Russ, John and Zombie Economics

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I finally got around to listening to Russ Roberts interview with John Quiggin about ‘Zombie economics’ (recorded November 1 this year). Well worth a listen. It is interesting how much consensus there is on financial regulatory issues from two economists who would normally be considered at opposite ends of the ‘political’ spectrum. And, of course, plenty they don’t agree on. Podcast available here.

2 Responses to "Russ, John and Zombie Economics"
  1. Unfortunately I couldn’t get the podcast working, but I found JQ’s article in “Foreign Policy” on-line. 

    http://www.foreignpolicy.com/articles/2010/10/15/five_zombie_economic_ideas_that_refuse_to_die?page=0,0

    What happens when the zombies in question are only straw men?

    1. Efficient Markets Hypothesis – JQ wants to argue against the “strong” case of EMH when no economist argues for it. (Refer to “Absurd Statements on the Efficient Markets Hypothesis” on this website.)

    2. The Great Moderation – I thought this was a descriptive term for the low volatility of the past decade. (It did really happen.) However did any credible economist really believe the economic cycle went away?

    3. Dynamic Stochastic General Equilibrium (DSGE) models failed to predict the GFC??? I’m not aware of any model that claims to be predictive. Other than the Bank for International Settlements, and a few miscellaneous wisemen, the majority of knowledgeable punters couldn’t or wouldn’t call stop on the world economy’s growth. (So much for Krugman’s beauty or truth. How is this different to any other historical economic bust?)

    4. Trickle Down Hypothesis – I hadn’t realized this was a core economic theory in any sense of the word.

    5. Privatization – Reads like a polemic – sweeping statements peppered with irrelevant facts (e.g. what has a failed process of privatization got to do with failure of operation under conditions of private ownership), gratuitous references to Macquaries’ model of hiving off assets (anybody heard of caveat empter), devoid of any evidence beyond cherry-picked examples.

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