BLOG MASH-UP OF THE WEEK

Everyday the blogosphere offers an enormous amount of in-depth analysis on any imaginable topic. The world of macroeconomics and economic forecasting is no exception. To keep themselves updated on the latest information, our in-house team of economists scan the world wide web and gather what they consider the most interesting, appealing, informative or just curious blog posts from experts in the field of global economics. Here’s the list of the Top 4 posts from this week. Check it out!

  1. Fixing the Economists – Philip Pilkington : ‘Why Thomas Piketty is Wrong About Inflation and Interest Rates

    Thomas Piketty is well know nowadays for his recent book titled Capital in the Twenty-First Century. In this book, Piketty uses history and data to analyze themes such as wealth concentration and distribution over the past 250 years. Piketty looks at a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. Several websites, including Wikipedia, underline that Piketty is a Keynesian economist. However, Phillip Pilkington, author of this blog, points out that Piketty’s book contains a section on public debt in a historical perspective which is “desperately misinformed.” Piketty argues that the reason that governments have been able to run persistent deficits is due to consistent inflation, which erodes the real interest rates governments must pay on their debt. While Pilkington thinks that this may be true, the conclusions Piketty draws from it are altogether incorrect and, “not the conclusions a Keynesian economist would draw.” An entire blog worth reading!” –  Ricardo Aceves

  2.  Testosterone Pit –  Wolf Richter: ‘Housing bubble 2 already collapsing for the 99%’

    Wolf Richter comments on the United States real estate market with a particular focus on contrasting developments among different price segments that point to a potential new real estate bubble. He shows that while during the first four months of 2014 the sales of the most expensive 1% of houses have soared an annual 21.1%, sales of the lower 99% have collapsed 7.6%. In 2013, sales in the top 1% price segment jumped up 35.7%, while the lower 99% category recorded a much weaker 10.1% growth. Richter also underlines that this diverging development in the housing market persists among many different U.S. cities. In his opinion, the Federal Reserve Bank’s loose monetary policy that has been adopted since the 2008 financial crisis led to the boost in the upper price segment and the potential next housing bubble.  Teresa Kersting

  3. Stumbling and Mumbling – Chris Dillow : ‘OPPORTUNITY VS REDISTRIBUTION’

    In this interesting blog post, Chris Dillow explains why the best response to immigration is not to give native citizens the required skills to succeed in the labor market. First, he argues that many people lack the innate skills, and perhaps there are genetic or quasi-genetic reasons why not everybody can succeed. A solution to this might be to increase the investment in education. However, studies show that an increase in average expenditure per pupil improves tests scores only marginally. Dillow argues that there is another reason why we’ll never live in a society in which everyone has equal opportunities. He argues that family connections and networking are advantages that cannot be easily eliminated. He concludes his post by saying that a solution to this dilemma might be a more progressive tax and benefit system. –  Dirina Mançellari

  4. VOX – Francesco Daveri: ‘The German surplus and the Eurosceptics

    Daveri tackles the popular notion that the rise in eurosceptic parties in the recent European elections is related to the way in which the economic crisis has impacted several countries in the region. In particular, this view refers to the trade balance differences between Germany and the rest of the euro area. Germany runs trade surpluses with the majority of the countries in the euro area. The argument follows that Germany exports too much and imports too little, and this undermines other countries’ industry and employment. Daveri offers some insights to the reader, in favor and against the common argument, although both sides of the story should be taken with a pinch of salt. – Enrique Jorge 

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