The OBR’s forecasts should be taken not just with a pinch of salt, but with the contents of an entire mine
There has been a great deal of crowing in metropolitan liberal circles over the report of the Office for Budget Responsibility (OBR), published with the Budget last week. The OBR revised downwards its projections for GDP growth for each of the next five years. Annual average growth to 2022 is predicted to be just 1.4 […]
Doublethinking or dim? Why the Labour party can’t be trusted with the economy
Are members of the Labour Party frontbench experts in doublethink? The concept was invented by George Orwell for his novel 1984, written in the 1940s as a critique of the Soviet Union. Masters of doublethink can hold, for purposes of political expediency, two opposing opinions at the same time, one of which might be complete […]
Mind the gap: Economics is catching up to the fact that we’re not always rational
Do Tube strikes make Londoners better off? At first sight, the question is simply absurd. The answer is surely “no”. But a paper in the Quarterly Journal of Economics comes to the opposite conclusion. Cambridge economist Shaun Larcom and his colleagues analysed the two-day strike of February 2014. They obtained detailed travel information on nearly […]
There’s a difference between priceless and worthless, but economics can’t measure it
The so-called “productivity puzzle” just does not go away. The October, employment figures released by the Office for National Statistics (ONS) brings it into focus. The number of people in work rose to a new record high of 32.1m, with an increase of around one per cent compared to a year ago. Total output, measured […]
Catalonia tries to avoid repeating history, but Spain has economic reality on its side
Karl Marx famously wrote: “History repeats itself, first as tragedy, second as farce”. The phrase might well have been coined with Catalonia in mind. Generalissimo Franco began a military coup against the elected Spanish government in the Canary Islands in 1936. The battle spread across Spain, and Catalonia was the last redoubt of the Republic […]
It’s time to question the macroeconomic orthodoxy on interest rates and inflation
Mark Carney, governor of the Bank of England, is getting his retaliation in early. Faced yet again with the Bank failing to deliver its designated target of a two per cent inflation rate, in a speech last week he suggested that his remit was broader. “We face a tradeoff between having inflation above target and […]
Comparison sites are forcing businesses and economists to rethink price theories
The competition and Markets Authority (CMA) published a report about Price comparison sites at the end of last month. They seem simple enough, but these straightforward sites raise interesting issues for economics. Overall, the CMA was pretty positive about the DCTs – digital comparison tools, to give them their Sunday best name. The conclusion was […]
Behavioural economics has had its Nobel moment, but take it with a pinch of salt
Behavioural economics has received the ultimate accolade. Richard Thaler of the University of Chicago Business School has been awarded the Nobel Prize in economics for his work in this area. Economics over the past 20 to 30 years has become far more empirical. Leading academic journals do still carry purely theoretical articles, but far less […]
From Korea to Germany, experiments with socialism show markets always win
A red-hot topic in economics is randomised controlled trials (RCT). Esther Duflo, the MIT academic who has really driven this idea, has surely put herself in pole position for a Nobel Prize at some point. The idea of RCTs has been imported from medicine. One group of people are selected at random to be subject […]
The demise of Germany’s Social Democrats reflects the challenge for all liberal parties
The German elections on Sunday went pretty much according to the polls. Another victory for Chancellor Merkel. Much of the commentary has focussed on the success of the far-right Alternative fur Deutschland (AfD) party. One of its leading candidates eulogised the German armed forces during the Second World War – a topic even more sensitive […]
