Recent posts

From Numbers to Merit: Escaping the Quantification Quagmire in Higher Education

19 December, 2023

Some time ago, HEC introduced quantification of research output, and made a certain number of publications necessary for hiring and promotions. At the time, it seemed like a good idea. Why? Because without any measurable standards for hiring and promotions, these decisions were being made subjectively. The feeling was that there is massive corruption in … Continue reading »

Book Review: “Why Capitalism” by Meltzer

16 December, 2020

In a complex world, discovering causality is very difficult. Many things happen simultaneously, and post hoc ergo propter hoc reasoning is a common fallacy that is hard to detect and critique. Here is how I understand Meltzer’s arguments. Meltzer defines Capitalism as private ownership of means of production, and free enterprise with minimal government regulations. … Continue reading »

Some Myths about Money

19 July, 2020

RG10 (Some Myths About Money Creation): Previous post in this sequence is RG9 Who Should Create Money? In this post, we pause to explain the process of money creation by private banks, and the role of Central Banks in enabling and facilitating this money creation. This is necessary in order to understand the history of … Continue reading »

RG9 Who Should Create Money?

30 May, 2020

In this post, we will cover the remaining portion of Goodhart Ch2 Case for Free Banking It is worth noting that this chapter is a theoretical preliminary, and not part of the historical analysis which is the main strength of this book.  The Central Question of importance, to which no solution is known currently, is … Continue reading »

Building a Better Pakistan

18 May, 2020

My interview/talk on “How Do We Bring Growth Back to the Pakistan Economy?” was recently recorded by Mohammad Siddique of the Better Pakistan Institute. The video is linked below. Very briefly, the message can be summarized as follows. The question of “How we can create growth?” is too ambiguous. Generally speaking, we think the question … Continue reading »

Descriptive Statistics: An Islamic Approach

16 May, 2020

About fifteen years ago, teaching a conventional statistics course, I started thinking about how I could teach it in a way that it would be an act of worship. How to teach the course so that the ink of the students would be rewarded like the blood of the martyrs? Since the worth of all … Continue reading »

RG7: Central Banks: Monopoly or Public Service?

8 May, 2020

This is the 7th Reader’s Guide in a sequence studying Goodhart’s book on the Evolution of Central Banks. For the previous post, see RG6: The Misleading Case for Free Markets. The key question under discussion here is: Do Central Banks provide a service to private commercial banks by supervising and regulating them, or do they use … Continue reading »

The Case Against Financial De-Regulation

1 May, 2020

The Reagan-Thatcher revolution started an era of financial de-regulation, in adherence to free market ideology, which continues to this day. This is true despite the hundreds of major and minor financial crises which testify to the inherent instability of the financial system, and the necessity for effective regulation. Regulation and supervision of private commercial banks … Continue reading »

Macro Models for Policy

29 April, 2020

BACKGROUND: At the request of Minister Finance Ishaq Dar and Minister Planning Ahsan Iqbal, a conference on “Macro Models for Policy and Planning” was  jointly organized by PIDE and NIBAF, on Oct 22, 2016, with wide participation from several ministries and academic institutions. Video Recordings of the day long seminar, papers presented, and related materials, … Continue reading »

RG6: The Deceptive Case for Free Markets

27 April, 2020

This is a sequence of posts which goes through Charles Goodhart’s book on Evolution of Central Banking. The previous post is: RG5 Evolution of Economic Systems Chapter 2 opens with a discussion of the views of Walter Bagehot (pronounce as badge-it), author of Lombard Street, which has received a lot of recent acclaim as masterpiece on … Continue reading »

RG5 Evolution of Economic Systems

24 April, 2020

As discussed in previous post (RG4: History, Methodology, & Economic Theory), economic systems have changed and evolved through history. The purpose of this post is to go over, very briefly, how the economic system has changed over time, to arrive at the capitalist economic system that we all live in today. Evolution of Economic Systems … Continue reading »

