Posts tagged economics
The case for reading old economists and the elephant in the room in EM equities

I hope you’re enjoying the 2023 Chat-GPT advent calendar even if it is quite a deviation from the content normally posted here. Fret not, I will pepper the flow of advent stories with some economics, and a lookahead to markets next year.

I really enjoyed @EconTalker's conversation with @tylercowen, the founder of the most widely read economics blog out there, reminding us that there is still value in reading the grand old masters of economics. I enjoyed re-reading most of Keynes’ the General Theory for my essay on fiscal policy, and it was also fun to remind myself about Milton Friedman’s permanent-income-hypothesis for the essay on the life cycle hypothesis. But in reality, I fall foul of Tyler’s accusation of an economist who is probably not as well acquainted with the classics as I should be. I have read very little of Smith for example, I find Hayek very difficult to read, and as an economist interested in demographics, I also regret to say that I have only read few parts of Malthus in the primary versions. Fortunately for me and others, Tyler has made his new his new book"GOAT" of economics—freely available, and I am looking forward to dig in over Christmas.

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The Life Cycle Hypothesis

Depending on the wording, a search on Google Scholar for papers and research on the link between macroeconomics and demographics yields anywhere between 20,000 and 100,000 results. This is an unhelpful start for someone looking to explore and understand the field. This essay aims to rectify this issue by tracing the origins of the life cycle hypothesis (LCH)—ground zero for linking macroeconomics and demographics—through a close inspection of the 1950s literature that gave birth to the theory. It is motivated by the idea that anyone who wishes to explore this topic needs to have a firm grasp of the original material. A lot can be said for getting the basics right, and this essay is an ode to that idea.

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