- Evidence of a Toxic Environment for Women in Economics - NYTimes
- A public plea to my male senior colleagues in economics – Jeffrey R. Brown
- A better centrism - Stumbling and Mumbling
- GSEs' Conservatorships: Not a Time to Celebrate - Cecchetti & Schoenholtz
- ‘Metrics Monday: Regression and Causality for Dummies - Marc Bellemare
- Brexit remains an exercise in deception - mainly macro
- Debts and Disasters - American Economic Association
- The new spring of artificial intelligence: A few early economics - VoxEU
- The Political Failure of Trickle-Down Economics - Paul Krugman
- Ahem! Stanley Fischer for the Fed? - Economic Principals
- The impact of demographics on long-term discount rates - VoxEU
- On zero-sum thinking - Stumbling and Mumbling
- The Low Misery Dilemma - Carola Binder
- Whither Trumpism? - Paul Krugman
- Blockchain: New Frontiers - Tim Taylor
- Japan and the burden of government debt - mainly macro
Monday, August 21, 2017
"So is the Trump agenda dead? Not necessarily":
What Will Trump Do to American Workers?, by Paul Krugman, NY Times: ...Donald Trump’s promise to be a populist fighting for ordinary workers was worth about as much as any other Trump promise — that is, nothing. His agenda, such as it is, amounts to reverse Robin Hood with extra racism — the conventional Republican strategy of taking from struggling families to give to the rich, while distracting lower-income whites by attacking Those People, with the only difference being just how blatantly he plays the race card.
At first sight, however, the Trump version of this strategy doesn’t seem to be going very well. ...
So is the Trump agenda dead? Not necessarily, because trickle-down has never been the whole story of the Republican assault on workers. Or to put it another way: Don’t just watch Congress, keep your eyes on what federal agencies are doing.
When you step back and take the long view on trickle-down policies, what you realize is that Trump’s legislative failure is more the rule than the exception. The election of Ronald Reagan was supposed to have set America on a path toward lower taxes and smaller government — and it did, for a while. But those changes have largely been reversed. ...
But here’s the thing: While the rich still pay taxes and the safety net has in some ways gotten stronger, the decades since Reagan have nonetheless been marked by vastly increased inequality, with stagnating wages for most, but soaring incomes for a tiny elite. How did that happen?
Yes, globalization probably played some role, as did technology. But other wealthy countries, just as exposed to the winds of global change, haven’t seen anything like America’s headlong rush into a new Gilded Age. To understand what happened to us..., you need to look at policy — and especially the kind of policy that often flies under the media’s radar. ...
Which brings us back to Trump and the effect he’ll have on America’s working class. Right now it looks as if he may have much less impact on taxing and spending than most people expected. But other policies, often made administratively by federal agencies rather than via legislation, can matter a lot. ...
The point is that progressives shouldn’t celebrate too much over Trump’s legislative failures. As long as he’s in office, he retains a lot of power to betray the working people who supported him. And in case you haven’t noticed, betraying those who trust him is a Trump specialty.
Friday, August 18, 2017
- Trump’s CEOs resigned. His staff should do the same. - Larry Summers
- Alfred Crosby Deserves a Nobel Prize in Economics - Douglas Campbell
- Fed Confronts New Reality: Low Inflation and Low Unemployment - NYTimes
- FOMC Minutes: Balance Sheet Normalization "Relatively soon" - Calculated Risk
- I Agree With Robert E Lee - EconoSpeak
- Online exports and the wage gap - VoxEU
- Centrism: the problem, not the solution - Stumbling and Mumbling
- The Lost Lesson of the Financial Crisis - Mohamed A. El-Erian
- Foreign-owned firms and productivity - Bank Underground
- "Theory vs. Data" in statistics too - Noahpinion
- Public choice and market failure - Notes On Liberty
- The Jobs Most Segregated by Gender and Race - Justin Fox
- The Imaginary Debt Crisis Is Here to Stay - Barry Ritholtz
"The Worst President Ever™":
Trump Makes Caligula Look Pretty Good, by Paul Krugman, NY Times: Even before the media obsession with Hillary Clinton’s email server put The Worst President Ever™ in the White House, historians were comparing Donald Trump to Caligula, the cruel, depraved Roman emperor who delighted in humiliating others, especially members of the empire’s elite. But seven months into the Trump administration, we can see that this comparison was unfair.
