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What We Read Today 24 April 2016

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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Topics today include:

  • Update on the Keen - Reissl Debate

  • Does Heavy Marijuana Usage by Young Men Shorten Life?

  • Best of Economics This Week

  • The Promise of Ecological Economics

  • Game ot Thrones, Science Fiction and Economics

  • Clinton and Trump Gathering Steam

  • Obama and Merkel Push for Trade Deal

  • China Picking Up Speed?

  • And More

Articles about events, conflicts and disease around the world


  • Clinton, Trump stream ahead as rivals show signs of fading  (Associated Press)   Hillary Clinton and Donald Trump surged Sunday toward another round of pivotal presidential primaries as their party leaders faced new questions about internal divisions that could complicate their nominees' general election chances.  With less than 48 hours before voting began across five Northeastern states, GOP front-runner Donald Trump looked ahead to Tuesday's contests in five states where he's poised to do well and to a foreign policy speech later in the week. Republican challenger Ted Cruz, meanwhile, abandoned the Tuesday states and instead campaigned in Indiana, which votes May 3.  On the Democratic side, underdog Bernie Sanders, meanwhile, rallied thousands of voters in Rhode Island, looking to the smallest state in the nation for momentum even as he appeared to soften his attacks on Clinton.


  • Obama, Merkel push for trade deal as foreign crises weigh (Reuters)  U.S. President Barack Obama said in Germany on Sunday he would do whatever he could to advance a controversial trade deal with the European Union in his last eight months in office, but warned that time was running short.  Obama has pushed to complete two trade agreements before his term ends on Jan. 20 - with Pacific nations and with the EU - but has run into a growing swell of populist concerns about the impact on jobs, consumer protections and the environment.


Saudi Arabia


  • Earliest China Economic Data Show Recovery Gathers Pace in April (Bloomberg)   China’s property-led economic rebound gathered pace in April, according to the earliest batch of private indicators for the month.  Gauges from four providers all increased in April from March, while sub-indexes for employment showed stronger demand for workers. Still, not all the clouds have parted: data tracking the outlook of businesses show companies remain reluctant to invest.  New credit, industrial output, fixed-asset investment and retail sales all picked up and exceeded economists estimates in March, while first-quarter economic growth matched forecasts for the slowest expansion since 2009. Signs the recovery is enduring into the second quarter may entrench a change in forecasts for monetary policy, with analysts already dialing back expectations for additional easing.

North Korea

  • Obama Says U.S. Won't Stop Military Drills, Spurning North Korea (Bloomberg)  The president has responded to a statement yestarday from North Korea.  President Barack Obama said the U.S. won’t back down from strengthening its military alliances and defenses against North Korea until the country “shows seriousness” toward eliminating nuclear weapons from the Korean peninsula.

The following three sections are an update of a two section discussion posted in What We Read Today Wednesday 20 April 2016.

A critique of Keen on effective demand and changes in debt (Severin Reissl, Real World Economics)  Note:  This section is unchanged from 20 April.  [Econintersect:  This is a paper that should be read very carefully by any student of Prof. Keen's empirical work on the relationships between money, credit, debt and economic growth.  We suggest our use of the word "carefully" should recognize that we also mean "critically".  We have reproduced the abstract of the paper below, with emphasis added.  We are especially put off by a central argument that an empirical observation can be challenged because it "lacks theoretical underpinning."]  Note:  Severin Reissl is a graduate student at Kingston University London, where he studies in a department headed by Steve Keen since September 2014.  The first appearance of this paper we have found is dated October 16, 2014 when his affiliation was listed as University of Glasgow.  It seems quite suitable for a department that self-proclaims to be "one of the few pluralist-friendly economics departments in the world" should attract a student who has challenged the work of the head of department.  Note:  This discussion has continued.  See next item below for list of links.  Here is the abstract:

In a paper for the Review of Keynesian Economics, Steve Keen recently provided a restatement of his claim that “effective demand equals income plus the change in debt”. The aim of the present article is to provide a detailed critique of Keen’s argument using an analytical framework pioneered by Wolfgang Stützel which has recently been developed further. Using this framework, it is shown that there is no strictly necessary relationship whatsoever between effective demand and changes in the level of gross debt. Keen’s proposed relation is shown not to hold under all circumstances, and it is demonstrated that where it does hold this is due to variations in the ‘velocity of debt’-variable he introduces. This variable, however, lacks theoretical underpinning. The article also comments on Keen’s proposal that trade in financial assets should be included in effective demand, arguing that this undermines the concept of effective demand itself. It is also shown that many weaknesses in Keen’s argument stem from a lack of terminological clarity which originates in his interpretation of the works of Hyman Minsky.

