“The Failure of Democracy” – “The weaknesses of Weimar”
Do headlines such as these suggest that the whole architecture of the first German republic was wrong, that it was doomed right from the start, that the “collapse” was unavoidable?
In the paper that we present this afternoon, Soren Johansen, Anders Rahbek, Morten Tabor, and I introduce the Qualitative Expectations Hypothesis (QEH) as a new approach to modeling macroeconomic and financial outcomes.
After re-iterating five well-known theorems about the properties of conditional expectations in
stationary settings—such as providing unbiased minimum mean square error predictions despite in-
complete information, and the law of iterated expectations—we clarify unpredictability and illustrate
its prevalence empirically.
I have read the various conference papers and am struck by the fact that many use the (omnipresent New-Keynesian) model of an aggregate loanable funds market to diagnose secular stagnation and investigate possible remedies.
The prevailing wisdom that aggregate demand ‘shocks’ determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various streams of literature in the last decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of recessions and negative aggregate demand shocks (Blanchard et al. 2015; Martin et al. 2015).
The deregulatory zeal of the 1990s and 2000s has returned to the US and the post-Brexit plans to protect the City in the UK sound like the pre-crash light-touch mentality that fueled global regulatory arbitrage. As a result, a foremost “challenge of our time” is to stop “subsidizing more one-way bets” and “doubling down on failure.”
Support for populism is often attributed to xenophobia, racism,
and resentment at
immigrants, racial or ethnic minorities, or “uppity” non-traditional women.
, people who feel
as favoring those “others” over people like
turn to outsider populistic leaders.
This paper discusses what we have learned about the debt build-up in advanced societies over the past century. It shows that the extraordinary growth of aggregate debt in the past century was driven by the private sector.