Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference." An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships." Jan Tinbergen is one of the two founding fathers of econometrics. The other, Ragnar Frisch, also coined the term in the sense in which it is used today.
Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to heterodox economics, which encompasses various schools or approaches that are only accepted by a minority of economists.
William Jack Baumol (February 26, 1922 – May 4, 2017) was an American economist. He was a professor of economics at New York University, Academic Director of the Berkley Center for Entrepreneurship and Innovation, and professor emeritus at Princeton University. He was a prolific author of more than eighty books and several hundred journal articles. He is the namesake of the Baumol effect.
Even though he never held a professorial position, Thünen had substantial influence on economics. He has been described as one of the founders of agricultural economics and economic geography. He made substantial contributions to economic debates on rent, land use, and wages. (Full article...)
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Economic democracy (sometimes called a democratic economy) is a socioeconomic philosophy that proposes to shift ownership and decision-making power from corporate shareholders and corporate managers (such as a board of directors) to a larger group of public stakeholders that includes workers, consumers, suppliers, communities and the broader public. No single definition or approach encompasses economic democracy, but most proponents claim that modern property relations externalize costs, subordinate the general well-being to private profit and deny the polity a democratic voice in economic policy decisions. In addition to these moral concerns, economic democracy makes practical claims, such as that it can compensate for capitalism's inherent effective demand gap.
Proponents of economic democracy generally argue that modern capitalism periodically results in economic crises, characterized by deficiency of effectivedemand; as society is unable to earn enough income to purchase its own production output. Corporatemonopoly of common resources typically creates artificial scarcity, resulting in socio-economic imbalances that restrict workers from access to economic opportunity and diminish consumer purchasing power. Economic democracy has been proposed as a component of larger socioeconomic ideologies, as a stand-alone theory and as a variety of reform agendas. For example, as a means to securing full economic rights, it opens a path to full political rights, defined as including the former. Both market and non-market theories of economic democracy have been proposed. As a reform agenda, supporting theories and real-world examples can include decentralization, democratic cooperatives, public banking, fair trade and the regionalization of food production and currency. (Full article...)
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Hermann Heinrich Gossen (7 September 1810 – 13 February 1858) was a German economist who is often regarded as the first to elaborate, in detail, a general theory of marginal utility.
Prior to Gossen, a number of economic theorists, including Gabriel Cramer, Daniel Bernoulli, William Forster Lloyd, Nassau William Senior, and Jules Dupuit had employed or asserted the significance of some notion of marginal utility. But Cramer, Bernoulli, and Dupuit had focussed upon specific problems, Lloyd had not presented any applications of theory, and if Senior provided a detailed elaboration of the general theory he had developed, he had done so in language that caused his applications of theory to be missed by most readers. (Full article...)
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Microeconomics analyzes the market mechanisms that enable buyers and sellers to establish relative prices among goods and services. Shown is a marketplace in Delhi.
Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the economy as a whole, which is studied in macroeconomics.
One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses. Microeconomics shows conditions under which free markets lead to desirable allocations. It also analyzes market failure, where markets fail to produce efficient results. (Full article...)
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Supply-side economics is a macroeconomic theory postulating that economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics theory, consumers will benefit from greater supply of goods and services at lower prices, and employment will increase. Supply-side fiscal policies are designed to increase aggregate supply, as opposed to aggregate demand, thereby expanding output and employment while lowering prices. Such policies are of several general varieties:
Investments in human capital, such as education, healthcare, and encouraging the transfer of technologies and business processes, to improve productivity (output per worker). Encouraging globalized free trade via containerization is a major recent example.
Tax reduction, to provide incentives to work, invest and take risks. Lowering income tax rates and eliminating or lowering tariffs are examples of such policies.
Investments in new capital equipment and research and development (R&D), to further improve productivity. Allowing businesses to depreciate capital equipment more rapidly (e.g., over one year as opposed to 10) gives them an immediate financial incentive to invest in such equipment.
Reduction in government regulations, to encourage business formation and expansion.
A basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue. The Laffer curve suggests that when the tax level is too high, lowering tax rates will boost government revenue through higher economic growth, though the level at which rates are deemed "too high" is disputed. (Full article...)
Jean-Baptiste Say (French:[ʒɑ̃batistsɛ]; 5 January 1767 – 15 November 1832) was a liberal French economist and businessman who argued in favor of competition, free trade, and lifting restraints on business. He is best known for Say's law—also known as the law of markets—which he popularized, although scholars disagree as to whether it was Say who first articulated the theory. Moreover, he was one of the first economists to study entrepreneurship and conceptualized entrepreneurs as organizers and leaders of the economy. He was also closely involved in the development of the École spéciale de commerce et d'industrie (ESCP), historically the first business school to be established. (Full article...)
The NIE assume that individuals are rational and that they seek to maximize their preferences, but that they also have cognitive limitations, lack complete information and have difficulties monitoring and enforcing agreements. As a result, institutions form in large part as an effective way to deal with transaction costs. (Full article...)
Richer countries tend to be happier than poorer countries (observations are lined up around an upward-sloping trend), and richer people within countries tend to be happier than poorer people in the same countries (arrows are consistently pointing northeast). The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness and quality of life, including positive and negative affects, well-being, life satisfaction and related concepts – typically tying economics more closely than usual with other social sciences, like sociology and psychology, as well as physical health. It typically treats subjective happiness-related measures, as well as more objective quality of life indices, rather than wealth, income or profit, as something to be maximized.
