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description= 15 posts published by Lars Syll during February 2026;
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s if the estimated coefficient is small and statistically insignificant the economist might conclude that education has little effect on earnings however this inference is fallacious because occupation is a mediator rather than a confounder the underlying causal structure is education affects occupational choice which in turn affects earnings by conditioning on occupation the regression estimates only the direct effect of education holding occupation constant formally suppose occupational attainment is determined by the total causal effect of education on earnings then consists of both a direct and an indirect component substituting the second equation into the first yields hence the total causal effect of education on earnings is by controlling for occupation the regression recovers only the direct effect thereby omitting the indirect effect this leads to post treatment bias since conditioning on an intermediate variable distorts the estimate of the total causal effect the fallacy lies in this example in interpreting the coefficient reported in table 2 as the full causal effect of education without considering the underlying causal structure and the role of mediating variables share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky why minsky still matters 24 feb 2026 at 15 05 posted in economics 1 comment perhaps the foremost financial crisis theorist of our time hyman minsky had as his central idea that crises are endogenous system internal phenomena where stability creates instability and reduces safety margins for financial transactions with excessively high leverage effects during the upswing phase of financial bubbles safety margins shrink and even the smallest setback can lead to expectations not being met forcing companies and investors to revise their plans to meet their cash flow commitments the result may be that assets have to be sold contributing to a debt deflation process with increasingly larger real debt burdens and problems resolving liquidity issues through asset disposals according to minsky these were inevitable processes stability creates instability even without euphoria and excessive optimism during the upswing phase banks lending practices are confirmed and even validate riskier projects in accordance with the cascade of information theory we encounter a logic where what was initially perceived as risky ends up being experienced as completely risk free the banks become more and more confident securitisation has meant that traditional credit ratings have been replaced by ratings performed by rating agencies without first hand knowledge of the borrowers this is based on a kind of stochastic assessment where instead of relying on the credit history of each individual borrower the borrowers are viewed as random realisations of a representative borrower with risks that follow a normal distribution curve with a given mean and variation however if real borrowers do not exhibit the degree of homogeneity that such a statistical approach is based on the shortcomings of the model become apparent when the risk turns out to be fat tailed the intention to reduce and distribute the risks is turned on its head the problem is that this is not really evident until the crisis is in full bloom and the representative borrower is hanging by a thread assets that banks have tried to move off balance sheets through securitisation reappear when the institutions they have created off balance sheets are forced to seek help to solve acute liquidity problems one of the fundamental reasons behind recent financial crises is that those who take the risks are no longer responsible for evaluating borrowers ability to bear their costs the instruments that are said by the financial market s own representatives to be created to distribute risk optimally among different actors cannot fulfil their task when there is no credible mechanism for assessing risks not even in capitalism s flagship the financial markets can genuine economic uncertainty be reduced to manageable stochastic risks stochastic processes are like the ones we have when we flip a coin and we know with certainty that the outcomes are either heads or tails and where randomness means that in repeated coin flips we have an equal chance of getting heads as tails if securities and other assets are priced based on risks estimated with assumptions that apply to stochastic normal distribution models these prices can never be better than the model assumptions they are based on in normal times they may provide decent approximations but when bubbles grow and the future definitely does not look like history in statistical terms economies are not ergodic systems where processes remain unchanged over time the result is spelt crisis crises stem from a financial system that systematically undervalues risks and overvalues creditworthiness the financial instability that minsky claimed permeates financial markets cannot be completely eliminated however we can ensure the implementation of regulations and institutions that minimise the damage conventional theory struggles to explain financial crises often the explanation is that it results from reckless speculation by irrational noise traders in reality the cause is that we do not have perfect information about the future and it is precisely future expectations that drive the financial market speculation is about trying to anticipate how these future expectations will manifest themselves in the market this is difficult to do market psychology is hard to grasp and often leads to rapid swings in the market and herd like behaviour where expectations of what other speculators expect play a greater role than economic fundamentals crises are fundamentally endogenous not exogenous information failures irrationality etc financial crises are not anomalies but rather a highly possible and expected part of a genuinely uncertain economic world the main lesson that financial crisis theory and historical experience teach us is that recurring financial crises are part of the essence of our economic system they are not just a series of coincidences and misjudgments they are a consequence of the deeper underlying and long term instabilities that characterise the financial system itself and are a source of economic instability and crises so what can we do to minimise the risk of future crises and prevent the economy from completely grinding to a halt the neoliberal era has reached its end what is needed now is enlightened action based on a relevant and realistic economic theory of the kind that keynes and minsky represent as long as we have an economy with unregulated financial markets we will also be subject to periodically recurring crises that does not mean that we should just sit with our arms crossed and wait for the storm to pass a keynesian tax on the financial market stricter regulations and increased transparency can actively contribute to reducing the risks of costly financial system crises in the long run however if we reflexively refuse to see the extent of the problems we will once again be powerless when the next crisis looms one of the fundamental misconceptions in today s crisis discussion is that one does not distinguish between debt and debt even though at