Wednesday 11 October 2017

Macroeconomic Paradoxes

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Eine schöne, knappe Übersicht über Paradoxien, die sich aus durchaus rationalen individuellen Handlungsweisen ergeben, deren negativen Auswirkungen aber erst auf makroökonomischer Ebene zu erkennen sind:


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Nicely done: a concise overview of a number of pardoxes that originate in rational individual actions that reveal their negative repercussions only to him who takes a macroeconomic view:

The paradox of thrift: saving by large numbers of people impoverish the economy: people spend less, sales drop, investments are cut, total income diminishes, and hence less money is available for saving. 

The paradox of debt: if large enough numbers of people dedicate large parts of their income to the repayment of debt, total income falls, and more people become indebted.

The paradox of stability: a stable economic environment breeds optimism, which tends to increase the willingness to take risks, creating a higher debt-to-income ratio, which increases instability.

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