Category Archives: Economics

The Two-Track Brain – Rationality and Bias

Thinking Fast and Slow -  Daniel Kahneman   Decision Making, Finance, Medicine, Political Economy

A simple maths problem: If a bat and a ball cost $1.10 and the bat is $1.00 more expensive than the ball, how much does the ball cost? Half a Harvard class got the wrong answer in a written test!!!

Economics Nobel Prize winning psychologist Daniel Kahneman argues that we have two systems of thinking. System-1 is intuitive and fast while System-2 is logical, slow and lazy.

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Debt, Demographics and the Distribution of Income: new challenges for monetary policy

Debt, Demographics and the Distribution of Income: new challenges for monetary policy -  Gertjan Vlieghe   Monetary Policy, Interest Rates, Macroeconomics

Monetary policies all over the world are such that interest rates are at their lowest rate ever. In some economies, the rate is negative so that it costs to keep money in banks rather than “under the bed”. This is unprecedented! Despite this, borrowing for new investment is weak – with implications on future productivity and economic growth.

The low interest rates mean that there is little scope to reduce them further, which in turn means that monetary authorities have little scope for managing economic activity – employment, production and investment.

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Contracts, Firms and the Boss-Worker Relationship

Contracts, Firms and the Boss-Worker Relationship -  Oliver Hart   Economics, Law, Contracts, Organisations, Employment

When is privatisation of services reasonable and when is it unreasonable? Why are there firms – rather than millions of independent contractors who trade goods and services markets? How does the impossibility of a complete contract affect productivity and production methods and efficient ownership? If firms exist because of organisational efficiencies, why isn’t there just one big relatively benevolent productive firm?

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