Introduction Conventional finance theory is based on the microeconomic theory of consumer choice under uncertainty. This is a long established theory with some serious weaknesses. On the MFin we have a core course called “Economic foundations of finance” which shows … Continued
In recent years there has been a fierce debate about the effectiveness of foreign aid, with opponents such as William Easterly arguing that most is wasted and that it often props up regimes that harm their population’s long term future. … Continued
Portugal is one of a number of countries that I have wanted to visit for years but somehow haven’t got to yet (some others are Russia and Turkey). I made my first, short but very enjoyable visit to Lisbon last weekend … Continued
Courtesy of the Economist’s View blog, I came across this important piece of research. You can tell it’s important because it isn’t in a finance or management journal but in the Proceedings of the National Academy of Sciences. The research … Continued
When I was flying to Portugal on Friday for a short holiday (more of that in a later post) I faced the small but not zero probability that the banking system might have collapsed. Why? Because the previous day the … Continued
As everybody has by now noticed, Greece and the ECB/EU are playing a game of chicken. If the opinion polls are correct, the anti-austerity vote will rise in the second set of Greek elections in June. A failure to keep … Continued
Recently one of my most distinguished colleagues said that the defining feature of academic research is rigour. He didn’t define it but I think his is a widely accepted view. I agree but “rigour” needs to be considered in context. … Continued
One of the most basic problems to solve before you can have a successful economy is, how do you reassure investors that they won’t be expropriated? This problem arises because of the combination of two features of most investments. First, … Continued
Daniel Kahneman – Thinking, fast and slow Whenever I’m asked in future to recommend a book on behavioural finance, I shall enthusiastically suggest this one. Although it’s not limited to behavioural finance or even its wider relation behavioural economics, the … Continued
Daron Acemoglu and James Robinson: “Why Nations Fail“ There have been many fascinating books in the last couple of decades on the big question of why some countries are rich and others poor, and the persistence of inequality over decades, … Continued
At a time when oil prices are around their all time highs it may seem odd to be thinking of how lower hydrocarbon prices will affect the world. But there is a growing sense in the US that longer term … Continued
2016, 2019, 2021, 2026. What do these dates have in common? They’re among the various predictions of investment banks and other pundits of when the Chinese economy will overtake that of the US to become the world’s largest. The most … Continued
The Institute for New Economic Thinking was founded two years ago with funding from George Soros. It held its first ever conference here in Cambridge, where possibly the greatest combination of leading economists ever assembled for one meeting debated how … Continued
Here’s a statement about the US consumer: “… certain dominant trends emerge: the increase in national income and in the purchasing power of a large section of the population; an increase in the availability of consumer credit; a sharp increment … Continued
There is growing enthusiasm in the US around the possibility that US oil and gas output will rise sharply in the next decade, improving the US balance of payments and sharply reducing the power of OPEC and major gas exporters … Continued