Wednesday, November 02, 2011
Friday, September 23, 2011
Sunday, August 28, 2011
Stephen Williamson says, "If you have never seen an Ed Prescott talk, here is your chance. Don't pay attention to how he's saying it, just listen closely. This is interesting, just to hear how he thinks about what he does."
I'd guess I was far less impressed, but here's the video so you can make up your own mind:
Friday, August 26, 2011
I enjoyed this talk:
George Akerlof: Identity Economics
Abstract: Identity economics constitutes the first sustained effort to incorporate the effects of social context into our understanding of why people make the economic decisions they do, and why certain people, given different identities, make markedly different decisions in the same situations. It yields a more realistic and deeper account of behavior, and thereby a better basis for shaping organizations and public policies. The lecture will give a brief introduction to the book Identity Economics by George Akerlof and Rachel Kranton. It will give a motivation for identity economics and why it matters.
This one too:
Joseph Stiglitz: Imagining an Economics tthat Works: Crisis, Contagion and the Need for a New Paradigm
Abstract: The standard macroeconomic models have failed, by all the most important tests of scientific theory. They did not predict that the financial crisis would happen; and when it did, they understated its effects. Monetary authorities allowed bubbles to grow and focused on keeping inflation low, partly because the standard models suggested that low inflation was necessary and almost sufficient for efficiency and growth. Advocates of capital market liberalization argued that it would lead to greater stability: countries faced with a negative shock borrow from the rest of the world, allowing cross-country smoothing. The crisis showed the deep flaws in this thinking, but policymakers have been slow to rethink the paradigms they relied on. There is a need for a fundamental re-examination of the models. This lecture first describes the failures of the standard models in broad terms, and then develops the economics of deep downturns, and shows that such downturns are endogenous. Further, the lecture will argue that there have been systemic changes to the structure of the economy that made the economy more vulnerable to crisis, contrary to what the standard models argued. In particular, the lecture will explore how integration can exacerbate contagion; and how a failure in one country can more easily spread to others. There are conditions under which such adverse effects overwhelm the putative positive effects. Finally, the lecture will contrast the policy implications of our framework with those of the standard models; for instance, how capital controls can be welfare enhancing, reducing the risk of adverse effects from contagion.
Tuesday, August 23, 2011
Saturday, July 30, 2011
Friday, July 22, 2011
Friday, June 17, 2011
Wednesday, June 15, 2011
Here's the argument for austerity that seems to be winning in Washington. This is Carmen Reinhart at the recent INET conference at Bretton Woods:
Her argument, essentially, is that yes, immediate austerity makes things worse. But the failure to invoke immediate austerity brings about even bigger problems down the road, so big that the pain now is worth it.
I disagree that immediate austerity is needed. I don't think that waiting, say, two years to begin reducing the deficit will substantially change the chance of big problems down the road. I realize that the credibility of Congress can be questioned, particularly when it involves promises about future actions. But putting a plan in place now that kicks in once predetermined levels of the unemployment rate or some other measure of economic performance are met helps to resolve whatever worries about the long-run might exist. And it does this without imposing immediate austerity measures and endangering the economic recovery.
Here's the entire session:
Monday, June 13, 2011
It's graduation day today here at the University of Oregon. (We do graduation on Monday, which to me is a strange day to hold the ceremony. Having graduation on Monday allows us to host the NCAA Track and Field Championship which ended on Saturday, a money maker for the University. But the Monday graduation is likely to exclude some parents and family, particularly working class families who sacrificed the most to put their kids through school, so I don't like it. We need to make it as conveneint as we can for families to attend the ceremony. It means a lot to people, and students and their families ought to come first.)
