by Roger Koppl Oliver Blanchard tells us “Where Danger Lurks” in the macro-finance world. The big theme is nonlinearity, which is a profoundly conservative move: DSGE modeling is just fine and we don’t need to rethink it at all. We just need to add in some nonlinearities. Blanchard does not tell how to calibrate a … Continue reading The Blanchard Danger
by Chidem Kurdas Gripes about capitalism go back 150 years and more. In the Communist Manifesto of 1848 Marx and Engels thundered that the specter of revolution haunted Europe, that the periodic reappearance of commercial crises “put on its trial, each time more threateningly, the existence of the entire bourgeois society.” They were not the first to … Continue reading Capitalism Loses Against Chimera
by Sandy Ikeda Jeffrey Friedman and Wladimir Kraus have a new book out, Engineering the Financial Crisis, (Univ. Penn Press) that grew out of research that first appeared in Critical Review back in 2009 on the "Causes of the Crisis." Friedman’s lead article in that issue did an excellent job of providing a detailed but readable description … Continue reading Radical Ignorance in the Financial Crisis
by Roger Koppl At the Cobden Centre's website (and here), Steve Baker discusses recent Fed signals in the context of Big Players theory. The more active the Fed (or other central bank), the greater the fraction of entrepreneurial attention devoted to Fed watching rather than productive activity. As Baker says, “traders must pay attention to the … Continue reading Bleeding the Economy
by Gene Callahan Let's say you are suffering from a moderately severe cold; you're operating at, say, 90% of your peak energy level, and so you go the doctor to see if he can help get you back to 100%. After examining you, the doctor says: “The point of our therapy is to approach the … Continue reading What Kind of Doctor Is This?
by Sandy Ikeda Following up on its recent issue on the financial crisis, Critical Review has started a blog with contributors to that issue doing the posting. So far they have "disputed the theory that bankers' bonuses, irrational exuberance, or capitalism caused the crisis. And four posts have debated the role of economic theory in … Continue reading “Causes of the Crisis Blog”
by Sandy Ikeda The most recent issue of Critical Review on the Causes of the Financial Crisis includes contributions from John B. Taylor, Daron Acemoglu, Steven Gjerstad and Vernon L. Smith, Lawrence J. White, and Joseph E. Stiglitz to name just few. I've not yet read the entire issue, but did have the opportunity to … Continue reading Critical Review Explores The Causes Of The Financial Crisis
by MARIO RIZZO _______________ It is said that when railways were first opened in Spain, peasants standing on the tracks were not [i]nfrequently run over; and that the blame fell on the engine-drivers for not stopping: rural experiences having yielded no conception of the momentum of a large mass moving at a high velocity. … Continue reading The Coming Slavery