Thursday , August 22 2019
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Tag Archives: Economic History

Mallaby on Grant’s Bagehot

I cannot add the second post before this afternoon but it would be this I’m halfway through James Grant’s Bagehot. The Life and Times of the Greatest Victorian. The book has been widely reviewed and it is, indeed, excellent. Grant writes engagingly and makes the most of Bagehot’s life (by the way, I was saddened by his reference to Thomas Hodgskin as “a kind of anarcho-socialist”, but this is a very minor fault of the book). Of the reviews I read, I’ve particularly...

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How has Keynes’s liquidity trap theory held up over time?

It’s worth revisiting this issue in a world with $17 trillion in negative yield bonds. Keynes was a complex thinker, who looked at issues from many different perspectives.  Unfortunately, that means his views were not always internally consistent. Thus it’s foolish to try to pin him down, as if sticking a pin in a butterfly. You’ll always find other passages that contradict your interpretation. Consider the following, from the General Theory: There is the...

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Blind faith in government

I recently participated in Alternative Money University at the Cato Institute. It was nice to see so many young students who are interested in exploring monetary ideas beyond New Keynesian DSGE models. Presentations by Larry White and George Selgin had the effect of slightly changing my views of the gold standard. On balance, I’m still opposed to going back to the gold standard, but the reasons have more to do with likely government interference in the regime, rather...

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Socialism Does Indeed Suck

Two free-market economists, Robert Lawson of Southern Methodist University and Benjamin Powell of Texas Tech University, have pulled off a marvelous stunt. Their just-published book, Socialism Sucks, is a humorous travelogue about their experiences in various socialist and allegedly socialist countries in the last few years. The book, subtitled “Two Economists Drink Their Way Through the Unfree World,” is the best in this genre since fellow drinker P.J. O’Rourke’s...

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Fernandez-Villaverde, Spain, and Gravity

In a follow-up to yesterday’s post, I asked Jesus Fernandez-Villaverde two follow-up questions. My first question: “Suppose Spain had been in South America.  Would the same policies still have worked nearly as well?” Jesus replied: “Yes if a free trade agreement with US and Canada had existed.” I then inquired: “So the gravity model just isn’t that important here?  Opening your economy when you’re surrounded by rich neighbors seems a lot more fruitful than opening...

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Fernandez-Villaverde on Spain’s Economic Success

Last week I asked: Why is Spain so much richer now than almost any country in Spanish America?  Before you answer with great confidence, ponder this: According to Angus Maddison’s data on per-capita GDP in 1950, Spain was poorer than Argentina, Chile, Mexico, Peru, Uruguay, and Venezuela, and roughly equal to Colombia, Bolivia, Costa Rica, Cuba, Ecuador, Guatemala, and Panama.  This is 11 years after the end of the Spanish Civil War, and Spain of course stayed out of...

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Winship Psychoanalyzes Economic Pessimism

I’ve spent years telling Tyler Cowen that conventional price indices are upwardly biased, so his stagnationist views are wrong.  And he’s spent years replying that my views are sadly out-of-date.  In this piece, the highly up-to-date Scott Winship unequivocally reaffirms the classic view that indices are indeed upwardly biased.  Indeed, the old Boskin Report was probably too cautious: The chart shows that from 1969 to 2012, the PCE and my extended C-CPI-U series...

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Historically Hollow: The Cries of Populism

History textbooks are full of populist complaints about business: the evils of Standard Oil, the horrors of New York tenements, the human body parts in Chicago meatpacking plants.  To be honest, I haven’t taken these complaints seriously since high school.  In the absence of abundant evidence to the contrary, I say the backstory behind these populist complaints is just neurotic activists searching for dark linings in the silver clouds of business progress.  When...

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Macro theory for all times and all places

In 1936, John Maynard Keynes came up with a macro model that was a product of its time. That’s the wrong way to do macro. Models should be based on the empirical facts of all countries and all time periods. If your macro model cannot explain why the US experienced a major deflation (with NGDP falling nearly 30%) from mid-1920 to mid-1921, the model is useless. If it cannot explain why industrial production suddenly fell by 30% after mid-1920, the model is useless. If...

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Murray on the Prevalence of “Poverty”

Charles Murray‘s Losing Ground contains a most surprising claim: [P]overty did not simply climb upward on our national list of problems; it abruptly reappeared from nowhere.  In the prologue to this book, 1950 was described as a year in which poverty was not part of the discourse about domestic policy – indeed, as a year in which the very word “poverty” was seldom used.  The silence was not peculiar to 1950.  From the outset of the Second World War until 1962, little...

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