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Monday, October 25, 2021

Reading The Classics: Mathematics Vs. Economics

There’s been a fun (but silly) long-running debate on Twitter whether economists need to read canonical texts: Smith, Marx, Ricardo, Keynes, etc. What caught my eye is that a mainstream economist compared economics to mathematics — why don’t we learn calculus by studying the history of calculus? Why this is interesting is that is showed a lack of understanding of the situation in both mathematics and economics.

Please note that this article is a discussion of the philosophy of teaching at the university level, so do not expect any conclusions that will help make analysing bond markets easier. That said, there is an outline of a critique of the core methodological principles of neoclassical macro.

Thursday, October 21, 2021

Money Printing (Sigh)

Note: This is an unedited draft section from my inflation text. To what extent it depends upon observed behaviour, those figures will appear in another section (that needs to be written).

In a lot of financial market commentary – and even in the output of some academics – one might often see discussion of “money printing” in the context of inflation. Although this section explains why the concept is not meaningful, these references do serve a purpose: they are a signal that the reader can stop taking the person invoking “money printing” seriously.

Friday, October 8, 2021

Publishing Pause

Just to note that I am heading out on a trip that came up at the last minute. Although I might have some free time for writing, I do not expect to publish anything here for a couple of weeks.

Monday, October 4, 2021

Why Inflation Expectations Matter A Lot For Theory

The fallout from the Rudd article on inflation expectations (that I described here) is still percolating around the internet. Duncan Weldon just wrote “We Have No Theory of Inflation” which discusses the issues from the empirical side. In this article, I am re-writing and expanding on some points that I noted in my previous article. If inflation expectations do not behave as predicted by neoclassical models, that is a critical problem that cannot be easily dealt with by adding epicycles to the models.

Friday, October 1, 2021

"The Meaning Of MMT" (Yeah, Sure)

Françoise Drumetz and Christian Pfister have enlivened us with a new Banque de France working paper “The Meaning of MMT.” I have read a lot of critiques of Modern Monetary Theory (MMT) over the years, and summarised what I saw as the reasonable critiques in a chapter in my latest book, “Modern Monetary Theory and the Recovery.” The Drumetz and Pfister article is somewhat novel in its approach when compared to the fairly dismal track record of earlier neoclassical critiques, but the conclusions were preordained (spoiler: MMT is bad).

The first immediate disclaimer to note that although this was a working paper published by the French central bank, the views in the paper are supposed to represent the authors, and not the institution. Although anyone familiar with the economics research scene grasps this, people less familiar with the research business might phrase this as “the French central bank says…,” which is an overstatement.

Monday, September 27, 2021

Rudd Inflation Expectations Article

Jeremy B. Rudd caught a fair amount of attention with his recent discussion paper “Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)” The text has a lot of zingers that post-Keynesians would write, but Rudd is in fact a researcher with the Federal Reserve.

Friday, September 24, 2021

Trillion Dollar Coins And Debt Ceilings (Again...)

The periodic debt ceiling silliness has again erupted in the United States. Since I was feeling mildly unwell this week, I was largely out of the loop. If the reader wants a brief explanation of what the trillion dollar coin idea is about, I highly recommend my brief discussion in my latest book Modern Monetary Theory and the Recovery.

If we go beyond the shameless self-serving plugs, it is quite easy to summarise my views.