Portal:Economics

Introduction

Economics (/ˌɛkəˈnɒmɪks, ˌiːkə-/) is a social science that studies the production, distribution, and consumption of goods and services.

Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses what is viewed as basic elements within economies, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses economies as systems where production, distribution, consumption, savings, and investment expenditure interact, and factors affecting it: factors of production, such as labour, capital, land, and enterprise, inflation, economic growth, and public policies that have impact on these elements. It also seeks to analyse and describe the global economy. (Full article...)

Selected general articles

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  Possible portrait of Mandeville

  
  Bernard Mandeville, or Bernard de Mandeville (/ˈmændəˌvɪl/; 15 November 1670 – 21 January 1733), was an Anglo-Dutch philosopher, political economist, satirist, writer and physician. Born in Rotterdam, he lived most of his life in England and used English for most of his published works. He became famous for The Fable of the Bees. (Full article...)
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  Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to heterodox economics, which encompasses various schools or approaches that are only accepted by a small minority of economists.
  
  The economics profession has traditionally been associated with neoclassical economics. However, this association has been challenged by prominent historians of economic thought including David Colander. They argue the current economic mainstream theories, such as game theory, behavioral economics, industrial organization, information economics, and the like, share very little common ground with the initial axioms of neoclassical economics. (Full article...)
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  New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the social and legal norms and rules) that underlie economic activity and with analysis beyond earlier institutional economics and neoclassical economics.
  
  The NIE assume that individuals are rational and that they seek to maximize their preferences, but that they also have cognitive limitations, lack complete information and have difficulties monitoring and enforcing agreements. As a result, institutions form in large part as an effective way to deal with transaction costs. (Full article...)
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  The Austrian school is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self interest. Austrian-school theorists hold that economic theory should be exclusively derived from basic principles of human action.
  
  The Austrian school originated in 1871 in Vienna with the work of Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and others. It was methodologically opposed to the Historical school, in a dispute known as Methodenstreit, or methodology quarrel. Current-day economists working in this tradition are located in many countries, but their work is still referred to as Austrian economics. Among the theoretical contributions of the early years of the Austrian school are the subjective theory of value, marginalism in price theory and the formulation of the economic calculation problem (Full article...)
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  Disequilibrium macroeconomics is a tradition of research centered on the role of deviation from equilibrium in economics. This approach is also known as non-Walrasian theory, equilibrium with rationing, the non-market clearing approach, and non-tâtonnement theory. Early work in the area was done by Don Patinkin, Robert W. Clower, and Axel Leijonhufvud. Their work was formalized into general disequilibrium models, which were very influential in the 1970s. American economists had mostly abandoned these models by the late 1970s, but French economists continued work in the tradition and developed fixprice models. Other approaches that focus on the dynamic processes and interactions in economic systems that are constantly changing and do not necessarily settle into a stable state are discussed as non-equilibrium economics. (Full article...)
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  A mixed economy is an economic system that accepts both private businesses and nationalized government services, like public utilities, safety, military, welfare, and education. A mixed economy also promotes some form of regulation to protect the public, the environment, or the interests of the state.
  
  This is in contrast to a laissez faire capitalist economy which seeks to abolish or privatize most government services while wanting to deregulate the economy, and a fully centrally planned economy that seeks to nationalize most services like under the early Soviet Union. Examples of political philosophies that support mixed economies include Keynesianism, social liberalism, state capitalism, fascism, social democracy, the Nordic model, and China's socialist market economy, Vietnam's socialist-oriented market economy. (Full article...)
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  This is a list of important publications in economics, organized by field.
  
  Some basic reasons why a particular publication might be regarded as important:

  • Topic creator – A publication that created a new topic
  • Breakthrough – A publication that changed scientific knowledge significantly
  • Influence – A publication which has significantly influenced the world or has had a massive impact on the teaching of economics.

  (Full article...)
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  Knut Wicksell, Swedish economist. Important source of inspiration for John Maynard Keynes and the Stockholm School.

  
  The Stockholm School (Swedish: Stockholmsskolan) is a school of economic thought. It refers to a loosely organized group of Swedish economists that worked together, in Stockholm, Sweden primarily in the 1930s.
  
