Posts Tagged ‘ economics ’

What is monetary policy?

May 18, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"When I use the term 'monetary policy' it refers to actions taken by the monetary authority aimed at influencing the supply or demand for base money, with the ultimate objective of influencing a broader set of macro variables, such as inflation or NGDP growth. I don't like it when people mix up monetary policy with other policies, such as banking regulation. On the other hand the dictionaries don't seem to agree with me." (05/16/14)

http://econlog.econlib.org/archives/2014/05/what_is_monetar.html  

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Piketty’s pretense of morality in the quest for equality

May 18, 2014
posted by

Cato Institute Cato Institute
by James A. Dorn  

"Piketty’s mantra is that 'capitalism and markets should be the slave of democracy and not the opposite.' He wants to promote 'progressive' policies so that 'democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness.' Yet, his planned redistribution via government taxation of income and wealth would undermine the fabric of civil society, stem economic growth, and diminish economic and personal freedom. Government power would rise and human liberty decline." (05/14/14)

http://tinyurl.com/mte6qcl  

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Piketty’s Capital, part 1

May 16, 2014
posted by

Randall Holcombe Independent Institute
by Randall Holcombe  

"Thomas Piketty's Capital in the Twenty-First Century is a surprising best-seller (how many economics books make the New York Times best-seller list?) and has been getting lots of press lately. Reading it, I have some comments and observations, which I will make in a series of posts rather than in one extended review. I’m figuring there’s a limit to how much readers of The Beacon will want to slog through at one time. It’s economics, after all, and my experience is that people don’t have a high level of tolerance for abstract economic commentary." (05/14/14)

http://blog.independent.org/2014/05/14/pikettys-capital-i/  

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How economists treat interest

May 14, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"Economists often make a distinction between an actual market price in a transaction, versus a 'hypothetical price' that we imagine must be the case in order to complete our model. For example, suppose we have a group of potential workers and potential employers, and that we know their preferences for leisure/wages and output/money. Every day we can compute what the market-clearing wage is. Now suppose that on a religious holiday, the market-clearing wage is $82/hour, at which price the total quantity supplied and demanded of labor is 0 hours. (Nobody wants to work on this very holy day, and the wage needs to be $82/hour in order to make no employer want to hire even a single hour of labor.) So it’s fine to academically say, 'The wage is $82/hour even though no wages are paid,' but on the other hand, in the real world we would have no way of actually knowing that." (05/14/14)

http://tinyurl.com/lu7pxfx  

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A note on the “real” rate of interest

May 14, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"Suppose the nominal interest rate is 10%. So you lend someone $100 today, and get paid back $110 next year. Ah, but in the meantime, 'prices' have risen by 3%. So, we say that the 'real' or 'inflation-adjusted' interest rate is actually only about 7%. More specifically, most economists would look at a basket of consumer goods to gauge the 'price level' and say that it has risen 3%.
So if you step back and consider, what we’re ultimately doing is figuring out how many more units of consumption goods people get, if they are willing to postpone consumption for a year." (05/12/14)

http://tinyurl.com/kcnjakq  

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Never debate the impact of a price change

May 13, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"There as been a lot of recent discussion about the 'Neo-Fisherite' claim that higher interest rates lead to higher inflation. Noah Smith has a good summary. Unfortunately the debate has been marred by a lack of precision. What is being held constant when we talk about higher interest rates, and what is allowed to change?" (05/13/14)

http://econlog.econlib.org/archives/2014/05/never_debate_th.html  

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Twelve issues with Piketty’s capital

