Brad DeLong's Grasping Reality 2020-01-28 21:08:15

Andrew Gelman: China Air Pollution Regression Discontinuity Update https://statmodeling.stat.columbia.edu/2018/08/02/38160/: 'If fourth-degree polynomials had never been invented, researchers could look at the above graph with just the scatterplot and draw their own conclusions, with no p-values to mislead them. The trouble is that, for many purposes, we do need advanced methods—looking at scatterplots and time series is not always...

Some Thoughts on the 1619 Project

I’m not sure how much of an impact the 1619 Project will have on the public, but it has certainly gotten a lot of academic historians wound up. Historians at the American Institute for Economic Research and the World Socialist Web Site have both criticized the Project. Talk about politics making strange bedfellows. Peter Coclanis is the latest to criticize it. And, of course, everyone with a Twitter account has an opinion. More than a few seem...

Automated Economic Reasoning Overview Hosted by Wolfram

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Announcing the US-China Trade Policy Working Group

Concerned about where the US-China trade relationship is going, we recently formed a “US-China Trade Policy Working Group.” Yang Yao, Jeff Lehman and I are co-conveners. Other members are Meredith Crowley, Robert Howse, Jiandong Ju, Feng Lu, Justin Yifu Lin, Eric Maskin, and Rob Staiger. We released our statement today. The statement is signed by 27 additional economists and legal scholars, including Philippe Aghion, Kaushik Basu, Robert...

Radio Show 23 January 2020

The running log of topics, questions and conversations from my appearance on KNOX – 1310 AM in Grand Forks, North Dakota.  Fiscal Issues A little side rant on fiscal issues like the lack of deficit control. Caller asked me what I would start with and it is defense and social security but that will never get you elected or re-elected. The further policy aim needs to be increasing taxes to generate more revenue to lessen the impacts of...

What Determines the Strength of Interest Rate Linkages between Countries?

Decisions regarding the trilemma, but also choices regarding macroprudential policies have an impact. From the revised version of Joshua Aizenman, Menzie Chinn and Hiro Ito, “Financial Spillovers and Macroprudential Policies” (forthcoming Open Economies Review): In this paper, we empirically investigated whether and to what extent the financial link through policy interest rates between the CEs [Core Economies] (i.e., the U.S. the euro area,...

A conversation with Eric Tymoigne on MMT vs SMT

There are a lot of moving parts to the MMT program. I want to focus on one of these parts today: the relation between monetary and fiscal policy. One thing I find appealing about MMT scholars is their attention to monetary history and institutional details. I've learned a lot from them in this regard. But as is often the case with details, one has to worry about whether they help shed light on a specific question of interest, or whether they...

Increased Price Flexibility is Destabilising in New Keynesian Models. (And a Price-Level Path Target is Stabilising)

Start with a very simple New Keynesian "IS" (or "Aggregate Demand") equation: y(t) = E[y(t+1)] - a[r(t)-r*(t)] The "real" (inflation-adjusted) interest rate r(t) is defined as the "one period" nominal interest rate, minus expected inflation for the following "one period". In order to stabilise output y(t), relative to expected future output E[y(t+1)], the central bank needs to ensure that the...

Ten years of social media have left us all worse off

Ten years of social media have left us all worse off The last decade has had plenty of landmark moments — but one big change crept up on us slowly: our experiences in the liminal space of social media. Somewhere between Silicon Valley and our vibrating pockets, between our closest friends and some faceless trolls, our privacy, politics, economy and above all our attention were reshaped by Facebook and its outriders. Social media existed...

Worries about Automation and Manufacturing Job Loss from 1940

Concern over how robots and automation can lead to loss of jobs are not new. For example, here's a cartoon used to illustrate a New York Times article by Louis Stark back in 1940. Stark's article was called "Does Machine Displace Men in the Long Run? New Studies Cited as Old Argument is Renewed over Significance of Technological Unemployment" (February 25, 1940). Here are a few thoughts stimulated by the article.1) It's interesting...

Is Trump “coupling” with China?

In a very interesting essay, Fatih Oktay asks why China would agree to a trade deal that seems to offer it very little of value: However, these considerations only provide breathing space for China. After the election, if Trump wins, he is likely to bring back into spotlight the more important issue of state involvement in the economy and technological development in China, and intensify the technology war. If Trump does not win, it is...

Monday assorted links

1. Ezra Klein on polarization in other countries. 2. Joshua Gans honors Clay Christensen. 3. “…different types of metal fans exhibit different moral reasoning styles dependent on their metal sub-genre identification. Further, it was found that moral reasoning styles explain a portion of the variance in lyrical preferences that weren’t already explained by personality traits.” 4. Cemeteries being underutilized for providing wildlife with needed...

How business lost its influence on right wing parties

This covers ground which others may be more knowledgeable about, so please let me know of any references or sources that I really should read that cover issues central to the discussion below. When Trump threatens governments that want to tax tech giants, most of which are based in the US, it seems like the familiar story of governments acting in the interest of business. But when Trump imposes tariffs on imports he may be favouring particular...

