In support of professor Mas-Colell

22 Jun, 2021 at 19:14 | Posted in Politics & Society | Comments Off on In support of professor Mas-Colell

Estamos profundamente preocupados por las noticias y la situación del profesor Andreu Mas-Colell, uno de los economistas españoles más conocidos y respetados, en el actual procedimiento del Tribunal de Cuentas.

Microeconomic Theory: Amazon.co.uk: Mas-Colell, Andreu, Whinston, Michael  D., Green, Jerry R.: 8601300133041: BooksEl profesor Mas-Colell ha sido catedrático de Economía Louis Berkman en la Universidad de Harvard, editor de Econometrica (una de las principales revistas científicas de economía) y secretario general del Consejo Europeo de Investigación. Mas-Colell también fue consejero de Economía y Conocimiento del Gobierno de Cataluña, a cargo de las finanzas y el presupuesto, durante una de las peores recesiones de la historia (diciembre de 2010-enero de 2016). La investigación del Tribunal de Cuentas parece estar vinculada al desempeño del profesor Mas-Colell durante ese período, aunque nunca se han especificado los cargos exactos en su contra.

El procedimiento del Tribunal de Cuentas puede tener consecuencias financieras desastrosas para el profesor Mas-Colell. El tribunal tiene la facultad de acusar a las personas de irregularidades que darían lugar a sanciones económicas. Cualquier apelación puede llevar años y, mientras tanto, el acusado tendría que presentar una garantía financiera por el monto total de cualquier multa especificada. Debido a que la sanción podría exceder el patrimonio neto combinado de todos los acusados, el profesor Mas-Colell se enfrenta a la perspectiva de que se incauten todos sus bienes. A pesar de esto, en la documentación de más de 18.000 páginas de las acusaciones enviadas al profesor Mas-Colell no se especifica su conexión.

Aquellos de nosotros que hemos tratado al profesor Mas-Colell durante muchos años como colegas, estudiantes y coautores, sabemos que es una persona de la máxima integridad. También es reconocido por ser una persona dedicada al bien público, como lo demuestra su marcha de Harvard para regresar a casa y fundar una nueva institución educativa española, así como su disposición a desempeñar responsabilidades de gobierno en España y en Europa. España fue muy afortunada de que un economista de la capacidad y la talla del profesor Mas-Colell estuviera dispuesto a dedicarse al servicio público. Una medida de la reputación del profesor Mas-Colell se refleja en el gran número de economistas de todo el mundo que han firmado peticiones o han manifestado su apoyo en Twitter durante la última semana expresando preocupación acerca de sus circunstancias.

El profesor Andreu Mas-Colell es un ejemplo para todos los científicos españoles en el exterior. El resultado de este procedimiento puede tener una influencia negativa en la voluntad de estas personas de volver a su país y contribuir al servicio público.

Esperamos que la situación se aclare con prontitud. También esperamos que, en ausencia de cargos específicos contra él, el Tribunal de Cuentas evite consecuencias indeseadas e injustas para el profesor Mas-Colell.

Atentamente,

Firman la carta Philippe Aghion, George Akerlof*, Manuel Arellano, Orazio Attanasio, Robert Aumann*, Abhijit Banerjee*, Richard Blundell, Partha Dasgupta, Angus Deaton*, Eddie Dekel, Mathias Dewatripont, Peter Diamond*, Esther Duflo*, Eugene Fama*, Ernst Fehr, Drew Fudenberg, Jordi Galí, Pinelopi Goldberg, Jean-Michel Grandmont, Rachel Griffith, Lars Hansen*, Oliver Hart*, James Heckman*, Elhanan Helpman, Bengt Holmström*, Dale Jorgenson, Daniel Kahneman*, Mervyn King, Michael Kremer*, Finn Kydland*, Eric Maskin*, Daniel McFadden*, Robert Merton*, Paul Milgrom*, Stephen Morris, Roger Myerson*, Edmund Phelps*, Christopher Pissarides*, Paul Romer*, Alvin Roth*, Myron Scholes*, Amartya Sen*, Robert Shiller*, Christopher Sims*, Robert Solow*, Hugo Sonnenschein, Michael Spence*, Joseph Stiglitz*, Guido Tabellini, Richard Thaler*, Jean Tirole*, Robert Wilson* y Fabrizio Zilibotti.

El País

What is money? (II)

21 Jun, 2021 at 18:28 | Posted in Economics | 16 Comments

Currently the credit theory dominates monetary theorizing and policy debate. So, policy analyses implicitly make assumptions about money as if its properties qua  money were those of a form of debt credit.

