How to Fix the Banks
Roger Farmer's Economic Window
by Roger Farmer
1y ago
This post first appeared in the Financial Times Economists Forum on February 9th 2009. I am reposting it here because it is as relevant today as it was then. My argument provides a way to provide a backstop to the banking system as a whole, without generating the incentive for any individual bank to engage in risky behavior and without putting taxpayer funds on the line. By Roger E. A. Farmer Feb 9, 2009 @ 12:11 We don't need to nationalise the banks. We don't need to guarantee bad assets. We don't need government to own voting shares in private banks. We don't need to create a bad bank full ..read more
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Axel Leijonhufvud Remembered
Roger Farmer's Economic Window
by Roger Farmer
2y ago
I learned today that my friend, colleague and mentor, Axel Leijonhufvud passed away on Monday May 2nd. Axel was one of the most creative macroeconomists of his generation and a towering presence in UCLA macro from 1964 until his departure in 1995 when he took up an appointment at the University of Trento. In 2006 I was privileged to organize a conference in Axel’s honor at UCLA that was later published as a Festschrift, Macroeconomics in the Small and the Large, with contributions from his friends and admirers, one of whom, Ned Phelps, was a Nobel Laureate and two more, Tom Sargent and Lars Ha ..read more
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An Interview with Roger Farmer by Phil Armstrong: Part 4 of 4: On Modern Monetary Theory
Roger Farmer's Economic Window
by Roger Farmer
2y ago
An excerpt from Chapter 5 of  Can Heterodox Economics Make a Difference, published by Edward Elgar in 2020. Here is a link to the Table Of Contents, and a link to the biographies of all those interviewed for the project.   “If the question is ‘what determines the price level?’, which I do take to be a useful question, I’m probably in bed with modern monetary theorists. My view is that beliefs determine the price level. But the reason that I’m able to make that statement and live in two worlds at the same time, is because the equilibrium models I build contai ..read more
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An Interview with Roger Farmer by Phil Armstrong: Part 3 of 4: On Heterodox Economics
Roger Farmer's Economic Window
by Roger Farmer
2y ago
An excerpt from Chapter 5 of  Can Heterodox Economics Make a Difference, published by Edward Elgar in 2020. Here is a link to the Table Of Contents, and a link to the biographies of all those interviewed for the project.   “I wrote a paper with Andreas Beyer of the ECB where we showed that New Keynesian models are unidentified. The implication of our work is that the parameters of the mainstream NK model are identified by theoretical restrictions and not by data. That may work well as a description of past data. But if the model is wrong, it will not help to ..read more
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An Interview with Roger Farmer by Phil Armstrong: Part 2 of 4: On Conventional Theories of Money
Roger Farmer's Economic Window
by Roger Farmer
2y ago
An excerpt from Chapter 5 of  Can Heterodox Economics Make a Difference, published by Edward Elgar in 2020. Here is a link to the Table Of Contents, and a link to the biographies of all those interviewed for the project.   “[Then] there is the question of whether central banks should intervene by controlling the yield curve. … [My] answer is yes and, I would go further. Central banks should control the price of a basket of risky assets. Policies of this kind are not currently in the remit of the Bank of England or the Fed. But they should be. I remain optimi ..read more
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An Interview with Roger Farmer by Phil Armstrong: Part 1 of 4: On Economic Methodology
Roger Farmer's Economic Window
by Roger Farmer
2y ago
I claimed to be a methodological individualist –  and I think that’s a useful way of thinking about the world on Saturdays –  but on Wednesdays something changes. Let me explain that idea. [Roger E. A. Farmer] In 2017 I gave a talk at the University of Greenwich where I met Phil Armstrong. Phil was finishing up a PhD in economics at the University of Southampton Solent and he asked me if I would agree to be interviewed for his dissertation on heterodox economists and to recruit some other mainstream economists to be interviewed for the book. Having recently written ..read more
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Rebuilding Macroeconomic Theory
Roger Farmer's Economic Window
by Roger Farmer
3y ago
Image is from Chapter 22 of Dynamic Macroeconomics by George Alogoskoufis. Martin Sandbu has written a nice piece in the FT about the latest issue of the Oxford Review of Economic Policy, which is dedicated to an idea I have been promoting for more than three decades. Multiple Equilibria matter. For David this is a new revelation. For some of us labouring on the coal front, it has been obvious for a long long time. And Martin is correct to point out that the ship of research is finally beginning to change course, albeit thirty years after the initial ideas were first floated. Recent books tha ..read more
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Self-Fulfilling Prophecies, Quasi-Non-Ergodicity and Wealth Inequality
Roger Farmer's Economic Window
by Roger Farmer
3y ago
Why is Jeff Bezos worth $200,000,000,000 while the median American has net assets of just $121,000? In a new working paper, co-authored with Jean-Philippe Bouchaud of the Collège de France, we argue that the vast inequalities we see in the world distribution of wealth are deeply connected to a somewhat esoteric concept from the theory of stochastic processes. The world is quasi-non-ergodic. Our paper is published as CEPR Discussion Paper 15573. It is also available on my website linked [here]. Our paper has two intertwined themes. The first is that it is impossible to accurately predict the f ..read more
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A Journey Through the Evolution of My Ideas
Roger Farmer's Economic Window
by Roger Farmer
3y ago
Last week, I finished a ten lecture series in macroeconomics for graduate students at the University of Warwick. You can access these lectures by registering here. The first nine lectures are quite technical, but the last one is accessible to a general audience and I have posted it in two parts on YouTube. Here is how I described the lecture in the YouTube header. Join Professor Roger Farmer in this first part of a two part lecture in which he takes you on a journey through the evolution of his ideas. In Part 1 Professor Farmer explains what's wrong with New Keynesian economics and why it ca ..read more
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A UK Sovereign Wealth Fund
Roger Farmer's Economic Window
by Roger Farmer
3y ago
This post first appeared on this site on December 17th, 2017. It was reposted on VoxEU in 2018. I’m also adding a link here to my 2013 Financial Times article, “A sovereign wealth fund  can save the UK from market meltdown” which was not included in the original post. I am reposting this piece because the idea of a UK Sovereign Wealth Fund is gaining popularity in the public square. This is an idea I have been writing about for many years and you will find links in my original post to my academic articles, books and opinion pieces on this topic as well as those of Miles Kim ..read more
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