New School Economic Review

Advice to young economists… zzzz

by Benjamin on October 23, 2011

A new video on the INET webpage promises ‘advice to young economists‘ but it’s not exactly awe-inspiring stuff (despite the star cast of the video). Best of the lot is probable INET director Rob Johnson who (paraphrasing Richard Hamming or Johnny Bunko) says to focus on important problems, because you only have so much time on earth and you should look at the big questions.

Beyond that John Kaye says to look at how people act, not how we think they should act – despite, as he says, the things he has been teaching over the last many years. Joe Stiglitz says to look at solving the problems of the developing world, Ian Goldin wants a toolbox and Anatole Kaletsky says these are exciting times to study economics. So yeah, despite the amount of interesting things these people usually have to say about economics, there’s not a lot to take away here. The cruel twist is perhaps Rob Johnson’s comment that he would give this advice to a ‘rising star in economics today’ … Of course, said rising star would probably not be coming with your radical or different ideas.

I think Deirdre McCloskey’s letter to a graduate student is a better time to spend five minutes, so let me leave you with her closing sentiment:

Please, please, my dear, be brave, and remake our splendid subject, the intelligent student of prudence, by bringing it back to science. I’ll hire you, if I can. And you’ll have a worthwhile life in science.

What a Nobel day to be back

by Benjamin on October 10, 2011

Courtesy of Banx at the FT

Back at the keyboard after a hectic late summer which included getting a final sign-off on the thesis, so that is all done, dusted and deposited in the university library. And what a day to be back. In a few hours they will announce who is going to win the Prize for Economics in memory of Alfred Nobel, and if Fama gets it this year I think it will be good fun. He was odds on favourite two years ago, but since the crash and recession all odds are off.

Harvard even had an on-line pool, but had to shut it down due to legal reasons. Oh well, we’ll know in a few hours. Either way, we’re back to our blogging ways now that term has properly started and there can be no more conference distractions.

Unfortunately, we have been advised by Harvard University to immediately shut down the Nobel pool due to legal reasons, and we have decided to comply with this request. We will fully reimburse the money of all participants, and we apologize for any inconvenience this creates for you. All participants will be contacted by email. (http://www.people.fas.harvard.edu/~pollmann/nobel/)

Economics of the Right and Left, in poetry

by Benjamin on April 29, 2011

I just got turned on to the daily poetry of Dr. Goose (of AEA 2011 conference fame) who comes out with a short limerick of the day’s economic news, theories or his observations. This one, called ‘fighting words‘ from a few days ago I thought was too good not to share:

A woman who loved a good fight
Would demand, as she argued all night,
Philosophical heft
From those on the left
And empirical proof from the right.

Inspired by the good doctors observation that:

A recent walk through the economic blogosphere left the impression that liberals (of the progressive variety, as in this randomly selected post by Paul Krugman) like to base their arguments on data, history and “whatever works;” while conservatives (particularly of the supply side or libertarian variety) seem to prefer philosophy, game theory, analogies or even the US constitution – anything but empirical studies.

And yes, I now need to check out Economists do it with models .com which I just found … It’s nice to procrastinate around midnight on Friday when I should be writing an abstract.

Grand Challenges in Economics

by Benjamin on December 27, 2010

The great and the good have answered the NSF to outline what the great challenges of our subject should be for the new year and next many years. This is what the people at the forefront are thinking, and it includes everything from development through aging, so well worth a look.

http://www.aeaweb.org/econwhitepapers/index.php

Thanks to Stephen Kinsella, for this note

Economics, the “Fantasyland”

by Benjamin on December 2, 2010

‘Fantasyland’ is not my term, rather, and here I am shamelessly borrowing from Dan Hirschman’s excellent blog, it is what MIT’s Richard Caballero calls economics in the JEP issue on ‘macroeconomics after the crisis‘, as Dan writes (1. Dec 2010):

When a high-profile MIT economist in an AEA-sponsored journal can accuse the core of his subfield of descending “deeper and deeper into a Fantasyland”, I wonder what economic sociology is to do. I mean, we’re not going to come up with better, more authoritative critiques of the unreality of the field than that!

And just so we don’t take it out of context, here be Caballero’s paragraph on the problem with the core of the discipline in its full glory:

I think this incremental strategy may well have overshot its peak and may lead us to a minimum rather than a maximum in terms of capturing realistic macroeconomic phenomena. We are digging ourselves, one step at a time, deeper and deeper into a Fantasyland, with economic agents who can solve richer and richer stochastic general equilibrium problems containing all sorts of frictions. Because the “progress” is gradual, we do not seem to notice as we accept what are increasingly absurd behavioral conventions and stretch the intelligence and information of underlying economic agents to levels that render them unrecognizable. (Caballero 2010: 90)

Now, what do we do about it?

Will economics change Mr. Gregory?

by Benjamin on September 26, 2010

Paul Gregory, economist and author of economics textbooks, is wondering whether economics should and will change in response to the crisis. When he wrote his first textbook (with Roy Ruffin) some 30 years ago, they were writing in the midst of stagflation and what could be called the emergence of rational expectations etc etc.  Gregory who was once pushing textbooks in new directions in response to the stagflation crisis, concludes that the recent crisis (which he recognises as the worst in 40+ years), should not lead to a re-evaluation of economics:

There is no need for a new Economics 101. What we have experienced over the past two years is nothing new. There is nothing unexpected that has happened. Events however should serve as “teachable moments. What is surprising is that Keynesian economists do not seem to have learned its lessons.

