The Illogical Golden Rule

12 April 2015

There’s a nice article by Wynne Godley written in 2005 for The Guardian on the fiscal policy golden rule. There are two things wrong about the golden rule. The first is to think that capital expenditure is somehow superior to current expenditure. This is the reason one frequently hears “wonks” stressing on government infrastructure spending. The other is […]

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Interest Rate, Growth And Debt Sustainability

7 April 2015

Frequently, discussions about debt sustainability have discussions about the importance of the interest rate and growth in debt sustainability analysis. See for example, today’s Paul Krugman’s post on his blog. It is concluded that as long as the rate of interest is below the rate of growth, the ratio public debt/gdp doesn’t explode. Unfortunately, this […]

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Severin Reissl’s Critique Of Steve Keen’s Black Box Economics

3 April 2015

Economics is a strange subject. A lot of times we learn a lot from others’ errors and even if you see the errors, there’s sometimes a lot to learn from others’ critiques of the same because sometimes it is difficult to see all the pitfalls even if one sees a few. Severin Reissl from the University […]

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The U.S. Net International Investment Position At The End Of 2014 [Updated]

1 April 2015

The U.S. Department of Commerce’s Bureau of Economic Analysis today released accounts for the United States’ international investment position. The U.S. is sometimes called the world’s biggest debtor and its net international investment position is now (at the end of 2014) minus $6.9 trillion. Here’s the chart from the BEA’s website. A few points. The importance of […]

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Disappointing Start, Mr. Bernanke

30 March 2015

Ben Bernanke has a new blog at Brookings. In his second post, Why are interest rates so low?, Bernanke “explains the rationale behind the Federal Reserve’s continued policies”. We should be thankful to Bernanke for his leadership qualities to have kept interest rates low to help the world economy recover from a crisis. The latest […]

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Respect For Identities

27 March 2015

The accounting identities equating aggregate expenditures to production and of both to incomes at market prices are inescapable, no matter which variety of Keynesian or classical economics you espouse. I tell students that respect for identities is the first piece of wisdom that distinguishes economists from others who expiate on economics. The second? … Identities say […]

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Thomas Palley — More Jobs, Still Weak Wage Growth: The Federal Reserve Must Wait

11 March 2015

Thomas Palley has a new op-ed titled More Jobs, Still Weak Wage Growth: The Federal Reserve Must Wait on the AFL-CIO page (here) and on his own web page (here). … The [February employment] report is another in a string of strong employment reports, but it also contains depressingly familiar news about weak wage growth and […]

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Thomas Palley — The U.S. Federal Reserve And Shared Prosperity

25 February 2015

Thomas Palley has a new Op-Ed for The Globalist titled The U.S. Federal Reserve and Shared Prosperity in which he argues against ““pre-emptive inflation tightening” that sacrifices wage growth and full employment versus “testing the waters” that gives wage growth and full employment a chance.” He asks the Fed to abandon its 2% inflation target with many compelling […]

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Derailed: Wynne Godley On The Euro Area

20 February 2015

I am in favour of Britain having much closer ties with other European countries, provided that appropriate institutions are created and the whole thing is brought under effective political control. But I have never been able to understand what it is that those who support the Maastricht Treaty think they are going to get out […]

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Anthony Thirlwall’s New Book On Keynesian And Kaldorian Economics

28 January 2015

During the global economic and financial crisis Keynes became popular again but Nicholas Kaldor’s ideas and the mention of the man himself didn’t take off as much. It’s unfortunate, as Kaldor played a huge role in the development of Keynesian economics itself. Kaldor’s own ideas are a subject of its own. Anthony Thirlwall is releasing […]

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