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We’re discontinuing the journal club as of this semester. After some discussion. we’ve reached the conclusion that the level of participation did not warrant the required preparation.

My personal opinion remains that there should be a place for students interested in economics to express and discuss those interests. There is always the Penn Journal of Economics, and regular coffee chat w/ professors that the UES intends to restart, but neither fully capture the objective of the journal club. If you have any ideas – or just want to state your interest – please feel free to email me at

Thanks for everyone who came and allowed us to have at least a few genuinely interesting conversations!

Journal Club Discussion 3/30 – Expansionary Policy in a Liquidity Trap: Lessons from Japan’s Lost Decade(s)

Date: Monday, March 30, 2015

Location: Huntsman (JMHH) G50

Time: 7:00 PM

After 40 years of impressive growth, the early 1990s saw Japan, then the world’s second largest economy, stumbling into a period of economic stagnation with no real recovery in sight. Even with the Bank of Japan’s aggressive monetary response, the deflationary trend appeared to be unstoppable. Many argue that the abnormalities of Japan’s economic system – weak financial regulations, crony capitalism, and conspicuous consumption – fueled a speculative asset bubble that eventually burst and brought the economy down with it. These claims, however, cannot be verified without a suitable framework for understanding Japan’s condition.

On the theoretical side, some economists point to Japan’s slump as a classic example of a liquidity. This proposition, however, remains as widely disputed as the policy implications that follow. During our discussion, we will briefly examine the concept of a liquidity trap as described through the new Keynesian model and then seek to evaluate the viability of its policy recommendations. The primary reading, Japan’s Trap by Paul Krugman (1998), provides a digestible overview of the topic in light of Japan’s economic stagnation. The secondary reading, The New-Keynesian Liquidity Trap by John Cochrane (2015), presents an elaborate critique of the policy predictions of the new Keynesian model. We will also look at historical data to inform our conversation on the relevance of both arguments. Can policy makers act to save an economy in a liquidity trap? If so, what can be done? We hope that the conversation will allow us to better evaluate policy responses in deflationary circumstances.


  1. Krugman (1998), “Japan’s Trap”.
  2. Cochrane (2015), “The New-Keynesian Liquidity Trap”.
  3. Krugman (2013), “Monetary Policy in a Liquidity Trap”, The New York Times.

P.S. While the discussion will cover theoretical material, participants are not expected to be well versed in the mathematical expositions of the subject. The readings are merely meant to provide relevant background information to help stimulate further discussion.

Discussion 3/2/15 – The Neoclassical Revolution and History of Economic Thought

The UES Journal Club will host a session on the Neoclassical Revolution.

Date: Monday, March 2, 2015.

Location: Huntsman (JMHH) G50

Time: 7:00 PM

Topic: Economists today argue in the world of models, where rational individuals encounter each other on the marketplace and buy and sell commodities to each other. The goal of each individual is to maximize his/her utility. But where do the assumptions of these economists come from? In this session, we will discuss how modern economic thought came into being by discussing the origins and evolution of economic thought, beginning with Aristotle, Colbert, Quesnay, Smith, Malthus, Ricardo, Marx, and then exploring the ‘Methodenstreit’ (dispute of methods) between the German Historical School (Schmoller) and the neoclassical school (Jevons, Marshall, Walras, Menger). We will conclude by watching a video that will lay out the philosophical differences between Hayekian and Keynesian economic thought. There will be ample time for discussion during the presentation and at the end. See you there.

Suggested readings: Milonakis and Fine (2009), “From Political Economy to Economics”, a superb rendition of the history of economic thought. (Free download in

The Wikipedia article on the history of economic thought, which is very brief and concise

(Posted on behalf of Larry Liu)

Discussion 2/23/2015: What Does the Fall in Energy Prices Mean for Firms and Policymakers?

Journal Club Discussion: What Does the Fall in Energy Prices Mean for Firms and Policymakers?

Date: Monday, February 23, 2015.

Location: Huntsman (JMHH) G50

Time: 7:00 PM

Topic:  In the past six months the price of crude oil has halved.  Natural Gas is the cheapest it has been in 10 years.  Around the world people are spending less on energy, and continuing to use more of it.  Is the global energy system undergoing a paradigm shift?  If so, what is causing it?  Who are the winners and who are the losers?  How should governments respond (if at all)? What does the latest series of current events mean for the world’s energy future?

Join us on Monday to discuss your opinions, questions, and predictions.  All are welcome.


Reading: The article below (from the Jan. 17th 2015 issue of The Economist) is a good starting point for our discussion, but we encourage you to read other materials related to the recent drop in energy prices, or energy industry/policy in general.

Discussion 2/9/15 – The Global Financial Crisis: Did Macroeconomics Fail?

Our first discussion is slated for Monday, Feb. 9th at 7pm, in SHDH 213. I will be taking the lead on this one, so feel free to email me ( with any suggestions.


While the financial crises of 2007-2008 are a massive subject in and of themselves, we will focus on evaluating the field of macroeconomics in light of these events. You have surely heard claims, by economists and non-economists alike, that the crisis, particularly in the U.S., represented a fundamental failure on the part of economists to prescribe policy and predict market behavior. Others, like Paul Krugman, used the opportunity to push (probably longstanding) criticisms against the field, particularly on the affinity for technically-sophisticated but otherwise questionable theoretical models. Despite evident failures in both policy and prediction, is a shift in our approach to macroeconomics really necessary? What changes have occurred since 2009? What changes should still occur, if any?

When using the financial crisis to criticize macroeconomics, another important question arises. Was the crisis predictable, even in theory? Proponents of the efficient markets hypothesis might answer in the negative. Others suggest that the crisis itself is predictable, yet the specific timing isn’t. And it’s certainly possible to devise scenarios where even the widespread expectation of an upcoming crisis isn’t sufficient to prevent its occurrence, nor even its continued aggravation. Do these arguments imply we are unable to predict and/or prevent market collapses, even with (or because of) the assumption of rational expectations?


Here are the brief presentation slides I made for this discussion: JC 2-9-15


The primary reading for this session is “How did Economists get it so Wrong?” by Paul Krugman (2009).

The secondary (i.e. optional) reading is John Cochrane’s (2009) response, “How did Paul Krugman get it so Wrong?”.

For background on the global financial crisis, we recommend two articles by The Economist magazine, “The Slumps that Shaped Modern Finance” and “The Origins of the Financial Crisis”.

For background on the use/role of models in economics, we recommend Paul Pfleiderer’s (2014), “Chameleons: the Misuse of Theoretical Models in Economics and Finance”, and “Economic Models as Analogies” by Gilboa et al. (2011). The latter is co-authored by Prof. Postlewaite, whom you may recognize from ECON 212.

Announcing the Journal Club

Dear Visitor,

Welcome to the provisional website of the UES Journal Club! I’m Modibo, head of the UES publications committee. Allow me to introduce Ken, Brendan, and Larry, who alongside myself are responsible for organizing this group.

For those of you who heard of us through the marketing committee’s exceptional advertising efforts, please note that the first session is postponed until Monday, February 9th. We want to give members more time to comfortably read/digest the article for this week.

Stay tuned for additional information regarding the upcoming discussion, including readings, location, and other details, as well as general information about the Journal Club. Expect updates tonight and later in the week (right now, dinner is calling).

PS. As always, please sign up here if you’re interested in joining the group. Likewise, if you’re just window-shopping, please feel free to stop by our discussions at any time.