Development that Works
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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • Like water for economics

    15
    Nov
    2013

    By

    Last night, I started reading Tim Harford´s The Undercover Economist Strikes Back. Like anything Harford touches, it is pure gold.  Or should I say pure water from the most pristine source. The book is about macroeconomics and although this blog is not about macroeconomics, I cannot resist the temptation to bring up the first chapter.

    In this first chapter, Harford describes the Monetary National Income Analogue Computer (MONIAC) invented by Bill Phillips – yes, William Phillips of Phillips Curve and LSE fame. The MONIAC (I cannot believe that the name is just an innocent acronym) was a collection of tubes, pumps, levers and valves, encased in a large glass box.

    Think of it as a hydraulic computer where water flowing into various tanks simulates the workings of the economy.

    One could argue that had Phillips lived today, he would have invented a machine that represented the 2009 financial crisis. Something like this:

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