Thursday, May 28, 2009

The war of slogans

The election fever is reaching new height with labelling effort to box the opponents.

I'd like to know more concrete policy and the number of each presidential candidate instead of empty slogans and the race to steal narrative.

Indonesian deserve a real and substantive debate on economic policy in order to make an informed choice.

Anyone know the website of economic platform of each candidates?

Saturday, May 09, 2009

Financial crisis & behavioral economics

TNR pubilish an article (click here) by Akerlof (Berkeley-Nobel Prize Winner) and Shiller (Yale). The title is provocative "Our New Theory of Macroeconomics' and very powerful excerpts below:

"The role of irrational behavior in the macroeconomy is not trivial and obvious to see. It requires the development of a new theory, which we only just have begun to provide in our book. In this book we strove to put together an array of evidence, some of it from psychology, some of it from economic research, that gave an overall picture that we think is in stark contrast to the usual paradigm.

It is a picture that stresses factors that are totally absent from conventional macroeconomic theorizing: that the economy is affected by variations in the level of trust, by storytelling and human interest, by perceptions of corruption or unfairness, by anger and optimism, by social epidemics causing changes in gut instincts and feelings. Those factors, we firmly believe, are ultimate causes of the boom we saw a few years ago, and the bust we are seeing now".
respond to Posner's (Chicago) review (click here) of their book "Animal Spirit.

Seem like a worthy book to read. And a call to arms for behavioral macroeconomist.

Update: more book reviews on origin of financial crisis (click here)