Archive for the ‘Economist’ Category

Why economists have trouble with bubbles?

July 30, 2015

This is because bubbles and their bursting exposes all the hyped expectations and notions set by economists. Actually bubble is not really a proper word. It is just a reversal of economic cycle and is a pretty normal phenomenon. Just that econs think that their ideas and policies can conquer these cycles only to be humbled.

Noah Smith has a piece on the bubble trouble. He says much of the negation of bubble idea came from rational expectations revolution which has been humbled in the 2008 crisis.

What Economics can (and can’t) do?

July 29, 2015

Superb interview of Daniel Hausman, Prof of Philosophy at Univ of Notre Dame.

He discusses variety of issues pertaining to field of economics. In the end he sums up:


IMF’s mistakes in Euro Crisis…

July 29, 2015

Much of the blame for EZ crisis has fallen on Europe and ECB policymakers. IMF which is usually a key party to such crisis has been ignored.

Nor surprisingly, IMF has retained its record of  worsening crisis in EZ case as well. Ngaire Woods of University of Oxford has a piece on the topic. IMF actually ignored six lessons this time:


European policymakers learn nothing from 1930s depression years

July 27, 2015

Prof Brad Delong is surprised how Europe has forgotten lessons from its dreary past:


Was India (and other developing economies) ignored in Bretton Woods talks?

July 27, 2015

That is the general perception. However, Prof Eric Helleiner of University of Waterloo does not think so. He says India infact contributed quite a bit to the thinking on BW institutions.


The Contradictions of China’s Communist Capitalism..

July 24, 2015

Prof Pranab Bardhan has a piece on the contradiction:


Why Hayek first missed and then moved towards Free Banking?

July 22, 2015

Prof. Geroge Selgin has a piece on this. (Update:Joseph Salerno of Mises says Prof Selgin is partly right; this is how we figure the history of thought)

One would imagine someone like Hayek would favor free banking (banking system without a central bank running their own currencies) right from the very beginning. But no. This transition/change of views happened fairly late:


Have banks become today’s tanks? Their attempted coup in Greece..

July 21, 2015

He reflects on the ongoing Greece crisis (for how long will it continue). He says how earlier tanks took over countries and now it is banks:


Will computers replace human intelligence in finance?

July 16, 2015

Prof Shiller does not think so.

He says this vision of financial singularity where computers shall replace a fund manager and markets become super efficient is unlikely to happen:


The birth of European macroeconomics and the crisis that followed..

July 13, 2015

Dae Woong Kang and Ashoka Mody have a piece on how macro ideas to create European Monetary union were birthed:


German economists thinking becoming more American over the years..

July 9, 2015

Thomas Fricke (Chief Economist, European Climate Foundation) has a piece on INET blog. Well, as one of the commentator on the piece said “German economists? What is that?” Actually such pieces reflect on the evolution of economic thought which depressingly is becoming just American over the years. No economist is considered worthy of his salt if he has not studied and worked in US. Post-US experience, the whole world is open to you and people easily become govt advisers/ heads in their home countries. Whereas those who study and spend times in home countries just end up scratching their heads.

Same is going on in Germany as well. A country which actually had made some mark in economic thought as there was a German school (Ordoliberalism as well) is getting lost in oblivion.


Guess who needs to finish Financial Reforms? US!!

July 8, 2015

IMF has released its usual country specific report. It is amazing how these reports are worked upon by IMF along with each country’s elite  policymakers. Still they miss the bus most of the times and worse make things even more pathetic via their interventions.

The recent report is on US and it says somethings on US financial sector. Asks US to complete its financial reform:


Six Memorable Months: The Best and Worst of Varoufakis

July 7, 2015

Nice Article on Greece’s Rock Star er Finance Minister.

There was the leather jacket, the motorbike and photo shoots of the man they said was like more a rock star than a finance minister. Then there were the lectures and proposals that left his European counterparts bemused and often annoyed.

As Greece’s Yanis Varoufakis leaves the job and bows out of ever-urgent talks to keep the country in the euro, the economic professor’s theories on how to fix Europe’s malaise return to the domain of academia, his blog and Twitter account.

From condemning Greece’s creditors to plans to enlist tourists to tackle tax evasion via angry exchanges at a summit in Latvia, here are some of the most memorable moments and comments from his time in office.

What you find amazing is how all this while it did not really look like a crisis. Compare Greece pictures to what you saw in previous crisis in emerging economies..

