Dirk Niepelt

In Econometrica, Emmanuel Farhi and Iván Werning neatly summarize how their work on demand externalities fits in the literature. … pecuniary externalities, which were first shown to arise when a simple friction, market incompleteness, is introduced into the Arrow–Debreu framework (see, e.g., Hart (1975), Stiglitz (1982), Geanakoplos and Polemarchakis (1985), Geanakoplos, Magill, Quinzii, and Dreze (1990)). The logic is as follows. When asset markets are incomplete and there is more than...

In the New York Times, Max Fisher reviews why the Two State Solution hasn’t happened.

In the Journal of Economic Literature, William Roberds reviews Christine Desan’s “Making Money: Coin, Currency, and the Coming of Capitalism” and he provides his own perspective on European monetary history. … the transition of the Bank of England’s notes from the status of experimental debt securities (in 1694) to “as good as gold” (1833) required more than a century of legal accommodation and business comfort with their use. Desan emphasizes England’s traditions of nominalism (as...

Die Volkswirtschaft 1–2 2017, December 21, 2016. HTML, PDF. Banning inside money creation would be unnecessary, insufficient, not enforceable, and besides the point. The way forward is to grant everyone access to central bank reserves and let investors choose between reserves and deposits.

In the Guardian, Jon Henley reports about Switzerland’s new immigration law. The Swiss parliament rejected quotas on EU workers, contrary to what a 2014 referendum demanded. Instead, the new law requires that residents be given priority in new job vacancies. [C]ross-border commuters to Swiss jobs, plus EU residents in Switzerland, will be able to register with a Swiss job centre and get the same treatment as Swiss citizens.

In the Washington Post, Henry Farrell writes about Schelling’s work and how it shaped the Cold War. Schelling’s contribution was to show how the two sides could think systematically about coordinating (where they had common interests) and deterring each other from unwanted actions (where they did not). This arguably gave rise to a much more stable world — the world of the Cold War — where both sides struggled with each other for dominance, but tacitly agreed on some of the rules of the...

In a 2011 paper, Kaushik Basu argued that “harassment bribes”—bribes that people give to officials in order to get what they are legally entitled to—should be treated as legal. The reasoning is as follows: Under the current law [treated as illegal], … once a bribe is given, the bribe giver and the bribe taker become partners in crime. … Under the new law [treated as illegal], when a person gives a bribe, she will try to keep evidence of the act of bribery so that immediately after the...

80,000 hours, that’s how many hours we typically spent working over a lifetime, according to Benjamin Todd and the 80,000 hours team. They have published a book/ebook on how to make the best of it. Their advice for a dream job: Look for work you’re good at, work that helps others, supportive conditions: engaging work that lets you enter a state of flow; supportive colleagues; lack of major negatives like unfair pay; and work that fits your personal life. The book discusses strategies to...

In the Washington Post, James Hohmann reports that U.S. President-elect Donald Trump and his candidate for secretary of state, Rex Tillerson, share an affection for Ayn Rand’s “objectivist” philosophy. Trump identifies with Howard Roark, the main character in [Rand’s] “The Fountainhead” while Tillerson prefers “Atlas Shrugged” which I reviewed here. Other prospective members of the new administration also hold objectivist views while Stephen Bannon rejects “unenlightened capitalism” a la...

On Marginal Revolution, Alex Tabarrok discusses the radicalism of the early American Economic Association (founded 1885) and its co-founder, Richard T. Ely. Prominent economists at the time rejected the marginalist principle, held socialist and racist views and supported eugenics.