Further correspondence with Keen and Reisll.

  • After Wednesday's post we had exchanges of email correspondence with both Prof. Steve Keen and Severin Reisll.  Here are the pertinent facts (summary):

  • Both Steve and Severin reported there have been further conversations on their 'debate', particularly this past week.

  • They both indicated they have refined more precisely where they disagree and have come to a better 'understanding' of issues.

  • Both indicated they will write further on this, either jointly or individually and will keep Econintersect advised of developments.

  • Severin clarified to what he referred when he used the characterization 'lacking theoretical underpinning'.  He said that applied specifically to whether Steve's proposal that "the relationship between debt and demand (or aggregate income) arises by necessity because it is some sort of accounting identity which is wholly independent of behavioural factors, institutional configurations, etc".  Severin indicated that a better reading by us would have made it made clear he was not criticizing the emipirical data (he very much praises it) but only this specific interpretation.

  • Severin also indicated he thinks the interpretation of data should further include attempts to model bank created debt (aka credit) distinctly from non-bank created debt (aka shadow banking).  Econintersect:  This is an interesting distinction because bank credit can be categorized as 'creating money out of thin air' (loans create deposits) while non-bank loans generally fit within the loanable funds format (firms loan money they already have).

  • Additional references were obtained from Severin, which have been included in the next section.

List of links for further discussion between Steve Keen and Severin Reissl and related posts (Updated 24 April 2016 with inputs from Severin Reissl):

1. Keen, S. (2014), "Endogenous Money and Effective Demand", Review of Keynesian Economics, Vol. 2, No. 3, pp. 271–291

2. Lavoie, M., (2014), "A comment on ‘Endogenous money and effective demand’: a revolution or a step backwards?", Review of Keynesian Economics, Vol. 2, No. 3, pp. 321–332.

3. Palley, T.I., (2014), "Aggregate demand, endogenous money, and debt: a Keynesian critique of Keen and an alternative theoretical framework", Review of Keynesian Economics, Vol. 2, No. 3, pp. 312-320.

4. Fiebiger, B. (2014), "Bank credit, financial intermediation and the distribution of national income all matter to macroeconomics", Review of Keynesian Economics, Vol. 2, No. 3, pp. 292-311.

5. Reissl, S. (2015), "A critique of Keen on effective demand and changes in debt", Real World Economics Review, Issue 72, pp. 96-117. (Published in September)

6. Keen, S. (2015), "The macroeconomics of endogenous money: response to Fiebiger, Palley and Lavoie", Review of Keynesian Economics, Vol 3, No. 4, pp. 602-611. (Published in October)  (Pay to Access Article)

7. Reissl, S. (2016), "Keen on endogenous money and effective demand: a further comment", Review of Keynesian Economics, Vol. 4, No. 2, pp. 201-207.  (Pay to Access Article)

8. Keenonomics, aggregate demand/change of debt, and some misleading critique (Egmont Kakarot-Handtke, Real-World Economics Review Blog) 

Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea

  • Heavy teen marijuana use may cut life short by 60 (CBS News)  Hat tip to Sig Silber.  Heavy marijuana use in the late teen years puts men at a higher risk for death by age 60, a new long-term study suggests.  Swedish researchers analyzed the records of more than 45,000 men beginning in 1969 and 1970. The scientists from the Karolinska Institutet in Stockholm reported that 4,000 died during the 42-year follow-up period, and men who'd used marijuana heavily at ages 18 and 19 were 40 percent more likely to die by age 60 compared to guys who hadn't used the drug.  The authors of the new study, published in the American Journal of Psychiatry, said the findings contradict previous research involving the same group of men.  This article contains information from a variety of sources that indicate marijuana usage per se may have no influence on mortality.  Rather, those with heavy marijuana usage may have had a high incidence of other situations which had the direct impact on health, with or without marijuana.  Some of the examples mentioned included smoking tobacco, poor psychological health and poor diets.  All of the bad health effects associated with marijuana usage may in fact be underlying and the marijuana usage may have increased as a result of them, rather than being the cause.  Correlation does not prove causation!!!!!!

Like in other disciplines, economics is a big and diverse field with both complementary and competing theories and practices.  There are financial economics, resource economics, macroeconomics, behavioral economics, experimental economics, environmental economics, welfare economics, Marxist economics, and so on.  I am always puzzled when people are surprised that there are so many different parts to the discipline.

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