Anyone an Economics Prof (or know one)?

In My Humble Opinion
1

I had an idea for an economic theory that I would like to develop into a paper (presuming it’s deemed worthwhile). Unfortunately, my basis for economic knowledge is the SDMB, a read through The Wealth of Nations, the Wikipedia, and deduction, so I would be hoping to find someone who is very forgiving. I’m reasonably sure that I haven’t screwed myself up, but I’m also quite sure that I’m missing a lot of terminology and that I certainly don’t have the background to write something which would be up to the minimal standards.

Anyone know anyone?

2

Do I understand correctly that you want tutoring in economics from a PhD? For free?
What is your idea for an economic theory that you’d like to develop into a paper?

A paper in what department? Will it be published or is it a course?
Unless you go Austrian, you’re likely to need a fair bit of math.

3

My wife has a doctorate in economics, University of Washington '97, now a professor in the Planning, Public Policy and Management department of Our State College. No, she will not read your paper.

4

I’m a programmer, rather than a mathematician. So I can and have created an economic model that demonstrates the idea, but it’s source code rather than formula.

I suppose that would depend on whether my idea had merit to begin with. If it did, then I could probably throw some money at it.

I may have already found someone willing to help, though.

5

Econ PhD students spend at least a year doing nothing but studying the basics of the discipline, and then another five trying to develop an idea to the point where it’s publishable. Most of them graduate with no publications. You don’t have the basic technical background, you don’t even know what was going in the field a century ago (let alone today) and you haven’t spent any time developing your idea (which is the actual hard part). Why should anyone take you seriously?

6

Where did I say they should? :confused:

7

Have you spent time searching the literature to see if someone has come up with your idea already? There are a lot of economists out there, all writing papers, and with your lack of background the chances of re-inventing the wheel are rather high. Even if your idea is new, any paper would require a section on similar previous work and a set of references.

Even in my field (not economics) I see people with ideas that got tried 20 years ago, and which were published beyond their literature search horizon. We were just beginning 50 years ago, economics has had over 200 years of wheels for you to reinvent,

8

Well maybe, but only the last 30 or so matter much in any kind of formal sense.

I know quite a lot of economists. I’d suggest that you try to figure out whether your model is compatible with anything we actually do know about economic behavior. This might require actually taking a class or even reading a few textbooks before you try to search the literature.

9

Why don’t you try and sketch out at least the basics of your idea here and we can see if it’s original, interesting & true.

10

“True” would remain to be seen, as it’s a proposal rather than an observation. The idea is a solution to the wage stickiness problem that, I believe, Keynes based his work on.

Essentially, as the economy goes into a down turn, businesses are making less money and have to cut back. Instead of lowering wages to match income, they cut workers.* Since this increases unemployment and fear in the marketplace, corporate revenues stay low and so the rate of employment stays as it is. Keynes’ solutions were, then, how to break this cycle.

My idea is to prevent the cycle by removing the problem. Fundamentally, when corporate revenues decrease, wages should decrease with it. If one considers contracted values, like wages, to be pegged to a market rate for the average national corporate income, then as that shrinks or falls, the wage rises and falls. If all businesses in the US made $1 billion last week and paid wages of $800 million, and this week they made $0.9 billion, wages would now be $720 million.

Nearly everyone has further contracted fees than wages, though; loans, rent, mortgages, etc. You can’t peg just wages to an exchange rate or people would find themselves unable to meet their obligations. You would need to modulate every (or near every) contracted payment according to the going exchange rate. But assuming that one did that, you achieve a secondary solution to the problem of a market collapse.

When the market takes a turn for the worse, it often leaves creditors hanging dry, which can exacerbate the situation. People are worried about banks with too many defaulters from whom no money can be collected – which depresses the market further. If one considers the value of money today to be graded on an exchange rate, then a smaller dollar value covers this month’s loan payment. The bank can clear out its debt based on a smaller amount of receipts than were handed out in an acceptable manner. Of course, this creates inflation, but so do stimulus packages and zero interest rates at the Fed. When the market is growing, this would also be a source of deflation, but with growing receipts at banks, they would be able to lower interest rates on loans. It should balance out.

  • Over a longer time scale, wages will likely decrease via attrition, of course.
11

Do I understand correctly that you want the State to forcibly lower the nominal value of all contracts (or perhaps only all wages)?
It couldn’t be done without price controls since most people think of their wages in nominal terms which leads to a phenomenon called sticky prices because they very much oppose reduced nominal wages even if their real wage stays the same.

