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We need economic theories fit for the real world

November 22, 2013 17 comments

from The Guardian

Jon Super

The Post-Crash Economics Society at Manchester University. Photograph: Jon Super for the Guardian

The Association for Heterodox Economics welcomes student initiatives for fundamental reform of the economics curriculum, as do our post-Keynesian colleagues (Letters, 19 November). Heterodox economists, drawing on a range of theorists, including Keynes, Marx, Minsky and others, have consistently argued for greater pluralism in both economics curricula and economics research evaluation. We recognise the clear benefits of pluralism in economics: it encourages, by exposing them to alternative perspectives, the development of students’ critical thinking and judgment. Read more…

Judea Pearl on regression and causation

September 28, 2013 7 comments

from Lars Syll

Judea Pearl was kind enough to send yours truly his article (co-authored with Bryant Chen) Regression and causation: a critical examination of six econometrics textbooks a while ago. It has now been published in real-world economics review  issue no. 65.

causation

The article addresses two very important questions in the teaching of modern econometrics and its different textbooks – how is causality treated in general, and more specifically, to what extent they use a distinct causal notation. Read more…

real-world economics review – issue no. 65

September 27, 2013 20 comments

Issue no. 65, 27 September 2013
http://www.paecon.net/PAEReview/issue65/whole65.pdf  
You can download the whole issue as a pdf document by clicking here    
 

In this issue: 

Regression and causation: a critical examination of econometrics textbooks          2
Bryant Chen and Judea Pearl          download pdf 

Diagrammatic economics          21
John Pullen          download pdf 

A plea for reorienting philosophical attention from models to applied economics          30
Gustavo Marqués          download pdf 

A Copernican turn in banking union urgently needed          44
Tom Mayer          download pdf 

A monetary and fiscal framework
for macroeconomic stability in the European Monetary Union         
51
Thomas Oechsle          download pdf 

The experience of three crises:
the Argentine default, American subprime meltdown and European debt mess          65
Víctor A. Beker          download pdf 

Global output growth: wage-led rather than profit-led?          116
Leon Podkaminer          download pdf  

Striking it richer: the evolution of top incomes in the United States          120
Emmanuel Saez          download pdf 

New Paradigm Economics          129
Edward Fullbrook          download pdf 

Past contributors, submissions and etc.          132


Wikipedia has the beginning of an article on the RWER, http://en.wikipedia.org/wiki/Real-world_economics_review.  It needs much work.  It would be useful if RWER subscribers contributed to this

10 most viewed posts of the last 90 days

August 5, 2013 Leave a comment

issue no. 64 of real-world economics review

Issue no. 64, 2 July 2013

You can download the whole issue as a pdf document by clicking  here  

In this issue: 

Is it a bubble?          download pdf           2     

          Steve Keen — A bubble so big we can’t even see it         download pdf          3

          Dean Baker – Are the bubbles back?          download pdf          11      

          Ann Pettifor – The next crisis          download pdf          15

          Michael Hudson – From the bubble economy to  . . . . .           download pdf          21

Rethinking economics using complexity theory          23
Dirk Helbing and Alan Kirman          download pdf

The fate of Keynesian faith in Joseph’s countercyclical moral          52
Douglas Grote              download pdf

A constructive critique of the Levy sectoral financial balance approach          59
Brett Fiebiger                download pdf

Capturing causality in economics and the limits of statistical inference          81
Lars Syll           download pdf

Money as gold versus money as water          90
Thomas Colignatus         download pdf

Constant returns to scale: Can the competitive economy exist          102
M. Shahid Alam             download pdf

Reassessing the basis of corporate business performance          110
Robert Locke                download pdf

Capitalism and the destruction of life on Earth          125
Richard Smith                           download pdf

Past contributors, submissions and etc.          152

rwer-issue-61

September 26, 2012 8 comments

Issue no. 61, 26 September 2012

You can download the whole issue as a pdf document by clicking   here

In this issue:

The optimal material threshold:
Toward an economics of sufficiency       2

Samuel Alexander    download pdf

The normative foundations of scarcity        22
Asad Zaman    download pdf

Degrowth, expensive oil, and the new economics of energy        40
Samuel Alexander    download pdf

Nash dynamics of the wealthy, powerful, and privileged:       52
America’s two-player, Darwin metaeconomy
L. Frederick Zaman    download pdf

Capital as power: Toward a new cosmology of capitalism       65
Shimshon Bichler and Jonathan Nitzan    download pdf

A warrant for pain:
Caveat emptor
vs. the duty of care in American medicine         85
Avner Offer    download pdf

Reassessing the basis of economics:
From Adam Smith to Carl von Clausewitz       100
Robert R Locke    download pdf

Mankiw’s attempted resurrection of marginal productivity theory       115
Fred Moseley    download pdf