Meme: "Money is money!" - All Templates - Meme-arsenal.comCurrently prominent examples include Minsky as well as proponents of Modern Money Theory (MMT). Hyman Minsky, who has been as infl uential as any money theorist in recent times, coined in passing, in a substantive piece, the familiar and frequently repeated aphorism that ‘everyone can create money; the problem is to get it accepted’ . Underpinning this clearly is the credit theory. If the nature of money lies in the nature of credit/debt, then any and all credit/debt is money, even that momentarily accepted between friends or relatives. So, anyone can indeed create money. Credit theorists must accept this. Alfred Mitchell Innes, perhaps the most influential credit theorist, embraced this. He thought that, therefore, any credit/debt ought to serve as a general means of payment. Minsky clearly does not accept the latter implication and was pointing to a problem of how a money qua  a form of debt is to become accepted. MMT proponents follow suit. The story they tell is very much like the one outlined just now re government debt and taxation. In my view, no aspect of the story withstands scrutiny. It is bank debt (positioned as money) not government debt that is involved in money constitution, government taxes and fines are not a debt in any technical or legal sense, and it is far from obvious that people accept to hold money just because they have to use some of it to pay taxes, etc.

Tony Lawson

What is money?

21 Jun, 2021 at 13:09 | Posted in Economics | 1 Comment

maxresdefaultMr. Innes’s next point is that the idea, that “in modern days a money-saving device has been introduced called credit, and that, before this device was known, all purchases were paid for in cash, in other words in coins,” is simply a popular fallacy. The use of credit, he thinks, is far older than that of cash. The numerous instances, he adduces in support of this, from very remote times are certainly interesting …

Mr. Innes’s development of this thesis is of unquestionable interest. It is difficult to check his assertions or to be certain that they do not contain some element of exaggeration. But the main historical conclusions which he seeks to drive home have, I think, much foundation, and have often been unduly neglected by writers excessively influenced by the “sound currency” dogmas of the mid-nineteenth century. Not only has it been held that only intrinsic-value money is “sound,” but an appeal to the history of currency has often been supposed to show that intrinsic-value money is the ancient and primitive ideal, from which only the wicked have fallen away. Mr. Innes has gone some way towards showing that such a history is quite mythical.

John Maynard Keynes

For anyone with an earnest interest in the debate on the origin of money, Innes’ book is still a must read.

In mot economics textbooks money is presented as something that was invented to replace a more onerous and inefficient barter system. The problem with this story is that there is hardly any evidence that support it. Human societies have used some kind of credit systems long before we invented coins and cash.

Keynes’ review is a good reminder of how important it is for economists to remember that what may perhaps be conceived as a logical development is far from self-evidently what also happened in the real world: history and economic theory doesn’t always go hand in hand.

Papa was a rolling stone

20 Jun, 2021 at 20:09 | Posted in Varia | Comments Off on Papa was a rolling stone

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The epistemic fallacy

19 Jun, 2021 at 15:48 | Posted in Theory of Science & Methodology | 15 Comments

bhaskit is not the fact that science occurs that gives the world a structure such that it can be known by men. Rather, it is the fact that the world has such a structure that makes science, whether or not it actually occurs, possible. That is to say, it is not the character of science that imposes a determinate pattern or order on the world; but the order of the world that, under certain determinate conditions, makes possible the cluster of activities we call ‘science’. It does not follow from the fact that the nature of the world can only be known from (a study of) science, that its nature is determined by (the structure of) science. Propositions in ontology, i.e. about being, can only be established by reference to science. But this does not mean that they are disguised, veiled or otherwise elliptical propositions about science … The ‘epistemic fallacy’ consists in assuming that, or arguing as if, they are.

No philosopher of science has influenced yours truly’s thinking more than Roy did, and in a time when scientific relativism is still on the march, it is important to keep up his claim for not reducing science to a pure discursive level.

Roy-Bhaskar-009

Science is made possible by the fact that there exists a reality beyond our theories and concepts of it. It is this reality that our theories in some way deal with. Contrary to positivism, I cannot see that the main task of science is to detect event-regularities between observed facts. Rather, the task must be conceived as identifying the underlying structure and forces that produce the observed events.

The problem with positivist social science is not that it gives the wrong answers, but rather that in a strict sense it does not give answers at all. Its explanatory models presuppose that the social reality is ‘closed,’ and since social reality is fundamentally ‘open,’ models of that kind cannot explain anything about​ what happens in such a universe. Positivist social science has to postulate closed conditions to make its models operational and then – totally unrealistically – impute these closed conditions to society’s real structure.

What makes knowledge in social sciences possible is the fact that society consists of social structures and positions that influence the individuals of society, partly through their being the necessary prerequisite for the actions of individuals but also because they dispose individuals to act (within a given structure) in a certain way. These structures constitute the ‘deep structure’ of society.