For one thing, Caligula did not, as far as we know, foment ethnic violence within the empire. For another ... Rome’s government continued to function reasonably well despite his antics...
Finally, when his behavior became truly intolerable, Rome’s elite did what the party now controlling Congress seems unable even to contemplate: It found a way to get rid of him.
Anyone with eyes — eyes not glued to Fox News, anyway — has long realized that Trump is utterly incapable, morally and intellectually, of filling the office he holds. But in the past few days things seem to have reached a critical mass. ...
Everyone in Washington now knows that we have a president who never meant it when he swore to defend the Constitution. He violates that oath just about every day and is never going to get any better.
The good news is that the founding fathers contemplated that possibility and offered a constitutional remedy: Unlike the senators of ancient Rome, who had to conspire with the Praetorian Guard to get Caligula assassinated, the U.S. Congress has the ability to remove a rogue president.
But ... all we get from the vast majority of elected Republicans are off-the-record expressions of “dismay” or denunciations of bigotry that somehow fail to name the bigot in chief. ...
The fact is that white supremacists have long been a key if unacknowledged part of the G.O.P. coalition, and Republicans need those votes to win general elections. Given the profiles in cowardice they’ve presented so far, it’s hard to imagine anything — up to and including evidence of collusion with a foreign power — that would make them risk losing those voters’ support.
So the odds are that we’re stuck with a malevolent, incompetent president... If so, we have to hope that our country somehow stumbles through the next year and a half without catastrophe, and that the midterm elections transform the political calculus and make the Constitution great again.
If that doesn’t happen, all one can say is God save America. Because all indications are that the Republicans won’t.
Wednesday, August 16, 2017
- Why don’t all CEOs quit Trump’s advisory councils? - Larry Summers
- Nearly All US Trade Deals Were Negotiated by Republicans - PIIE
- How Donald Trump Is Driving Up Health Insurance Premiums - NYTimes
- Adam Smith: The Impartial Spectator in Times of Faction - Tim Taylor
- More Credit Cards, Higher Limits, and an Uptick in Delinquency - Liberty Street
- Job polarization - Stumbling and Mumbling
- What does respecting the referendum result mean? - mainly macro
- Why Is The Fed Raising Interest Rates As Fast As It Is? - EconoSpeak
- Missing growth - VoxEU
- Current Account Deficits and Safe Assets - Capital Ebbs and Flows
- Autonomous Cars: Altering One in Nine Jobs - Tim Taylor
- The behavioural economics paradox - Chris Dillow
- Old Ideas About Foreign Trade Are Being Retired - Noah Smith
- Counterparty and Collateral Policies of Central Banks - Liberty Street
- Car finance: what’s new? - Bank Underground
- The Counterfactual and the Factual - Notes On Liberty
- Why Trump’s protectionist trade agenda will fail - VoxEU
Tuesday, August 15, 2017
Retail Sales, Dudley, Wages, by Tim Duy: Some quick thoughts for the day.
First, New York Federal Reserve President William Dudley gave an extended interview to the Associate Press. Definitely worth the time to read. Some highlights:
1.) Dudley never put a Trump bump in his forecast, so his forecast is essentially unchanged:
I think we’re still on the same trajectory we’ve been on for several years. Above trend growth, gradually tightening labor market, inflation -- somewhat below our objective -- but we do expect as the labor market continues to tighten, to see firmer wage gains and that will ultimately filter into inflation moving up towards our 2% objective.
2.) He expects inflation numbers to improve. He wants us to ignore the year-over-year numbers (of course, recent month-over-month numbers are not great):
Well, the reason why inflation won’t get up to 2% very quickly on a year-over-year basis is because we’ve had these very low inflation readings over the last 4 or 5 months. So it’s going to take time for those to sort of drop out of the year-over-year calculation.
3.) Assuming the forecast continues as he expects, he believes the Fed will hike rates again:
I think it depends on how the economic forecast evolves. If it evolves in line with my expectations, I would expect -- I would be in favor of doing another rate hike later this year.
4.) Bubble? What bubble?
My own view is that -- I’m not particularly concerned about where our asset prices are today for a couple of reasons. The main one is that I think that the asset prices are pretty consistent with what we’re seeing in terms of the actual performance of the economy.
