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Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).
Every day most of this column ("What We Read Today") is available only to GEI members.
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Nonlinearity, Multiple Equilibria, and the Problem of Too Much Fun (Wonkish) (Paul Krugman, The New York Times) First, the good news: Paul Krugman is addressing the issues of equilibrium states and nonlinearity in macroeconomics.
Next, the bad news: Paul Krugman is NOT addressing the issues of equilibrium states and nonlinearity in macroeconomics.
In this short article Prof. Krugman mentions "multi-equilibrium" (or a similar form) about 10 times (plus equilibrium itself a couple more) and "non-linearity" (or a similar form) 6 times. Not once is anything related to "dynamic" or "dynamical" mentioned. This is like claiming to present a meaningful description of calculus with a series of discrete values but never incorporating the processes of differentiation and integration.
The problems associated with considering macroeconomic systems in terms of one or more equilibrium states derive from the fact that the macroeconomy is in a time continuum and, without analyzing time flow of economic activity, any model is, at best, only a crude approximation.
Prof. Krugman is one of many locked in a conceptual trap who think in terms of static states when trying to understand dynamical system flows through time. No matter how many snapshots (multiple equilibria) are considered information is lost unless the number of snapshots approaches infinity. When that happens the process leaves algebraic addition and reaches functional integration.
Dynamical analysis, chaos and time-flowing non-linearity are the logical end points of any discussion of nonlinear and multi-equilibria processes in macroeconomics. Prof. Krugman has started on that journey - he just has a way further to travel to reach the end.
For two recent GEI Analysis articles by Ted Carron on this see: (1) Nonlinearity: The Simple and Useful Side of Dynamical Analysis and (2) Chaos: The Simple and Useful Side of Dynamical Analysis.
Articles about events, conflicts and disease around the world
Fossil Fuels Just Lost the Race Against Renewables (Tom Randall, Bloomberg Business) The beginning of the end for fossil fuels is ... well .. beginning.
The tipping point was in 2013. Econintersect would like to hear from all the people over the past 6-8 years who berated our support of wind, solar and other renewable energy sources. We have been repeatedly told that renewables were just not "economic".
Be sure you understand the data here. Fossil fuel consumption is not going away. In fact it is still growing for some time to come. The turning point in 2013 is that renewable energy production first grew faster than fossil fuel additions. And fossil fuel additions are projected to be more than cut in half in the next 15 years while renewables are expected to more than double their growth rates.
See also (which we have discussed before): Seven Reasons Cheap Oil Can't Stop Renewables Now (Tom Randall, Bloomberg).
California Just Had a Stunning Increase in Solar (Bloomberg Business) The Golden State produces more utility-scale solar than all the other states combined and has almost tripled capacity in 2014. While all the media focus has been on rooftop distributed solar, the utilities are fighting back to take advantage of the new "low cost producer" for electricity by building solar farms to feed the grid.
GEI will be expanding coverage of the rapidly changing solar electricity scene with articles by GEI Associate Andrea Rangel and with more discussions here at WWRT.
What Can You do With a Masters in Economics? (Barcelona Graduate School of Economics, Top Universities) About 3/4 of those receiving a masters degree in economics from the Barcelona Graduate School of Economics took positions as an economist in one of the fields displayed in the graphic below. Most of the remainder went on to study for a Ph.D.
Stocks Really Expensive According to Goldman Sachs (Marketfy) The S&P 500 index trades at a forward P/E of 17.2x, the highest level in the past 40 years outside of the Tech Bubble (see Exhibit 3). The median stock trades above 18x, ranking in the 99th historical percentile since 1976.
Other Economics and Business Items of Note and Miscellanea
Ziosk seeks to transform casual dining with tablets (CNBC) Hat tip to Marvin Clark. Diners will place their orders at a tablet on the table. The announcement says that wait staff will not be displaced but it is obvious to Econintersect that this could be a first step to "robo dining" where people go to eat by traveling in their driverless cars. Soon a robot served world will be ready for a planet where no one works and no one has any income to spend.
Mainstream Economics Is Flawed And That's Fine (Cullen Roche, Seeking Alpha) Cullen Roche has contributed to GEI. Cullen reviews the flaws of other economists' "schools of thought" and throws in a couple of hints about his own.
Keystone Pipeline Debate: Impact and Economics (Wall Street Journal) Video.
‘Popular Economics’ contains inconvenient truths for liberals (MarketWatch) This discussion of John Tamney's book shows a misunderstanding of economics based upon confusing assumptions with facts.
The Economics of Charity Telemarketing (Harvard Business Review)
Prison Economics (Counter Punch)
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