The Coming Weather Blow to the Global Economy

Summary:  With all the power our mastery of the physical sciences has given us, we often forget that we remain subject to the whims of nature.  Earthquakes, volcanoes, asteroids — and weather.  Our recent obsession with climate change has blinded us to the ferocious impact of rare but normal weather patterns.  Such as the second year […]

G20 Defers Decision on FTT Despite Global Support

The G20 finance ministers and central bankers have put off an immediate decision to weigh up a global financial transaction tax (FTT) proposal at the forthcoming G20 Summit (Cannes, 3-4 November 2011). The two-day Ministerial Meeting (14-15 October) in Paris took place against the backdrop of huge protests in US and Europe, galvanized by the […]

Saudi Arabia: When Surging Oil Demand Meets Limited Supply

The following note from Gulf News reinforces the concept that high population growth in the Middle East will slow the amount of oil available for export (hat tip Andy Lees). I believe the consequences are higher prices. Saudi Aramco has forecast that the kingdom’s daily energy demand will reach an equivalent of 8.3 million barrels […]

An IS-LM Model That Almost Has It All

There is an ongoing debate in the blogosphere on the usefulness of the IS-LM model taught in undergraduate economics.  Brad DeLong nicely summarizes the problems with this model: We really need a model with five moving pieces: Money demand equilibrium M = L(i, PY) as a function of the level of spending and the short-term […]

Sargent and Sims

I’m a little late getting to this (by standards of cyberspace time anyway), but I wanted to comment on Monday’s announcement about the Nobel prize in economics. NYU Professor Thomas Sargent and Princeton Professor Christopher Sims were justly recognized for their contributions to characterizing dynamic relations between economic variables. For concreteness, let me give an […]

A Boom in 2013?

While searching through market commentary, I came across these remarks, via Bloomberg: “We are focusing on major U.S. equities now, looking past the European stock markets because there’s too much volatility there,” Tim Hartzell, who oversees about $350 million as chief investment officer for Houston-based Sequent Asset Management, said in a telephone interview. “The Fed […]

Thomas Sargent

I am not sure if the Nobel Committee (well, for economics, it is some other committee) did the right thing in awarding the Economics Prize to Sargent. The bulk of the problems that the world faces today with modern capitalism as it has come to evolve in reality started from the works of the troika […]

Should the BRICs ‘Save’ the Eurozone?

The BRICs cannot bailout the risky Eurozone economies. They can offer capital and jobs, but in return of hard assets and advanced technology. It is time for old barriers to crumble in Europe. Not so long ago, Italy’s finance minister Giulio Tremonti used to write profusely about the threat of China’s “reverse colonization” of Europe. […]

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