Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 10 belangrijke of informatieve artikelen en interviews die de voorafgaande 7 dagen op economisch terrein verschenen op onafhankelijke sites.

De kop is de link naar het oorspronkelijke artikel, waarvan de samenvatting of de eerste (twee) alinea’s hier gegeven worden.

Sinds december 2015 nemen we ook een paar extra links op naar artikelen die minder specialistische kennis vereisen. Deze met *** gemerkte artikelen zijn ons inziens ook interessant voor lezers met weinig basiskennis van economie.

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***“More Data” Won’t Improve Economists’ Lousy Predictions – Carmen Elena Dorobăț
25 april
The Economist has lately been running a series of articles on the shortcomings of the economics profession. Its most recent piece argues the important point that “the [2008-2009] crisis exposed the economic profession’s continued ignorance of the business cycle.” One reason for this ignorance is, they observe, a lack of data: while crises do happen repeatedly, they do not happen often enough for statistical analysis of them to be rigorous. Another reason—underlying the ongoing debate between neoclassical and New Keynesian camps on monetary policy—is represented by the “epistemological woes” of macroeconomics, which the profession “must get to grips with… if it hopes to maintain its influence and limit the damage done by the next crisis.”
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Are European Companies Ready for Life Without Draghi? – Don Quijones
29 april
An unusually fierce spat broke out this week between two of Europe’s biggest utilities companies, Spain’s Iberdrola and Italy’s Enel, both of which are locked in a bidding war for the Brazilian electricity company Eletropaulo. The Spanish firm accused its Italian rival, almost a quarter of which is owned by the Italian State, of unfair competition due to its access to cheaper debt.
“With the obvious support of the State, Enel clearly benefits from a privileged regulatory situation in Italy, which makes access to the capital markets both cheaper and easier,” complained Iberdrola’s CEO Ignacio Sánchez Galán in a scathing letter to the European Commission. He called for a debate on the privileges certain state-owned companies continue to enjoy despite EU competition laws on illegal state aid.
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The curse of persistently low real interest rates – Jan Willem van den End, Marco Hoeberichts
25 april
Persistent low interest rates prompt the question of whether the natural, or equilibrium, rate of interest has similarly shifted downwards. This column uses data for seven OECD countries to explore how low interest rates have affected potential output. The results lend support to concerns that a prolonged period of low real interest can reduce the natural rate. This causality can run through both real and financial channels.
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Connecting the Dots of Big Data, Soaring Corporate Profits and Trade Wars – Charles Hugh Smith
23 april
It’s self-evident that we cannot possibly understand trade, soaring corporate profits, Facebook’s data collection or the economy without understanding the core role played by Big Data in reaping outsized profits and pushing narratives.
Let’s connect the dots between these two comments from longtime correspondents: the first is on the model of collecting and selling data (Big Data), and the second on trade:
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EPA, the nature of regulation, and democracy – John H. Cochrane
28 april
My Hoover colleague Richard Epstein posted a revealing essay on the nature of environmental regulation last week, with environmental regulation as a particular example. The contrast with “Environmental Laws Under Siege: Here is why we have them” in New York Times and the New Yorker’s Scott Pruitt’s Dirty Politics is instructive
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What Will these Mortgage Rates Do to Housing Bubble 2? – Wolf Richter
25 april
4.73% now. 5% in a few weeks. Then 6%.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances – $453,000 or less – and a 20% down-payment jumped to 4.73% for the week ending April 20, from 4.66% in the prior week, according to the Mortgage Bankers Association. This was the highest rate since September 2013. So far in 2018, this measure of the average mortgage rate has risen half a percentage point
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***The Economics Debate: The Problem isn’t Bad Economics, It’s Bad Science – David Orrell
28 april
The argument between orthodox economists and their critics resembles one that occurred in weather forecasting in the mid-nineteenth century.
As if governed by some deterministic law, the current debates between economists and critics follow a predictable path. Critics begin by mentioning the failure of economists to predict or warn of the crisis. Howard Reed for example recently wrote in Prospect that ‘When the great crash hit a decade ago, the public realised that the economics profession was clueless.’
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The Keynesian Multiplier Is an Illusion – Frank Shostak
27 april