5.) But - and I think this is important - financial conditions continue to easy despite rate hikes:
Now the reason why I think you’d want to continue to gradually remove monetary policy accommodation, even with inflation somewhat below target, is that 1) monetary policy is still accommodative, so the level of short-term rates is pretty low, and 2) and this is probably even more important, financial conditions have been easing rather than tightening. So despite the fact that we’ve raised short-term interest rates, financial conditions are easier today than they were a year ago.The stock market’s up, credit spreads have narrowed, the dollar has weakened, and those have more than offset the effects of somewhat higher short-term rates and the very modest increases that we’ve seen in longer-term yields.
6.) Balance sheet normalization is coming:
Well, we obviously have to have the FOMC meeting to make that decision at the next FOMC meeting. But, I don’t think the expectations of market participants are unreasonable. In June, following the June FOMC meeting, we laid out a plan in terms of how we would actually do our balance sheet normalization. How we would allow Treasury and agency mortgage-backed securities to gradually run off our portfolio over time.And so the plan is out there. It’s been I think generally well-received, and fully anticipated. People expect it to take place. In the last FOMC statement, we said that we expected this to happen relatively soon. So, I expect it to happen relatively soon.
7.) At the end of the day, the balance sheet reduction might amount to very little:
My own view is, if I had to say today, we’re probably going to see a balance sheet five years from now that’s probably in the order of 2-1/2 to 3-1/2 trillion rather than the 4-1/2 trillion dollar balance sheet.
Overall, Dudley continues to adhere to what amounts to the Fed's median forecast, and that means he thinks another rate hike this year is solidly in play.
Separately, retail sales for July were up:
The monthly data is noisy, so be wary that it reflects the true state of spending. The three-month and twelve-month changes (for core sales) are similar at 3.2% and 3.6% respectively and more likely reflect the underlying trend. Basically, the consumer continues to press forward at a modest pace. Stop worrying about consumer spending. It isn't an imminent threat to the outlook.
And why should it be a threat? Like, job growth, wage growth is actually fairly solid. The headline weakness in wage growth is all about demographic shift, at least according to new research from Mary Daly of the Federal Reserve Bank of San Francisco. Via Bloomberg:
Fresh research from the San Francisco Fed provides an explanation: baby boomers. As they retire in droves, their exit from the workforce is distorting the data for average earnings, according to a blog post published Monday on the bank’s website.“Wage growth isn’t as disappointing as it looks,” Mary Daly, director of economic research at the San Francisco Fed, said in an interview. “Wage growth, when cleaned up, looks consistent with other measures seen in the labor market.”
The implication is that the labor market low wage growth does not necessarily imply the labor market is weak. It is an artifact of demographic change. That change has been fairly persistent, but at the end of the note Daly holds out some hope that it may be changing:
Overall, these factors have combined to hold down growth in the median weekly earnings measure by a little under 2 percentage points (Figure 2), a sizable effect relative to the normal expected gains.Most recently, the effect from flows into and out of full-time work has started to tick upward and might be a sign of stronger growth ahead.
We will see.
Fed Shouldn't View Productivity as an Exogenous Factor: The Federal Reserve has an opportunity to test a hypothesis critical to the health of the U.S. economy: Can persistently loose monetary policy boost the pace of productivity growth? Sadly, for now, an adherence to a strict Phillips curve framework for the economy and fear of financial instability will prevent the Fed from venturing down this path. ...[Continued at Bloomberg Prophets]...
Do Low Interest Rates Punish Savers?: This is the second of my posts on the conference: Applications of Behavioural Economics, and Multiple Equilibrium Models to Macroeconomic Policy, held at the Bank of England on July 3rd and 4th. I feature two papers written by officials from the Federal Reserve System. James Bullard, President of the Federal Reserve Bank of St. Louis, discusses the implications of his recent research for low interest rates. And Kevin Lansing, a Research Advisor at the Federal Reserve Bank of San Francisco, discusses his work on multiple equilibria. ...
