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Macroeconomics

Macroeconomics

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Eric Livny
May
08

On “Humans” vs. “Econs”, the mystery of human psyche, and the domain of economic inquiry

Macroeconomics
You may think that the subject matter of economics is human behavior. Well, not so fast. There is a growing body of behavioral economics literature suggesting that the subject matter of mainstream economics has been behavior by “Econs”, not “Humans”. Consider this journalistic account of “Nudge”, an influential book by Richard Thaler and Cass Sunstein:  Economics has traditionally ignored psychology. In NUDGE, Richard Thaler and Cass Sunstein take a step toward greater realism about it. […] The authors start off by differentiating "Econs" from "Huma...
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economic theory economic thought microeconomics
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Michael Fuenfzig
May
03

The Catching-up Game

Macroeconomics
A recent paper by Dani Rodrik has an interesting observation about Georgia. The paper itself estimates the productivity growth rates of manufacturing firms, based on a UNIDO dataset covering 72 countries. What would we expect? We could believe that it is hard to innovate, but easy to copy and emulate the productivity leaders in the industry. In this case the most unproductive firms are the ones with the highest productivity growth, and the most productive firms the ones with the lowest productivity growth. Or we believe that productivity growth is d...
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development
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Michael Fuenfzig
Apr
26

Two Cities

Macroeconomics
The New York Times ran an article about Lazika, the planned city near Zugdidi, on the Black Sea coast. It’s not the only attempt to build a new city from the scratch in the South Caucasus, as Azerbaijan has similar plans. While these plans sound like pipe dreams of overambitious and overconfident politicans and planners a few positive things can be said about Lazika. Maybe, after all it is not such a crazy idea. In particular, this quote in the New York Times caught my attention (and I have to admit, it speaks for Mr Vashadze to be open to new ideas...
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azerbaijan development
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Yasya Babych
Apr
19

The Best Years of Our Lives

Macroeconomics
Anyone who has seen an old American classic “Best Years of Our Lives” (1946) probably remembers the scene where one of the protagonists, Al Stephenson, a banker who just returned from war in the Pacific, tells his incredulous colleagues: “Our bank is alive. It’s generous. It’s human. We are going to have such a line of customers seeking – and getting - small loans, that people may think we are gambling with the depositors’ money. And we will be. We will be gambling on the future of this country” This speech neatly summed up the prevailing mood of the pos...
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macroeconomics
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Yasya Babych
Mar
29

The Georgian Consumption Puzzle

Macroeconomics
One of the current economic mysteries of the South Caucasus and the source of certain uneasiness on the part of world development organizations has been the significant rise in the recent years of the consumption to output ratio in Georgia. The reason why such trend can be worrisome is simple. High consumption rates, including private and government consumption, imply low domestic savings. Savings, in turn, are the source of funds for capital investment, one of the important engines of future economic growth. In an open economy the lack of domestic savin...
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macroeconomics
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