and Mexico as facing these issues in various ways.

I find myself thinking about the tunnel effect and expectations about future social mobility in the current context of the United States. Rising economic inequality in the United States goes back to the 1970s, and the single biggest jump in inequality at the very top of the income distribution happened in the 1990s when stock options and executive compensation took off. But my unscientific sense is that at that time, during the dot-com boom of the 1990s, many people who were either pleased, or not that unhappy, with the rise in inequality of that time. There seemed to be new economic opportunities opening up, new businesses were starting, unemployment rates were low, cool new products and services were becoming available. Even if you were for the time stuck in the left lane, all that movement in the right lane seemed to offer opportunities.

But that optimistic view of high and rising inequality came apart in the 2000s, under pressure from a from a number of factors: the sharp rise in imports from China in the early 2000s that hit a number of local areas so hard; the rise of the opioid epidemic, with its dramatically rising death toll exceeding 40,000 in 2016; and the carnage in employment and housing markets in the aftermath of the Great Recession.  In Hirschman’s words, it seems to me that many politicians were “lulled into complacency by the easy early stage when everybody seems to be enjoying the very process that will later be vehemently denounced and damned as one consisting essentially in `the rich becoming richer.'”

Of course, no country is really one big tunnel. When people look at high or rising inequality, their views will often depend on the extent to which they feel some commonality–Hirschman calls it “shared historical experience”–with those who are moving ahead more briskly. In turn, this feeling may depend on the extent to which those who are moving ahead more briskly segment themselves off as a special and separate guild, with an implicit claim that they are just more worthy, or the extent to which they act in ways that embody broader and more inclusive outcomes.

Hmm..

Hirschman was from a different league altogether. What a thinker and communicator of economic ideas…

How the media helped turn the worst recovery in 100 years into a strong economy in stable hands before the 2015 election

October 5, 2018

Prof Simon Wren Lewis in his blogpost takes on UK’s financial media and City economists (non-academic) for painting a rosy picture of UK economy:

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How do you fight against selection bias as you consume information about the world?

September 12, 2018

Scott Sumner responds to the Ted question:

This is my second “Ted talk”.  Ted asked:

How do you fight against selection bias as you consume information about the world?

One answer is to read “everything”, as does Tyler Cowen.

But you may not have the time, in which case I’d focus on a “diverse” set of reading material. This means much more than avoiding ideological bias (although that’s important too.)

Even though he distills quite a few points, that is an awful lot to read…

Why does the Indian Government mandate proprietary software?

September 3, 2018

Prof JR Varma’s Blog is back after a long break and starts with a bang.

He questions government making it mandatory to use proprietary softwares for filing income tax, independent director report and so on:

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World War I, Gold, and the Great Depression

August 28, 2018

Nice post by Hu Mcculloch. He revisits the Great Depression and says it was Gold Standard which was primarily responsible for the deep crisis we had back then.

My own view, after pondering the problem for many decades, is that indeed the Depression was monetary in origin, but that the ultimate blame lies not with U.S. domestic monetary and financial policy during the 1920s and 30s. Rather, the massive deflation was an inevitable consequence of Europe’s departure from the gold standard during World War I —  and its bungled and abrupt attempt to return to gold in the late 1920s.

In brief, the departure of the European belligerents from gold in 1914 massively reduced the global demand for gold, leading to the inflation of prices in terms of gold — and, therefore, in terms of currencies like the U.S. dollar which were convertible to gold at a fixed parity. After the war, Europe initially postponed its return to gold, leading to a plateau of high prices during the 1920s that came to be perceived as the new normal. In the late 1920s, there was a scramble to return to the pre-war gold standard, with the inevitable consequence that commodity prices — in terms of gold, and therefore in terms of the dollar — had to return to something approaching their 1914 level.

The deflation was thus inevitable, but was made much more harmful by its postponement and then abruptness. In retrospect, the UK could have returned to its pre-war parity with far less pain by emulating the U.S. post-Civil War policy of freezing the monetary base until the price level gradually fell to its pre-war level. France should not have over-devalued the franc, and then should have monetized its gold influx rather than acting as a global gold sink. Gold reserve ratios were unnecessarily high, especially in France.

And as there was no Gold Standard during 2008 crisis, the policies should not have reacted asif we are about to face another Great Depression:

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The price impact of removing the penny

August 22, 2018

Nice post by Marilena Angeli and Jack Meaning on BoE’s Bank Underground Blog.

There is a belief that removing pennies will lead to higher inflation as shops adjust price upwards in absence of this short denomination change. They say these arguments are flawed:

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Nobel symposium on Money and Banking

July 30, 2018

The Stockholm School of Economics houses Swedish House of Finance, which is Sweden’s national research center in financial economics.

It recently ran a symposium on banking and finance bringing all who’s who of academia in financial matters. Given the picture of the venue and the stunning backdrop, finance should be least on the minds. Nevertheless, the program is here.

Prof John Cochrane aka Grumpy economist (his blog) summarises the proceedings and papers really well.

  • Day 1  (mainly on banking)
  • Day 2 (mainly on monetary policy)

I attended the Nobel Symposium on Money and Banking in May, hosted by the Swedish House of Finance and Stockholm School of Economics.   It was a very interesting event. Follow the link for all the presentations and videos. (Click on “program.” )

This review is  idiosyncratic, focusing on presentations that blog readers might find interesting. My apologies to authors I leave out or treat briefly — all the presentations were action-packed and even my verbose blogging style can’t cover everything.

“Nobel” in the title has a great convening power! The list of famous economists attending is impressive. And each presenter put great effort into explaining what they were doing, in part on wise invitation from the organizers to keep it accessible.  As a result I  understood far more than I do from usual 20 minute conference presentations and 15 minute discussions.

The first day was really “banking day,” giving a whirlwind tour of the financial economics of banking.

Lots of ideas and discussions to digest on money and banking in just 2 days…


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