Neoclassical Theory under Fire from the Sciences

This is Philip Ball, "consultant editor of Nature and the author of Critical Mass," with a criticism of neoclassical theory:...more>>

Once Again, There is Too a Short-Run Phillip's Curve

One more time, There is Too a Short-Run Phillips Curve. This commentary disagrees with economists who claim there is a permanent inflation-unemployment tradeoff. However, it's been quite a long-time since anyone seriously suggested a permanent tradeoff between inflation and unemployment, particularly since Phelps, Friedman, Lucas and others came up with came up with the expectations augmented short-run Phillips curve to rebut this idea. Thus, the commentary below strikes at a position - a permanent tradeoff between inflation and output - that no economist that I know of holds. It is the nature of the short-run Phillip's curve that is at issue, how long the short-run tradeoff persists, the steepness of the tradeoff, whether hybrid versions of the Phillips curve are needed, etc., and contrary to what is stated in this commentary, the existence of a short-run Phillip's curve is well-accepted. I do agree with the commentary's suggestion that somebody doesn't understand this literature, but I doubt very much that it is Bernanke, Mishkin, and others at the Fed that are the ones missing key pieces of this line of research:...more>>

"Inflation Persistence in an Era of Well-Anchored Inflation Expectations"

John Williams from the San Francisco Fed asks whether there has been a fundamental shift in the behavior of inflation:...more>>

Globalization and the Phillips Curve

Last week, I attended the Academic Consultants meeting at the Federal Reserve, where nerdy economics professors like me discussed globalization with Ben Bernanke (an erstwhile nerdy economics professor) and his colleagues. I was assigned to discuss a paper by Larry Ball on whether globalization has fundamentally changed inflation dynamics as described in modern Phillips curve equations. I thought readers of this blog might enjoy reading my discussion...more>>

Neuroeconomics: The Role of the Brain in Economic Decision-Making…or Why We Sometimes Make Stupid Decisions

I recently purchased tickets for a Jack Johnson concert. I’m a big fan of Jack Johnson and I was excited to get a chance to hear him live. On the night of the concert I hopped on the local train and arrived at the venue with plenty of time to spare. When the attendant asked for my tickets, I reached into my pocket and realized with horror that the tickets were gone. I searched everywhere, but to no avail. When the attendant asked me if I’d like to buy another two tickets I was offended. Why would I purchase another set of tickets? I had already paid for the initial set. I left the concert and rode the train home despondent at not seeing my favorite artist.

Economists would call this an irrational decision...more

Immigration and Productivity

This is an argument against illegal immigration on the basis that it stifles innovation and technological change by taking away the incentive to lower costs:...more>>