by Taiki Murai and Gunther Schnabl Similar to the credit unions in the US, the goal of the Japanese Shinkin banks is the promotion of the sound development of the regional economy. The members of these non-profit cooperatives are small- and medium-sized enterprises as well as natural persons from the respective regions of Japan. The … Continue reading The Japanese Shinkin Banks Turn Away from the Regional Economy
by Sebastian Müller and Gunther Schnabl Massive losses for Germany’s former catch-all parties (CDU/CSU and SPD) and record gains for the far-right Alternative for Germany (AfD) have caused turmoil in Germany’s political landscape. The tumbling leaders Angela Merkel and Martin Schulz keep affirming that good policies were simply not explained sufficiently. They blame globalization and … Continue reading The European Central Bank Drives the Political Polarization in Europe
High-speed broadband networks are key to the growth of digital markets as well as most modern forms of communication, and have been subject to far-reaching regulation in many countries. In this piece, we’ll review the rationale behind a cornerstone of the prevailing regulatory paradigm: forced access to incumbent operators’ network infrastructure by alternative operators on … Continue reading A Critical Appraisal of Network Unbundling
by Andreas Hoffmann Stefan Kolev and I run a new colloquium at Leipzig University. This "Colloquium on the Foundations of the Market Order" provides an opportunity for academics interested in the principles of the market economy and a free society to meet and discuss research. Several participants of the colloquium contribute to this blog. Yesterday … Continue reading The Leipzig Colloquium
by Mario Rizzo Richard Thaler has won the Nobel Prize for initiating the behavioral moment in economics. My view of the Nobel Prize in economics is much like Time magazine’s view of its “Person of the Year.” It is awarded to the economist who "for better or for worse... has done the most to influence” … Continue reading Richard Thaler’s Nobel Prize
by David Herok and Andreas Hoffmann* Since the financial crisis, trust in the European Central Bank (ECB) has declined substantially among Europeans. We argue that the decline in trust is worrisome and can be both a cause and a consequence of the ECB’s policy failure. All modern monetary systems are based on trust. Since central … Continue reading Why Europeans Lost Trust in the ECB
by Jerry O'Driscoll* The U.S. economy has been growing slowly but steadily since the trough of the Great Recession in June 2009. Deep recessions are typically followed sharp recoveries. Not so this time. More recently, there is the mystery of low inflation. The Fed’s preferred inflation measure, the core PCE index, has consistently fallen short … Continue reading Fed Policy and Velocity’s Dance
Check out: PPE.Life It is a new blog by students in the PPE master’s program at the CEVRO Institute in Prague, Czech Republic. Prague's PPE program is exciting. I taught there in the spring and met many great students with an interest in liberty and market solutions. The blog has been up and running for … Continue reading PPE Blog & Interview
by Jerry O'Driscoll* For many years, pundits have been predicting the demise of cash for payments. Currency is bulky, dirty, subject to theft, etc. Making change at the point of payment is time consuming. The rise of e-commerce will surely bring about the demise of cash. Cash is passé. Nothing could be further from the … Continue reading The Truth about Cash
by Gunther Schnabl* The European Central Bank (ECB) continues buying securities. By the end of 2017, the balance sheet is expected to have further grown by about 800 billion euros. This corresponds to a growth rate of 20 percent per year, while real growth of the euro area is expected to be only 1.5 percent. … Continue reading Inflation Is Not Measured Correctly
by Andreas Hoffmann and Nicolás Cachanosky The Federal Reserve’s (Fed) and European Central Bank’s (ECB) policy responses to the recent financial disasters offer two tales of unintended consequences. Our previous post outlined undesired effects of the Fed’s policies. In this post, we suggest that the ECB’s stabilization policy did not only fail to achieve its … Continue reading Unintended Monetary Policy Effects – Tale II: ECB Crisis Policies
by Taiki Murai and Gunther Schnabl[*] In the second half of the 1980s, 13 Japanese city banks climbed into the group of the world's largest banks, boosted by a domestic speculation boom. With the bursting of the Japanese financial “bubble” in the early 1990s, a gradual decline followed. Since then, the Japanese city banks have … Continue reading The Bank of Japan Creates a State-Led Monopolistic Banking System
by Sandy Ikeda Jane Jacobs’ writings span several disciplines—including ethics and most especially economics—but she is best known for her contributions to and her critique of urban planning, design, and policy. Many of those whom she influenced in academia, policy, and activism took the occasion of her one-hundredth birthday in 2016 to celebrate those contributions … Continue reading COSMOS + TAXIS Issue on Jane Jacobs
by Andreas Hoffmann The pre-crisis Jackson Hole Consensus view on how to take asset market developments into account in monetary policy can be summarized as follows: Because it is hard to spot bubbles in asset markets with certainty ex-ante, central bankers should not lean against the wind when there seems to be a boom in … Continue reading Should Central Banks Lean Against the Wind?
