----- Forwarded Message ----- From: Institute for New Economic Thinking <[email protected]> To: [email protected] Sent: Thursday, 2 February 2012, 3:03 Subject: John Kay: Why Economics Needs Eclecticism John Kay: Why Economics Needs Eclecticism Click to view this email in a browser Hi Robert Searle, Today INET presents you an interview with John Kay, who calls for a healthy dose of eclecticism in economics. John Kay: The Limits of Consistency and Rigor, and Why Economics Needs Eclecticism Previously, INET presented a paper by John Kay that examined the relationship between modern economics and the world we live in. Kay, Fellow at St. John’s College of Oxford University and Visiting Professor at the London School of Economics, presented methodological critiques of economics in general, and of DSGE models and rational expectations in particular. The paper incited wide-ranging debate, and INET posted on its website several responses to the article from other prominent economists (Michael Woodford, Roger Guesnerie, Paul Davidson, and Giovanni Dosi). Today, INET presents you a video interview with John Kay in which he discusses the state of economics with INET Executive Director Rob Johnson. Kay suggests that economics has focused too much on axiomatic and deductive reasoning and has been constrained by the simplifying assumptions that such an agenda imposes. The exclusion of inductive reasoning in the name of consistency and rigor is not how real science advances, he says. Economics would benefit from a healthy dose of eclecticism. Link to video Kind regards, Enno Schröder Manager INET Online ________________________________ Please do not reply to this message. This email was generated automatically and responses are not monitored. History of Economics Playground Marion Fourcade and historians of economics: a quiet revolution? by YANN GIRAUD In recent years, an increasingly significant part of the history of economics has modeled itself after the methodologies developed by Science and Technology Studies (STS) scholars. Accordingly, since I began working in the field as a graduate student, I have seen a lot of sociologists of science being invited at our conferences and our seminars. ... How God, Adam Smith, and the invisible hand changes over time by BENJAMIN MITRA-KAHN So with a suitably provocative title I think we can declare 2012 open. And in starting the year I was struck by how words and sentences can change in meaning over time, particularly prompted by this quote: ... At Home in Economics by TILL DÜPPE My friend read somewhere that the experience of death makes people think in philosophical terms. He might have thought of religion rather than philosophy, I replied. We agreed, and wandered off talking about our crypto-religious experiences in good old secular Europe. ... ________________________________ David Tuckett: How Stories about Economic Fundamentals Drive Financial Markets Fund managers cannot possibly know what the future will bring, yet they have to commit today to holding assets that promise a return tomorrow. Such a commitment requires confidence -- confidence that is hard to come by in the face of uncertainty. To cope with the uncertainty, fund managers rely on gut feelings and invent stories that justify their decisions. In the end, it is stories and emotions that drive financial markets. That is, in a nutshell, the theory of asset pricing developed by David Tuckett. Link to video The Money View Bank or No Bank? A Money View of SDRs by DANIEL NEILSON In a market economy, when you need something, you go out and buy it. Liquidity is no different, in that respect at least. If it is market liquidity that you need, you go to a dealer, who stands ready to buy what you are selling. You pay for the convenience, though—the dealer is getting more for the same asset than you are. ... Why did the ECB LTROs help? by PERRY MEHRLING From a money view perspective, the central issue is settlement of TARGET balances between national central banks within the Eurozone, and the key is to understand TARGET balances as a kind of interbank correspondent balance. ... ________________________________ Moritz Schularick: Credit Booms Gone Bust Carmen Reinhart and Kenneth Rogoff tell the history of financial crisis as a tale of excessive public debt. But what more commonly drives financial instability, says Moritz Schularick, is excessive private debt. Financial crises are credit booms gone bust. Schularick and his collaborators compile a long-run data set of disaggregated credit flows, separating loans for productive investment from loans for the purchase of existing assets. A marriage of economic history and modern statistical methods to investigate the role of finance in the macroeconomy -- this is new economic thinking. Link to video Students: Join Us in Berlin INET’s Young Scholar Initiative (YSI) will be hosting a select group of graduate students at its third annual plenary conference in Berlin, April 12-15, 2012, “Paradigm Lost: Rethinking Economics and Politics.” Check out the conference program here, and fill out a brief application here. (INET will cover all travel and accommodation expense.) Find more info here. ________________________________ Economists: A Profession at Sea Without an Anchor Economics needs to find a new way forward if it is to remain relevant to today's society. In an essay for Time Magazine, INET Executive Director Rob Johnson suggests remedies to get economics and society back on course. 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