Posts Tagged ‘ economics ’

A search-theoretic critique of Georgism

February 14, 2012
posted by

EconLog EconLog
by Bryan Caplan  

"Economist Henry George famously advocated a 100% (or near 100%) 'Single Tax' on the unimproved value of land. Many modern tax economists, most notably Joseph Stiglitz, conclude that George's logic was sound: Since the unimproved value of land is perfectly inelastic, even an expropriatory tax is non-distortionary. Economists' main objections to Georgism are merely that (a) it is difficult to implement in practice, and (b) politically impossible. My co-author Zachary Gochenour and I have a new working paper arguing that the Single Tax suffers from a much more fundamental flaw." (02/14/12)

http://econlog.econlib.org/archives/2012/02/a_search-theore.html  

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What is Bernanke saying about housing?

February 12, 2012
posted by

EconLog EconLog
by Arnold Kling  

"To a first approximation, housing is fungible. By that, I mean that a given rental unit can be sold to an owner-occupant and a given owner-occupied unit can be rented out. To the extent that housing is fungible, it is nonsense to speak of the rental market and the owner-occupied market as obeying different conditions of supply and demand." (02/12/12)

http://econlog.econlib.org/archives/2012/02/what_is_bernank.html  

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The mystery of marginal pairs

February 12, 2012
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Daniel James Sanchez  

"What was earth-shattering about the advent of economics, according to Ludwig von Mises, was its unprecedented discovery of regularity in the social realm. Just as Kepler, Galileo, and Newton had discovered that there were immutable laws that regulate the movements of physical bodies, the early economists discovered that there were immutable laws that regulate market phenomena. Key among these discoveries was the realization that prices are not arbitrary numbers that people simply tack on to commodities." (02/10/12)

http://mises.org/daily/5903/The-Mystery-of-the-Marginal-Pairs  

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Economics in my fiction

February 1, 2012
posted by

David Friedman Ideas
by David Friedman  

"A correspondent points me at a blog post with the intriguing title 'Sci-fi needs economists.' Neither of my novels is science fiction, but both of them are speculative fiction -- sf, of which sci-fi is a subset. And both of them reflect, in varying ways, the fact that they were written by an economist. It occurred to me that some readers of this blog might be interested in how." (01/31/12)

http://tinyurl.com/83wfe7t  

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An answer to a monetary riddle

January 31, 2012
posted by

EconLog EconLog
by David Henderson  

"On this particular day a rich tourist from back west is driving thru town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night. As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher." (01/30/12)

http://econlog.econlib.org/archives/2012/01/an_answer_to_a.html  

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Nominal GDP and employment

January 26, 2012
posted by

EconLog EconLog
by Arnold Kling  

"As long as inflation and productivity growth are close to trend, or as long as the product of the two is close to trend, the relationship between nominal GDP and employment will be close to trend. This leads me to expect to find that when nominal GDP growth is low, employment growth is also low. You would only not get that if there were a big surge in inflation and/or a big surge in productivity." (01/25/12)

http://econlog.econlib.org/archives/2012/01/nominal_gdp_and.html  

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Is the United States in a liquidity trap?

January 25, 2012
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Frank Shostak  

"Recessions, according to Keynes, are a response to the fact that consumers -- for some psychological reasons -- have decided to cut down on their expenditure and raise their savings. For instance, if for some reason people have become less confident about the future, they will cut back on their outlays and hoard more money. So, once an individual spends less, this worsens the situation of some other individual, who in turn also cuts his spending. Consequently, a vicious circle sets in ..." (01/25/12)

http://mises.org/daily/5881/Is-the-United-States-in-a-Liquidity-Trap  

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We are all Austrians now?

