Misdirection in the United States

Originally posted on Real-World Economics Review Blog:

from David Ruccio

private employment

The Washington Post tries to put a positive spin on the recent pattern of job growth. However, the underlying study (from the National Employment Law Project [pdf]) offers quite a different view: even though jobs gains have recently accelerated in higher-wage industries, the imbalance of especially pronounced gains at the bottom and slow growth in mid-wage industries persists.

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Misunderstanding (Totally!) Competitive Currency Devaluations

Originally posted on Uneasy Money:

Before becoming Governor of the Resesrve Bank of India, Raghuram Rajan professor was Professor of Finance at the University of Chicago Business School. Winner of the Fischer Black Prize in 2003, he is the author numerous articles in leading academic journals in economics and finance, and co-author (with Luigi Zingales) of a well-regarded book Saving Capitalism from the Capitalists that had some valuable insights about financial-market dysfunction. He is obviously no slouch.

Unfortunately, based on recent reports, Goverenor Rajan is, despite his impressive resume and academic credentials, as Marcus Nunes pointed out on his blog, totally clueless about the role of monetary policy and the art of central banking in combating depressions. Here is the evidence provided by none other than the Wall Street Journal, a newspaper whose editorial page espouses roughly the same view as Rajan, summarizing Rajan’s remarks.

Reserve Bank of India Governor Raghuram Rajan warned Wednesday…

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AS IF STILL BURNING

dmerciar:

A date many of us will have forgotten:

Originally posted on Pandaemonium:

hiroshima before    hiroshima after

This week marked the 100th anniversary of the start of the First World War. Today marks  the anniversary of an even more grotesque event – the dropping of the atom bomb on Hiroshima on 6 August 1945. Three days later the second bomb was dropped on Nagasaki. These remain the only use of nuclear weapons in warfare.

Some 12 km² of Hiroshima were destroyed, as were around 69% of the city’s buildings. The images above, which were taken by the US military on the day, show Hiroshima before and after the bombing. Some 66,000 people are thought to have died in Hiroshima on the day; probably a similar number again died over the next four months as a result of their injuries or from radiation sickness. So fierce was the heat that people were vaporised but their shadows left upon the walls.

In the years since the…

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On Being Evacuated: It’s every volunteer’s worst nightmare.

Originally posted on Sara in Peace Corps Guinea:

Today volunteers in Guinea, Sierra Leone, and Liberia received the information that we will be sent home for an undetermined amount of time as a cautionary move against the rising risk of Ebola.

Electron micrograph image of the Ebola virus.

Electron micrograph image of the Ebola virus.

Friends and family back home are overjoyed at the news, but volunteers in-country are stumbling around in a state of shock. Projects that have taken months of sweet-talking the authorities, grueling grant applications, planning every step of the way have to be left now – postponed indefinitely. Bags must be packed. Close of Service dates for volunteers preparing to leave will be moved up. Pre-service training has been stopped dead in its tracks for the recently arrived group of volunteers. Somehow, we must all find the words to explain to our friends and host-families the harsh truth that we are leaving and don’t know when we will be back.

The…

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The Phillips Curve: Missing the obvious and looking in all the wrong places

Originally posted on Real-World Economics Review Blog:

from Thomas Palley

There is an old story about a policeman who sees a drunk looking for something under a streetlight and asks what he is looking for. The drunk replies he has lost his car keys and the policeman joins in the search. A few minutes later the policeman asks if he is sure he lost them here and the drunk replies “No, I lost them in the park.” The policeman then asks “So why are you looking here?” to which the drunk replies “Because this is where the light is.”That story has much relevance for the economics profession’s approach to the Phillips curve.

Recently, there has been another flare-up in discussion of the Phillips curve involving Paul Krugman [Here], Chris House [Here], and Simon Wren-Lewis [Here]. It is précised by Mark Thoma [Here].

The question triggering the discussion is can Phillips curve (PC) theory…

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Krugman & Mankiw on the loanable funds theory — so wrong, so wrong

Game theory — a critical introduction

Originally posted on LARS P. SYLL:

Back in 1991, when yours truly earned his first Ph.D. with a dissertation on decision making and rationality in social choice theory and game theory, I concluded that “repeatedly it seems as though mathematical tractability and elegance — rather than realism and relevance — have been the most applied guidelines for the behavioural assumptions being made. On a political and social level it is doubtful if the methodological individualism, ahistoricity and formalism they are advocating are especially valid.”

This, of course, was like swearing in church. My mainstream neoclassical colleagues were — to say the least — not exactly überjoyed.

For those of you who are not familiar with game theory, but eager to learn something relevant about it, I have three suggestions:

Start with the best introduction there is

carm

and then go on to read more on the objections that can be raised against game theory and its underlying…

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