RG4: History, Methodology, & Economic Theory

23 April, 2020

[] This is the 4th Readers Guide to Goodhart’s book on Evolution of Central Banking. See: Reading Course on Central Banking for more details about this online Reading Course. We have completed Chapter 1, and before beginning Chapter 2, I would like to add some notes on the importance of History for Economic Theory – … Continue reading »

RG3: Goodhart on Central Banks

22 April, 2020

[] This continues from previous post RG2: Goodhart on Central Banks of our online READING Course on the Evolution of Central Banks by Charles Goodhart. This post (Readers Guide 3) covers  pages 6-11, or the last half of Chapter 1. Writeup is given following the 10m video lecture. Central Banks were not designed for macro and micro management roles. … Continue reading »

RG2: Goodhart on Central Banks

21 April, 2020

RG2 (Reading Guide 2) – Continues from previous posts on Reading Course: Central Banking and Readers Guide: Goodhart on Central Banks. Writeup is given following the ten minute video: Goodhart starts by discussing discontent with Central Banking System. He wrote this book well before the GFC 2007 -8, which has created much greater discontent. There are two different … Continue reading »

Readers Guide: p1-3 of Goodhart on CB

20 April, 2020

This is the first readers guide RG1 of our online Reading Course: Central Bank History Here are a few questions to ponder while reading the introductory chapter of Goodhart. In addition to the 5 questions, an explanation of some theoretical material which is covered very briefly in the Goodhart book is given after the questions.  … Continue reading »

Reading Course: Central Bank History

19 April, 2020

I am in process of creating an online course on the history of Central Banking. The era of online courses has been forced upon us by the Corona Virus, though I have been meaning to do this for a long time. The WEA Pakistan Blog seems like a great place to do a beta-test. I … Continue reading »

Dealing with Educational Poverty: A Nobel Approach

7 April, 2020

Article by Nadia Hassan, published in Daily Times, Jan 16th, 2020. See Dealing with Educational Poverty Educational poverty is most prevalent among the several diverse forms of poverty. It is the one that originates and amplifies the other issues for the poor, such as lack of opportunities, awareness, discrimination and so on. Therefore, development theory … Continue reading »

The Values of a Market Society

23 March, 2020

Continued from previous post on Subjectivity Concealed in Index Numbers. Because modern epistemology rejects values as being just opinions, and only accepts facts as knowledge, values have be to disguised in the shape of facts. What better way to do this than by embodying them in cold hard and indisputable numbers? This post discussed how the … Continue reading »

Errors of Empiricism 4

14 March, 2020

Empiricism holds that observations are all that we have. We cannot penetrate through the observations to the hidden reality which generates these observations. Here is a picture which illustrates the empiricist view of the world: The wild and complex reality generates signals which we observe using our five senses. The aspects of reality which we … Continue reading »

Thinking about Thinking 3

11 March, 2020

When we think about epistemology (theory of knowledge), then we are doing meta-thinking. That is, we are thinking about thoughts people have, which they think is “knowledge”.  Because there are many many wrong ideas, and very few right ideas, we must learn to think critically. Unless we do so, our thoughts will be captured by … Continue reading »

Models and Realities 2

24 February, 2020

Foundations for modern social sciences were laid in the early twentieth century, and were strongly influenced by logical positivism. The central idea of positivism is that science is true and valid because it deals (principally) with observables, while religion is false and invalid because it deals (principally) with unobservables. For a detailed discussion, see “Logical Positivism … Continue reading »

Mistaken Methodologies of Science 1

23 February, 2020

The problem at the heart of modern economics is buried in the logical positivist methodological foundations created in the early twentieth century by Lionel Robbins. Substantive debates over the content actually strengthen the illusion of validity of these methods, and hence are counterproductive. As Solow said about Sargent and Lucas, you do not debate cavalry … Continue reading »

The Hundred Years’ Peace

21 February, 2020

Below, I will reproduce extracts from the opening Chapter, titled as above, of Karl Polanyi’s  The Great Transformation: the Political and Economic Origins of Our Times . This is essential background in conjunction with the history of Central Banking which was covered in  Lecture 13  of  Advanced Macro II . The central concept underlying the course is that of “Entanglement (Lecture 18B) “ – … Continue reading »