May 12, 2014
posted by

Eamonn Butler Adam Smith Institute
by Dr. Eamonn Butler  

"Piketty’s thesis is that the rate of return on capital exceeds the general rate of growth (r > g). So, barring wars, capital owners accumulate a larger and larger share of the world’s wealth. 1. This theory does not fit the facts." (05/12/14)

http://tinyurl.com/luxh5h8  

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Pricking the Piketty bubble

May 12, 2014
posted by

Spiked
by Sean Collins  

"Piketty’s single-minded concern with lessening income and wealth inequalities is myopic. It leads him virtually to celebrate the wartime years of 1914 to 1945, because that period reduced the gap between rich and poor. What really matters are significant increases in absolute living standards for the masses, which includes leisure time as well as pay, and can come from both individual advancement as well as improvements in social conditions. Yet, for all his reams of statistics, Piketty has remarkably little to say about those on middle or lower incomes. Instead, he asks us to examine forensically the wealth of the one per cent, which, in the absence of any higher purpose, begins to feel like vicariously watching reality TV shows about celebrities in mansions. The over-hyped reaction to Piketty in the US and UK has little to do with the merits of the book itself, and much more to do with the current preoccupations of the Anglo-American elite." (05/09/14)

http://tinyurl.com/mm6j4be  

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Piketty-Piketty

May 8, 2014
posted by

Don Boudreaux Cafe Hayek
by Don Boudreaux  

"I’m nearly finished reading Piketty’s tome. I share the above paragraph with you because it condenses and conveys well in less than a single page much of Piketty’s world view. The following list is not meant to be an exhaustive enumeration of all relevant angles of Piketty’s world view (as I understand that view from having now read his monster book). Only some of the most important aspects of that view are indeed here." (05/07/14)

http://cafehayek.com/2014/05/piketty-piketty.html  

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When ideologies change

May 7, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"Over the past 5 years I've done a number of posts discussing a strange phenomenon. My views on money/macro are in many respects quite close to the consensus view of 2007: 1. Fiscal stimulus is ineffective. 2. Monetary stimulus can be highly effective at the zero bound. 3. Low interest rates and a fast rising monetary base do not imply 'easy money.' And yet by early 2009 my views were widely regarded as heterodox, even bizarre." (05/07/14)

http://econlog.econlib.org/archives/2014/05/when_ideologies.html  

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A quick question for those who consider competition to be sometimes tortious

May 1, 2014
posted by

Don Boudreaux Cafe Hayek
by Don Boudreaux  

"If I understand Steve Landsburg’s argument, sometimes investors’ or entrepreneurs’ failure to account for the lost value of a rival’s (or of rivals’) investments creates social waste. This waste is the destruction of the value of rivals’ productive capital assets when the additional net social value of the new investment is less than the amount of social value of the ‘older’ assets that is destroyed by the new investment. I believe that Steve is mistaken. I promise to write more in-depth on this matter when my current flurry of busy-ness subsides, but I want here, before I forget it, to ask a question that just occurred to me about this matter." (05/01/14)

http://tinyurl.com/pf284eu  

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Compton and Long Beach togetha on this one: Piketty has no clue about capital

April 30, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"It’s rare that you will see Peter Klein and James Galbraith agree, but they do. And after getting my own copy of Capital in the 21st Century, I can join the party: Thomas Piketty doesn’t have the foggiest idea what economists are arguing about when they bring up concerns over aggregation in capital theory." (04/29/14)

http://tinyurl.com/n556kmh  

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Piketty gets it wrong

April 23, 2014
posted by

Michael D. Tanner Cato Institute
by Michael D. Tanner  

"For those who believe in the redistribution of wealth, the hero of the hour is Thomas Piketty, the French economist whose book Capital in the Twenty-First Century provides a serious critique of inequality in modern capitalist economies and warns that market economies 'are potentially threatening to democratic societies and to the values of social justice on which they are based.' To remedy this, he argues for a globally imposed wealth tax and a U.S. tax rate of 80 percent on incomes over $500,000 per year. The Left has been rapturous." (04/23/14)

http://www.cato.org/publications/commentary/piketty-gets-it-wrong  

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The sad state of the economics profession

April 17, 2014
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Frank Hollenbeck  