Case of Ireland vs Iceland: Some lessons (Did Iceland do better as it had limited support of its central bank??)

July 6, 2015

Today is the day of results of Greece referendum which could change Europe and world polity in unimaginable ways. Few imagined that we could actually stare at a Greece exit from Europe. But we have it right here. Lot is being written and lot is going to follow. Keep tuned.

Meanwhile, an interesting (and updated) take on Ireland vs Iceland. Being a member of ECB, Ireland fared better in 2008 but Iceland did better over a long run as it did not have the support of a central bank!


Why Small Booms Cause Big Busts?

June 26, 2015

Prof J Bradford Delong says this is because of credit cycle. If credit is behind the boom then even a small boom will lead to a big bust..


Krugman battles Austerians … A cartoon strip

June 25, 2015

Interesting and funny cartoon strip on how Krugman knocks out the several austerity promoting economists and declares himself as the winner..

Macroeco transition from philosophy/theory based subject to empirical/data based..

June 24, 2015

Noah Smith has an article on this transition.Big data followers have always suggested that soon all your micro/macro theories will be history. All people will look at is evidence. As more and more data becomes available, we will get trends real time. If the data analysis matches the theory, the theory is lucky else the theory does not matter. The broad idea is earlier the onus was on data to match the theory as former was scarce. Now it will be the reverse – the theory has to match the data.


How economists are biased and self-selective about monetary history..

June 9, 2015

An insightful post by Prof George Selgin.

He picks a ppt from a Fed official who taught monetary economics to a school class. Prof Selgin says that the official tried to show how Fed is a superior system compared to the alternatives:

One of the chief goals of Cato’s Center for Monetary and Financial Alternatives is to make people aware of alternatives to conventional monetary systems—that is, systems managed by central bankers wielding considerable, if not unlimited, discretionary authority.  The challenge isn’t just one of informing the general public: even professional monetary economists, with relatively few exceptions, are surprisingly ill-informed about such alternatives.

I recently came across a document that perfectly illustrates this last point: a power point presentation by a senior Federal Reserve Bank research economist, given at a conference aimed at school teachers specializing in economics.

I have no desire to single-out the economist in question, who I will therefore refer to simply as “our economist.”  On the contrary: I offer his presentation as an example of the all-too common tendency for otherwise competent monetary economists (and our economist is in fact very accomplished) to misread the historical record regarding potential alternatives to central banking and to otherwise give such alternatives short shrift.

This unfortunate tendency rests in part on the fact that most economics graduate programs stopped teaching any sort of economic history decades ago (our economist earned his PhD in the early 1990s), while burdening their students with enough mathematics and statistics to all but guarantee that they never so much as crack open a book on the subject.  But the trouble isn’t just that many monetary economists don’t know their monetary history: it’s that they know, and teach, monetary history that ain’t so.  That’s what our economist did when he lectured a roomful of teachers on the merits of central banks and “Alternative Monetary Systems.”

Hmm.. Standard way to show how useful you are to the society.

It is frustrating how none of the real monetary history is taught to students. I mean one may disagree with free banking stuff, but atleast it should be taught.

Don’t trust the economic oracles..

June 4, 2015

 of Mises Institute says it nicely:

The positivist ideas dominant among economists led them to agree that, as stated by the motto of the Econometrics Society, “Science is prediction.” We are surrounded by forecasts about numerous economic indicators. “Experts” reveal the rate of growth with .1 percent precision as if they were reading the oracle or seeing the future in chicken entrails.

In the nineteenth century, people used to believe everything which was written in the newspapers. With time, they became more skeptical and began to question what has been considered as a reliable source of information. After that came television. Images have real power over the minds, but after a while, people began to mistrust the news and exercise their critical judgment. Oddly however, government statistics and economic predictions are held as truths since they exist and people only too rarely question the figures.

But if we can’t trust the government to produce safer rail travel or more affordable health care, why should we trust it to produce better economic predictions? Why would things be different for statistics and predictions?

Blame it on human psyche. We always believe that there should be someone taking care of us. Oracles have always amazed and fascinated humankind. Just that the fortune telling oracles have been replaced by economics oralces. Needless to say, both have mostly duped their followers..

Putting Economic Models in Their Place (and economists too?)

June 3, 2015

Prof. Brad Delong has a piece reflecting on the Paul Romer outlash.



Get every new post delivered to your Inbox.

Join 1,504 other followers