politicartoons | (no subject)

It has been quite entertaining to see so many conservative 'experts' completely take for granted that Piketty is wrong. So-called libertarians endorsing plutocracy over an Animal Farm scenario really takes the cake though. Apparently Schuchman didn't read Animal Farm either...

Isn't it wild, people reviewing a book they've never read? E.g. Megan McArdle’s column for Bloomberg View.

I apologize in advance, because I am going to talk about a book that I have not yet read. To be clear, I intend to read Thomas Piketty’s “Capital in the Twenty-First Century.” It is sitting on my (virtual) bedside with a big stack of other (digital) books that I intend to read. But it’s far down in the queue, and I’m afraid that I can’t wait to weigh in—not on the book itself, but on its topic.

I've heard this book will likely win the Nobel prize for economics, due to the statistical work Piketty has done.

Edited 2014-06-03 23:19 (UTC)

If it does it will take a while. The Nobel in econ is still pretty backed up, both because there is a lot of important work (well at least that academics care about and how it shapes the thinking) but also because it often takes time to know the impact of a work. It would be amazing if Capital would get on the short list so soon, even if it did get consideration it probably would not win just due to tradition

So long as KL as a macro static is no longer taken for granted, they've done their job.

I don't understand what you're saying.

I'm saying that pedagogical simplifying assumptions, such as the Cobb-Douglas function(ie when K^n L^n=1), are detrimental to the field. Nobels in econ would be more substantial if such intuitions were done away with.

Maybe, but I don't think so. Cobb Douglas doesn't sum to one for pedagogical reasons, it does so for theoretical reasons. You would be hard pressed to come up with reasons for economies or diseconomies of scale in a macro context. Now CB production functions are often used because they're convenient but the scale economy parts are not.

I haven't read the book, but i do not think that Pikettys work relies on a production function which is not homogenous of order one. I would be surprised if he went in that direction because macro research had tried to go in that direction before (in the 80's when people were doing geographic/spacial examinations they ran into neededing macro level scale economies but could never find them or justify their existing*)

*IIRC: My knowledge of this comes from Krugman's "Development, Geography, and Economic Theory (Ohlin Lectures)" which is a short, accessible, and very interesting book/group of essays.