- Why the Federal Reserve’s job will get harder - Larry Summers
- The Case for Regulating Before Harms Occur - The Regulatory Review
- The Natural Rate of Unemployment over the Past 100 Years - FRBSF
- Misallocation and Productivity: International Perspective - Tim Taylor
- The social mobility lie - Stumbling and Mumbling
- The Rise of Market Power and the Decline of Labor’s Share - ProMarket
- How did the UK austerity mistake happen - mainly macro
- Analyzing Terabytes of Economic Data - No Hesitations
- Adverse Selection: A Primer - Cecchetti & Schoenholtz
- Don’t blame the global financial cycle - VoxEU
- Financial globalisation and market volatility - VoxEU
- North Korea Is an Economic Problem - Economic Principals
- Thinking about Costs and Benefits of Immigration - Nick Rowe
- The Bees Are Better, But They're Not All Right - Justin Fox
- Moral progress and critical realism - Understanding Society
- The Economic Outlook - FRBSF
Monday, August 14, 2017
"we don’t need to wonder whether an anti-American cabal ... has seized power in Washington. It has:":
When the President Is Un-American, by Payl Krugman, NY Times: ...what makes America America is that it is built around an idea: the idea that all men are created equal, and are entitled to basic human rights. Take away that idea and we’re just a giant version of a two-bit autocracy. ...
Real Americans understand that our nation is built around values, not the “blood and soil” of the marchers’ chants; what makes you an American is your attempt to live up to those values, not the place or race your ancestors came from. ...
But the man who began his political ascent by falsely questioning Barack Obama’s place of birth — a blood-and-soil argument if ever there was one — clearly cares nothing about the openness and inclusiveness that have always been essential parts of who we are...
Real Americans understand that our nation was born in a rebellion against tyranny. They feel an instinctive aversion to tyrants..., and an underlying sympathy for democratic regimes...
But the present occupant of the White House has made no secret of preferring the company, not of democratic leaders, but of authoritarian rulers...
Real Americans expect public officials to be humbled by the responsibility that comes with the job. They’re not supposed to be boastful blowhards ... like Trump...
Real Americans understand that being a powerful public figure means facing criticism... Foreign autocrats may rage against unflattering news reports, threaten to inflict financial harm on publications they dislike, talk about imprisoning journalists; American leaders aren’t supposed to sound like that.
Finally, real Americans who manage to achieve high office realize that they are ... meant to use their position for the public good. ... Now we have a leader who is transparently exploiting his office for personal enrichment, in ways that all too obviously amount in practice to influence-buying by domestic malefactors and foreign governments alike.
In short, these days we have a president who is really, truly, deeply un-American, someone who doesn’t share the values and ideals that made this country special...., it’s remarkable that Trump won’t even pretend to be outraged at Putin’s meddling with our election. ...
Whatever role foreign influence may have played and may still be playing, however, we don’t need to wonder whether an anti-American cabal, hostile to everything we stand for, determined to undermine everything that truly makes this country great, has seized power in Washington. It has: it’s called the Trump administration.
I have a new column:
The Republican Retreat From Market-Based Regulation: During the debate over the repeal of Obamacare, Republicans made frequent reference to their desire for a “free market” for health care. This is consistent with the GOP’s long-standing support of deregulation and free market principles.
But all well-functioning markets are regulated to one degree or another. ...
Don't Add To The Fire: Vox has an article out this morning with the title "The real "deep state" sabotage is happening at the Fed." It begins:
Trump administration officials are notorious for their suspicion that a “deep state” of career military, intelligence, diplomatic, or civil service professionals is seeking to sabotage their work. But for a clearer example of sabotage — albeit without much in the way of a conspiracy — Trump would do well to cast his gaze at the Federal Reserve, which, dating back to before his inauguration, has been waging war on an inflationary menace that appears not to exist.
I have no qualms with the criticism that the Fed's is excessively focused on inflation or, more accurately, possibly working with a broken model of inflation. That's fair game.
What I find disturbing and quite frankly irresponsible is the use of "deep state" language to describe the Fed. This is the language used by the far right to discredit and undermine faith in our government institutions. For the left to adopt the same language adds to the fire already burning.
Take this language into consideration with the rage already directed against the Federal Reserve. This, for instance:
A Sayre man has been arrested in connection with what authorities says is a foiled plot to blow up a bank building in Downtown Oklahoma City with a truck filled with fake explosives.Jerry Drake Varnell, 23, of Sayre, initially wanted to blow up the Federal Reserve Building in Washington, D.C., but settled on attempting to detonate a bomb at the BancFirst building at 101 N Broadway in downtown Oklahoma City, according to court documents.An undercover FBI agent posed as someone who could help Varnell to blow up the building, according to a complaint filed Sunday in U.S. District Court for the Western District of Oklahoma. Varnell allegedly told an FBI informant that he wanted to blow up the Federal Reserve Building in Washington, D.C., with a device similar to the one used in the 1995 Oklahoma City bombing because he was upset with the government.