the macro level it is necessary that debts and assets balance each other out it is not insignificant who has the assets and who has the debts as a young research stipendiary in the u s more than forty years ago yours truly had the great pleasure and privilege of having hyman minsky as a teacher he was a great inspiration at the time he still is share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky trump s tariffs a laughing matter 24 feb 2026 at 11 03 posted in economics 1 comment share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky vienna 23 feb 2026 at 21 27 posted in varia 3 comments back in the 1980s yours truly had the pleasure of studying german in vienna i must have been a diligent student since at the end of the studies i was awarded an honorary silver medal at a graduation ceremony when not studying or visiting berggase 19 i often listened to ultravox on my sony walkman a wonderful city full of history and kaffeehäuser some years ago i was invited to give a series of lectures at the university of vienna and at the vienna university of economics and business administration i spent an absolutely fabulous week there with visits to café central the hofburg the vienna state opera the belvedere the prater and more afterwards yours truly of course could not resist the temptation to make a stopover in karlsbad karlovy vary if you would like to feel as though you have stepped straight into a novel by jane austen and your wallet is not too thin it is a highly recommendable destination hopefully i will find the time for another visit to vienna and karlsbad share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky song für friedrich merz 23 feb 2026 at 15 12 posted in varia comments off on song für friedrich merz share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky s kritiken av svantesson totalt missriktad 21 feb 2026 at 11 49 posted in economics politics society 1 comment när finanspolitiska rådet med den väne lars heikensten i spetsen riktade kritik mot att regeringen inte följt sitt eget ekonomiska regelverk kunde inte mikael damberg hålla sig han gick rätt i fällan bekräftandes bilden att pengarna är slut men fakta är att sverige har en mycket låg statsskuld vi har stora investeringsbehov och nationen sverige har inte alls slut på pengar problemet är att sossarna enats med borgarna om ett stramt finansramverk även för perioden 2027 2035 den period då mikael damberg siktar på att vara finansminister det är då svantesson säger att pengarna är slut och damberg säger inte emot utan håller med han laddar alltså ännu en gång för att skruva ner sossarnas vallöften och förbereda sverige på nedskärningar det är hål i huvudet både som valtaktik och regeringspolitik damberg har rätt i att svantessons skattesänkningar till de mest välbärgade varit ineffektiva och orättvisa men det är inte fel i sig att staten spenderar när arbetslösheten är 9 procent så s kritiken är totalt felriktad daniel suhonen aftonbladet för ett par år sedan kom regeringen och socialdemokraterna överens om att slopa överskottsmålet i det finanspolitiska ramverket och ersätta det med ett balans mål för att möjliggöra stora infrastruktursatsningar och få fart på ekonomin det var väl bra men långt ifrån tillräckligt det enda vettiga i dagens situation är så klart att man skulle ha ett underskotts mål och möjliggöra ännu större nödvändiga investeringar i välfärd och underhåll av vår infrastruktur och att som nu låta skuldankaret ligga kvar på 35 är nästintill kriminellt att socialdemokraterna på det viset låter sig bakbindas till att föra en alltför kraftlös makroekonomisk politik under den tid vi har på oss till nästa översyn av ramverket är inget annat än ett svek mot de egna väljarna och lejonparten av landets löntagare med de problem svensk ekonomi brottas med idag duger inga sådana harhjärtade halvmesyrer daniel suhonen talar och talar tydligt att den socialdemokratiska ledningen åter igen faller in i det gamla mantrat om att den som är satt i skuld är icke fri är just inget annat än hål i huvudet share on facebook opens in new window facebook share on x opens in new window x share on bluesky opens in new window bluesky why are ceos paid so much 20 feb 2026 at 08 56 posted in economics 2 comments while the united states often symbolises extreme wealth concentration the perception of sweden as an egalitarian utopia requires re examination in recent decades economic inequality in sweden has grown at a rate that in some respects rivals that of the us although sweden maintains a robust social safety net the underlying income inequality has surged the gini coefficient has risen sharply since the 1980s as in america this is largely driven by the super rich pulling away from the middle class through high capital gains and profits from a deregulated financial system while the us still has a higher overall level of inequality the trend and the underlying neoliberal policies such as tax cuts for the wealthy and the erosion of collective bargaining reveal that even the nordic model is not immune to the forces dividing rich from poor the lo s swedish trade union confederation latest report the power elite rocketing away from reality shows that corporate executive pay continues to skyrocket reaching historic highs in 2023 the ceos of sweden s 50 largest firms earned on average more than 70 times what an industrial worker makes for many mainstream economists this is not a problem since according to neoclassical theory people are paid according to their marginal productivity but trying to whitewash the vast disparities in sweden today doesn t work wealth and income distribution both individual and functional in a market society is to an overwhelmingly high degree influenced by institutionalized political and economic norms and power relations things that have relatively little to do with marginal productivity in complete and profit maximizing competitive market models not to mention how extremely difficult if not outright impossible it is to empirically disentangle and measure different individuals contributions in the typical teamwork production that characterize modern societies history has over and over again disconfirmed the close connection between productivity and remuneration postulated in mainstream income distribution theory mainstream economists over and over again tell us that inequality isn t really a problem at all because the gap between top and bottom will always be greater in a successful economy this line of reasoning is a familiar refrain among market fundamentalists it s the old trickle down theory feed the horse more oats and eventually enough will pass through to feed the birds the problem is that the empirical evidence for this trickle down is precisely zero several concurrent reports from autumn 2025 indicate that 700 000 swedes are living in poverty this represents a doubling since 2021 bringing the figure to nearly 7 of the population the issue encompasses both social and material deprivation with many unable to cover even the most basic expenses the 2026 oxfam report our unequal sweden issues a damning indictment of the nation s economic trajectory systematically dismantling the enduring myth of swedish egalitarianism it reveals a society undergoing a profound and deliberate schism where escalating mass vulnerability exists in parallel with unprecedented weal...
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