Finance: Past, Present and Future

Econ Journal Watch is an online journal which looks at economics in an unusual and helpfully provocative manner. The current issue asks the question: Does economics need an infusion of religion or quasi-religious formulations? There is a really interesting essay by Nicholas Taleb and Rupert Read which argues that religion performs a useful risk management function by transmitting risk-control heuristics across generations.

In the video below, the Financial Times claims that the data underpinning Piketty's Capital is dodgy! Here is Piketty's response and Guardian coverage of the story is here .

I have been a fan of Thomas Piketty's work for nearly a decade, particularly his work on wealth concentration in France over the long run ( click here ). Indeed, his papers on wealth concentration inspired me to write an article on wealth inequailty in Ireland over the long run using probate data. The publication of Capital in the Twenty-First Century , his 685-page book, has turned him into a 'rock-star economist', with sales of his book propelling it to the top of the best-seller lists. His book is controversial. Using long-run data on wealth, he argues that Western societies are returning to their unequal past, where wealth and income is concentrated in the hands of the few. However, it is his explanation for these events as well as his radical policy prescriptions, such as international wealth taxes, which caused the most controversy.  The review of Capital by Robert Shiller is here and Evan Davis has a nice piece at the Spectator, comparing Piketty with M...

Tyler Goodspeed has written a wonderful Ph.D. dissertation at Harvard University on Scottish free banking entitled "Upon Daedalian Wings of Paper Money: Adam Smith, Free Banking, and the Financial Crisis of 1772". It is well worth reading and is available here .

The FA Commission have produced a report which looks at how the globalisation of the English Premiership has affected the development of English footballers and the England football team. The FA Commission makes various recommendations to address the effects of globalisation on the development of English football talent. What I would like to see economists tackle is how the globalisation of different professions and sectors has affected the domestic development of talent. The NY Times has an alternative league table which only counts goals scored by English players - click here  (hat tip: Graeme Acheson). In this table, Liverpool come top, Manchester Utd come third, and the Premiership winners Manchester City come 18th!  

The latest data from the ONS show that UK house prices rose by 8% in the year to March 2014. Most of the increase was in England, with house prices in N. Ireland rising only 0.3%.  Indeed, the increases in England were mainly driven by London (17.0%), the South East (6.1%) and East (6.6%). This, allied to the build-up of household debt, has caused Mark Carney, Vince Cable, and the Prime Minister to sound warnings in recent days over the health of the housing market and the dangers the over-heating housing market poses for the economy - click here , here and here . Why have house prices in London and the South East risen so much? Is it a supply problem? Is it a demand problem? After all, these are the two areas of the economy where there is most job creation and pressure on space. Or could it be a combination of the government's Help to Buy scheme and Bank of England's radical monetary policy, which has kept the cost of borrowing artificially low?   www.spectat...

Belfast-born and Queen's-educated Brian Arthur  of the Santa Fe Institute is a leading thinker in the area of complexity economics . Complexity economics builds on the idea that the economy is not (if ever) in equilibrium and that the economy is complex, dynamic and continually in flux. You can read his paper on complexity economics here  and below is a video of him talking about complexity economics.

Behavioural finance has attracted a lot of attention from academics, but can the insights of behavioural finance be used to make money? In the FT video below, Tom Howard of AthenaInvest summarizes his talk  given at the CFA Institute on how he makes money using insights from behavioural finance. You can read his paper entitled Behavioral Portfolio Management here .

Click here for another insightful student review of a working paper at NEP-HIS Blog . This review is by Alexander Horkan, a final-year PPE student at Queen's University. Alexander reviews a paper by Thor Berger and Kerstin Enflo which looks at the short- and long-term economic impact of railroad development in Sweden. They suggest that railroad development in the nineteenth century shapes the economic geography of present-day Sweden.

Last night's Spotlight programme was a piece looking at the allegations that Ulster Bank (and RBS) pushed viable businesses into administration in order to grab valuable assets. These allegations have been made in the government-commissioned  Tomlinson Report  but have been refuted in Clifford Chance's independent review of the Tomlinson Report. I was interviewed for the programme and you can watch it on BBC iPlayer . 

The obesity epidemic is global and is a major public health issue. Why has it happened? Robert Lustig , a pediatrician at the University of California San Francisco, argues in his  new book  that sugar is to blame. According to Lustig, food companies add more sugar to drink and food than in the past. He also blames governments who have also been complicit, since they have been captured by the fructose producers and the food and drink industry. Politicians have also wanted food to be cheap so as to remove it as an election issue. Below is a brilliant lecture by Lustig on the role of sugar in the obesity epidemic. 

One of the growth industries in Northern Ireland is television and movie production. For example, most of HBO's Game of Thrones is filmed and edited in Belfast. My colleague Graham Brownlow has recently spoken to the BBC about the Games-of-Thrones effect on the local economy - click here .

Michael Lewis's Flash Boys has caused quite a stir among traders, investors, and regulators - click here and watch FT video below for further details. Lewis's basic allegation is that high-frequency traders are manipulating the market to their advantage with high-powered computers and complex algorithms. New York's Attorney General calls it "Insider Trading 2.0".

I have just finished reading   Fortune Tellers: The Story of America's First Economic Forecasters   by HBS's  Walter  Friedman . Friedman's  book is a series of fascinating biographical accounts of the leading forecasters in the first three decades of the twentieth century – Roger Babson (see  video  clip below); Yale economist Irving Fisher; John Moody; Charles J. Bullock and Warren Persons, who led the Harvard Economic Service; and economist and NBER founder Wesley Mitchell along with politician Herbert Hoover, who both saw economic forecasting as a public good, which should be provided by government agencies. This is one of the best books which I have read over the last number of years.  It is very readable and exceptionally thought provoking. Anyone with any interest in economics, investing or forecasting would profit from reading it.

EconPop have started a series where they look for the economics in popular culture. Below is their Economics of Ghostbusters, but they also look at House of Cards . 

Today QUCEH is hosting a workshop on the Great Famine of 1845-52. During the Irish Potato Famine, excess mortality exceeded one million and about one million people emigrated. Why did it happen? What could have been done to prevent the failure of the potato crop resulting in so many deaths? Joel Mokyr addressed these questions 30 years ago in Why Ireland Starved . At today's workshop, Joel Mokyr along with other famous scholars, will be revisiting the question as to why the Great Famine happened. The workshop programme is here . The Great Hunger Memorial in Cambridge, MA