Our observations and theories are concept-dependent without therefore necessarily being concept-determined. There is a reality existing independently of our knowledge and theories of it. Although we cannot apprehend it without using our concepts and theories, these are not the same as reality itself. Reality and our concepts of it are not identical. Social science is made possible by existing structures and relations in society that are continually reproduced and transformed by different actors.

Explanations and predictions of social phenomena require theory constructions. Just looking for correlations between events is not enough. One has to get under the surface and see the deeper underlying structures and mechanisms that essentially constitute the social system.

The basic question one has to pose when studying social relations and events are​ what are the fundamental relations without which they would cease to exist. The answer will point to causal mechanisms and tendencies that act in the concrete contexts we study. Whether these mechanisms are activated and what effects they will have in that case it is not possible to predict, since these depend on accidental and variable relations. Every social phenomenon is determined by a host of both necessary and contingent relations, and it is impossible in practice to have complete knowledge of these constantly changing relations. That is also why we can never confidently predict them. What we can do, through learning about the mechanisms of the structures of society, is to identify the driving forces behind them, thereby making it possible to indicate the direction in which things tend to develop.

The world itself should never be conflated with the knowledge we have of it. Science can only produce meaningful, relevant and realist knowledge if it acknowledges its dependence of the​ world out there. Ultimately that also means that the critique yours truly wages against mainstream economics is that it doesn’t take that ontological requirement seriously.

Sunshine of your love

19 Jun, 2021 at 00:27 | Posted in Varia | Comments Off on Sunshine of your love

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Comment mesurer le racisme et les discriminations raciales

18 Jun, 2021 at 14:04 | Posted in Politics & Society | Comments Off on Comment mesurer le racisme et les discriminations raciales

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Et ici le Rapport de recherche TEPP.

Ritva Syll In Memoriam (personal)

18 Jun, 2021 at 09:13 | Posted in Varia | Comments Off on Ritva Syll In Memoriam (personal)

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In loving memory of my mother-in-law, Ritva Syll, whose funeral took place yesterday at Skeda church, Sweden.

Real business cycles — nonsense on stilts

16 Jun, 2021 at 10:50 | Posted in Economics | 2 Comments

rbcThey try to explain business cycles solely as problems of information, such as asymmetries and imperfections in the information agents have. Those assumptions are just as arbitrary as the institutional rigidities and inertia they find objectionable in other theories of business fluctuations … I try to point out how incapable the new equilibrium business cycles models are of explaining the most obvious observed facts of cyclical fluctuations … I don’t think that models so far from realistic description should be taken seriously as a guide to policy … I don’t think that there is a way to write down any model which at one hand respects the possible diversity of agents in taste, circumstances, and so on, and at the other hand also grounds behavior rigorously in utility maximization and which has any substantive content to it.

James Tobin

Real business cycle theory (RBC) basically says that economic cycles are caused by technology-induced changes in productivity. It says that employment goes up or down because people choose to work more when productivity is high and less when it’s low. This is of course nothing but pure nonsense — and how on earth those guys that promoted this theory (Thomas Sargent et consortes) could be awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is really beyond comprehension.

In yours truly’s History of Economic Theories (4th ed, 2007, p. 405) it was concluded that

the problem is that it has turned out to be very difficult to empirically verify the theory’s view on economic fluctuations as being effects of rational actors’ optimal intertemporal choices … Empirical studies have not been able to corroborate the assumption of the sensitivity of labour supply to changes in intertemporal relative prices. Most studies rather points to expected changes in real wages having only rather little influence on the supply of labour.

Rigorous models lacking relevance is not to be taken seriously. Or as a famous British economist once  had it:

Why it is better to be roughly right than precisely wrong | Real-World  Economics Review Blog

Structural equation modelling (student stuff)

15 Jun, 2021 at 19:00 | Posted in Statistics & Econometrics | Comments Off on Structural equation modelling (student stuff)

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This is a good introduction to some of the basic thoughts behind the use of SEMs. But — for the controversial question if SEMs really can be considered causal, yours truly highly recommends reading Kenneth Bollen’s and Judea Pearl’s Eight myths about causality and structural equation models.

Table 2 Fallacy (student stuff)

14 Jun, 2021 at 19:02 | Posted in Statistics & Econometrics | 2 Comments

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Discrimination and the use of ‘statistical controls’

14 Jun, 2021 at 12:27 | Posted in Statistics & Econometrics | Comments Off on Discrimination and the use of ‘statistical controls’

The gender pay gap is a fact that, sad to say, to a non-negligible extent is the result of discrimination. And even though many women are not deliberately discriminated against, but rather self-select into lower-wage jobs, this in no way magically explains away the discrimination gap. As decades of socialization research has shown, women may be ‘structural’ victims of impersonal social mechanisms that in different ways aggrieve them. Wage discrimination is unacceptable. Wage discrimination is a shame.

