The economics of business cycle theory revolves around understanding the recurrent fluctuations in aggregate economic activity—expansions and contractions—that characterize market economies. These cycles, while irregular in timing and amplitude, display certain regularities in employment, production, investment, and prices. Over the past century, economists have developed two main traditions in explaining them: one empirical and inductive, epitomised by the work of Geoffrey H. Moore and Victor Zarnowitz; the other theoretical and deductive, culminating in Real Business Cycle (RBC) theory. The contrast between these approaches highlights a broader tension in macroeconomics between data-driven description and model-based explanation.
Read MoreThe economics of tax incidence concerns the question of who ultimately bears the burden of taxation—whether it falls on consumers, workers, or producers—and under what conditions that burden shifts between them. It is a foundational topic in public economics, tracing back to the work of early classical economists such as David Ricardo, John Stuart Mill, and later formalised within the marginalist revolution of the late nineteenth and early twentieth centuries. The key insight is that the party legally responsible for paying a tax is not necessarily the one who bears its economic cost. Rather, the incidence of a tax depends on the relative elasticities of supply and demand in the market affected.
Read MoreDiscrimination has long been a central topic in the study of labour markets and economic behaviour, with economists attempting to understand not only its moral and social implications but also its economic causes and consequences. At its core, the economics of discrimination explores how differences in treatment based on race, gender, ethnicity, or other characteristics affect employment, wages, and productivity, and how market forces interact with these behaviours. The field was first formalised in Gary Becker’s The Economics of Discrimination (1957), which applied the tools of microeconomics to the question of why discrimination persists and under what conditions it might diminish. Later contributions, including those of Thomas Sowell, further investigated the incentives shaping discriminatory practices and the economic outcomes across different groups.
Read MoreBayesian statistics has become an increasingly influential framework in economics, offering an alternative to the frequentist methods that dominated much of the twentieth century. At its core, the Bayesian approach is built around the idea of probability as a degree of belief rather than as a long-run frequency. Rooted in the eighteenth-century work of Thomas Bayes and formalised by Pierre-Simon Laplace, the Bayesian method uses Bayes’ theorem to update prior beliefs in light of new evidence. This simple but powerful principle—posterior belief equals prior belief updated by data—has profound implications for how economists model uncertainty, interpret evidence, and make decisions.
Read More