Performance management and workplace culture: evidence from a US trucking firm

Summary Firms increasingly collect data on their employees’ performance, a management practice that they can use to promote comparisons among staff and potentially boost productivity. At the same time, there is growing corporate emphasis on employee empowerment, teamwork, and happiness – again with the goal of improving overall performance. Are these two objectives compatible? A new...

Taxing Billionaires

I just read a fascinating twitter exchange between @Noahpinion and @gabriel_zucman. My scoring so far: Noah: 10: Gabriel: 0 Gabriel argues for taxing billionaires immediately based on the principle of “ability to pay”. Noah asks if his reasoning is based on some unarticulated moral principle; or is it on practical grounds. The State needs the ...

Will the Coronavirus Cause a Major Growth Slowdown in China?

Some fear that the timing of China’s coronavirus outbreak – at the start of the country's week-long New Year celebration, and in the middle of traditional school-break travels – will exacerbate the economic fallout from the epidemic. But three important factors may limit the virus’s impact on Chinese and global GDP. NEW YORK – The panic generated by the new coronavirus, 2019-nCov, which originated in...

Greta Versus the Greedy Grifters

I’ve never been a fan of Davos, that annual gathering of the rich and fatuous. One virtue of the pageant of preening and self-importance, however, is that it brings out the worst in some people, leading them to say things that reveal their vileness for all to see.And so it was for Steven Mnuchin, Donald Trump’s Treasury secretary. First, Mnuchin doubled down on his claim that the 2017 tax cut will pay for itself — just days after his own...

Why Kevin Williamson is wrong about poverty and bad behavior

I recently wrote a post at Bloomberg Opinion arguing that "bad behavior" - drug use, violence, single parenthood, and idleness - is not the main cause of poverty in advanced nations. As evidence, I cited the country of Japan, which has extremely low rates of drug use, violence, single parenthood, and idleness, and yet which has a poverty rate almost as high as that of the U.S., and significantly higher than those of wealthy European...

Class and fish

Suppose you grew up in a place where only the well-to-do were ever allowed to fish for trout, where the working class only had access to 'rough fish', and you were a committed communist.If you moved to a place where trout had been introduced and were protected through fishing licenses while some native species were in trouble and generally unprotected, what would you do?Charlie Mitchell tells us over in the Stuff newspapers. The story almost...

Performance management and workplace culture: evidence from a US trucking firm

Summary Firms increasingly collect data on their employees’ performance, a management practice that they can use to promote comparisons among staff and potentially boost productivity. At the same time, there is growing corporate emphasis on employee empowerment, teamwork, and happiness – again with the goal of improving overall performance. Are these two objectives compatible? A new...

The Federalist Papers #5: Unless United, the States Will Be at Each Others’ Throats

In the Federalist Papers #5, John Jay has one point: if the 13 states were divided up into several different nations (“confederacies”), those nations would soon be at odds with one another and tearing one another down. Later events backed up his claim on two occasions. First, the Civil war followed swiftly upon the secession of the Confederacy from the Union. Those same states, despite their different views, conducted their rivalry in...

Poverty and equality of opportunity: three pictures to motivate policy for social mobility

Read my comments presented to the Public Economics Forum on “Intergenerationally Disadvantaged: Newest Evidence and What it Means for Policy,” organized by the Melbourne Institute for Applied Economic and Social Research, on November 26th, 2019 in Canberra, Australia. Social mobility varies across countries, but it varies in a particular way, a way that I argue is relevant for the conduct of public policy. Inequality begets inequality. Up to...

32+ Years…

Marijuana legalization increases cigarette consumption

Econ Paper:   ... marijuana and cigarettes are complements and legalizing recreational marijuana is associated with an increase in cigarette consumption by about 4-7%. So, beware the hidden-cost fallacy:   We advise caution in passing [marijuana legalization] laws since we estimate the nationwide health care costs associated with such an increase in tobacco consumption will be about $10 billion and may equal or exceed the touted monetary...

Allan Meltzer’s Life Work

The Hoover Press and the Mercatus Center have just released a new book on Allan Meltzer's contributions to economics. The book is comprised of papers that were presented at a 2018 conference commemorating his work on the monetary transmission mechanism, the history of the Fed, and his more general work on public policy. Below is the table of contents for the book: I happen to be the editor of the book and, as seen above, have two chapters...

Structural, Not Cyclical, Budget Reform

Today I published a column in Project Syndicate on fiscal policy. I am positive about pro-growth effects of the tax reform in the 2017 tax act and of the greater use of cost-benefit analysis in the recent regulatory reform effort. And the recent trade deals—the USMCA and “phase one” with China—take away some threats of trade wars. But there is still a fiscal policy problem due to the growing federal budget deficit and debt. Fortunately, this...

