Krugman’s 45 Degree Rule
Recently, Paul Krugman reminded us of his “45 degree rule” on his blog Conscience Of A Liberal. This was a reference to his paper in 1989 which was a rediscovery of Thirlwall’s Law from 1979 [1] which...
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U.S. Manufacturing Deficit
The latest U.S. trade report is out and has data for the whole year 2015. Manufacturing deficit is something worth noting. The U.S. manufacturing deficit is $831 bn. U.S. Manufacturing Exports/Imports...
View Articley = x/π
‘The rate of growth (y) of any developed country in the long run is equal to the growth rate of the volume of its exports (x) divided by its income elasticity of demand for imports (π)’, he [Anthony...
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Neochartalism, Balance Of Payments And Mainstream Economics
There have been many critiques of Neochartalism. Almost all of them, simply ignore the most important issue which makes Neochartalism the so-called “Modern Monetary Theory”, a chimera. A delusion. Bill...
View ArticleLimits To Growth?
There has been a debate led by vicious attack by Paul Krugman that Bernie Sanders’ plans cannot achieve growth of 5.3%. And there have been replies by others. Coming from a third-world country and...
View ArticleLimits To Growth, Part 3
[For previous discussions, see my posts Limits To Growth? and The Full Employment Assumption] Brian Romanchuk has written a post as a response to my post Limits To Growth? referred above. In that his...
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The World Balance Of Payments Constraint: Nicholas Kaldor Explaining The Way...
Thirlwall’s Law is counter-intuitive and comes across as shocking. It says that the growth of a nation’s economy is directly proportional to the rate of exports and inversely related to the income...
View ArticleHeterodox Blogger On Neochartalism
The trouble with Neochartalism (and called “Modern Monetary Theory” by the Neochartalists) is that what is correct is not original and what is original is not correct. A popular heterodox blogger...
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Bernie Sanders, U.S. Private Sector Deficits And Balance Of Payments
Over his blog The Beauty Contest – A blog on Spanish and international affairs, macroeconomics and finance, Javier López Bernardo has an analysis of Bernie Sanders’ economic plan (written with his...
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Non-selective Protectionism In Wynne Godley’s 1999 Article Seven...
‘Free Trade Loses Political Favour,’ says the front-page of today’s Wall Street Journal. Paul Krugman has two articles conceding that he held wrong views earlier. Krugman says: But it’s also true that...
View ArticleThe ‘Paradox’ Of Protectionism
Paul Krugman says trade wars are a wash. Brad Delong is raising his neoliberal freak flag high. Who is right? Answer: Neither. Global output will rise under non-selective protectionism (or has an...
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Getting Paid To Have A Trade Deficit?
Source: BEA. Eric Lonergan has written an interesting post about US trade deficits on his blog Philosphy Of Money/Sample Of One. In the post Eric claims that the United States is not a debtor of the...
View ArticleNicholas Kaldor On The Foreign Trade Multiplier
This is the basis of the doctrine of the ‘foreign trade multiplier’, according to which the production of a country will be determined by the external demand for its products and will tend to be that...
View ArticleOutput At Home And Abroad
It’s fairly common for economists to confuse accounting identities and behavioural relationships. Question: What is the best way to find it? Answer: The behaviour of output (at home and abroad) is not...
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Milton Friedman On Free Trade
I always like watching Milton Friedman, not because I like him but for something totally opposite. It helps in knowing what the exact position of economists is. Milton Friedman has been hugely...
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Do US Trade Deficits Result In “Net Profits” For The US?
It’s frequently claimed that the US has trade deficits but since the US dollar has not collapsed, the ones saying that the US does not have a balance of payments constraint are all wrong. Now there...
View ArticleThe Treaty Of Rome And Balanced Trade
Policy Research in Macroeconomics (PRIME)’s blog Prime Economics reminds us of the Treaty of Rome, to establish a European Economic Community, first signed in 1957 which has a Chapter on Balance of...
View ArticleNeochartalists Shifting Positions
In a three part series, Bill Mitchell, makes the case against free trade. While this is most welcome – success and failure of nations depends on success in international trade via the principle of...
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Euro Area NCBs’ TARGET2 Balance As Cumulative Accommodating Item In The...
There’s a discussion on Nick Rowe’s blog about the interpretation of TARGET2 balances of the NCBs in the Euro Area’s Eurosystem. How do we interpret this? My answer is the headline. TARGET2 balances...
View ArticleDean Baker On US Manufacturing And International Trade
The U.S. manufacturing deficit was $831 billion in 2015. The 2016 number might be out in a few days. Dean Baker has an excellent article, Painful Nonsense on Trade on his blog in which he debunks the...
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