by Richard Ebeling* On July 9th, Nobel economist and New York Times columnist, Paul Krugman, gave his read on the recently unearthed letters between J. M. Keynes and F. A. Hayek in the London Times in October 1932, which have been posted and discussed on ThinkMarkets. (and in the Wall Street Journal). Krugman insists that Hayek … Continue reading Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek
by Mario Rizzo Some time ago I wrote a post with this name. Now Paul Krugman is at it again with his ex-cathedra pronouncements. He says that because of the recent planned move by European countries in the direction of austerity and the talk in the US about austerity, we are on the verge on … Continue reading Paul Krugman, Ipse Dixit 2
by Mario Rizzo Paul Krugman continues to invoke Keynes’s famous statement. I wish Krugman and others would give some serious thought about what it is supposed to mean and the errors it involves. In the first place, Keynes was complaining about the “classical” economics, that is, the ideas of the economists before him who believed that … Continue reading “In the Long Run We Are All Dead” What Does It Mean?
by Mario Rizzo More than thirty-five years have passed since Friedrich Hayek said in his Nobel speech, “The Pretence of Knowledge" (1974): “The theory which has been guiding monetary and financial policy during the last thirty years… consists in the assertion that there exists a simple positive correlation between total employment and the size of … Continue reading Quick, More Stimulus!
By Chidem Kurdas Headline topics like derivatives are part of the larger issue of how markets function. About this big question there’s been profound confusion in the past two years. Peter Boettke's article in the Winter 2010 issue of the Independent Review clarifies the muddle. A particular mathematical interpretation of what an efficient market is … Continue reading Understanding Efficient Markets
by Andreas Hoffmann and Gunther Schnabl* In a recent New York Times column Paul Krugman is “Taking on China” again. He argues that the Chinese dollar peg contributes to global imbalances, depressing US and world growth perspectives. Bashing China’s fixed exchange rate is also fashionable in academics. Bernanke blames China’s dollar peg for contributing to a … Continue reading The US is “Taking on China”
by Chidem Kurdas A big rate hike by an insurance company in California’s market for individually purchased health insurance provided a rationale for the new Obama care proposal. As Paul Krugman explains, the key issue is adverse selection: people who retain coverage tend to be those with high medical expenses. Those with low expenses tend … Continue reading Out of Death Spiral, Into the Fire
by Mario Rizzo In recent months there has been a discussion both in the traditional media and in the blogosphere about why orthodox macroeconomics failed to predict or explain the financial crisis and the subsequent Great Recession. Some of that discussion focused around Paul Krugman’s criticism that economics mistook (mathematical) beauty for truth. Subsequently, there … Continue reading How Mathematical Economists Overreach
by Mario Rizzo As we have been saying here, the claims that the fiscal stimulus has saved or created X number of jobs is not a simple empirical question. It must be an inference from a model that tells us what would have happened in the absence of that stimulus. Collecting reports from various firms … Continue reading Mankiw And Meltzer Are Right! More Or Less
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, … Continue reading Understanding The “Sectoral Problem” In Business Cycles: A Note