I’m not sure where the quotation mark ends, but clearly Gregory doesn’t think economics needs an update. But then again, his textbook was last re-published in 2000, and I guess it’s a lot of work re-thinking what you’ve thought for three decades…

The problem with Money in economics

by Benjamin on April 10, 2010

I spent yesterday at a workshop on “The Origin of Paper Money in Theory and Practice” which was thoroughly enjoyable, looking at how paper money had emerged, failed, succeeded and generally impacted people and economies in the past and today.  Some consensus seemed to emerge that ‘paper’ money – unlike money on paper, which was missing the point – could emerge privately and publicly but its successful widespread use required some systemic / macro factors to be in place: Particularly the credibility of the issuer was paramount if they were to guarantee the value of the fiat, but there also had to be a social acceptance of instability. This was an interesting point I thought, and the argument was made that we can’t forget the issue of deception, if you trust someone 100% economic logic dictates that they will try to deceive you… This was attributed to Hegel and Adam Smith’s “Deception of Nature”, and the point was that people knew there was some risk in attributing value to a fiat, and they have to  accepted this to have a widely used fiat money.

Some of the papers had stock-flow consistent models or purely theoretical models built around the quantity theory of money and similar devices and this led to some debate after the issue of a standard fiat money was raised. The argument was made that any fiat money needed a denominator, be it a price level, gold ingots, goods bundle or something which it could base its value on. I suggested that this was not the case, and there were several cases where paper money had been based on ability to pay taxes in that currency. The Maryland Dollar (1720-70)  and French Asignat (1790s) were both examples of this, and papers presented by Farley Grubb and Patrice Baubeau had earlier talked about them, so it seemed an obvious thing to say. The problem is that economists don’t like modelling, or thinking about,  money not based on a common denominator. “It feels wrong” was a comment made. The irony is that not only does it feel wrong, but in set theory, which all our economic modelling in this field is based on, it is wrong. Ben Fine has made the point in a paper well worth reading that money as a variable ‘M’ would be mathematically inconsistent if it values itself and stood as a measure of value for all other goods. Ironically that is exactly what fiat money does, and to avoid that in modelling we use M/x, where x is some denominator which, sadly, makes the money a relative price and not money at all. Funny thing money…

You know you’re in Geneva Switzerland…

by Benjamin on March 27, 2010

…When the public transportation is free for tourists, but it’ll cost you $60+ to drive on the highway. When the ATM asks you if you want to credit your account in Swiss Francs or your home currency, and then quotes you the exchange rates. When the UN, WTO and WIPO all have their headquarters together, and none of them sell travel adapters even when Switserland have non-EU and non-US power outlets.

All in all, it’s a very nice place, given its main attraction is a lake. That is made up for with the caliber of the people it attracts. Of all the interesting things I heard, the scariest may be the chief economist at the WTO explaining how positive it was that the debate on TRIPs had shifted from one of static rent-seeking with winners and losers, to a more nuanced picture, even if it was a matter of rent seeking originally. Hmmm…

The effects of crisis on distribution

by Benjamin on March 6, 2010

Yesterday the New School played host to a veritable who’s who of economists concerned with distribution and inequality as “The Effects of Crisis on Distribution” one-day Conference. Over the coming days I will try and get some more of the content of the conference, but with sessions attended by the UN, World Bank, and several other institutions academic and policy-oriented the session on the perceived worsening of US inequality, development and the fall-out from the crisis there was a lot on the table. [the overview is here] Well done to the conference organisers, all of them students, who have been working at this since June! Conferences take time to do, but they are well worth it. Hope you’ve all had a good nights well-deserved sleep.

Thesis Throes

by Benjamin on October 20, 2009

My posting has been a bit sporadic of late, as I am now in the last week of writing before submitting what is a first final draft of my thesis – it sounds paradoxical doesn’t it? The good thing is that I feel like the story is coming together, the bad news is that I worry constantly if the text on the page will reflect what I think. After staring at my notes and monitor for days on end, there are a couple of things I wish I’d done while working on the thesis, and a couple I am very grateful that I did. I thought I might share these, during my five minute sanity break, as they might be useful if you’re also getting to grips with having to do a thesis:

-I wish, that on every draft which people have commented on, I’d written the date it was returned, the draft number and the name of who commented. Now I have a pile of useful comments, but no idea when or why they were made on an ocean of paper instead.

-I am happy that I wrote out each of my references as I went along. Especially when I have single sheets of paper with notes, even there I pasted in any bibliographical detail at the end. It’s great! Because whenever I add new material this week I only need to copy-paste the reference off the note sheet into the bibliography.

-I wish I’d have some way of shuffling each chapter reference section into a aggregate reference section. This seems like a lose-lose situation though. Because if you work with a ‘thesis bibliography’ from the start, it becomes a pain putting out papers for conferences as the work is on-going, and if you don’t you get the pain in the last week.

-I wish I had asked more people to read my chapters, and to read them earlier. I’ve had lots of great feedback, and a lot of it from outside sources. But each draft seems to make the point clearer, and each comment tends to sharpen the mind. “If it’s unclear to the reader, then your writing is unclear” – regardless of who the reader is. Rough but true.

-I’m glad I went to conferences every year. Why didn’t someone tell me in my first year that going to conferences means you’ll meet people who are interested in what you do, have expert knowledge, and are generally willing to read your stuff (because they’re interested) and give you comments and feedback. Fantastic.

I’m sure more will come to me as I finish the thing up – and it has to be done – and once this week is over there will be more recurrent blog posts from my side. I already have two or three very exciting things lined up :)