A blog of the NYU Colloquium on Market Institutions and Economic Processes
by Jerry O’Driscoll
In today’s Wall Street Journal, there is an article titled “Returning Workers Face Steep Pay Cuts.” The article cites research by Kenneth Couch of the University of Connecticut that returning workers are taking on average a 40% pay cut from their old jobs. This is first and foremost a personal tragedy for those affected. The question we must ask as economists is why? Read the rest of this entry »
by Jerry O’Driscoll
In today’s Wall Street Journal, hedge-fund founder Mark Spitznagel celebrates Ludwig von Mises as “The Man Who Predicted the Depression.” Spitznagel opens by observing that “Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.”
Spitznagel deals with The Theory of Money and Credit and does a good job presenting its principal arguments. What I found most interesting, however, is the author’s argument that the book is a warning today. Read the rest of this entry »
by Mario Rizzo
There has been some important discussion emanating from Paul Krugman’s unoriginal question implicitly about the Austrian Business Cycle Theory (as well as other sectoral theories of employment shifts both during and outside of business cycles). (See Econbrowser, Marginal Revolution, Econlog, Angry Bear, for examples.)
His question, as Tyler Cowen states it: “…[W]hy, say, a housing boom – which requires shifting resources into housing – doesn’t produce the same kind of unemployment as a housing bust that shifts resources out of housing.” Read the rest of this entry »
by Mario Rizzo
I have now read both Paul Krugman’s New York Times essay on the state of macroeconomics and John Cochrane’s reply. They are each, in very different ways, quite disappointing. The level of argument is poor, the prejudices are simplistic, and the tones are annoying. Read the rest of this entry »
by Mario Rizzo
Her Majesty Queen Elisabeth II asked why economists did not predict the current economic troubles. The British academic community (and some in the American) is using this opportunity to discuss views on the nature and limits of contemporary macroeconomics. This is very useful.
Peter Boettke over at The Austrian Economics summarizes and discusses some of the main issues. I shall not repeat what he says in my post. Everyone should read Pete’s.
It is convenient for those of us who never thought much of contemporary macroeconomics to support the complaints that the financial crisis and recession was not “predicted” by the Macroeconomics Top Brass. But, as tempting as it is, it would be a mistake. Read the rest of this entry »
by Mario Rizzo
Reportedly, Queen Elisabeth asked why didn’t any of the top-tier macroeconomists predict the financial meltdown and Great Recession. So now The Economist and other loyal subjects are trying to answer that question. The Chicago economist Robert Lucas, an American, has also added his opinion. It is deeply flawed but perhaps a comfort to the “Neoclassical Top Brass” (as my late colleague Ludwig Lachmann used to say). Read the rest of this entry »
by Jerry O’Driscoll
In an interview with The Wall Street Journal, German Chancellor Merkel called for an end to risky growth policies built on asset bubbles. “In recent years we’ve had the Asian crisis, the new economy crisis, and now this great international financial and economic crisis — we can’t slide into a crisis every five to seven years.” As she notes, however, the central banks of the major economies have implemented “unorthdox” policies to increase borrowing and lending in the current crisis. Those policies risk yet another asset bubble. Read the rest of this entry »
by Mario Rizzo
An increasing number of articles in the popular press are claiming that signs of economic recovery are becoming more numerous. That may be. However, I am not an economic prognosticator and so I don’t know what to make of that.
There is a more basic question. What do people mean by “recovery”? It seems that, if articles in the Wall Street Journal are any guide, recovery is often taken to mean a return to normalcy in some key markets – in particular, the housing market. Read the rest of this entry »
by Gene Callahan
Brian Doherty quotes Treasury Secretary Geithner:
“I would say there were three types of broad errors of policy and policy both here and around the world. One was that monetary policy around the world was too loose too long. And that created this just huge boom in asset prices, money chasing risk.”
by Mario Rizzo
“And government spending is as good as anybody else’s.” Brad DeLong seems to think so. But the idea is only plausible because it has been repeated many times and because it is a politically convenient “truth.” Read the rest of this entry »
