Economists are fond of analogies to describe technical ideas.
Most of those analogies are confusing and/or useless. As I wrote in the introduction of Bankers are people, too:
Economists and journalists writing for lay audiences tend to use metaphors when explaining financial concepts. For example: ‘Cheap credit is like heroin. It’s addictive, and the economy can overdose from it.’ That may sound nice, but what does it even mean?
This is a review of a book written over 50 years ago by a central banker.
Based on that introduction, even most finance geeks will probably think “boring!” or “irrelevant!”. Until you learn it has Nazis, hyperinflation and the Nuremberg trials in it. And those are not even the interesting parts. Continue reading “The Magic of Money”
In a recent blog post, professor Roger Farmer comments on the publishing process in economics. He writes that economic journal publishing is “a process that is highly centralised around five leading journals. These are the American Economic Review, the Quarterly Journal of Economics, the Review of Economic Studies, Econometrica and the Journal of Political Economy. For a young newly appointed lecturer, publishing a paper in one of these top five journals is a pre-requisite for promotion in a leading economic department […]” Continue reading “Two publication cultures: economics versus physics”
Do you think banking is too hard for you? Are you convinced that all bankers are crooks? Would you like to follow the financial news, but you always get stuck on terms like derivatives, cryptocurrency or quantitative easing?
My first reaction was: probably not, because the ECB already evaluates its past performance. However, after more thought, I have changed my mind. This post examines some recent failures of central banks; how an IEO could improve monetary policy going forward2; and what it would take for the IEO to be an effective department rather than a paper tiger. Continue reading “Should central banks have an Independent Evaluation Office?”