wynne godley

Ben Bernanke Embracing Heterodox Ideas

18 July 2015

It’s remarkable how some economists were ahead of the time, while others such as Ben Bernanke seem to just catch up. In a recent post on his blog Ben Bernanke gives out some unorthodox ideas to resolve the Euro Area crisis. Ben Bernanke says: … Germany’s large trade surplus puts all the burden of adjustment on countries […]

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Is A Fiscal Union Expensive For Its Rich Members?

10 July 2015

Josh Barro writing for The New York Times claims that a fiscal union for the Euro Area will be an enourmous expense for its rich members. Fiscal union would fix the euro permanently — but at enormous expense to its rich members. So it won't happen. http://t.co/naXIp75vIz — Josh Barro (@jbarro) July 10, 2015 He cites […]

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Free Trade? Heterodox Dissent

25 April 2015

One of the most important message of this blog is that “free trade” is quite devastating to economies. In a recent article Economists Actually Agree on This: The Wisdom of Free Trade for The New York Times, Greg Mankiw once again pushes for free trade and also mentions that there is consensus in the profession. Many of […]

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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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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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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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Greg Mankiw And Empirics

24 May 2014

Greg Mankiw wonders if teaching students empirics is feasible and answers in negative: Noah Smith says introductory economics needs to be more empirical. I understand his argument, and have some sympathy with it, but I wonder if the substantial change he seems to be proposing is practical. Economists usually do empirical work with statistical tools […]

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Steve Keen And Sectoral Balances

19 May 2014

Steve Keen has a new article on sectoral balances here. First apologies in advance for sometimes criticizing heterodox economists more but needless to say, such criticisms are of a totally different nature than criticisms of mainstream economists. Anyway, I am surprised at why Keen mixes accounting identities, especially when it involves banks in the analysis. […]

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Tobinesque Models

15 February 2014

Paul Krugman writes today on his blog on James Tobin’s work: Let me offer an example of how this ended up impoverishing macroeconomic analysis: the strange disappearance of James Tobin. In the 1960s Tobin developed and elaborated a sophisticated view(pdf) of financial markets that offered insights into things like the role of intermediaries, the effects of […]

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