Resources for Study of Polanyi’s Great Transformation

19 February, 2020

Polanyi offers a deep historical study of how European societies based on traditional values of cooperation and social responsibility were transformed into modern secular societies. In Polanyi’s terminology, social relations became embedded within the market, creating a market society driven by the imperative of commercialization, which makes money the measure of all things, including human … Continue reading »

Summary of the Great Transformation by Karl Polanyi

17 February, 2020

Ever since the spectacular failure of modern economic theory became obvious to all in the Global Financial Crisis, the search for alternative ways of organizing our economic affairs has intensified. The vast majority of alternatives under consideration offer minor tweaks and patches, remaining within the methodological framework of neoclassical economics. In contrast, Polanyi offers a … Continue reading »

Effect of Drugs on Recovery 2: Simpson’s Paradox 5 —- continued

15 February, 2020

Case 4: Drug as Mediator — The causal sequence in map #8 could be reversed. It may be that Blood Pressure governs whether or not the drug is taken, and has no direct effect on recovery. Causal Map # 9  Suppose the drug is extremely helpful. Recovery rate in treatment groups (with the drug) is … Continue reading »

Effect of Drugs on Recovery 1: Simpson’s Paradox 5

14 February, 2020

Fifth of sequence of 6 pedagogical posts on the Simpson’s Paradox. Our last example considers the classical case of testing the effectiveness of a drug as a treatment for a disease. It is standard to divide the population into two groups, and compare recovery rates. The group which does not take the drug is called … Continue reading »

Baseball scores: Overall Average or Stratified?: Simpson’s Paradox 4

13 February, 2020

Fourth of sequence of 6 pedagogical posts on the Simpson’s Paradox. It is standard practice in statistical analysis to separate the role of the field expert from the statistical consultant. The field expert has deep knowledge of the processes which generate the numbers, while the statistician knows about the numbers, and has superficial knowledge of … Continue reading »

Policy depends upon unobservable causal relations: Simpson’s Paradox 3

12 February, 2020

Third of sequence of 6 pedagogical posts on the Simpson’s Paradox. As Hume realized a long time ago, observations cannot reveal the underlying causes. Studying alternative hidden causal structures for the same data set could radically change the interpretations discussed in previous sections. Understanding data REQUIRES understanding causal structures which generate the data and these … Continue reading »

Changing causal structures: Simpson’s Paradox 2

11 February, 2020

This is the second in a series of posts which discusses the causality and Simpson’s Paradox. For the 1st part see Causality, Confounding, and Simpson’s Paradox 1 where, there is not one (gender) but two causal factors (gender and difficulty level per department) that influence the admission rates. Being female is a positive influencer in … Continue reading »

Causality, Confounding, and Simpson’s Paradox 1

10 February, 2020

First of sequence of 6 pedagogical posts on the Simpson’s Paradox. Bitter fighting among Christian factions and immoral behavior among Church leaders led to a transition to secular thought in Europe (see Zaman (2018) for details). One of the consequences of rejection of religion was the rejection of all unobservables. Empiricists like David Hume rejected … Continue reading »

6-Potentials and Possibilities

16 January, 2020

This is the 6th and final part of a sequence of posts on policy implications of Modern Monetary Theory for Pakistan. The first five posts are 1-MMT For Pakistan,2-Two Sources of Monetary Injections,3-Three Way Partnership,4-Job Guarantee Programs, and 5-Sectorally Balanced Monetary Expansion. Once we realize that money is not a constraint, the possibilities for utilizing … Continue reading »

5-Sectorally Balanced Monetary Expansion

15 January, 2020

This is the fifth in a series of posts which expand upon a talk delivered on Modern Monetary Theory at the State Bank of Pakistan on 7th Jan 2020. The previous post (4-Job Guarantee Program) explained some aspects relevant to Pakistan. This portion deals with how we can avoid inflationary consequences of the money creation … Continue reading »