  The Stockholm School had—like John Maynard Keynes—come to the same conclusions in macroeconomics and the theories of demand and supply. Like Keynes, they were inspired by the works of Knut Wicksell, a Swedish economist active in the early years of the twentieth century. (Full article...)
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  Agent-based computational economics (ACE) is the area of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in the paradigm of complex adaptive systems. In corresponding agent-based models, the "agents" are "computational objects modeled as interacting according to rules" over space and time, not real people. The rules are formulated to model behavior and social interactions based on incentives and information. Such rules could also be the result of optimization, realized through use of AI methods (such as Q-learning and other reinforcement learning techniques).
  
  As part of non-equilibrium economics, the theoretical assumption of mathematical optimization by agents in equilibrium is replaced by the less restrictive postulate of agents with bounded rationality adapting to market forces. ACE models apply numerical methods of analysis to computer-based simulations of complex dynamic problems for which more conventional methods, such as theorem formulation, may not find ready use. Starting from initial conditions specified by the modeler, the computational economy evolves over time as its constituent agents repeatedly interact with each other, including learning from interactions. In these respects, ACE has been characterized as a bottom-up culture-dish approach to the study of economic systems. (Full article...)
• 
  This is a list of important publications in economics, organized by field.
  
  Some basic reasons why a particular publication might be regarded as important:

  • Topic creator – A publication that created a new topic
  • Breakthrough – A publication that changed scientific knowledge significantly
  • Influence – A publication which has significantly influenced the world or has had a massive impact on the teaching of economics.

  (Full article...)
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  In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a mutual perspective on the way economies function. While economists do not always fit within particular schools, particularly in the modern era, classifying economists into schools of thought is common. Economic thought may be roughly divided into three phases: premodern (Greco-Roman, Indian, Persian, Islamic, and Imperial Chinese), early modern (mercantilist, physiocrats) and modern (beginning with Adam Smith and classical economics in the late 18th century, and Karl Marx and Friedrich Engels' Marxian economics in the mid 19th century). Systematic economic theory has been developed primarily since the beginning of what is termed the modern era.
  
  Currently, the great majority of economists follow an approach referred to as mainstream economics (sometimes called 'orthodox economics'). Economists generally specialize into either macroeconomics, broadly on the general scope of the economy as a whole, and microeconomics, on specific markets or actors. (Full article...)
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  Posthumous Muir portrait, c. 1800

  
  Adam Smith (baptised 16 June [O.S. 5 June] 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics" or "The Father of Capitalism", he wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, often abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work that treats economics as a comprehensive system and an academic discipline. Smith refuses to explain the distribution of wealth and power in terms of God's will and instead appeals to natural, political, social, economic, legal, environmental and technological factors and the interactions among them. Among other economic theories, the work introduced Smith's idea of absolute advantage.
  
  Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford, where he was one of the first students to benefit from scholarships set up by fellow Scot John Snell. After graduating, he delivered a successful series of public lectures at the University of Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow, teaching moral philosophy and during this time, wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. (Full article...)
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  Ludwig Heinrich Edler von Mises (German: [ˈluːtvɪç fɔn ˈmiːzəs]; 29 September 1881 – 10 October 1973) was an Austrian-American economist, logician, sociologist and philosopher of economics of the Austrian school. Mises wrote and lectured extensively on the societal contributions of classical liberalism and the power of consumers. He is best known for his work in praxeology, particularly for studies comparing communism and capitalism, as well as for being a defender of classical liberalism in the face of rising illiberalism and authoritarianism throughout much of Europe during the 20th century.
  