"It is not an exaggeration to say the current reputation of economists is probably just below that of a used car salesman. The recent failures of economic policies to boost growth or employment have tarnished this image even more. This, however, is in sharp contrast to the past when economists were seen as the intellectual roadblock to popular misconceptions, bad ideas, or more importantly, government policies sold to the public on false assumptions. Popular slogans such as 'protecting American jobs' play on nationalism, but in reality only serve special interests. The economist of the past would never have hesitated to highlight the fallacies in such reasoning." (04/17/14)

http://mises.org/daily/6726/The-Sad-State-of-the-Economics-Profession  

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A new wrinkle on public choice theory

March 26, 2012
posted by

Liberty Unbound Liberty Unbound
by Gary Jason  

"PCT asserts three propositions. First, everyone in the political process -- voters, politicians, government bureaucrats, special interest groups, and the lobbyists who represent them -- are motivated primarily (if not entirely) by self-interest. That is, egoism governs political reality. Second, there is an asymmetry in what participants in the process stand to gain, with special interests often standing to gain a lot while the average taxpayer only a little. And there is a concomitant asymmetry of knowledge. Third, since politicians are not spending their own money, but are using other peoples’ money (OPM), they have no incentive to use resources for the general good." (03/25/12)

http://www.libertyunbound.com/node/774  

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Test the predictions — or check the assumptions

February 28, 2012
posted by

EconLog EconLog
by Bryan Caplan  

"Where do economists draw the line between science and dogma? In most cases, they say something like this: 'A model is scientific if and only if it makes true testable predictions.' Perhaps this is why Arnold was dissatisfied by my brief reply to last week's challenge." (02/27/12)

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

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Caplan’s entrepreneurial critique of Georgism

February 23, 2012
posted by

Liberale et Libertaire
by dL  

"What Caplan is actually arguing in his working paper is that there is no such thing as land rents. Land rents are only quasi-rents. Therefore, georgist rent (or 'land tax') is distortionary. Now, indeed, if there is no such thing as land rent, then I would have to concede Caplan’s critique." (02/23/12)

http://bit.ly/wumR0r  

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Bailing out banks is inflationary

February 22, 2012
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Thorsten Polleit  

"The latest wave of financial-market turmoil has been caused in particular by growing investor concern about the financial health of commercial banks, especially banks in the eurozone. It seems that investors have been increasingly losing confidence in banks' ability to live up to their payment obligations under 'normal' market conditions and to generate sufficient profits going forward." (02/22/12)

http://mises.org/daily/5890/Bailing-Out-Banks-Is-Inflationary  

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Inequality and stagnation

February 19, 2012
posted by

Cafe Hayek Cafe Hayek
by Russ Roberts  

"There is now a widely held view that the last 10 or 20 or even 40 years have been a time of great stagnation for the average American. Yes, the overall economy has grown, but all or most or nearly all of the gains have gone to the top 1% or top 10% or top 20%. These claims are accompanied by various data that seem to confirm the claim. These claims conflict with casual evidence available to people over a certain age who remember the 1970s or 1980s." (02/16/12)

http://cafehayek.com/2012/02/inequality-and-stagnation.html  

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Deflation’s inflationary source

February 16, 2012
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by David Howden  

"A cry heard often today -- both on the west and east sides of the Atlantic -- is that inflation levels are dangerously low. While most central banks target a price inflation level of around 2–3 percent, general price indexes of most Western countries are falling below the lower bound of that target. A fear of deflation -- apoplithorismosphobia, as Mark Thornton calls it -- is setting in." (02/16/12)

http://mises.org/daily/5905/Deflations-Inflationary-Source  

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The Hill criteria and the stimulus

February 16, 2012
posted by

EconLog EconLog
by Arnold Kling  

"Hill wanted to convince people that smoking caused lung cancer. The available data was not experimental. Instead, it was observational data, where there is a risk of interpreting a coincidence as causation. So, he set forth some criteria to justify the causal inference. A good question would be whether these criteria are satisfied in macroeconomics, where we have observational data to use in trying to determine whether a fiscal stimulus has positive effects. In fact, the criteria are not satisfied very well at all." (02/16/12)

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

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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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