4-Job Guarantee Programs

14 January, 2020

Continues from previous post on 3-Three Way Partnership. While the three-way partnership (discussed in previous post) is an unconventional program, designed for the unique circumstances currently prevailing in Pakistan, the JOB GUARANTEE PROGRAM is one of the central recommendations which emerges out of macroeconomic ideas generated by Modern Monetary Theory. The basic idea is that … Continue reading »

3-Three Way Partnership

13 January, 2020

Previous posts in this sequence about “Policy Implications of MMT for Pakistan” are 1-MMT For Pakistan and 2-Two Sources of Monetary Injections. This post notes that standard approaches to MMT, where the government creates money to finance public projects, are not feasible in current Pakistani context. Instead, a three-way partnership is required to allow private sector creation … Continue reading »

2-Two Sources of Monetary Injections

12 January, 2020

As a brief recap of the previous post (1-MMT For Pakistan) , Part 1 of a talk on Policy Implications of MMT for Pakistan, we note the key accounting identity that Business Profits + Household Savings = Government Injections (Deficits) + Foreign Injections. If firms are motivated by profits, and households seek to save, the … Continue reading »

1-MMT For Pakistan

11 January, 2020

{} Introductory Remarks: This post is 1st part of my second talk at SBP; (see MMT at SBP for first talk) . I taught a two semester course on this topic, and very little of the depth and complexity can be covered in the allotted time of half an hour. Accordingly, in this talk I … Continue reading »

Transformation of Economic Theory

1 November, 2019

This post is a continuation of our series on the history of Central Banking. The previous post was:  Monetary Policy from 1914 to 1980. Before going on to discuss the transition from Keynesian goals to inflation targeting, we need to step back and provide some background information on the ideological battles which were crucial to this … Continue reading »

Obstacles to Democracy

29 October, 2019

This article was published in The Express Tribune, February 3rd,  2015. It explains that, contrary to popular opinion, democracy DOES NOT mean rule by political parties. Today, we see genuine efforts being made by Imran Khan to help the people, but the general mindset among the ruling classes opposes these efforts. The Colonial Mindset makes the … Continue reading »

Colonial Mindset and Economic Policy

26 October, 2019

Re-posted from Islamic WorldView Blog: Impact of Colonial Heritage on Economic Policy in Pakistan.  [] In this post, we provide a video-lecture and a summary of comments by Guest Panelist: Dr Asad Zaman on  a Research Presentation by Syndicate-1: “Task Force on Governance”  at National Institute of Management on Thursday, 23rd May, 2019 from 12:00-13:00 … Continue reading »

Improving Planning and Policy in Pakistan

24 October, 2019

22 Feb  2017: Seminar at MoPD&R on how we can improve planning and policy making in context of Health & Nutrition.  The seminar was based on the Outcomes and Conclusions of the Brainstorming Session on Policy Priorities for Health & Nutrition held at PIDE Friday 17th Feb 2017. An Executive Summary and outline of points … Continue reading »

The Great Transformation of Economic Theory

21 October, 2019

Note: This is part of a sequence of posts on Central Banking, which is essential to understanding monetary policy today. Most posts are from the WEA Pedagogy Blog, and are reproduced here. I will provide an organized sequence of posts at some later date, once the sequence is complete. This post provides a broad perspective … Continue reading »

Summary of Karl Polanyi’s Great Transformation

18 October, 2019

This post, by far the most popular I have ever written, attracts about 1000 hits per month since it was first posted about six years ago in 2013. It summarize Polanyi’s book, which was among the top ten most influential books of the twentieth century. It provides deep insights into the origins of capitalism and … Continue reading »

Effects of Wrong Exchange Rates

16 October, 2019

Preliminary Remarks: This article was published as “Burning Billions” in Dawn, on 18th Jan 2019.  At the time it was written, there was a huge debate about the falling rupee, and most of the public supported the policies of Finance Minister to prop-up the Rupee at an artificially high rate. As has now become apparent to most … Continue reading »

The Conflict between Microeconomics and Reality

14 October, 2019

In my paper entitled “Empirical Evidence Against Neoclassical Utility Theory: A Survey of the Literature,” I have argued that neoclassical utility theory acts as a blindfold, which prevents economists from understanding simple realities of human behavior. The paper provides many examples of this phenomenon, which I will illustrate briefly with one simple example in this … Continue reading »