  Mises emigrated from Austria to the United States in 1940, fleeing from Nazis who on the first day the German Army entered Vienna rushed into the von Mises apartment in Vienna, apparently looking for him, and confiscated his library and papers. Mises was in Geneva, Switzerland at the time, but when the German invasion of France was about to leave Switzerland completely surrounded by Fascist and Nazi controlled territory, von Mises and his wife found it necessary to flee through France dodging German troops, to get to the US via Spain and Portugal. Since the mid-20th century, both libertarian movements and the field of economics as a whole, have been strongly influenced by Mises's writings. Mises's student Friedrich Hayek viewed Mises as one of the major figures in the revival of classical liberalism in the post-war era. Hayek's work The Transmission of the Ideals of Freedom (1951) pays high tribute to the influence of Mises in the 20th-century libertarian movement. Economist Tyler Cowen lists his writings as "the most important works of the 20th century" and as "among the most important economics articles, ever". (Full article...)
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  Georgist campaign button from the 1890s in which the cat on the badge refers to a slogan "Do you see the cat?" to draw analogy to the land question

  
  Georgism, also called in modern times Geoism, and known historically as the single tax movement, is an economic ideology holding that people should own the value that they produce themselves, while the economic rent derived from land—including from all natural resources, the commons, and urban locations—should belong equally to all members of society. Developed from the writings of American economist and social reformer Henry George, the Georgist paradigm seeks solutions to social and ecological problems based on principles of land rights and public finance that attempt to integrate economic efficiency with social justice.
  
  Georgism is concerned with the distribution of economic rent caused by land ownership, natural monopolies, pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges (e.g., intellectual property). Any natural resource that is inherently limited in supply can generate economic rent, but the classical and most significant example of land monopoly involves the extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy recommendation is a tax assessed on land value, arguing that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes (such as on income, trade, or purchases) that are unfair and inefficient. Some Georgists also advocate for the return of surplus public revenue to the people by means of a basic income or citizen's dividend. (Full article...)
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  The upper-left space $\Theta$ depicts the type space and the upper-right space X the space of outcomes. The social choice function $f(\theta )$ maps a type profile to an outcome. In games of mechanism design, agents send messages $M$ in a game environment $g$. The equilibrium in the game $\xi (M,g,\theta )$ can be designed to implement some social choice function $f(\theta )$.

  
  
  Mechanism design (sometimes implementation theory or institution design) is a branch of economics and game theory. It studies how to construct rules—called mechanisms or institutions—that produce good outcomes according to some predefined metric, even when the designer does not know the players' true preferences or what information they have. Mechanism design thus focuses on the study of solution concepts for a class of private-information games.
  
  Mechanism design has broad applications, including traditional domains of economics such as market design, but also political science (through voting theory). It is a foundational component in the operation of the internet, being used in networked systems (such as inter-domain routing), e-commerce, and advertisement auctions by Facebook and Google. (Full article...)
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  Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economic theory.
  
  Behavioral economics is primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology, neuroscience and microeconomic theory. (Full article...)
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  Myrdal in 1964

  
  Karl Gunnar Myrdal (/ˈmɜːrdɑːl, ˈmɪər-/ MUR-dahl, MEER-; Swedish: [ˈɡɵ̌nːar ˈmy̌ːɖɑːl]; 6 December 1898 – 17 May 1987) was a Swedish economist and sociologist. In 1974, he received the Nobel Memorial Prize in Economic Sciences along with Friedrich Hayek for "their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." When his wife, Alva Myrdal, received the Nobel Peace Prize in 1982, they became the fourth ever married couple to have won Nobel Prizes, and the first and only to win independent of each other (versus a shared Nobel Prize by scientist spouses).
  
  Myrdal is best known in the United States for his study of race relations, which culminated in his book An American Dilemma: The Negro Problem and Modern Democracy. The study was influential in the 1954 landmark U.S. Supreme Court decision Brown v. Board of Education. In Sweden, his work and political influence were important to the establishment of the Folkhemmet and the welfare state. (Full article...)
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  Ernst Friedrich Schumacher CBE (16 August 1911 – 4 September 1977) was a British statistician and economist who is best known for his proposals for human-scale, decentralised and appropriate technologies. He served as Chief Economic Advisor to the British National Coal Board from 1950 to 1970, and founded the Intermediate Technology Development Group (now known as Practical Action) in 1966.
  