January 16, 2012
posted by

EconLog EconLog
by Arnold Kling  

"Circling back to Austrian economics, the crisis we are having does resemble the crisis that Austrians were predicting. That is, they thought that money was too easy and that this would result in malinvestment. In his essay on Austrian economics, Yglesias dismisses this because the decline in the economy proved to be so widespread. However, I would argue that the patterns of specialization and trade are so complex and interdependent that the crash in housing could in fact lead to widespread disruptions." (01/15/12)

http://econlog.econlib.org/archives/2012/01/we_are_all_aust.html  

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“Wages must fall!”: What all good Keynesians should say

December 15, 2011
posted by

EconLog EconLog
by Bryan Caplan  

"The gloating is easy to understand. After all, nominal wage rigidity is the driving assumption of the Keynesian model. Unemployment is just a labor surplus; since wages are the price of labor, the fundamental cause of unemployment has to be excessive wages. .... What's hard to understand, though, is Keynesian neglect of -- if not outright hostility to -- the logical implication of their argument: Wages must fall!" (12/15/11)

http://econlog.econlib.org/archives/2011/12/wages_must_fall.html  

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Mr. Keynes’s aggregates

December 15, 2011
posted by

Foundation for Economic Education Foundation for Economic Education
by Steven Horwitz  

"All that is true of capital here is also true of labor. Most Keynesian models also treat labor as an undifferentiated aggregate, speaking of 'the' labor market and 'the' wage rate. Once we look at the microeconomic processes underlying the structure of production, we see that each of these stages has its own labor market." (12/15/11)

http://www.thefreemanonline.org/headline/mr-keyness-aggregates/  

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Dangerous waffle about “the” liquidity trap

December 14, 2011
posted by

Cato Institute Cato Unbound
by Tim Congdon  

"From May 2009 to last month, the U.S. unemployment rate has been at 9 percent or above, the longest period of such high joblessness since the 1930s. Can anything be done? In a television debate on August 14 the Nobel economics laureate Paul Krugman complained that the Federal government had not been imaginative enough." (12/05/11)

http://bit.ly/sttmkj  

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Obama’s math works only in BizzaroEcon World

December 13, 2011
posted by

Cafe Hayek Cafe Hayek
by Don Boudreaux  

"What sorry testimony about the 'reality-based' political community that the current President of the United States believes it to be simply a matter of 'math' that lower tax rates necessarily result in lower tax revenues." (12/12/11)

http://bit.ly/vYZCV6  

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Fearing Hayek

December 11, 2011
posted by

Sheldon Richman Foundation for Economic Education
by Sheldon Richman  

"Economics and business reporter David Warsh is getting much attention for suggesting that F. A. Hayek, far from being one of the two most prominent economists of the 1930s -- the other being Keynes -- is rather more like the woman who was thought to have won the Boston marathon in 1980 when in fact she had joined the race, mostly unnoticed, a half-mile from the finish line." (12/09/11)

http://www.thefreemanonline.org/columns/tgif/fearing-hayek/  

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The price of money

November 27, 2011
posted by

David Friedman Ideas
by David Friedman  

"The price of money is what you have to give up to get it -- the inverse of the price level. If the price of an apple is fifty cents, the price of a dollar is two apples. The interest rate is the rent on money, measured in money. A change in the price of money affects both the money you are renting and the money you are paying as rent, leaving the ratio of the two unchanged." (11/25/11)

http://daviddfriedman.blogspot.com/2011/11/price-of-money.html  

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The economics of war

November 17, 2011
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Robert P. Murphy  

"The market economy involves peaceful cooperation. The division of labor cannot function effectively amidst a war. Warfare among primitive tribes did not suffer this drawback because the warring parties had not been engaged in trade before the hostilities. Thus they engaged in total war. Things were different in Europe (before the French Revolution) when military, financial, and political circumstances produced limited warfare." (11/16/11)

http://mises.org/daily/5664/The-Economics-of-War  

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Markets are messy, part 2

November 17, 2011
posted by

Foundation for Economic Education Foundation for Economic Education
by Steven Horwitz  

"The mainstream economists’ foremost model describes 'perfect competition.' It shows how, under particular assumptions, markets will produce ideal results: Resources will all be allocated to their highest valued use, prices of goods will reflect marginal costs of production, and producers, knowing exactly what goods consumers want, will produce them at minimum average total costs." (11/17/11)

http://www.thefreemanonline.org/headline/markets-are-messy-2/  

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Reply to Arnold on PSST

November 15, 2011
posted by

EconLog EconLog
by Bryan Caplan  

"Yes, it's conceivable for new production methods to suddenly drive millions of workers' productivity down to zero. But why on earth should we believe that this has occurred? This is an extraordinary claim requiring extraordinary evidence. If lots (say 25%) of old economy firms saw their revenues fall by 80% I might believe it. If wages fell 50% and the unemployment rate didn't budge, I might believe it. All I've seen this recession, however, is that nominal GDP sharply fell, and real GDP fell almost proportionally. That's how recessions in low-inflation economies usually work." (11/15/11)

http://econlog.econlib.org/archives/2011/11/reply_to_arnold.html  

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Price competition and price discrimination