I am honestly just simply disappointed that Vox chose to add to the hate directed at the Fed by using the inflammatory language of the far right. I have had plenty of criticisms of the Fed over the years. I am concerned that their model of inflation isn't working, and that their estimate of the natural rate of interest is too high. But that type of criticism is a far cry from describing the institution as the "deep state." We have seen time and time again that fomenting that kind of thought only leads to bloodshed. The last thing we need is the left helping to incite another Oklahoma City bombing on Constitution Ave. - or anywhere for that matter.
Saturday, August 12, 2017
- Micro Needs macro - Brad DeLong
- The Financial Crisis Tenth Anniversary - EconoSpeak
- What economists study: A guide for the curious - VoxEU
- Inequality and Property in Russia - Novokmet, Thomas Piketty, Zucman
- Gender quotas and the crisis of the mediocre man - Microeconomic Insights
- Measuring the True Impact of Job Loss on Future Earnings - FRB Cleveland
- Warehousing A Historical Lesson in central bank independence - FRB Cleveland
- Why income inequality is so much worse in the U.S. - The Washington Post
- Honduras experiments with charter cities - The Economist
- NAFTA in a Multipolar World Economy - Tim Taylor
- Entrepreneurial Marxism - Stumbling and Mumbling
- What is Keynesian Search Theory? - Roger E. A. Farmer
- Why subsidize protectionism motivated foreign investors? - Ken Thomas
- Trilemma redux: Evidence from emerging market economies - VoxEU
- The politics of lying - mainly macro
- Migration and terror - VoxEU
Friday, August 11, 2017
"Where does climate denial come from?":
The Axis of Climate Evil, by Paul Krugman, NY Times: ...At this point the evidence for human-caused global warming just keeps getting more overwhelming, and the plausible scenarios for the future — extreme weather events, rising sea levels, drought, and more — just keep getting scarier.
In a rational world urgent action to limit climate change would be the overwhelming policy priority for governments everywhere.
But the U.S. government is, of course, now controlled by a party within which climate denial — rejecting not just scientific evidence but also obvious lived experience, and fiercely opposing any effort to slow the trend — has become a defining marker of tribal identity. ...
So where does climate denial come from? ... The answer, I’d argue, is that there are actually three groups involved — a sort of axis of climate evil.
First, and most obvious, there’s the fossil fuel industry — think the Koch brothers — which has an obvious financial stake in continuing to sell dirty energy. And the industry ... has systematically showered money on think tanks and scientists willing to express skepticism about climate change. ...
Still, the mercenary interests of fossil fuel companies aren’t the whole story here. There’s also ideology.
An influential part of the U.S. political spectrum — think the Wall Street Journal editorial page — is opposed to any and all forms of government economic regulation; it’s committed to Reagan’s doctrine that government is always the problem, never the solution. ...
Some conservatives ... support market-friendly intervention to limit greenhouse gas emissions. But all too many prefer simply to deny the existence of the issue — if facts conflict with their ideology, they deny the facts.
Finally, there are a few public intellectuals — less important than the plutocrats and ideologues, but if you ask me even more shameful — who adopt a pose of climate skepticism out of sheer ego. In effect, they say: “Look at me! I’m smart! I’m contrarian! I’ll show you how clever I am by denying the scientific consensus!” And for the sake of this posturing, they’re willing to nudge us further down the road to catastrophe.
Which brings me back to the current political situation. Right now progressives are feeling better than they expected to a few months ago: Donald Trump and his frenemies in Congress are accomplishing a lot less than they hoped, and their opponents feared. But that doesn’t change the reality that the axis of climate evil is now firmly in control of U.S. policy, and the world may never recover.