Economics for the 21st Century

13 October, 2019

Published on 22 Jan 2018 in Newsline Magazine as “ Cradle of A New Economics“.  This is a 1600 word summary of The Presidential Address at the 33rd Annual Conference of PSDE, on 12 Dec 2017 in Islamabad. Also, full 35m Video Lecture:  Failure of Economics: After the Global Financial Crisis (GFC) of 2007, the failure of economic theory … Continue reading »

Michel Foucault: Power/Knowledge

11 October, 2019

We cannot understand the world around us without a sophisticated understanding of the complex but intimate relationship between knowledge and power. One of the most influential philosophers of the twentieth century, Michel Foucault, crafted a radically different understanding of this relationship. Instead of seeing power in brute force, he saw power as being the ability … Continue reading »

Monetary Policy from 1914 to 1980s

8 October, 2019

This series of posts is based on a single lecture (Lecture 13 of Advanced Macro II) exploring the evolving functions of Central Banks through time. It goes through a vast amount of material in a very short time, and hence is a very sketchy treatment. This is the 3rd post,  which deals with the period … Continue reading »

Coarse and Fine Histograms

5 October, 2019

Our universe has amazing structure, which varies tremendously by the level at which it is examined. At the macroscopic level the spiraling galaxies race outwards. Within a galaxy, starfish arms dance around the center. Sharpening the focus, planets circle our sun in regular orbits. At our human scale, the flora, fauna, forests, oceans, mountains, and … Continue reading »

The Greatest Teacher

3 October, 2019

There is no doubt that our Prophet Mohammad SAW was the greatest teacher of all time. At the very beginning of Wahy, in the Cave of Hira, Allah T’aala introduced Himself as the one who gives knowledge to man which man did not have. In other words, Allah T’aala introduced Himself as a TEACHER. This … Continue reading »

Histograms: Pictures of Distributions

1 October, 2019

Our goal in this first sequence of posts on “Real Statistics”, is to understand the concept of a “distribution”. There are four different, closely related concepts. We are in process of discussing the first concept, which I call a “real distribution”. The first post “Understanding Statistical Distributions” explains this in detail. As a brief summary, … Continue reading »

Real Statistics: Introduction

30 September, 2019

After the dramatic failure of economists to predict the Global Financial Crisis, Krugman said that “the profession as a whole went astray, because they mistook the beauty of mathematics for truth” (see Quotes Critical of Economics). Many people have independently arrived at similar conclusions – current educational methods train students using mathematical theories not connected … Continue reading »

Understanding Statistical Distributions 1

29 September, 2019

In his Guide to Econometrics, Peter Kennedy writes that, even though the concept of distribution of random variables is the most basic and the most important concept at the foundation of all of statistics and econometrics, very few students actually understand what this means. My own teaching experience with students who have taken statistics and … Continue reading »

Guide to Thesis Writing

28 September, 2019

I have many lectures about advice to students in process of writing M.Phil. or Ph.D. thesis proposals, and/or the actual thesis. The most comprehensive advice is contained in the IIIE Student Guide to development of M.Phil. Research proposal. This entire website is a step-by-step guide about how to write an M.Phil. Thesis proposal. Other than … Continue reading »

Re-Launch and Re-Activation

26 September, 2019

Dear Pakistani Economists – friends, colleagues, students — This website is a branch of the World Economic Association, which strongly rejects conventional economics (as fairy tale economics) and works on creating Real World Economics. There are MANY, MANY elements which are extremely different when we want to do real world economics, as opposed to theoretical … Continue reading »

Radical Paradigm Shift

21 July, 2018

An excellent article written by Dr. Asad Zaman While logical positivism is rarely discussed in classes, it is deeply embedded in the foundations of economics and econometrics. Even though it is a failed philosophy, the mistake is subtle and difficult to detect. Linked post below explains my own experiences with absorbing and then unlearning this … Continue reading »

