Edward Prescott

Posts About

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  Discretion Is Necessary For Commitment Power

  The usual supposition in economics is that predefined rules are preferable to administrative discretion, in that the latter often precludes credible commitments, and introduces a social dilemma that an enforceable rule could solve (Simons 1936; Kydland and Prescott 1977; Root 1989). This logic holds to the extent that one can rely . . .

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  Why Are There Taxes? Or, Taxation Isn't About Revenue

  In a recent post on the concept of a “stock of savings”, I argued: In a proper money economy investment does not depend on anyone’s conscious decision to save. All it requires is the purchasing power to bid away resources into investment use. This purchasing power can be amassed by abstaining . . .

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  Self-Interest is the Basis of Self-Denial: On Cooperative Equilibria and the Capacity for Commitment

  A second pass at the themes in The Meta Level Doesn’t Justify Itself. I’ll roll the two together at some point in the indefinite future. Imagine you need money, and somehow you find yourself sitting across from Warren Buffet pitching a new business venture. From a purely self-interested perspective, your best scenario . . .

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  Monetary Theory as a Prototype for a Theory of Civilization

  Big questions can only be competently approached from a specialized research program. Here’s how I see my own research program – monetary theory – informing a broader theory of civilization. Coordination and Extended Cognition The most obvious relevance of monetary economics to a theory of civilization is the coordinating potential of the . . .