Financial traders and speculators help to allocate society's resources to the most promising businesses. But these people's activities also impose costs on the rest of us.

High unemployment in Europe, the U.S. and elsewhere is also tragic because of the emotional cost to the jobless of not being part of working society.

A speculative bubble is a social epidemic whose contagion is mediated by price movements. News of a price increase enriches early investors, creating word-of-mouth stories about their successes, which stir envy and interest. The excitement then lures more and more people into the market, ...

Great significance — probably too much — has been attached to a possible breakup of the eurozone. Many believe that such a breakup — if, say, Greece abandoned the euro and reintroduced the drachma — would constitute a political failure that would ultimately threaten ...

In his classic “Fable of the Bees: or, Private Vices,” Publick Benefits (1724), Bernard Mandeville, the Dutch-born British philosopher and satirist, described — in verse — a prosperous society (of bees) that suddenly chose to make a virtue of austerity, dropping all excess expenditure ...

Economists like to talk about thresholds that, if crossed, spell trouble. Usually there is an element of truth in what they say, but the public often overreacts to such talk. Consider, for example, the debt-to-GDP ratio, much in the news nowadays in Europe and ...

NEW HAVEN, Conn. — We are in the midst of a boom in popular economics: books, articles, blogs, public lectures, all followed closely by the general public. I recently participated in a panel discussion of this phenomenon at the American Economic Association annual meeting ...

NEW HAVEN, Conn. — Much of the talk emerging from the August 2010 Jackson Hole Economic Symposium, attended by many of the world’s central bankers and economists, has been about a paper presented there that gave a dire long-run assessment of the future of ...

NEW HAVEN, Conn. — Central bankers around the world failed to see the current financial crisis coming before its beginnings in 2007. Martin Cihak of the International Monetary Fund reported in July 2007 that, of 47 central banks found to publish financial stability reports ...

NEW HAVEN, Conn. — The International Monetary Fund’s October World Economic Outlook proclaimed that “Strong public policies have fostered a rebound of industrial production, world trade, and retail sales.” The IMF, along with many national leaders, seem ready to give full credit to these ...

NEW HAVEN, Conn. — The widespread failure of economists to forecast the financial crisis that erupted in 2008 has much to do with faulty models, which meant that economic policymakers and central bankers got no warning of what was to come. As George Akerlof ...

NEW HAVEN, Conn. — Since hitting bottom in early March, the world’s major stock markets have all risen dramatically. Some, notably in China and Brazil, reached lows last fall and again in March, before rebounding sharply, with Brazil’s Bovespa up 75 percent in May ...