According to About.com, \u201cParadox is used in a particular way within the literature of economics – not to describe a situation in which facts are apparently in conflict, but to describe situations in which apparent facts are in conflict with models or theories to which some class of people holds allegiance. This use of the word implies strong belief in the measured facts, and in the theory, and the resolution to economic paradoxes tend to be of the form that the data do not fit the model, the data are mismeasured or, (the most common case) the model or theory does not fit the environment measured.<\/p>\n
“In some ways the term paradox is awkward in economics since the data are so poorly measured, the models so brutally simplified, and the mapping between environment and evidence so stochastic.\u201d<\/p>\n
Just think of the recent controversy regarding the modeling of economics that was at the heart of austerity measures: if the data does not fit, drop it and ignore questions and answers regarding the correctness of the model itself.<\/p>\n
How does this apply to our current problem of continuing lack of consumer demand, low inflation threatening to turn into deflation and meagre, at best, GDP growth rates? In Europe there is much back slapping resulting from growth rates of half a per cent and in the US there is talk of downturn even with a growth rate near 2.5%.<\/p>\n
We need growth to reduce unemployment and to create a sense of future well-being which stimulates demand. Eurozone unemployment was 12% in December, 2013. In the US the Federal government had a policy of increasing interest rates if unemployment fell to its target. Yet when it dropped to 6.6% in January they decided that their 6.5% target is no longer a good one, so no change in interest rate policy. The same will be true in the UK.<\/p>\n
Resurgence of consumer demand, coupled with increased industrial production and a sense of ‘it\u2019s going to be alright’ remain elusive targets.<\/p>\n","protected":false},"excerpt":{"rendered":"
We have come across the term paradox, when the opposite of what one expects happens; can we apply it to economics? Of course we can.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66],"tags":[],"sponsor":[],"class_list":["post-9017","post","type-post","status-publish","format-standard","hentry","category-the-economist"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9017","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=9017"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9017\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=9017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=9017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=9017"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=9017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}