Thursday, August 10, 2017
- The Search for New Assumptions - Benjamin Friedman
- Revenge of the Experts - Barry Eichengreen
- Markets Don't Work for Everything - Noah Smith
- A well-argued smackdown from the smart Dean Baker - Brad DeLong
- Occupational Licenses and the Prison-to-Poverty Pipeline - Regulatory Review
- The portfolio rebalancing effects of the ECB's asset purchase programme - VoxEU
- Avik Roy Claims Reagan Embraced Universal Health Care Coverage - EconoSpeak
Wednesday, August 09, 2017
- Ranking Academic Economic Journals by Speed - Douglas Campbell
- Real wages are mainly a macro issue - mainly macro
- My socialism - Stumbling and Mumbling
- Investing in roads versus schools - VoxEU
- Regulation of the Chinese Equity Crowdfunding Market - Regulatory Review
- Interview: Prof. Peter Temin, MIT Economics - Acemaxx-Analytics
- Time for a critical-realist epistemology - Understanding Society
- Stabilizing the System of Mortgage Finance in the US - Unassuming Economist
Multiple Jobholders Are Not A Weak Spot In The Employment Report, by Tim Duy: Along with every decent employment report comes the efforts to debunk that report. I see that an article from Pedro Nicolaci Da Costa at Business Insider is making the rounds tonight. In it Da Costa directs us to this in particular from Komal Sri-Kumar:
The plight of low-income workers is underlined by yet another statistic. According to BLS numbers, 7.6 million workers held multiple jobs last month, up 2% from 7.4 million in July 2016. The principal reason workers hold more than one position is that no single job provides a sufficient income. In a robust economic recovery, the number of full-time workers should be rising, and the number of workers employed part-time or holding multiple jobs, should decline. The rise in the number of multiple job holders is troubling, and is yet another signal that there is still slack in the labor market. Are we there yet? No, we are still far from full employment.
Let's look at a picture of this one:
Sri-Kumar claims that in a robust economic expansion, the number of multiple job holders should be declining. In other words, multiple job holders should be a countercyclical indicator. But even the most cursory look at the data tells you that the number of multiple job holders is a procyclical indicator. It should rise as the economy gains steam and there is more opportunity for those who need or want second jobs to find such employment.
The trend of multiple job holders is very clearly not a sign of weakness in the economy, but a sign of strength.
It is also worth noting that as a percentage of the employed, the number of multiple job holders has been in a two decade decline:
Note that the job market of the late 1990's is considered one of the best, yet at the same time the percentage of multiple job holders was rising and high. A decline in the number of multiple job holders, both in absolute and percentage terms, was actually a leading indicator of recession. In other words, if you are concerned about opportunities for those who need or want multiple jobs, you should be hoping these metrics move higher, not lower.
Bottom Line: The rise in the number of multiple job holders is a sign of economic strength, not weakness. Regardless of what the bears might say, the July employment report was solid. Get over it. Worry about the inability of this Administration to deal with a crisis like North Korea instead.
Continuing with recent posts on models with multiple equilibria, this is by Luis C. Corchón (link is to a draft)
A Malthus-Swan Model of Economic Growth, by Luis C. Corchón Departmento de Economía Universidad Carlos III de Madrid Calle Madrid, Journal of Dynamics and Games, July 2016: [Open link to working paper]: Abstract. In this paper we introduce in the Solow-Swan growth model a labor supply based on Malthusian ideas. We show that this model may yield several steady states and that an increase in total factor productivity might decrease the capital-labor ratio in a stable equilibrium.
“Why has it taken economists so long to learn that demography influences growth?” Jeff Williamson (1998)
1. Introduction. In this note we propose a model which combines the classical Solow (1956) and Swan (1956) model with ideas about population growth that are borrowed from Malthus (1798). We will refer to our model as a Malthus- Swan-Solow (MSS) model. Our model has no technical progress, no institutional change, no human capital and no land.
We assume that the rate of growth of population depends on the real wage in a continuous way. This function is a generalization of one used by Hansen and Prescott (2002).
We find that, as in the classical Solow-Swan model, there exist a steady state value of capital-labor ratio, see Proposition 1. However this steady state is not necessarily unique: Proposition 2 and Example 3 show that there might be an odd number of steady state capital-labor ratios. And only the smaller and the larger values of these capital-labor ratio are locally stable, see Proposition 4. This implies that there might be two, very different values of per capita income in the steady state: one with a small and another with a large value of per capita income. Finally we find that an increase in total factor productivity may increase or decrease the capital-labor ratio in a stable steady state (Proposition 5) but it always increases per capita income (Proposition 6).
Summing up, the consideration of endogenous population in the Solow-Swan model brings new insights with respect to the standard model regarding the number, stability and comparative static properties of steady states. ...
