Dani Rodrik at Princeton writes:  A consensus among economists can arise for both good and bad reasons. Sometimes a consensus is innocuous enough, as when you hear economists argue that one ignores the role of incentives at one’s peril.

Can anyone really disagree with that? Sometimes it is restricted to a particular episode and is based on evidence accumulated after the fact: Yes, the Soviet economic system was hugely inefficient; yes, the Obama fiscal stimulus of 2009 did reduce unemployment.

But when a consensus forms around the universal applicability of a specific model, the critical assumptions  of which are likely to be violated in many settings, we have a problem.  Consensus Among Economists

Jean Pisani-Ferry writes:  Packaging existing loan portfolios and offloading them to non-bank investors, as many have proposed, should be encouraged. Beyond short-term fixes, the main priority must be to encourage a resumption of savings flows across Europe, but this time in the form of equity, not bank deposits and loans. For this, Europe needs an adequate regulatory and tax framework. Official institutions could also be involved in a suitable way. Oddly, the European Investment Bank, the EU’s financial arm, is authorized to provide only loans and guarantees, not equity investment. Substitutes should be found.  Europe’s Growth Strategy

There are, finally, a few fields where national governments could act directly. Infrastructure is a case in point, provided that the current interest in investment projects is not used as an excuse to revive Europe’s love for white elephants.

Will it be enough? It is hard to know.

More business schools in China are tapping experience from the West and elsewhere to meet the country’s growing demand for business elites.

Earlier this month, Shanghai’s Fudan University and London Business School jointly launched a business degree program. Their Global Masters in Management program boasts a combination of teaching modes and real-life experience from East and West. It will include business immersion through company projects.  Leading Chinese companies will mentor some of these managers.

The partnership with London Business School, one of the world’s top business education institutions, will help us reach a higher level in terms of expertise. It will also help draw out the best of the management systems employed in both the East and West, aiding the development of more capable leaders in the future,” Lu said.
Andrew Likierman, dean of the London school, said: “This program will give its graduates a ‘two-world’ mindset, combining direct exposure to China and the West. The balance of theory and practice will ensure that students gain a head start in the competition for the world’s best business jobs.”

Fudan’s business school has also worked with other prestigious schools overseas to carry out cooperative programs. The university has worked with Washington University to launch the Executive MBA program, which prepares senior-level professionals in China and other parts of Asia for global leadership.
“As the nation’s commerce takes off, it has become important for companies’ higher management to have a better understanding of the thriving Chinese economy and business practices. We have already seen the growing demand from employers for business talent with profound experience in China and the West,” said David Huang, a veteran headhunter who has worked in a multinational talent recruiter in Beijing.
“In this regard, how to provide a combined education with global vision and practical knowledge suitable for the local market becomes an issue,” he said.
Many consider Chinese business schools to have experienced a late start compared with those in the West. They have also faced a number of challenges, including lagging training modes, insufficient practical cases to draw on and ignorance about career design for students.
Over the past years, these schools have been implementing global strategies to help plug these gaps.

Although the exact relationship between the US Federal Reserve’s commitment to full employment and its Congressional mandate to achieve this, little evidence has been provided to demonstrate how this happens.

Yellen’s plans for community support were spelled out in the first big trip and speech after her appointment.   A recent New Yorker article suggests how deep the commitment of the new Fed chair is to jobs, but does not describe how she plans to help matters in a beleaguered US labor market.

Here is a synopsis of the points made about jobs in the article by Nicholas Lemann. Both Yellen and her husband George Akerlof (a Nobel-prizewinning economist) grew up in families where everyone wanted to work hard and at times could not find a job.  She is fierce in her determination to see that wiling workers can find jobs. In the 1990s as a Fed governor, when she thought she had made a dent on a Greenspan position, she said to another governor:  “I think we might have saved five thousand jobs.”  Now she might save a million or even two.

How she proposes to do this is evident on a trip to Chicago in late March.  Addressing a community on Chicago’s beleaguered South Side, she said the following:  “The Fed supports the work you do in communities because you make a difference. You help ensure that credit is available for families to buy homes and for small businesses to expand. Your organizations sponsor programs that help make communities safer and families healthier and more financially secure. One of the most important things you do is to help people meet the demands of finding a job in what remains a challenging economy. And that help is crucial, but I also believe it can’t succeed without two other things.”  She goes on to ask for grit and also community help in locating jobs.  She points out that low interest rates help people buy homes, for businesses to expand.  “We are trying to lower the costs of buying a car that can carry a worker to a new job and kids to school, and our policies are also spurring the revival of the auto industry. We are trying to help families afford things they need so that greater spending can drive job creation and even more spending, thereby strengthening the recovery.”

In sum, Yellen clearly is a passionate jobs’ advocate, but do the Fed’s policies really count in the jobs’ figures?  Why has the Fed become the prime force in setting fiscal policy?  Does a Fed Chairman, even the most brilliant one, really have the clout to get banks to help out?  Can a mature person with undeveloped political skills deal with the wolves of Wall Street?  This is Yellen’s challenge and we shall see.

