History of Economic Thought

Thursday, May 19th, 2011
"William Niskanen (2002) estimated a Phillips curve for the United States using annual 1960–2000 data. By adding one-year lagged terms in unemployment and infl ation, he was able to show that this familiar equation is misspecified.
Thursday, May 5th, 2011
"F.A. Hayek said that his biggest regret in a lifetime of writing was that he never wrote a book-length refutation of Keynesian economics. He seriously doubted that Keynesian style planning would ever captivate governments, so he focused on different things.
Wednesday, May 4th, 2011
Over on the Coordination Problem blog, a number of scholars in the field of monetary theory are having an interesting discussion on the topic of Hayek and deflationary spirals. I am providing the link.
Thursday, March 31st, 2011
The discussion in monetary institutions is becoming increasingly relevant in economics. How to deal and avoid financial crisis is an important issue. The recent financial crisis showed that economics might not be as suited to foresee and deal with these problems as the theory seems to suggest.
Friday, March 11th, 2011
"The first fact that needs to be noted in answering such questions is that inflation is detrimental to all creditors. The higher prices rise, the lower will fall the purchasing power of the principal and interest payments due.
Thursday, March 10th, 2011
"Friedman's emphasis on avoiding monetary disruptions arose, like many of his other ideas, from his study of U.S. monetary history. He had observed that, in many episodes, the actions of the monetary authorities, despite possibly good intentions, actively destabilized the economy.
Thursday, March 3rd, 2011

There are two main reasons usually mentioned to prefer fiat money over gold standard. One is that fiat money offers more flexibility to do fine tuning on the economy and also central banks will have their hand free if they need to go into a monetary stimulus.

Monday, February 28th, 2011
"Friedman, as with the other papers that day, found inflation to be a massive problem. In fact, next to the threat of a third world war, inflation is what he finds to be the most serious threat to the preservation of a free society.
Friday, February 25th, 2011
"The Foundation for Economic Education’s goal from the very beginning was to promote, what Leonard E. Read called, the freedom philosophy. Understanding the principles of economics is a crucial step to understanding why freedom works.
Tuesday, February 22nd, 2011
"The President's budget is informed by his belief that government has a strategic role to play in guiding the economy. That means in some cases picking winners and losers and directing capital to individual industries and technologies that have a shot at delivering jobs and economic prosperity.
Wednesday, February 16th, 2011
"One of the most important concepts in economic theory is the quantity of money. However, when going from theory to practical application, things get messy. In the real world, it's not obvious how to count up the amount of "money" in the economy at any given time.
Thursday, December 16th, 2010
"In reading Mises I am always struck by how fresh he still reads, and how relevant his analysis of contemporary policy in the first half of the 20th century still is relevant for us at the beginning of the 21st century.
Tuesday, November 30th, 2010
"The dance of the dollar counts — and it counts a lot. With few exceptions, when the dollar weakens against the euro, commodity prices soar, and when the dollar soars against the euro, commodity prices plunge. Every commodity trader knows the importance of the dance of the dollar.
Monday, November 29th, 2010
"Last year the consensus opinion was that we are all Keynesians now. Virtually everyone in the commentariat believed that John Maynard Keynes’s solution for the Great Depression—heavy government spending to resuscitate the economy—was also the answer to today’s global downturn.