November 13, 2011
posted by

Adam Smith Institute Adam Smith Institute
by Tim Worstall  

"Imagine a mid level supermarket, say, a Waitrose. Imagine then that a cheapy cheapy place opens next door, say an Iceland or a Lidl. Imagining? Good, now, what happens to the prices in the Waitrose? Do they rise or fall? Ah, yes, we've our old correct answer in economics again, 'it depends.'" (11/13/11)

http://bit.ly/vygte9  

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Protesting narrow economics

November 13, 2011
posted by

The Libertarian Standard
by Wirkman Virkkala  

"I am pretty sure that, had I taken economics in school, I would never have developed an interest in it." (11/11/11)

http://bit.ly/sOCp3i  

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Back to economic basics

November 13, 2011
posted by

Reason Reason
by Sheldon Richman  

"Lately I’ve landed in discussions about whether there is such a thing as human action. I’m not kidding. Some educated people have their doubts." (11/11/11)

http://reason.com/archives/2011/11/11/back-to-economic-basics  

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Sumner needs to watch some film and hit the gym

November 3, 2011
posted by

Free Advice
by Robert P. Murphy  

"The Fed today lowered its forecast for economic growth next year, and raised its forecast for unemployment. So Scott is saying, rather than refusing to pump in more money, and resting content with a worsening forecast, the Fed should do what it needs to do, so that it doesn’t have to give the public the bad news about gloomier prospects for next year. OK, now that we understand what Sumner is doing in his cute analogy, we are ready to get knocked onto the floor by how wrong the analysis is." (11/02/11)

http://bit.ly/uB3EZq  

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The fundamental fallacies of macroeconomics

October 18, 2011
posted by

Competitive Enterprise Institute Competitive Enterprise Institute
by William Frezza  

"Do you sometimes wonder why economists are accorded such respect and influence given the fact that they claim knowledge over the unknowable, promote theories that are untestable, and make forecasts for which they are never held accountable? Isn’t that the definition of a witch doctor?" (10/18/11)

http://tinyurl.com/3vf2af3  

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A comparison of the utility theory of Rothbard and Kirzner

October 17, 2011
posted by

Libertarian Papers
by Dan Mahoney  

"In this article we consider the theories of utility developed by Rothbard and Kirzner in their respective treatises on economic theory (Man Economy and State, and Market Theory and the Price System). We argue that while both authors were strongly influenced by Mises’ ordinalist conception of utility and in fact both authors affirm this conception in their initial expositions of utility theory, their subsequent developments diverge quite sharply." [abstract -- full paper available as PDF or MS Word download] (10/16/11)

http://bit.ly/p2N6Pi  

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Two Americans win economics Nobel

October 10, 2011
posted by

Associated Press    

"Americans Thomas Sargent and Christopher Sims won the Nobel economics prize on Monday for research that sheds light on the cause-and-effect relationship between the economy and policy instruments such as interest rates and government spending. ... The Royal Swedish Academy of Sciences said the winners have developed methods for answering questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut." (10/10/11)

http://tinyurl.com/4xe33m9  

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Important new evidence on regime uncertainty

October 9, 2011
posted by

Independent Institute Independent Institute
by Robert Higgs  

"The idea of regime uncertainty had sound economic theory and substantial empirical evidence to support it from the beginning, and a great deal of additional evidence has accumulated over the past three years. Yet critics have continued to dismiss it either as Republican bunk bought and paid for by Obama-hating billionaires or as a sort of 'just so' story concocted by flaky think-tank nobodies, such as yours truly. Now, however, the research reported by Baker, Bloom, and Davis knocks the ball firmly back into the critics’ court." (10/08/11)

http://bit.ly/q38IkG  

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