If you were told the following graph showed two indicators of Australia’s economic health, and one of them had to be addressed urgently, which one would you expect politicians and economists to try to bring under control first?
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I’m not the only economist campaigning to bring about a new, empirical, realistic economics–far from it. In fact there is an association dedicated to this end with over 10,000 subscribers: the World Economics Association.
Three Business Spectator readers contacted me directly about one topic last week – bank money creation, and how bank reserves work. Following an old journalism adage that three direct enquiries about a topic from the public means that everybody’s interested in it, I’m diving into wonkdom to answer their queries in detail here. Ignore this post if the adage isn’t true for you, but if it is and you haven’t yet had your morning Java, now’s the time for that stroll to the barista.
This is the second of two contributed pieces by Paul Ormerod, the author of Positive Linking and, as I noted in my last post, in my opinion the most effective developer of multi-agent models of the economy.
Did Economists Go Mad? Networks and the Economic Crisis
Australia and the University of Western Sydney have been very good to me for the last 20 years. I have been able to develop a unique monetary dynamic approach to economics “under the radar” out here, with the support of four consecutive Heads of School who have favored a pluralist approach to economics.
Replacing ‘Rational Economic Person’: Networks, Behaviour and Policy in the 21st Century
Oct18
on October 18, 2012
at 6:36 pm
This is the first of two guest pieces by Paul Ormerod, the author of “Positive Linking” (Amazon USA; Amazon UK) and several other important books on non-equilibrium economics.
As some readers will know, I am developing a dynamic macroeconomic modeling tool–code-named “Minsky”–with the help of an INET Grant. The grant of US$128,000 has allowed me to hire Dr Russell Standish to develop the program. Russell is a long-time research collaborator of mine who was the Director of UNSW’s High Performance Computing Centre before it was discontinued. He is now a visiting Professor of Mathematics at UNSW and a freelance programmer specialising in high-performance numerical programming.
Whenever I fear that my well of inspiration for this blog might run dry, my neoclassical mates rush to the rescue with some priceless pearl of wisdom that simply demands a rejoinder. They are the Abbotts to my Costello (and I’m not talking Australian politics here – though the Tony and Julia show reached truly great heights with Gillard’s recent brilliant oratory on misogyny).
Today’s helping hand was a comment from French economist Olivier Blanchard. He qualifies as a serial offender on the comic statements front, since when wearing the hat of founding editor of the American Economic Review: Macroeconomics, he uttered the now immortal line that “the state of macro [economic theory] is good” – one year and six days after the financial crisis began.
He was the chief economist for the IMF prior to that gig, and he subsequently returned to the IMF, where he now has the curious title of “economic counsellor” (now there’s another potential gag, but I digress).
While delivering the baleful news in the latest IMF World Economic Outlook that the global economy is slowing, Olivier noted that:
“In most countries, fiscal consolidation is proceeding according to plan.”
“According to plan?” Well, yes, if the plan is to inspire the rise of fascist dictatorships in southern Europe, I suppose you could say that.
The site has had a cascade of problems, commencing with us exceeding the server’s size limits, and ending with our ISP shutting the site down because they interpreted our attempts to move gigabytes of material off-line as suspicious!
We were finally allowed back up today, and are now moving the site to a different ISP.
By Philip Soos
Few Australian housing policies are more contentious than negative gearing.
Despite the publicity it has received and its popularity with government and property investors, little analysis of negative gearing can be found within easy reach, with much of it accessible only in academic journals. Only an occasional fragment is found in the mainstream media.
