The Problems With Piketty

Everybody has had a go at the phenomenon of Thomas Piketty’s Capital in the 21st Century. Here’s a version of my Sunday Times piece of a few days ago. Most people in Britain will never have heard of Thomas Piketty, a 42-year old professor from the Paris School of Economics, but that may be about […]

Video: Piketty, Krugman, Stiglitz, and Durlauf on ‘Capital in the Twenty-First Century’

            “The French economist Thomas Piketty discussed his new book, Capital in the Twenty-First Century at the Graduate Center. In this landmark work, Piketty argues that the main driver of inequality—the tendency of returns on capital to exceed the rate of economic growth—threatens to generate extreme inequalities that stir discontent […]

Worst Case Scenarios vs. Fat Tails: A Discussion of Climate Change

Summary: Threat assessment requires understanding not just of worst case scenarios, but their odds of occurrence. Yesterday’s post looked at the math: A guide into the weird numbers that run our world, describing both financial bubbles & climate change — power laws, Black Swans, and Dragon Kings. If the worst case scenarios come true, we’ll all become […]

The Future of the State Revisited: Reforming Public Expenditure

By: Sanjeev Gupta and Martine Guerguil The global financial crisis brought to the fore the question of sustainability of public finances. But it merely exacerbated a situation that was bound to attract attention sooner or later—governments all over the world have been spending more and more in recent decades. Here at the IMF, we’ve been looking into the factors […]

Capital Liberalization and Inequality

Inequality, which has drawn a great deal of comment and analysis following the publication of Thomas Piketty’s Capital in the Twenty-First Century, has sometimes been seen as a byproduct of increased international trade. But now other international economic linkages are being investigated. The International Monetary Fund’s Managing Director, Christine Lagarde, has acknowledged the need to take distributional consequences into […]

The Free Market’s Weak Hand

“Except where market discipline is undermined by moral hazard, owing, for example, to federal guarantees of private debt, private regulation generally is far better at constraining excessive risk-taking than is government regulation.” That was Alan Greenspan back in 2003. This is little different from another of his famous maxims, that anti-fraud regulation was unnecessary because […]

Crisis Recovery: Flying on a Single Engine

Policy makers in the advanced economies at the core of the global financial crisis can make the claim that they prevented a new “Great Depression”. However, recovery since the outbreak of the crisis more than five years ago has been sluggish and feeble. These macroeconomic outcomes have to some extent been shaped by the policy […]

Use of Logarithms in Economics

Why do economists always want to take the natural logarithm of everything? Here’s the answer, if you don’t mind looking at a few equations and graphs. Let me begin with a quick review of compound interest rates. If you invest an amount  for one year at an r% interest rate, at the end of the year you’ll […]

Economic Implications of Anthropogenic Climate Change and Extreme Weather

In my ten years living in Madison, this has been the coldest thus far. Keeping in mind everything is probabilistic, it’s likely that I have anthropogenic climate change to thank for experiencing this event. [1] [2] [3] (Just like one can’t say Hurricane Sandy was directly a result of global climate change, the likelihood of such events rises with […]