You see it all the time in studies. “We controlled for…” And then the list starts … The more things you can control for, the stronger your study is — or, at least, the stronger your study seems. Controls give the feeling of specificity, of precision. But sometimes, you can control for too much. Sometimes you end up controlling for the thing you’re trying to measure …

paperAn example is research around the gender wage gap, which tries to control for so many things that it ends up controlling for the thing it’s trying to measure …

Take hours worked, which is a standard control in some of the more sophisticated wage gap studies. Women tend to work fewer hours than men. If you control for hours worked, then some of the gender wage gap vanishes. As Yglesias wrote, it’s “silly to act like this is just some crazy coincidence. Women work shorter hours because as a society we hold women to a higher standard of housekeeping, and because they tend to be assigned the bulk of childcare responsibilities.”

Controlling for hours worked, in other words, is at least partly controlling for how gender works in our society. It’s controlling for the thing that you’re trying to isolate.

Ezra Klein

Trying to reduce the risk of having established only ‘spurious relations’ when dealing with observational data, statisticians and econometricians standardly add control variables. The hope is that one thereby will be able to make more reliable causal inferences. But — as Keynes showed already back in the 1930s when criticizing statistical-econometric applications of regression analysis — if you do not manage to get hold of all potential confounding factors, the model risks producing estimates of the variable of interest that are even worse than models without any control variables at all. Conclusion: think twice before you simply include ‘control variables’ in your models!

piled-up-dishes-in-kitchen-sinkWhen I present this argument … one or more scholars say, “But shouldn’t I control for everything I can in my regressions? If not, aren’t my coefficients biased due to excluded variables?” … The excluded variable argument only works if you are sure your specification is precisely correct with all variables included. But no one can know that with more than a handful of explanatory variables …

A preferable approach is to separate the observations into meaningful subsets—internally compatible statistical regimes … If this can’t be done, then statistical analysis can’t be done. A researcher claiming that nothing else but the big, messy regression is possible because, after all, some results have to be produced, is like a jury that says, “Well, the evidence was weak, but somebody had to be convicted.”

Christopher H. Achen

Kitchen sink econometric models are often the result of researchers trying to control for confounding. But what they usually haven’t understood is that the confounder problem requires a causal solution and not statistical ‘control.’ Controlling for everything opens up the risk that we control for ‘collider’ variables and thereby create ‘back-door paths’ which gives us confounding that wasn’t there to begin with.

Ett ljus i radiomörkret

13 Jun, 2021 at 14:04 | Posted in Varia | Comments Off on Ett ljus i radiomörkret

radioI dessa tider — när ljudrummet dränks i den kommersiella radions pubertalflams — har man nästan gett upp.

Men det finns ljus i mörkret.

I programmet Text och musik med Eric Schüldt — som sänds på söndagsförmiddagarna i P2 mellan klockan 11 och 12 — kan man lyssna på seriös musik och en programledare som verkligen har något att säga och inte bara låter foderluckan glappa. Att få höra någon med intelligens och känsla tala om saker som vi alla går och bär på djupt inne i våra själar — men nästan aldrig vågar prata om — är en lisa för själen.

Jag har i flera år nu lyssnat på Erics program varje söndag. En helg utan hans tänkvärda och ofta lite melankoliska funderingar och vemodiga musik har blivit otänkbart.

I dag kunde man bland annat höra filmmusik av vår egen Stefan Nilsson, vars musik till Ingmar Bergmans och Bille Augusts Den goda viljan är bland det vackraste och mest suggestiva i filmmusikväg som gjorts.

Me and Jane Austen in Karlsbad (personal)

13 Jun, 2021 at 09:37 | Posted in Varia | Comments Off on Me and Jane Austen in Karlsbad (personal)

karlsbadBack in the 80’s yours truly had the pleasure of studying German in Vienna. A wonderful town full of history and Kaffeehäuser.

A couple of years ago, I was invited to give a series of lectures at University of Vienna and at Vienna University of Economics and Business Administration. I spent an absolutely fabulous week with visits to Café Central, Hofburg, Vienna State Opera, Belvedere, Pratern, etc., etc. 

Afterwards, yours truly — of course — could not resist the temptation to make a stopover in Karlsbad (Karlovy Vary). If you like to walk right into a novel by Jane Austen — and your wallet isn’t too thin — it’s a highly recommendable place. Hopefully,​​ when the present pandemic is all over, I will get time off for a new visit. 

La réforme du bac et le Covid

12 Jun, 2021 at 14:18 | Posted in Education & School | Comments Off on La réforme du bac et le Covid

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