A mental model is an explanation of a thought process about how something works in the real world. Mental models help shape our behaviour and define our approach to solving problems (akin to a personal algorithm) and carrying out tasks. Mental models have been studied by cognitive scientists as part of efforts to understand how … Continue reading Mental Model: Economics
Tag: macro
Francis Chou on Sovereign debt (in the Annual Letter of 2009)
"It is hard to believe that governments can and do default on their debts and, as the following table shows, even with their power of taxation and the ability to print money, governments have to obey the laws of economics. Just like an individual or a corporation, if governments cannot service their debt, they either … Continue reading Francis Chou on Sovereign debt (in the Annual Letter of 2009)