by Mario Rizzo Periodically, people warn about the “crisis in economics.” I have heard about several of these over my professional career. Somehow the mainstream or orthodox economists never seem to notice these crises or take them seriously. They continue doing what they were doing. Today the crisis, if there is one, is due to … Continue reading A Crisis in Economics?
I'd like to draw your attention to the following opportunity: Call for Research Proposals IREF is a free-market oriented think tank based in France. It promotes ideas, debates, events, and rigorous academic research. With regard to research, IREF supports original research projects that lead to the production of papers of academic quality of at least … Continue reading IREF Research Support
by Nicolás Cachanosky and Andreas Hoffmann Even when a policy is successful in achieving its desired ends, we have to consider its unintended and unforeseen consequences, resulting from cumulative market adjustments to policy changes that make it hard to judge the overall outcome of a policy in our complex economy. The Federal Reserve and European … Continue reading Two Tales of Unintended Consequences of Monetary Policy – Tale 1
Allan Meltzer has died at age 89. The number of articles on Meltzer these days indicate the significance of his contributions. Carnegie Mellon University and Bloomberg published good summary articles on Meltzer's outstanding academic career, ideas and influence in policy. Jerry O'Driscoll's personal note on Alt-M emphasizes that Meltzer was also a great manager and … Continue reading O’Driscoll: Allan Meltzer Remembered
by André Casajus[*] and Andreas Hoffmann Estonia was the first European country to introduce a flat tax on income in 1994. Many others followed. For example, Hungary successfully introduced a flat tax in 2012. In the U.S., some of the States (e.g. Pennsylvania) have introduced a flat tax on income. As in Germany, however, the … Continue reading An Axiomatic Case for the Flat Tax
by Shruti Rajagopalan Today is the 200th anniversary of David Ricardo’s On the Principles of Political Economy and Taxation, published on April 19, 1817. This remarkable, and rather unintuitive idea, is an essential component of every economist’s arsenal. When challenged by the mathematician Stan Ulam to name one proposition in the social sciences that was … Continue reading 200 Years of the Theory of Comparative Advantage
by Stefan Kolev* For a better understanding of the turbulences of our time, studying those earlier politico-economic debates which focused on fragile orders of economy and society can certainly prove insightful. In The Viennese Students of Civilization, Erwin Dekker addresses such an age and interprets the works and impact of economists often labeled as the … Continue reading The Viennese culture of conversation: Understanding and defending fragile orders
by Gunther Schnabl* The Brexit and the election of U.S. President Donald Trump were unexpected and were followed by a search for explanations. Subsequently, the common view spread that globalization is at the root of the frustrations of more and more people who are susceptible to strong nationalist statements from populists. This is surprising because … Continue reading Globalization Alone Does Not Produce Losers!
by Pablo Duarte* Venezuela is in deep political and economic crisis. According to Reuters – quoting a leaked document from the Venezuelan Central Bank – output fell 19% and prices increased 800% during 2016. Even though the “Socialism of the 21st Century”, the political program initiated by former President Hugo Chavez, has been losing support … Continue reading The Venezuelan Crisis and the Political Costs of Reforms
by Andreas Hoffmann A growing number of economists suggest that governments in highly indebted countries should consider liquidating debt via financial repression. In other words, they want governments to intervene in financial markets and push government borrowing costs below the rate of inflation to erode the real value of debt. In a previous post, I … Continue reading Are we all Debt Liquidationists now? … No!
This is the final installment of my comments at Liberty Matters in the discussion of Israel Kirzner's theory of entrepreneurship and its interpretation by Peter Boettke.