  In 1995, his 1973 book Small Is Beautiful: A Study of Economics As If People Mattered was ranked by The Times Literary Supplement as one of the 100 most influential books published since World War II. In 1977 he published A Guide for the Perplexed as a critique of materialistic scientism and as an exploration of the nature and organisation of knowledge. (Full article...)
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  Wilhelm Röpke

  
  Wilhelm Röpke (10 October 1899 – 12 February 1966) was a German economist and social critic, one of the spiritual fathers of the social market economy. A professor of economics, first in Jena, then in Graz, Marburg, Istanbul, and finally Geneva, Röpke theorised and collaborated to organise the post-World War II economic re-awakening of the war-wrecked German economy, deploying a program referred to as ordoliberalism, a more conservative variant of German liberalism.
  
  With Alfred Müller-Armack and Alexander Rüstow (sociological neoliberalism) and Walter Eucken and Franz Böhm (ordoliberalism) he elucidated the ideas, which then were introduced formally by Germany's post-World War II Minister for Economics Ludwig Erhard, operating under Konrad Adenauer's Chancellorship. Röpke and his colleagues' economic influence therefore is considered largely responsible for enabling Germany's post-World War II "economic miracle". Röpke was also a historian and was nominated to the Nobel Prize in Literature in 1965. (Full article...)
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  The Lausanne School of economics, sometimes referred to as the Mathematical School, refers to the neoclassical economics school of thought surrounding Léon Walras and Vilfredo Pareto. It is named after the University of Lausanne, at which both Walras and Pareto held professorships. Polish economist Leon Winiarski is also said to have been a member of the Lausanne School. (Full article...)
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  Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed two-person zero-sum games, in which a participant's gains or losses are exactly balanced by the losses and gains of the other participant. In the 1950s, it was extended to the study of non zero-sum games, and was eventually applied to a wide range of behavioral relations. It is now an umbrella term for the science of rational decision making in humans, animals, and computers.
  
  Modern game theory began with the idea of mixed-strategy equilibria in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original proof used the Brouwer fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by Theory of Games and Economic Behavior (1944), co-written with Oskar Morgenstern, which considered cooperative games of several players. The second edition provided an axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat decision-making under uncertainty. (Full article...)
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  Supply-side economics is a macroeconomic theory postulating that economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics theory, consumers will benefit from greater supply of goods and services at lower prices, and employment will increase. Supply-side fiscal policies are designed to increase aggregate supply, as opposed to aggregate demand, thereby expanding output and employment while lowering prices. Such policies are of several general varieties:

  1. Investments in human capital, such as education, healthcare, and encouraging the transfer of technologies and business processes, to improve productivity (output per worker). Encouraging globalized free trade via containerization is a major recent example.
  2. Tax reduction, to provide incentives to work, invest and take risks. Lowering income tax rates and eliminating or lowering tariffs are examples of such policies.
  3. Investments in new capital equipment and research and development (R&D), to further improve productivity. Allowing businesses to depreciate capital equipment more rapidly (e.g., over one year as opposed to 10) gives them an immediate financial incentive to invest in such equipment.
  4. Reduction in government regulations, to encourage business formation and expansion.

  
  
  A basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue. The Laffer curve suggests that when the tax level is too high, lowering tax rates will boost government revenue through higher economic growth, though the level at which rates are deemed "too high" is disputed. A 2012 poll of leading economists found none agreed that reducing the US federal income tax rate would result in higher annual tax revenue within five years. Critics also argue that several large tax cuts in the United States over the last 40 years have not increased revenue. (Full article...)
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  Johann Heinrich von Thünen, age 57

  
  Johann Heinrich von Thünen (24 June 1783 – 22 September 1850), sometimes spelled Thuenen, was a prominent nineteenth-century economist and a native of Mecklenburg-Strelitz, now in northern Germany.
  
