The Bank of England needs trade unionists and social scientists to stop groupthink
The Bank of England’s persistent failure to meet its inflation target over a long period of time is a matter of public record; the huge increase in inflation over the past 18 months or so is simply the most spectacular of the Bank’s errors. Every single member of the Monetary Policy Committee (MPC), both those […]
Great expectations: The Darwinian wars of economic and epidemiological forecasting
A key concept in modern economics is, to use the jargon term, rational expectations. The idea has dominated orthodox macroeconomics over the past 30 years. Not all economists have been persuaded of its merits by any means, but nevertheless, its influence has extended far beyond academia, into finance ministries and central banks around the world. […]
Economists have lost the public’s trust by meddling in politics
Michael Gove famously said during the Brexit campaign that people “have had enough of experts”. Certainly, the outcome suggests that many were sceptical of the doom-laden economic projections of Project Fear. But what do the public think about economists themselves? An intriguing survey released last week by ING bank and the Bristol University Economics Network […]
Brexit was the final straw: it’s time to scrap the IMF
Sports fans will all be familiar with the commentator who almost always gets things wrong. “Arsenal are very much on top here” he – it is invariably a “he” – will pronounce, or “Root is looking very settled”, only for the opposition to score a goal immediately and for the Yorkshireman to be clean bowled. […]
The poor state of macro justifies scepticism with Brexit disaster forecasts
David Cameron has tried to frame the Brexit debate into one based on economics. Standing with him is the overwhelming consensus of economists themselves, from academics to the International Monetary Fund (IMF). Their pronouncements are not having that much impact on the electorate if the polls are to be believed. There is justification for this […]
Integration won’t save the struggling Eurozone
Olivier Blanchard, the recently retired Head of Economics at the International Monetary Fund, has something of a track record with his predictions. In 2013, he warned George Osborne that he was “playing with fire” with the UK’s recovery from the financial crisis. Austerity had to be relaxed. We now know that we were actually nowhere […]
Psychology, not hard line maths, tells us why Osborne’s strategy is working
So, International Monetary Fund, wrong again! At the end of last week, the IMF abandoned its criticism of the UK government’s economic strategy. Christine Lagarde, the IMF chief, said her organisation had ‘underestimated’ the strength of the recovery in Britain. The IMF now believes that the UK will be the fastest growing of any major […]
The so-called ‘output gap’: another piece of economic mumbo-jumbo
The concept of the’ output gap’ is central to mainstream macroeconomics. It is not merely of academic interest. The Office for Budget Responsibility (OBR) has a specific requirement to estimate the output gap, which it defines formally as “the difference between the current level of activity in the economy and the potential level it could […]
Don’t say IMF, it’s IMF Squared!
In the boom decade of the 2000s, corporate rebranding and renaming was all the rage. Some were successful. Others are best forgotten, like PWC’s proposal to bestow the name of Monday on its consulting arm. But as the world’s economic recovery gathers momentum, perhaps it is time to revive the practice. A prime candidate is […]
George Osborne’s economic policy seeks to blind markets from the truth
Andrew Mitchell, the government’s chief whip, remains in some difficulty after his exchange with the police at the gates of Downing Street. At the heart of the incident there is an objective reality. Either he used the word pleb, or he didn’t. Either the police were officious jobsworths, or they were the epitome of politeness. […]