You may want to look this up if you haven’t already: Nominal rigidity - Wikipedia
In the 70s, wage controls were tried, you may want to know more about that.

What effect would price controls have on the ability of prices to signal relative scarcity?

You want to avoid a liquidity trap. Why do you prefer price controls to increasing the quantity of money until aggregate demand is a few percentage points above aggegate supply?

12

If this is applicable to what was tried in the 70s, I’d certainly be interested in seeing it (and I do mean that – if you know of any books which discuss the topic, I’d enjoy picking them up). But I’d personally guess that their attempts would have been somewhat arbitrary. A problem I have with stimulus packages or the Fed’s interest rate is that they rely on human intervention, which presumes that humans can peg values accurately – i.e. create a planned economy. I believe that there’s lots of evidence to show that we can’t.

While this would be modulating prices to some extent, it would be based entirely on market factors, outside of the hands of humans. It would respond to the market in real time, just like the stock market, international money exchange, etc. which are also automated price modulations. In a sense, it’s a domestic money exchange.

13

Isn’t this, essentially, inflation?

14

No, when there’s an economic downturn, the total amount of money in the economy doesn’t change significantly. What changes is how much is circulated versus stuck in savings, and how quickly money passes from one hand to the other.

There will be deflation, since people stop taking out new loans so all money travels back towards the bank (or Central Bank), and possibly other factors which I can’t think of at the moment, but it wouldn’t be a particularly good measurement of day-to-day or week-to-week corporate revenues.

For example, say that I have an economy with two people and $100 split between them. Bob pays Melinda a wage of $1 each day. She then buys $1 of food from Bob. Over the course of a year, Melinda will have earned $365 in wages and Bob will have made $365 in sales, and yet only a single dollar bill was ever moved, leaving the other $99 in the economy alone. Inflation is a measurement of the total amount of money. It says that there’s $100. The value of the market per day is $1 and over the year $365. If Melinda decides to diet, buying half as much food, Bob’s revenue decreases, and he cuts her wage by 50%. The market has now shrunk to 50 cents per day, while the total amount of money is still $100.

15

What you are arguing for is a countercyclical monetary policy based on corporate income. This would be implemented via an algorithm. Monetary policy by algorithm has been advocated before, most famously by Friedman. What is novel about your suggestion is basing the policy on corporate income instead of inflation and unemployment. If you can make a convincing case about why corporate income would be a better metric, you might have a publishable paper.

16

Is there any sort of length that I would want to target?

I would imagine that the basic layout would be something like:

  1. A brief statement of the proposal
  2. An overview of the problem (stickiness, and why it exacerbates economic downturn)
  3. An overview of alternate solutions (like Friedman’s)
  4. In depth review of the proposal, including models, etc.

?

17

Ask jrodefeld. He’s an expert at economics.

18

Wait, you don’t want government intervention in the economy, so you propose having the government ‘modulate nearly every single contract’? :confused:
Of course, what that boils down to in effect is just forcing deflation. Which is basically what classic Kenseyian monetary policy (e.g. the Fed setting interest rates) is trying to do. So it’s not exactly been overlooked by economists. Again, I’m not sure why you think revaluing nearly every single private contract in the country is preferable (from a libertarian perspective) to changing the price the federal reserve puts on loans and deposits that banks are free to make or not.

And I don’t really understand why you think government stimulus is a ‘planned economy’. It doesn’t even have to be spent on particular projects – temporary tax breaks would be countercyclical fiscal stimulus.

19

Er, I neither said nor implied that. Nor, really, does government intervention really tie in to this one way or the other. If the idea became accepted as being economically sound, contracts could very well be set up voluntarily by the banks, businesses, or individuals to operate on an exchange rate simply because it would be accepted as the wisest method of trading money. I’d imagine that the government would set the ball rolling, but it wouldn’t be involved past that point any more than it was after the move from the gold standard to a fiat system. I.e., declare it so and then go off to do other things.

At any rate, for an idea like this to actually affect anything, if ever, it would need to be accepted by a significant portion of economists. That could well take decades. But if it did, it’s really that acceptance which causes the change, not the government.

20

What your proposal is missing is data. After the overview of the problem, present your data and explain how your data invalidates other theories and supports your theory. To get a feel for the style and layout go to a nearby college library and read an economics journal.
Your exchange rate idea is identical to monetary policy. If the Fed creates inflation money is worth less and if deflation is created money is worth more. Since contracts are written in nominal terms changing the value of money is changing the value of the contract. The value of inflation in fighting wage stickiness is that it is stealthy. If you made it explicit in every contract then it would be subject to politics even more than it already is.