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Economics is the discipline that studies how people respond to scarcity, i.e., the observed fact that individuals desire more than they already possess, whether the object of their desire is wealth, health, education, security, or some other intangible good or service. An economy can be viewed as a social mechanism that emerges when individuals cooperate with others in order to deal with the problem of scarcity. It is a vast network of individuals (and institutions guided by individuals) that make, barter, sell, and buy goods and services in order to achieve their desired ends.
Economic forces are at work virtually any time exchanges occur or resources are used. A knowledge of economic principles—fundamental truths identifying patterns or components of economic cause and effect—is essential for understanding phenomena such as prices, markets, commerce, employment, industrial output, economic growth and prosperity, and business fluctuations. The economic way of thinking (including the recognition of incentives, constraints, opportunity costs, transactions costs, and self-interested motives) is also useful for the study of non-market phenomena such as government regulations, elections, lobbying, and government decision making.
Corporate Influence and Political Corruption Lessons from Stock Market Reactions to Political Events Movements in stock prices provide important clues for understanding the effect of campaign contributions on the decisions of elected officials. What they tell us challenges widespread beliefs…
The Icelandic and Irish Banking Crises Alternative Paths to a Credit-Induced Collapse Central banks set the stage for financial collapse through excessive credit expansion, but a lax monetary policy isn’t the only way that policymakers can foster a meltdown. As…
Fractional Reserves and Demand Deposits Historical Evidence from an Unregulated Banking System Would banks operating under laissez faire adopt a 100 percent reserve ratio or a fractional-reserve rule that would allow them to affect the money supply? The Chettiar banking…
We Are Not Macroprudentialists A Skeptical View of Prudential Regulation to Deal with Systemic Externalities The 2008 financial crisis is widely touted as supporting the case for more bank regulation and taxation to deal with “systemic” risk. This claim, however,…
The Legislation of Nationwide Assured Banks in Argentina, 1887–1890 Free-Banking Failure or Regulatory Failure? Many analysts have characterised Argentinas 4 years beneath the Legislation of Nationwide Assured Banks as a interval of free banking, which suggestsincorrectlythat the monetary disaster of…
Alternatives to the Federal Deposit Insurance Corporation Federal deposit insurance creates moral hazard that encourages risky banking practices and sets the stage for bank failures and financial crises. Alternatives to our current scheme include the creation of a more stable,…
Dodd–Frank Accretion of Power, Illusion of Reform The Dodd-Frank Act, ostensibly passed to address causes of the financial crisis of 2007-2009, created government entities whose powers may be setting the stage for even worse problems with the financial system. With…
An Episodic Historical past of Fashionable Fed Independence Regardless of many steps taken to make sure its independence, the Federal Reserve nonetheless succumbs to political pressures. This pessimistic conclusion is in line with each empirical research and an anecdotal evaluation…
A Proposal of Monetary Reform for Argentina Flexible Dollarization and Free Banking Argentina’s inflation problem has been so chronic and debilitating that it can be solved only by adopting a reliable alternative to central banking and discretionary monetary policy. The…
The Imprudence of Macroprudential Coverage The monetary disaster of 2008 has prompted some economists to name for presidency regulators to broaden their attain—by attempting to attenuate monetary disruptions and “systemic dangers” which may hurt the broader economic system. Their arguments,…