National Poverty Report 2015-16

20 July, 2018

Since 2001, the Planning Commission of Pakistan has been estimating the national poverty line. From 1990 to 2011-12 nutritional inadequacy is used to measure poverty line. However, keeping in view of recent dynamics, the poverty line is now calculated by using the cost of basic needs. The present report presents national poverty number, along with disaggregation at rural-urban level. … Continue reading »

The Second Crisis of Knowledge in the Islamic Civilization

26 November, 2017

I am sharing a very interesting and mind blowing post written by Prof. Dr. Asad Zaman. in his recent post” The Second Crisis of Knowledge in the Islamic Civilization” he argued that “This crisis is all encompassing, and requires a massive and multi-dimensional effort on many different fronts to counter-act and cure. Some aspects are … Continue reading »

Freeing Our Minds from Colonial Chains….

21 November, 2017

Recently Dr. Asad gave a talk at IMS Peshawar on the need to launch a revolution in economics. He argued that the conventional theory is fundamentally flawed. This wrong theory is taught because it is a weapon in the war of the rich against that poor. His 90min talk, entitled: Freeing Our Minds from Colonial Chains, … Continue reading »

Recent post of Dr. Asad Zaman on WEA Pedagogy Blog

14 November, 2017

The Shifting Battleground

معاشی انسان اور کراچی

1 March, 2014

تحریر: عتیق الرحمن مروجہ اقتصادیات ایک انسان کو جس طرح کا تصور کرتی ہے یا دیکھنا چاہتی ہے، اس تصور کو معاشی انسان (Economic Man) کہا جاتا ہے۔ معاشی انسان میں درجہ ذیل خصوصیات کی موجودگی ضروری ہے: ۱۔ مذہب اور مذہبی ذمہ داریوں کو ذاتی زندگی تک محدود سمجھنا اور سماجی ومعاشی ذمہ داریوں … Continue reading »

Good Intentions ,Poor and Cities

15 February, 2014

Zahid Asghar Sympathies for poor are very common and there is no lack of good ideas. Good intentions for helping the poor may be fine but helping the poor in real terms is a different story. Thousand miles journey begins with a single step but it should be in the right direction. Do we really … Continue reading »

PM Youth Loan Scheme: Honest Opinion

6 January, 2014

I have received ” Honest Opinion” about PM Youth Loan Scheme which i am posting here…  your comments are welcome…  The purpose is not to criticize on the policies and standard operating procedures designed by the Federal policy makers,  but I am  here to present some honest observations and suggestions for better improvements regarding the counseling, execution … Continue reading »

Modern Structure of Knowledge and Criticism of Islamic Banking

4 January, 2014

By Omar Javaid Islamic banking is growing by leaps and bounds in the world, many sees this as a successful utilization of Islamic principles to solve worldly problems whereas others considers it as a mistake of putting a label of ‘Islamic’ on various things which are prohibited or disliked by Islam. These two groups often … Continue reading »

Exchange Rate, Debt Burden and Balance of Trade

3 January, 2014

By: Atiq-ur-Rehman Consider a realistic example; the current total external debt of Pakistan is about US$61 billion. At the exchange rate of 106, this amount is equivalent to PKR 6466 billion. Suppose the value of dollar goes up by one in exchange of Pakistani rupee, the debt would be come PKR 6527 billion with an … Continue reading »

Remittances in Pakistan; what is happening and what can be done

2 January, 2014

By: Atiq-ur-Rehman For 2013-14, the total budget of federal government of Pakistan was about 34 billion US$. Out of this budget, about 4.7 billion $ is the share of debt servicing and about 12 billion US$ is the share of provincial governments. Therefore about 17 billion $ is available to the federal government for its … Continue reading »

Cities and Sustainable Development

1 January, 2014

Cities Development: A win-win proposition Zahid Asghar[1] 21st is not only a century of cities but also century of dense cities. Cities have played remarkable role in rapid economic development both in developed countries and developing countries like China, India, Vietnam and Brazil. Pakistan can also make its cities as engine of growth by following … Continue reading »


Cities and sustainability »

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