Tuesday, August 08, 2017
- The Financial Crisis Began 10 Years Ago This Week - Cecchetti & Schoenholtz
- How Bad Will It Be If We Hit The Debt Ceiling? - Paul Krugman
- The Danger From Low-Skilled Immigrants: Not Having Them - NYTimes
- Negative Interest Rates: Evidence and Practicalities - Tim Taylor
- Britain’s early efforts to finance the First World War - Bank Underground
- The media cannot reform itself until it acknowledges its power - mainly macro
- The Dead Weight Loss of a Consumption Tax with Externalities - Econbrowser
- The New Socialism of Fools - J. Bradford DeLong
- Brexit and the balance of bulls*** - Jonathan Portes
- Antifragility and justice - Magic, maths and money
- Free Banking and the Friedman Rule - Josh Hendrickson
- Maybe Central Banks Are Too Independent - Narayana Kockerlakota
- Merger Control in the Banking Sector - FRB Cleveland
- Post-crisis regulation and CEO bonuses - VoxEU
- Politics vs. Commerce - Economic Principals
The Marriage of Psychology with Multiple Equilibria in Economics: This is the first of a new weekly blog series, Monday’s Macro Memo with Roger Farmer, which will discuss a wide range of economic issues of the day. The blog will appear on both the NIESR site and on Roger Farmer’s Economic Window and in the first few weeks, I will be posting a series of videos, recorded at a conference held at the Bank England on July 3rd and 4th of 2017. The conference was titled "Applications of Behavioural Economics and Multiple Equilibrium Models to Macroeconomic Policy"...
I had been planning, for some time, to run a conference on the topic of multiple equilibria sponsored by Warwick University. Andy Haldane and Sujit Kapadia had been talking with Alan Taylor of U.C. Davis about organizing a conference on the topic of behavioural economics. After talking with Andy, Sujit and Alan, we decided it would be ideal to combine our plans into a single conference that would highlight the promise of studying the marriage of psychology with multiple equilibria in economics. The video ... explains why this is a fruitful idea.
Roger goes on to discuss how "psychology enters the picture," and why the Robert Lucas idea that "the expectations of market participants are determined by economic fundamentals ... makes little or no sense in models ... where there are multiple equilibria." Also:
In addition to the introductory video, linked above, we also recorded videos from many of the conference presenters and discussants. I will be releasing these videos in a series of posts in the coming weeks and I will discuss the research associated with the accompanying topic. You can find links to the original papers on the conference website linked here. Stay tuned.
Monday, August 07, 2017
There's more than one way to get to universal coverage:
What’s Next for Progressives?, by Paul Krugman, NY Times: ...If Democrats regain control of Congress and the White House, what will they do with the opportunity?
Well, some progressives — by and large people who supported Bernie Sanders... — are already trying to revive one of his signature proposals: expanding Medicare to cover everyone. Some even want to make support for single-payer a litmus test for Democratic candidates.
So it’s time for a little pushback. ...
Look at the latest report by the nonpartisan Commonwealth Fund, comparing health care performance among advanced nations. America is at the bottom; the top three performers are Britain, Australia, and the Netherlands. And the thing is, these three leaders have very different systems.
Britain has true socialized medicine: The government provides health care directly through the National Health Service. Australia has a single-payer system, basically Medicare for All... But the Dutch have what we might call Obamacare done right: individuals are required to buy coverage from regulated private insurers, with subsidies to help them afford the premiums.
And the Dutch system works, which suggests that a lot could be accomplished via incremental improvements in the A.C.A...
Meanwhile, the political logic that led to Obamacare rather than Medicare for all still applies. ... The ... 156 million people who currently get insurance through their employer ... are largely satisfied with their coverage. Moving to single-payer would mean taking away this coverage and imposing new taxes;... you’d have to convince most of these people both that they would save more in premiums than they pay in additional taxes, and that their new coverage would be just as good...
This might in fact be true, but it would be one heck of a hard sell. Is this really where progressives want to spend their political capital?
What would I do instead? I’d enhance the A.C.A., not replace it, although I would strongly support reintroducing some form of public option ... that could eventually lead to single-payer.
Meanwhile, progressives should move beyond health care and focus on other holes in the U.S. safety net.
When you compare the U.S. social welfare system with those of other wealthy countries, what really stands out now is our neglect of children. ...
I have nothing against single-payer; it’s what I’d support if we were starting fresh. But we aren’t: Getting there from here would be very hard... Even idealists need to set priorities, and Medicare-for-all shouldn’t be at the top of the list.