For most economists and financial commentators the heart of economic growth is the increase in the demand for goods and services. It is held that increases or decreases in demand are behind rises and declines in the economy’s production of goods and services. It is also held that the overall economy’s output increases by a multiple of the change in expenditure by government, consumers or businesses.
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How income gains from globalisation are distributed – Valentin Lang, Marina Mendes Tavares
27 april
Globalisation stirs a diverse range of sentiments and views: some credit globalisation for boosting economic well-being while others blame it for worsening inequality. This column examines the effect of globalisation on income among and within countries, and shows that globalisation is associated with income convergence across countries and income divergence within countries. Targeted redistributive policies and investments in education are needed to ensure that the benefits of globalisation are enjoyed by all.
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The Next Crash: Making The Fed An Instrument For Disaster – Nomi Prins
27 april
Warning: What you are about to read is not about Russia, the 2016 election, or the latest person to depart from the White House in a storm of tweets. It’s the Beltway story hiding in plain sight with trillions of dollars in play and an economy to commandeer.
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While we’ve been bombarded with a litany of scandals from the Oval Office and the Trump family, there’s a crucial institution in Washington that few in the media seem to be paying attention to, even as President Trump quietly makes it his own. More obscure than the chambers of the Supreme Court, it’s a place where he has already made substantial changes. I’m talking about the Federal Reserve.
As the central bank of the United States, the “Fed” sets the financial tone for the global economy by manipulating interest rate levels. This impacts everyone, yet very few grasp the scope of its influence.
During times of relative economic calm, the Fed is regularly forgotten. But what history shows us is that having leaders who are primed to neglect Wall Street’s misdoings often sets the scene for economic dangers to come. That’s why nominees to the Fed are so crucial.
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Carmageddon for Cars: “Cars” Are Scheduled to Die – Wolf Richter
25 april
The end of an era in the US Auto industry — until $7 gas arrives.
“Cars,” as the auto industry defines them, are going to die. Not necessarily the vehicles, though they’re disappearing too, but the category of “cars” because sales have plunged beyond hope, especially for vehicles by the Big Three US automakers, GM, Ford, and Fiat-Chrysler.
It came to a head today: Ford announced $25.5 billion in planned cost cuts by 2022 – some red meat it threw to its restive stockholders, whether or not these “cuts” will ever materialize. But the cuts included a big category that is a sign of the times: all current Ford car models, except the Mustang, will be killed off.
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QE Failed in Japan – Bill Mitchell
24 april
We’ve pointed out that the Fed’s retreat from QE appears to be due at least in part to the fact that the central bank recognizes belatedly that it didn’t achieve its intended aim of stimulating the real economy. On one level, the Fed sorta knew that, since monetary stimulus does not lead to more demand in the economy. Only more fiscal spending, aka deficits, will do that.
What QE can do is provide a wealth effect, which will lead consumers to spend more. But the wealth effect works to a degree with housing wealth, and not much with financial assets. Moreover, the people who will spend more are people who already by definition have assets. They already have a weaker propensity to marginal spending than less well off people, so the wealth effect is at best an inefficient way to try to induce more expenditures. And those rich people could engage in spending that does little or nothing in the way of adding to GNP, like going on vacation abroad or buying collectables (as in pushing other asset prices up).
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The 1990s trade and wages debate in retrospect – Adrian Wood
25 april
Two decades ago, the economics profession concluded that trade with developing countries was not seriously hurting unskilled workers in developed countries. This column argues that the debate from which that consensus emerged came to an end prematurely. Even now, the evidence does not permit any firm conclusion about the contribution of globalisation to the economic misfortunes of less-educated people in developed countries. Had there been less consensus among economists, more might have been done, sooner, to mitigate the social costs of globalisation.
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Disclaimer: De VoL-redactie selecteert deze artikelen op interessante inzichten, of naar wij denken nuttige informatie. Wij kunnen echter geen enkele aansprakelijkheid aanvaarden voor de gevolgen van beslissingen die op grond hiervan door lezers zijn genomen, zakelijk zomin als privé.

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