The field has grown substantially since the late 20th century, for example by the development of methods, surveys and indices to measure happiness and related concepts, as well as quality of life. Happiness findings have been described as a challenge to the theory and practice of economics. Nevertheless, furthering gross national happiness, as well as a specified Index to measure it, has been adopted explicitly in the Constitution of Bhutan in 2008, to guide its economic governance. (Full article...)
Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economic theory.
Agent-based computational economics (ACE) is the area of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in the paradigm of complex adaptive systems. In corresponding agent-based models, the "agents" are "computational objects modeled as interacting according to rules" over space and time, not real people. The rules are formulated to model behavior and social interactions based on incentives and information. Such rules could also be the result of optimization, realized through use of AI methods (such as Q-learning and other reinforcement learning techniques).
As part of non-equilibrium economics, the theoretical assumption of mathematical optimization by agents in equilibrium is replaced by the less restrictive postulate of agents with bounded rationalityadapting to market forces. ACE models apply numerical methods of analysis to computer-based simulations of complex dynamic problems for which more conventional methods, such as theorem formulation, may not find ready use. Starting from initial conditions specified by the modeler, the computational economy evolves over time as its constituent agents repeatedly interact with each other, including learning from interactions. In these respects, ACE has been characterized as a bottom-up culture-dish approach to the study of economic systems. (Full article...)
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Economics classes make extensive use of supply and demand graphs like this one to teach about markets. In this graph, S and D refer to supply and demand and P and Q refer to the price and quantity.The following outline is provided as an overview of and topical guide to economics. Economics is a branch of science that analyzes the production, distribution, and consumption of goods and services. It aims to explain how economies work and how agents (people) respond to incentives.
Economics is a behavioral science (a scientific discipline that focuses on the study of human behavior) as well as a social science (a scientific discipline that explores aspects of human society). (Full article...)
Ricardo was born in London as the third surviving child of a successful stockbroker and his wife. He came from a Sephardic Jewish family of Portuguese origin. At 21, he eloped with a Quaker and converted to Unitarianism, causing estrangement from his family. He made his fortune financing government borrowing and later retired to an estate in Gloucestershire. Ricardo served as High Sheriff of Gloucestershire and bought a seat in Parliament as an earnest reformer. He was friends with prominent figures like James Mill, Jeremy Bentham, and Thomas Malthus, engaging in debates over various topics. Ricardo was also a member of The Geological Society, and his youngest sister was an author. (Full article...)
For Walras, exchanges only take place after a Walrasian tâtonnement (French for "trial and error"), guided by the auctioneer, has made it possible to reach market equilibrium. It was the general equilibrium obtained from a single hypothesis, rarity, that led Joseph Schumpeter to consider him "the greatest of all economists". The notion of general equilibrium was very quickly adopted by major economists such as Vilfredo Pareto, Knut Wicksell and Gustav Cassel. John Hicks and Paul Samuelson used the Walrasian contribution in the elaboration of the neoclassical synthesis. For their part, Kenneth Arrow and Gérard Debreu, from the perspective of a logician and a mathematician, determined the conditions necessary for equilibrium. (Full article...)
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Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).
Trained in political science at UCLA, Ostrom was a faculty member at Indiana University Bloomington for 47 years. Beginning in the 1960s, Ostrom was involved in resource management policy and created a research center, the Workshop in Political Theory and Policy Analysis, which attracted scientists from different disciplines from around the world. Working and teaching at her center was created on the principle of a workshop, rather than a university with lectures and a strict hierarchy. Late in her career, she held an affiliation with Arizona State University. (Full article...)
Did you know...
... that when the COVID-19 pandemic began, Masyita Crystallin was instructed by the Indonesian finance minister to study the Spanish flu to help formulate unconventional economic policies?
... that the Canadian journalist Bernard Descôteaux is credited with the economic revival of the independent newspaper Le Devoir?
Image 3The publication of Adam Smith's The Wealth of Nations in 1776 is considered to be the first formalisation of economic thought.
Image 4The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase in demand from D1 to D2 and the resulting increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
Image 12Pollution can be a simple example of market failure; if costs of production are not borne by producers but are by the environment, accident victims or others, then prices are distorted.
Lufthansa staff conduct a one-day strike to protest the airline's cost-cutting measures, grounding at least 460 flights and affecting nearly 70,000 passengers. (DW)(Reuters)
Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference." An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships." Jan Tinbergen is one of the two founding fathers of econometrics. The other, Ragnar Frisch, also coined the term in the sense in which it is used today.
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The U.S. unemployment rate from 1990 to 2022 (from Economics)
John Maynard Keynes, a key economics theorist (from Economics)
The publication of Adam Smith's The Wealth of Nations in 1776 is considered to be the first formalisation of economic thought.
The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase in demand from D1 to D2 and the resulting increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
An example production–possibility frontier with illustrative points marked (from Economics)
São Paulo Stock Exchange in Brazil, an electronic trading network that brings together buyers and sellers through an electronic trading platform
An environmental scientist sampling water
List of countries by gross domestic product (PPP) per capita in April 2022 (from Economics)
Milton Friedman (from Economics)
Pollution can be a simple example of market failure; if costs of production are not borne by producers but are by the environment, accident victims or others, then prices are distorted.
A basic illustration of a business cycle (from Economics)
The circulation of money in an economy in a macroeconomic model. In this model, the use of natural resources and the generation of waste, such as greenhouse gases, is not included. (from Economics)
Economists study trade, production, and consumption decisions, including those that occur in a traditional marketplace.
A 1638 painting of a French seaport during the heyday of mercantilism
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