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The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High! -- Brad DeLong sides with Krugman on the benefits from trade. He cites the Heckscher-Ohlin model basically, and I explain here the limitations of that model based on the capital debates (the Ricardian model is at least logically consistent, but also ultimately does not explain trade patterns)

The Mundell-Fleming Model and Republican Economics -- Pro-Growth Liberal (PGL) at Econospeak, in an older post, notes that GOP candidates are more likely to be 'protectionist' than Democrats (yes, I know, it's about managed trade, not protectionism). At any rate, true about Trump, not the others necessarily. And incorrect on Bernie. PGL thinks that fiscal and monetary expansion would work with a devalued dollar and stronger exports (he should abandon the Mundell-Fleming model)

Senator Sanders and Financial Regulation -- Menzie Chinn on the positions of several politicians on financial regulation. Not sure Hillary would be better. Mind you, I'm not for an audit of the Fed, I think that Dodd-Frank does not go far enough, and that TARP was flawed and something like the Swedish nationalization of the banks in the 1990s should have been the solution. Bernie might have a learning curve on this, but he's not in the pocket of Wall Street, like some other candidates (wink, wink, nudge, nudge)


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A few brief comments on Brexit and the postmortem of the European Union

Another end of the world is possible
There will be a lot of postmortems for the European Union (EU) after Brexit. Many will suggest that this was a victory against the neoliberal policies of the European Union. See, for example, the first three paragraphs of Paul Mason's column here. And it is true, large contingents of working class people, that have suffered with 'free-market' economics, voted for leaving the union. The union, rightly or wrongly, has been seen as undemocratic and responsible for the economics woes of Europe.

The problem is that while it is true that the EU leaders have been part of the problem and have pursued the neoliberal policies within the framework of the union, sometimes with treaties like the Fiscal Compact, it is far from clear that Brexit and the possible demise of the union, if the fever spreads to France, Germany and other countries with their populations demanding their own referenda, will lead to the abandonment of neoliberal policies. Aust…

A brief note on Venezuela and the turn to the right in Latin America

So besides the coup in Brazil (which was all but confirmed by the last revelations, if you had any doubts), and the electoral victory of Macri in Argentina, the crisis in Venezuela is reaching a critical level, and it would not be surprising if the Maduro administration is recalled, even though right now the referendum is not scheduled yet.

The economy in Venezuela has collapsed (GDP has fallen by about 14% or so in the last two years), inflation has accelerated (to three digit levels; 450% or so according to the IMF), there are shortages of essential goods, recurrent energy blackouts, and all of these aggravated by persistent violence. Contrary to what the press suggests, these events are not new or specific to left of center governments. Similar events occurred in the late 1980s, in the infamous Caracazo, when the fall in oil prices caused an external crisis, inflation, and food shortages, which eventually, after the announcement of a neoliberal economic package that included the i…

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