The evolution of economic theory:
And some implications for financial risk management      125

Patrick Spread    download pdf

More on why we should bury the neoclassical theory       137
of the return on capital

Roy Grieve  download pdf   Read more…

1. Germany’s beggar-thy-neighbour wages policy and 2. Shrinking the financial sector to its 1970s pre-bubble size

June 18, 2012 Leave a comment

The above and related issues arise in two papers in the current issue 59 of the Real-World Economics Review

Matías Vernengo and Esteban Pérez-Caldentey, “The euro imbalances and financial deregulation: A post-Keynesian interpretation of the European debt crisis” http://paecon.net/PAEReview/issue59/VernengoPerez59.pdf 
and
Robin Pope, “Public debt tipping point studies ignore how exchange rate changes may create a financial meltdown” (co-author Reinhard Selten) http://paecon.net/PAEReview/issue59/PopeSelten59.pdf

 Vernengo, Pérez-Caldentey and Pope all  agree on the need for: 

(i) fiscal stimulus while the private sector deleverages, 

(ii) inter-country fiscal transfers to losers in a global downturn in order to reduce contagious adverse aggregate demand effects, 

(iii) re-regulation of the financial sector to aid in averting future financial bubbles, and 

(iv) an absolute rise in German wages – though for different reasons.
Robin Pope: in order to try to curb the dramatic increase in inequality in Germany between the upper echelon and the average German worker that has occurred over the past decade, an increase that damages democracy and damps internal demand.
Matías Vernengo and Esteban Pérez-Caldentey: in order to reverse the dramatic narrowing of the gap between wages in Germany and non-core countries that occurred over the past decade, a reversal that they believe would eliminate Germany’s dramatically increased export surplus to non-core countries that occurred over this same decade plus.

On where the three disagree, see their extremely interesting exchange below, and do, if inclined, append your comments.  Read more…

Forbes’ update on the state of plutonomy or “democracy for the few”

March 30, 2012 15 comments

from Edward Fullbrook

The current Forbes, the bi-weekly of The One Percent, features an update on the current state of what it, like Citigroup, calls plutonomy.  Also called by its insiders “democracy for the few”, this is the basic economic-political reality of our time, which one-percenters chat about daily and which the rest of us generally pretend doesn’t exist.  Skeptics of the analysis of plutonomy offered in “The Political Economy of Bubbles” in the current issue of RWER are encouraged to read Forbes’ plutonomy update.   Below is a taster. 

The new “us versus them” is not like the racism of colonial times. This is starkly different. It’s the 99% versus the 1%, . . . Read more…

RWER issue 57: Hazel Henderson

September 6, 2011 Leave a comment

From rigged carbon markets to investing in green growth

Hazel Henderson  

Abstract

Reviews failure of global carbon trading underKyotoand reasons why alternatives emerged.  Assesses prospects for climate policies beyondKyotoand covers shifts toward green growth in governments and private sector investments.

            The Kyoto Protocol and its global carbon emission-trading scheme expire in 2012.  The World Bank in State and Trends of the Carbon Market found that the market declined in 2010 and is at a crossroads, due to loss of political momentum.  Read more…

RWER issue 56: Egmont Kakarot Handtke

March 11, 2011 4 comments

Scrap the lot and start again

Egmont Kakarot-Handtke   [Germany]

Abstract: In the wake of the recent financial crisis heterodox economists have taken up a time-honored refrain and proposed to abandon the axiomatic method. The present paper argues that this proposal is self-defeating.

            An economic crisis is always a crisis of economic theory – of mainstream economics, to be sure – and the latest financial crisis is no exception. This is the day of reckoning for the heterodox camp and, of course, rightly so for quite different reasons. Read more…

RWER issue 56: George DeMartino

March 11, 2011 2 comments

The economist as social engineer: Maxi-max decision, utopia and the need for professional economic ethics*
George DeMartino   [University of Denver, USA]

Introduction

             The economics profession has attracted a good bit of attention lately due to revelations regarding the failure of influential economists to disclose potential conflicts of interest when serving in the role of public intellectual. For this we are indebted to filmmaker Charles Ferguson, whose film “Inside Job” ought to serve as a wake-up call to a profession that has suppressed its ethical obligations for over a century. Even worse, Read more…

RWER issue 56: Wolfgang Drechsler

March 11, 2011 1 comment

 Understanding the problems of mathematical economics: A “continental” perspective
Wolfgang Drechsler   [Tallinn University of Technology, Estonia]

1.             Introduction

            Within the heterodox and especially the post-autistic, real-world-focused critique of Standard Textbook Economics (STE), often published in this journal, attention to its literally fundamental method, quantitative-mathematical in general and mathematically modelling specifically, and how this method steers economics away from reality, is and has been almost inevitable. Read more…

