Dani Rodrik CCT cash transfer program. Simple framework.
Friedman – Moderate price ceiling. Increase output, 1953 realism of assumptions not matter. If results right, matters not what assumptions used.
Free market price control – Firms reduce supply, profit less. Not want to waste. Monopoly price control – Induces output. Blunt underproduce. Don’t criticize unrealistic assumptions. – What about values laden in assumptions?
Books: Shilling game theory – Aero and Debrew
What makes complexity complex? Comparative advantage. Mario boat lift Miami. 7% increase of workforce in low end on wage market. No observable impact on wages. Sociology of profession. Fads in models, not evidence.
Models good for 3 reasons : Allow testing of hypotheses M, method for sorting disagreements, K shared based on competence.
Markets Competitive. Many open, no one control price. Imperfect competition. Mono or duopoly. A symmetric markets. Insurance, credit.
Reinhardt and Rogath.
Public Debt levels over 90% decrease GDP. Used to shift burden of 2008 crisis, which was 98% caused by private banks, on the taxpayers shoulder. We paid for their mistakes based on part on this idea which was yet another mistake. Tom Herden. He found errors and choices.
A model for the model, omission of errors. 2008 not see fat tail, not see systemic risk. Commission advocate for policies based on idea – Austerity.
EMH all have all info we need. All info in price. Yet debt hidden in price.
Latin American reform in 90s. Washington consensus. Gonna make free market.
Gov intervention killed Econ in 80s. Stable, private and liberalization. Yet no rule of law, no functioning properly rights. Created ideal conditions for crony capitalism. Also treated all counties same, same reforms. Doubled down when things not work. Then if ignore or deny after. Open doors killed existing companies but not spur new. No cash for infrastructure, not flexible work force, inflated currencies
OECD free capital flow around the globe. Created instability. Principle agent model. How to control people in control.
Comparative development. Colonialism protected property rights. People stay.