Yellen Chicago Speech on the Job Market

We all know that men and women behave differently in myriad ways, including when it comes to money. Visa’s International Barometer of Women’s Financial Literacy survey, conducted with 25,000 male and female participants in 27 countries, confirmed the point: Men and women have different financial priorities.

But it’s not just men and women who differ in how they approach family finances. The study reveals some interesting findings that go beyond gender differences and reveal widely different priorities across countries and cultures, too.

For example, mothers in Mexico, Brazil, Bosnia and Serbia talk to their kids about finances more often than moms in any other nations. Mexican mothers, on average, have such conversations at least once a week during 41.7 weeks a year. Indonesian mothers talked to their children about money the least, averaging just 3.9 weeks a year. American mothers ranked eighth, talking to their kids about money management just a bit more often than once every two weeks.

The overall scores on Visa’s Financial Literacy survey are based on rankings in individual categories including budgeting, emergency savings, frequency in talking to children about money, perception of young peoples’ money skills, and the desired age for beginning formal personal finance lessons.

For many women, raising their children to be financially savvy is extremely important, particularly if they come from an economically stressful situation. More than likely, this is because the parents want their kids to be better off financially than they are.

Interestingly, the survey found that mothers, rather than fathers, spent the most time talking with their children about money management, budgeting, saving, responsible spending, and debt. On the other hand, men are slightly more likely to have a budget and emergency savings — two key indicators of economic stability for a family.

Women in Brazil rank highest overall on the survey, primarily because they earned high scores for having a budget, talking to their kids about money, and starting their children’s financial educations early. In each of those categories, Brazilian women were equal with Brazilian men.  The one area in which these women lag behind men is saving for emergencies, with more than half (51 percent) having no savings at all.

Mexican women ranked low when it comes to having a budget and emergency savings, but they came in third overall because of their emphasis on teaching their children about money management. All those money talks must be working, though, because only a minority of Mexican women thought that young people and teens lack money skills. Compare that to Australian women (No. 2 overall), 64 percent of whom think young people lack basic knowledge about money.

Women in Indonesia and Pakistan were ranked lowest for financial literacy overall and hovered near the bottom in every category. And on every score, Pakistani women lagged behind Pakistani men.  Women in Pakistan report having nearly no savings at all. And those who do don’t have enough to last one month. Indonesian women ranked last when it comes to talking to their kids about money and near the bottom for having a budget and emergency savings.

Women from the United States are fourth among the top five countries in the world for overall financial literacy, with men and women in this country virtually on equal footing when it comes to financial savvy.  But American women only ranked among the top five in one category: budgeting. While 53.4 percent said they follow a budget, 24.2 percent said they don’t have a budget or they don’t have enough money for a budget.  In 23 of the countries, a majority of women either have no budget or think they are unable to budget for economic reasons. In Canada, Russia and Belarus, women are more likely to have a budget than men.

Financial planners recommend that everyone have emergency savings of three to six months’ worth of expenses, but in only a handful of countries did the majority of women say they had three months’ of savings.  Women from Taiwan and China averaged the biggest savings cushions at 3.7 months, and women in Hong Kong, Canada, and Australia each had an average of three months’ expenses or more in savings.  Men, on the other hand, have saved more for emergencies in all but one country: Australia.  The lack of emergency savings among women could be tied to the fact that in many countries, men control the household budget and women may not have any income of their own. In 22 countries, a majority of women have less than three months’ savings or none at all. In Egypt, Serbia and the Ukraine, more than 90 percent of women have less than three months’ savings. Pakistani women had the least savings, with an average of 0.7 months of expenses saved.

The survey’s findings reinforce the dismal reality that we’re already aware of: Most of the world’s population is dangling by a financial thread, one that could snap far too easily. But as women across the world continue to talk to their children about finances, it’s a trend that can be reversed in the future.

Paul Krugman has mentioned Knut Wicksell from Sweden twice recently.  Dirk Ehnts on Econoblog thinks Krugman misunderstood the master.  Wicksell was very influential; Keynes before his General Theory was building his work on Wicksellian theory. Here is  Wicksell’s Natural Rate of Interest

Among Wicksell’s points that are easy to misunderstand: Krugman defended the idea of loanable funds, whereas Steve Keen holds the idea of endogenous money. Loanable funds theory says that banks have to have savings (deposits, alternatively reserves) before being able to lend, whereas the idea of endogenous money says that banks lend without having to collect savings (deposits) first. If reserves are required, they will be acquired later. What is interesting is that Wicksell is firmly rooted in the endogenous money camp, and might even be called the grandfather of endogenous money.

Dirk Ehnts further points out:  Banks do not act as intermediaries, Wicksell indirectly writes, but ‘no matter what amount of money may be demanded from the banks, that is the amount which they are in a position to lend…’. Banks ‘have merely to enter a figure in the borrower’s account to represent a credit granted or a deposit created’. So, banks do not collect savings from those that have too much money in order to lend those loanable funds to those that need money.

Knut Wicksell deserves to be lifted from obscurity. The crisis of economics is the crisis of non-Wicksellian economics. In Wicksell, as in Keynes, we look at a monetary circuit and inter-temporal problems. In non-Wicksellian economics, we are always in inter-temporal equilibrium and hence there are no financial no defaults and not even assets or liabilities nor are banks modeled.