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Why Economic Models Can’t Provide a Realistic Picture of Human Behavior May 26th 2021, 4:17 pm Mises: The experience with which the sciences of human action have to deal is always an experience of complex phenomena. No laboratory experiments can be performed with regard to human action. Image Credit: Email While in the natural sciences a laboratory experiment can isolate various elements and their movements can be followed through, there is no equivalent in the economic discipline. The introduction of econometrics and model building is an attempt to produce a laboratory where controlled experiments can be conducted. The idea of having such a laboratory is very appealing to economists and politicians, since once the model is built and endorsed as a good replica of the economy, politicians can evaluate the outcomes of various policies. ....
Printing Money Can’t Replace Real Savings April 14th 2021, 11:53 am If monetary stimulus could strengthen real economic growth, then world poverty would have been eliminated a long time ago Image Credit: Email Between January 1970 and December 2020 on average changes in money supply preceded changes in real economic activity by fourteen months, as depicted by real gross domestic product (GDP). Based on this it is tempting to suggest that a strengthening in the growth rate of money supply will result in the strengthening of real economic growth. Conversely, a weakening in the growth rate of money supply will set in motion a decline in real economic activity. ....
President Joe Biden has promised to raise the minimum wage from $7.25 to $15 per hour. Some economists are of the view that the increase in the minimum wage could cause an increase in unemployment. Other economists think that the increase is unlikely to harm the labor market. Hence, they are of the view that raising the minimum wage could lift the workers living standards. For example, in a study conducted in the 1990s, economists David Card and Alan Krueger examined a minimum wage rise in New Jersey by comparing fast-food restaurants there and in an adjacent part of Pennsylvania.1 They found no impact on employment. ....