RWER issue 56: Wade and Sigurgeirsdottir

March 11, 2011 3 comments

Iceland’s meltdown:The rise and fall of international banking in the North Atlantic
Robert H. Wade and Silla Sigurgeirsdottir [1]   [London School of Economics and University of Iceland]

Iceland should be a model to the world” (Arthur Laffer, November 2007)

 “They [the Icelandic banks] shouldn’t be worried about the fundamental soundness of their business model. I think it is very sound and very good”. (Richard Portes, May 2008)

In 2007 average income in Iceland was almost $70,000, about the fifth highest in the world and 1.6 times that of the United States. Read more…

RWER issue 56: Victor Beker

March 11, 2011 1 comment

On the economic crisis and the crisis of economics

Victor A. Beker*   [Universidad de Belgrano and Universidad de Buenos Aires, Argentina]

 “So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”

Letter to the Queen of England by the British Academy. July 2009 Read more…

RWER issue 56: Pavlina Tcherneva

March 11, 2011 Leave a comment

Fiscal policy effectiveness: Lessons from the Great Recession

Pavlina R. Tcherneva   [Levy Economics Institute of Bard College, USA]

 Abstract

This paper reconsiders fiscal policy effectiveness in light of the recent economic crisis. It examines the fiscal policy approach advocated by the economics profession today and the specific policy actions undertaken by the Bush and Obama administrations. Read more…

RWER issue 56: Richard Smith

March 11, 2011 10 comments

Green capitalism: the god that failed

Richard Smith   [Institute for Policy Research & Development, London]

Abstract

In rejecting the antigrowth approach of the first wave of environmentalists in the 1970s, pro-growth “green capitalism” theorists of the 1980s-90s like Paul Hawken, Lester Brown, and Francis Cairncross argued that green technology, green taxes, eco-conscious shopping and the like could “align” profit-seeking with environmental goals, even “invert many fundamentals” of business practice such that “restoring the environment and making money become one and the same process.” This strategy has clearly failed. Read more…

Call for Papers: a planned special issue/section of “Real World Economics Review”

March 2, 2011 3 comments

from Bruce Edmonds

Call for contributions on the Social Complexity of Informal Value Exchange: A special issue or section of an issue of “Real World Economics Review
Whilst traditionally Economics focuses on markets where the mechanisms of price and economic rationality might dominate, we call for contributions that consider a wider class of social phenomena.  Read more…

Neoliberals do not know what markets look like

December 27, 2010 3 comments

from Merijn Knibbe

Exchange takes place without any specification of its institutional setting. We have consumers without humanity, firms without organizations,and even exchange without markets.
Ronald Coase

I love markets. I love businesses. My family background: the so called ‘Kleine luyden’, ‘Small people’ who had all kinds of business: farming, small scale real estate, groceries, transport, meat – you name it. I recall going to the vegetable auction, sitting in the back of a truck with my nephews, watching the auctioneer and coming back with loads of radishes, cabbages – you name it. This world has largely vanished.

Read more…

Discussion nuggets #1

December 12, 2010 Leave a comment

Merijn Knibbe – 30 November
I do think that a flexible labor market does not necessarily increase the number of jobs or hours: it’s a bit like ‘musical chairs’. Quite a lot of tension, movement and shifting of chairs – but the tension and the like does not increase or decrease the number of chairs. Other factors however do – just look at the job statistics of the Bureau of Labor Statistics, the OECD or Eurostat. A very alarming statistic is however that the USA at the moment does seem to have something of a ‘Lump of Labor’: the 2010 number of jobs is not Read more…

RWER issue 54: Adam Kessler

September 28, 2010 1 comment

Real-World Economics Review, issue 54
You may read the whole paper here:
http://www.paecon.net/PAEReview/issue54/Kessler54.pdf

Cognitive dissonance, the Global Financial Crisis and

the discipline of economics*

Adam Kessler   [Fairleigh Dickinson University, USA]

 Abstract

The global financial and economic crisis has produced a powerful shock to the worldview of an influential group of economists whom I call believers in laissez faire (BLF). I provide evidence which suggests that the BLF responded to this shock in a manner that can best be described as irrational, ill-considered and clearly erroneous. I consider the social-psychological concept cognitive dissonance as the best explanatory framework for understanding this response. Cognitive dissonance theory predicts that when real-world events “disconfirm” deeply-held beliefs this creates psychological discomfort in persons and they will respond by means of distortion and denial. I test the proposition that the BLF experienced cognitive dissonance through a survey in which I asked two groups of economists what their views were on 10 possible causes of the Great Recession. One group consisted of the signers of the notorious open letter circulated by the Cato Institute opposing President Obama’s stimulus program. (I consider members of this group to be self-proclaimed BLFs.) The second group consisted of a random sample of members of the American Economics Association. Read more…

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