Micro, Macro, and the Minimum Wage

Economists disagree. It's so common that there are jokes about.  For example, If all of the economists in the world were laid end-to-end they would scarcely reach a conclusion. and Economics is the only field in which two people can get a Nobel Prize for saying the opposite thing. Why?  I can't explain all of … Continue reading Micro, Macro, and the Minimum Wage

Sometimes Methodology Isn’t Everything

Brad Delong points us to a study published in the British Medical Association jounal BMJ and quotes from it: Smith and Pell: Parachute use to prevent death and major trauma related to gravitational challenge: systematic review of randomised controlled trials 327 (7429): 1459 -- bmj.com: No randomised controlled trials of parachute use have been undertaken … Continue reading Sometimes Methodology Isn’t Everything

Employment News, A Muddle – Part 2

In this post, I'm going to look at the methodology that produces our monthly employment reports because with today's report, it's particularly timely. As mentioned in the first post, the employment situation report for January 2011 is a real muddle, full of apparent contradiction. The obvious contradiction is 36,000 new jobs (an incredibly weak number) … Continue reading Employment News, A Muddle – Part 2

The History of Modern Macroeconomics

A good piece from Brad Delong.  At the core, modern macroeconomic theory is relatively empty and vacuous when it comes to the major crises: last year's melt-down, the Great Depression, the many bubbles, etc.  I have to agree with Brad's conclusion that macro theory must re-connect with economic history ( I would suggest micro theory … Continue reading The History of Modern Macroeconomics

We need a better measure than GDP

Nobel winner Joseph Stiglitz explains why GDP is NOT a good measure of society's well-being and offers ideas on better measures.  It's a good critique of GDP. National income statistics such as GDP and gross national product were originally intended as a measure of market economic activity, including the public sector. But they have increasingly … Continue reading We need a better measure than GDP

Krugman on How Did Economists Get It So Wrong? – Excellent

Long, but excellent reading on the recent (last few decades) of the history of macro thinking.  I think Krugman understates some issues, but much of it is good.  I recommend. It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they … Continue reading Krugman on How Did Economists Get It So Wrong? – Excellent

Macro: an awful mess today

I was not alone.  Apparently Tim Harford of FT.com was also confused and disappointed while learning the modern macro models and theories.  I however figured it was a bunch of nonsense.  The assumptions made by modern macro models, particularly the Rational Expectations stuff of New Classical and New Keynesian theory are the problem.  By making … Continue reading Macro: an awful mess today

‘Goodbye, homo economicus’: Apparently economics is thin-skinned

Anatole Kaletsky indicts the modern economist profession for the current crisis  in the Prospect: Was Adam Smith an economist? Was Keynes, Ricardo or Schumpeter? By the standards of today’s academic economists, the answer is no. Smith, Ricardo and Keynes produced no mathematical models. Their work lacked the “analytical rigour” and precise deductive logic demanded by … Continue reading ‘Goodbye, homo economicus’: Apparently economics is thin-skinned

Systemic failure of economics methodology

What I've been thinking for some time. Economics, particularly the mainstream analyses, has lost it's way. The failures of the current crisis point out failures of economic advice and policy making. Those policies were based on models & theories that have a flawed methodology. The "positivist" methodology of economics and it's accompanying physics envy dating … Continue reading Systemic failure of economics methodology

The Austrian and Chicago Schools

via Economist's View: The Austrian and Chicago Schools. This is from History of Economic Thought: A Critical Perspective, by E.K. Hunt, a long out of print textbook I had when I was an undergraduate at CSU Chico [update: it is has been published again by M E Sharpe]. It explains how the "Austrian and Chicago … Continue reading The Austrian and Chicago Schools