  Even though he never held a professorial position, von Thunen had substantial influence on economics. He has been described as one of the founders of agricultural economics and economic geography. He made substantial contributions to economic debates on rent, land use, and wages. (Full article...)
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  Oskar Lange

  
  Oskar Ryszard Lange (27 July 1904 – 2 October 1965) was a Polish economist and diplomat. He is best known for advocating the use of market pricing tools in socialist systems and providing a model of market socialism. He responded to the economic calculation problem proposed by Ludwig von Mises and Friedrich Hayek by claiming that managers in a centrally-planned economy would be able to monitor supply and demand through increases and declines in inventories of goods, and advocated the nationalization of major industries. During his stay in the United States, Lange was an academic teacher and researcher in mathematical economics. Later in socialist Poland, he was a member of the Central Committee of the Polish United Workers' Party. (Full article...)
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  Henry George (September 2, 1839 – October 29, 1897) was an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the economic philosophy known as Georgism, the belief that people should own the value they produce themselves, but that the economic value of land (including natural resources) should belong equally to all members of society. George famously argued that a single tax on land values would create a more productive and just society.
  
  His most famous work, Progress and Poverty (1879), sold millions of copies worldwide. The treatise investigates the paradox of increasing inequality and poverty amid economic and technological progress, the business cycle with its cyclic nature of industrialized economies, and the use of rent capture such as land value taxation and other anti-monopoly reforms as a remedy for these and other social problems. (Full article...)

Did you know...

• ... that the petunia carnage of 2017 led to worldwide economic losses?
• ... that Ruth Huenemann was one of the first researchers to make a connection between socioeconomic status and childhood obesity?
• ... that anti-Korean sentiment, due to South Korea's economic growth, motivated Djuna to write the sci-fi novel Counterweight?
• ... that Eleanor Hadley, a 29-year-old doctoral candidate in economics, was recruited by the Supreme Commander for the Allied Powers to implement antitrust policies in occupied Japan?
• ... that Michael Kremer's O-ring theory of economic development was inspired by his forgetting to purchase toilet paper for a training session?
• ... that environmental economist V. Kerry Smith has been described as a "Renaissance Man of Economics"?

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Selected images

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  Economists study trade, production, and consumption decisions, including those that occur in a traditional marketplace
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  A basic illustration of a business cycle (from Economics)
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  A 1638 painting of a French seaport during the heyday of mercantilism
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  List of countries by gross domestic product (PPP) per capita in April 2022 (from Economics)
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  The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase in demand from D₁ to D₂ and the resulting increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
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  Pollution can be a simple example of market failure; if costs of production are not borne by producers but are by the environment, accident victims or others, then prices are distorted.
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  A map showing the main trade routes for goods within late medieval Europe (from Economics)
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  The publication of Adam Smith's The Wealth of Nations in 1776 is considered to be the first formalisation of economic thought.
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  An environmental scientist sampling water
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  The Marxist critique of political economy comes from the work of German philosopher Karl Marx.
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  An example production–possibility frontier with illustrative points marked (from Economics)
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  The U.S. unemployment rate from 1990 to 2022 (from Economics)
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  John Maynard Keynes, a key economics theorist (from Economics)
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  São Paulo Stock Exchange in Brazil, an electronic trading network that brings together buyers and sellers through an electronic trading platform

In the news

7 January 2025 – Argentine debt restructuring

Argentina's country risk index, measured by the JPMorgan GBI-EM Index, briefly drops to 444 points, its lowest level since 2018, before closing at 561 points due to technical adjustments linked to upcoming bond payment amid improved market sentiment driven by cooling inflation and signs of economic recovery. (Reuters)

2 January 2025 – German economic crisis

The Handelsblatt Research Institute reports that the German economy is in its "greatest crisis in post-war history" after projecting that the economy will enter its third year of recession in 2025 with a 0.1% contraction, following a 0.3% contraction in both 2023 and 2024. (TVP World)

18 December 2024 – 2024 Georgian presidential election, 2024 Georgian parliamentary election, 2024 Georgian post-election protests

In an address to the European Parliament, Georgian President Salome Zourabichvili urges the European Union to economically and politically pressure the current Georgian government into holding new elections, claiming that recent elections represented a "new form of invasion" by Russia. (Euronews) (AP)

5 December 2024 – German economic crisis

German workers' union IG Metall announces they will go on extended strikes next week leading up to a fourth round of negotiations with Volkswagen. (DW)

2 December 2024 – German economic crisis

Workers of the German metalworkers' union IG Metall begin a labor strike after failed negotiations with Volkswagen following the closure of three automotive manufacturing plants. (DW)

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