Ferguson and the billionaires at Davos

In my last post, I commented on Joe Stiglitz view, heading to Davos, that billionaires and corporate leaders are anxious to pollute the air.  In my wealth tax series I reported on the popular view on the Warren Sanders Saez Zucman view that corporate leaders and billionaires represent a regressive right wing political force, that must ...

The game theory of the electoral threshold

The game theory of the electoral threshold April 7, 2019 in Uncategorized Israel is holding an election Tuesday. It’s a multi-party system in Israel, based on proportional representation, and the main battle is between two blocs of parties. We call them the left-wing bloc and the right-wing bloc, and civics textbooks will tell you that this division is about policy: the Arab-Israeli conflict, economics and the role of religion. But...

Carbon Prices, not Monetary Policies, Are the Tools to Fight Climate Change

TweetJanuary 23, 2020 —  Everyone agrees that Climate Change is at the top of the list of most important policy issues that we face – everyone, with a few exceptions such as Trump supporters who call it a hoax.  Identifying the problem, however, is not much use unless we also identify the appropriate tools to address the problem. Financial institutions In my own field of specialization, central bankers have caught Climate Change fever. ...

Nose Blind To Inflation

Posted on 26 January 2020 by John Mauldin, Thoughts from the Frontline The human brain excels at taking shortcuts. Processing all the information our senses collect takes a lot of energy, so repetitive data gets lower priority. Things we see often fade into the background so we can notice new stuff.Please share this article - Go to very top of page, right hand side, for social media buttons.This is where we get phenomena like "nose...

Private equity and the mark-to-market myth

News overnight from the Wall Street Journal: Southland Royalty, a private equity owned oil-and-gas company with assets in Wyoming, has filed for bankruptcy.Formed in 2015, Southland had received around $1.1bn in equity commitments from its private-equity owner, Encap, and other investors including Southland’s management. A further $540m in debt was provided by a revolving line of credit, according to the WSJ.Another bankruptcy in the US’s...

Is Russia a Resurgent Great Power Competitor in Central Asia?

Pentagon says Russia is a great power competitor. Not in Central Asia. Russian economic woes weaken its ties. 15 January 2020 **Is Russia a Resurgent Great Power** **Competitor in...

Brainteasers From My Dad

When my sister and I were little, our Dad would challenge us with riddles and word games. I mentioned three in my eulogy for Dad: 1. Imagine a two-volume dictionary sitting on a shelf. Each volume has 500 pages. A bookworm is on the first page of letter A. It wants to eat its way to the end of letter Z as fast as possible. How many pages does it need to eat? 2. Should you walk to work or bring your lunch? 3. Is it warmer in the summer or in...

Another Semester Has Started

Welcome to any new students. The entries usually have something to do with a basic economic principle that is related to a recent news story.Here is something I wrote for The Ranger (the school paper of San Antonio College where I used to teach) back in 2011 titled "Why is college so hard?"Students might wonder why college, and SAC in particular, is hard. This might sound trite, but I think the faculty at SAC want students to...

The Past and Future of Econ 101

During the recent ASSA meeting, I had the honor of receiving the John R. Commons Award from Omicron Delta Epsilon, the economics honor society. When receiving the award, I gave a lecture titled "The Past and Future of Econ 101." You can now read the lecture by clicking here.

The new tools of monetary policy

By Haowen Chen Since the 1980s, interest rates around the world have trended downward, reflecting lower inflation, demographic and technological forces that have increased desired global saving relative to desired investment, and other factors. Although low inflation and interest rates have many benefits, the new environment poses challenges for central banks, who have traditionally relied on cuts to short-term interest rates to stimulate...

Central Banking Stories to Watch in 2019

Happy New Year, everybody! 2018 has been a quiet year for my blog, but productive on other fronts, as I've kept busy with research and my family. But here are a few central bank-related stories I'm interested in following in the new year. 1. New Governor at Reserve Bank of IndiaFollowing the early exit of Governor Urjit Patel in December, Prime Minister Modi appointed the third central bank governor in just three years: Shaktikanta Das....

Religious competition was to blame for Europe’s witch hunts

IN EUROPE, a belief in witchcraft is widely associated with medieval superstition. But this is not quite accurate. Before the 15th century popes denied the existence of witchcraft and forbade the prosecution of anyone accused of practising it. It was only after 1500 that churches reversed their position. Over the following three centuries 80,000 people were tried for witchcraft, half of whom were executed, mostly by hanging or burning. But in...

The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...

Some Links

A couple of links to things I have been working on… My paper entitled, “The Riksbank, Emergency Finance, Policy Experimentation, and Sweden’s Reversal of Fortune” is now forthcoming at the Journal of Economic Behavior and Organization. The paper includes a lot of background on Swedish governance and fiscal capacity, as well as information about the early Swedish monetary system and the Riksbank. I argue that the constraints on the Riksbank...

Who were the top taxpayers in 1923?

From page 71 of Daniel Marcin’s “The Revenue Act of 1924: Publicity, Tax Cuts, Response” div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...

The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...