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Roger Farmer

Roger Farmer

ROGER E. A. FARMER is a Distinguished Professor of Economics at UCLA and served as Department Chair from July 2008 through December 2012. He was the Senior Houblon-Norman Fellow at the Bank of England, January-December 2013.

Articles by Roger Farmer

Rebuilding Macroeconomic Theory

January 29, 2021

Image is from Chapter 22 of Dynamic Macroeconomics by George Alogoskoufis. Martin Sandbu has written a nice piece in the FT about the latest issue of the Oxford Review of Economic Policy, which is dedicated to an idea I have been promoting for more than three decades. Multiple Equilibria matter. For David this is a …

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Self-Fulfilling Prophecies, Quasi-Non-Ergodicity and Wealth Inequality

December 17, 2020

Why is Jeff Bezos worth $200,000,000,000 while the median American has net assets of just $121,000? In a new working paper, co-authored with Jean-Philippe Bouchaud of the Collège de France, we argue that the vast inequalities we see in the world distribution of wealth are deeply connected to a somewhat esoteric concept from the theory …

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A Journey Through the Evolution of My Ideas

November 9, 2020

Last week, I finished a ten lecture series in macroeconomics for graduate students at the University of Warwick. You can access these lectures by registering here.The first nine lectures are quite technical, but the last one is accessible to a general audience and I have posted it in two parts on YouTube. Here is how …

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Monetary Finance in the Age of Corona Virus: MMT and the Green New Deal

May 14, 2020

The world is going through a remarkable transformation in the aftermath of an unprecedented shut down of economies all over the globe. Before the crisis there was already significant debate about how to pay for the costs associated with the transition to a low carbon environment. That debate has intensified as treasuries and central banks …

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The Peters Paradox

May 6, 2020

This is a post I wrote in advance of an upcoming online conference on May 18th on ergodicity. The programme is available here. To participate, please send an email to Richard Arnold saying you would like to register for the Ergodicity day on 18th May. Since I’m working on non-ergodic behaviour in economic models, I …

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Jack Hirshleifer: A Memory

April 30, 2020

I was approached last month by Junyao Ying, a UCLA alum who is now working in China. Junyao and his wife Weiyi Qiu have recently translated Jack’s book, Investment Interest and Capital into Chinese. Junyao asked me to write a few words about Jack for the translation. This is what I wrote.The economics department at …

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March 5, 2020

Central banks throughout the world are charged not only with price stability, but also with maintaining financial stability. For example, the Federal Reserve is charged with maintaining maximum employment and stable prices and the Bank of England now has an entire new building packed with financial regulators.  Historically, the Fed has achieved its employment mandate by …

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Taxing Billionaires

November 23, 2019

I just read a fascinating twitter exchange between @Noahpinion and @gabriel_zucman. My scoring so far: Noah: 10: Gabriel: 0 Gabriel argues for taxing billionaires immediately based on the principle of “ability to pay”. Noah asks if his reasoning is based on some unarticulated moral principle; or is it on practical grounds. The State needs the …

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How Economics Can Help To Improve People’s Lives

October 10, 2019

Professor Roger Farmer discusses the cost to society of financial instability and how economics can help to improve people’s livesFriday 27 Sep 2019The International Journal of Economic Theory issued a Festschrift in honour of Warwick Professor Roger E.A. Farmer this year. The Festschrift reviews and pays tribute to Roger’s ideas, his career and his intellectual legacy up …

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A Requiem for the Fiscal Theory of the Price Level

September 12, 2019

Pawel Zabcyck and I have completed an update of our new paper on the Fiscal Theory of the Price Level. Here is the abstract of our paper. The Fiscal Theory of the Price Level (FTPL) is the claim that, in a popular class of theoretical models, the price level is sometimes determined by fiscal policy …

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Central Bank Equity Purchases: An Idea Whose Time has Come

August 2, 2019

Writing in the Financial Times last week, BlackRock executive, Rick Rieder, urged the ECB to purchase equities in an attempt to stimulate growth in the Eurozone. Merryn Somerset Webb, disagrees. While Merryn is correct to point out that BlackRock stands to benefit from a policy that would increase equity prices in the Eurozone, that is not a …

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The Future of Macroeconomics

June 15, 2019

In May of 2018, I was privileged to be invited to participate in an ECB colloquium on the Future of Central Banking and Macroeconomics in honour of Vítor Constâncio. Here is a video of my ten minute discussion of a paper by John Muellbauer.This discussion reflects my thinking on many topics including hysteresis, multiple equilibria …

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Why the Indeterminacy Agenda Matters in the Real World

May 29, 2019

In a couple of weeks, I will be presenting two lectures at the 20th edition of the Axel Leijonhufvud Summer School in Trento Italy. I’ve also just completed a piece for the Oxford Research Encyclopedia of Economics and Finance on the Indeterminacy Agenda in Macroeconomics. That article is available here as an NBER paper or …

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There are many unemployment rates for any r*

March 3, 2019

Eric Lonergan has a new blog post in which he draws attention to the importance of the asset markets in business cycle dynamics. While there is much to like in that post, I find parts of Eric’s argument misleading. Here is Eric: “This leads us to the how [stet] the equity market determines the ‘neutral …

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Why deficits are sustainable and inflation has a life of its own

January 14, 2019

My new working paper “The Fiscal Theory of the Price Level in Overlapping Generations Models” is now available here. The paper, joint with Pawel Zabczyk of the IMF, is also available as CEPR Discussion Paper 13432 and as NBER Working Paper 23445. Here is a teaser from the abstract“We demonstrate that the Fiscal Theory of …

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Social Progress is not an Illusion

January 12, 2019

I recently came across this critical review of Steven Pinker’s book, Enlightenment Now: The Case for Reason, Science, Humanism, and Progress, by Jeremy Lent in the online magazine, Open Democracy. Jeremy makes some good points, but then proceeds dramatically to overstate his case by painting a monothlithic concept of ‘free market economics’ as the enemy of …

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Don’t Trust the Markets

December 26, 2018

In a week when the Vix is at a seven-year high and the markets are back to the trading range of the summer of 2017, now seems like a good time to revisit the theme of market efficiency. Here is a link to the pre-publication version of an academic paper I published this year in …

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Taxing the Intangible Economy

July 11, 2018

With a slowdown in productivity growth hurting Western governments’ ability to deliver goods and services, new forms of revenue generation are needed. One possible solution is to tax capital gains at the same rate as other income.

LONDON – Some very clever people, including the president of the European Central Bank, Mario Draghi, and Andy Haldane, chief economist at the Bank of England, are expressing concerns over the slowdown in productivity growth. And, given that productivity (measured as GDP per hour worked) is the ultimate driver of increases in living standards, they are right to be worried. For most people in the West, wages and living standards have stagnated for decades. If you were a factory worker in the north

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Conference at the Bank of England

July 2, 2018

Last year I co-organize d a highly successful conference at the Bank of England on Economics and Psychology. You can find links to videos from most of the conference presenters here. This year I am co-organizing a second conference with the title, “Economics and Psychology: New Ways of Thinking about economic policy”. The conference will …

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Lend Me Your Ears: Friedman and The Role of Financial Policy

June 5, 2018

I was invited by Matías Vernengo, Co-Editor of the Review of Keynesian Economics, to write a paper, ‘The Role of Financial Policy’ in honour of the 50th anniversary of Friedman’s Presidential Address to the American Economic Association. The Review will be publishing a special edition later this year and I am honoured to be writing in the …

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Taming the Lion

June 3, 2018

In the nineteenth and early twentieth centuries the business cycle was a wild ride. Part of the damage inflicted by financial crises was caused by price instability. That problem was successfully solved in the 1980s when the Fed adopted inflation targeting. The success proved chimeric.  My last post argued for a second policy, designed to …

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Bulls and Bears: Why central banks should stabilize the stock market

May 30, 2018

My paper, Pricing Assets in a Perpetual Youth Model was recently published in the Review of Economic Dynamics. The paper uses mathematics to make a point.  But the idea is simple and worth explaining in English.   The paper constructs a formal mathematical model to capture the idea that free trade in capital markets does …

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Moving the Overton Window: Let the Debate Continue

April 19, 2018

The NIESR Rebuilding Macroeconomics project is stirring a great deal of controversy. And that’s a good thing. I am part of the management team. But I can only speak for myself here. In my opinion,  we should be generating dialogue between heterodox non-mainstream groups and conventional macroeconomists. Mainstream economists, and heterodox economists alike, should each stop being …

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Standing on the Shoulders of Giants

April 14, 2018

I have rarely read anything as unhelpful to the task of Rebuilding Macroeconomics as Howard Reed’s poisonous attack on the foundations of the dismal science. I have a lot of sympathy for Howard’s position. But if you are young and committed, with a desire to rebuild economics, your first job is to understand the edifice you …

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Large Scale Econometric Models: Do they Have a Future?

March 27, 2018

Here is an intriguing question: How is the Large Hadron Collider like the National Institute Global Economic Model? Read on! It was a great pleasure to organize a session on econometric models for the Royal Economic Society Conference at the University of Sussex. In my new role as Research Director at the National Institute of …

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What Does it Mean to Have Rational Expectations?

March 18, 2018

This is a follow up to my ergodicity post from last week. Both posts are inspired by conversations I had with my Co-Hub-Leader Jean Philippe Bouchaud (for the Rebuilding Macroeconomics Hub: Why are Economies Unstable?) on the role of the ergodicity assumption in science. Content warning: This is more technical than many of my posts with no apologies. It …

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The Household Fallacy

March 12, 2018

My new working paper, joint with Pawel Zabczyk, is out now as an NBER working paper, a CEPR discussion paper and a NIESR discussion paper. Here is the abstract:  We refer to the idea that government must ‘tighten its belt’ as a necessary policy response to higher indebtedness as the household fallacy. We provide a reason …

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March 12, 2018

Last Thursday, Jean-Philippe Bouchaud and I held the first meeting of the Rebuilding Macroeconomics project’s Instability Hub. There were roughly twenty people, some in attendance in person and some attending through Zoom. As expected, what emerged was an eclectic mix of ideas, some better presented or better formed than others. The overarching theme that emerged …

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