I was a marshall at the University ceremony this morning (boring), and we have the Department ceremony later today. Yesterday, I went to a graduation party for my Ph.D. students. One is headed to the Federal Reserve Board and the other to an academic position (both got good jobs - yeah!). So unlike the suggestion in the video below, grad school is not always "a terrible life choice." At least not for everyone:
Thursday, May 12, 2011
Nice to see that Alan Blinder agrees with the call for more fiscal stimulus to boost jobs (though I'd go beyond the "somewhat more" fiscal help he calls for to address the unemployment crisis), that there's no evidence of inflation, that the Fed should keep rates low and take other steps to stimulate job growth, and that we should address our long-run budget deficit, but not until the economy is is better shape:
Blinder Calls for More Fiscal Stimulus to Boost Jobs, Bloomberg: Former Federal Reserve Vice Chairman Alan Blinder, now a Princeton University economist, talks about the central bank's monetary policy and the need for "somewhat more" fiscal stimulus from Congress in order to boost employment even as it legislates "fiscal consolidation in the future." Blinder speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." David Blanchflower, a professor of economics at Dartmouth College and a former policy maker at the Bank of England, also speaks.
Friday, May 06, 2011
I haven't had a chance to watch it yet, I've been distracted with other things, but several people told me they enjoyed this session at the Global Conference:
The Attention Deficit Society: What Technology Is Doing to Our Brains
- Nicholas Carr, Author, "The Shallows: What the Internet Is Doing to Our Brains"
- Cathy Davidson, Ruth F. DeVarney Professor of English and John Hope Franklin Humanities Institute Professor of Interdisciplinary Studies, Duke University
- Clifford Nass, Thomas M. Storke Professor, Stanford University
- Sherry Turkle, Abby Rockefeller Mauzé Professor of the Social Studies of Science and Technology, MIT
- Dennis Kneale, Senior Correspondent, Fox Business Network
Monday, May 02, 2011
I missed this session:
Panel: The Shape of Things to Come: Understanding the New Global Economy
- Mohamed El-Erian, CEO and Co-Chief Investment Officer, PIMCO
- Scott Minerd, Chief Investment Officer, Guggenheim
- Laura Tyson, S. K. and Angela Chan Chair in Global Management, Haas School of Business, University of California, Berkeley; former Chairman, National Economic Council
- Ruben Vardanian, Chairman and CEO, Troika Dialog
- Jared Carney, Executive Director, Program Development and Marketing, Milken Institute
[I'll post Tom Keene's interview of Nouriel Roubini as soon as it's processed.]
Wednesday, April 27, 2011
Tuesday, April 12, 2011
Sunday, April 10, 2011
Friday, April 08, 2011
Thursday, March 17, 2011
Wednesday, March 09, 2011
Friday, March 04, 2011
Sunday, January 23, 2011
Roman Frydman emails that he'd like a chance to respond to Chris Sims' defense of DSGE models. This is from the session "Life After Rational Expectations":
Update: More from Roman Frydman on this topic:
“The Imperfect Knowledge Imperative in Modern Macroeconomics and Finance Theory,” prepared for the conference on Microfoundations for Modern Macroeconomics, co-authored with Michael D. Goldberg, Center on Capitalism and Society, Columbia University, New York, November 2010, revised version forthcoming in Roman Frydman and Edmund S. Phelps (eds.), Micro-Macro: Back to the Foundations, Princeton University Press.
“Opening Models of Asset Prices and Risk to Non-Routine Change,” prepared for the conference on Microfoundations for Modern Macroeconomics, Center on Capitalism and Society, Columbia University, New York, November 2010, revised version forthcoming in Roman Frydman and Edmund S. Phelps (eds.), Foundations for a Micro-Macro: Back to the Foundations, Princeton University Press.
And while I'm here again, turning in another direction, here's George Akerlof on whether the efficient markets hypothesis caused the crisis:
Friday, January 21, 2011
I haven't posted enough of the videos from the inaugural INET conference at King's College, especially some of the slightly more technical presentations. As a start to rectifying this, here's Chris Sims defending the use of DSGE models in the session "How Empirical Evidence Does or Does Not Influence Economic Thinking and Theory: Calibration, Statistical Inference, and Structural Change":
Here are two more I've posted before, one from Richard Koo on balance sheet recessions, and another from Joseph Stiglitz on what's wrong with macroeconomics (from a session I moderated -- though I won't be posting the video of my nervous introduction):
Friday, January 07, 2011
Monday, January 03, 2011
Sunday, December 05, 2010
Friday, November 05, 2010
Via History of Economics Playground (from 2007):
"Conversations host Harry Kreisler welcomes Professor J. Bradford DeLong of Berkeley's Economics Department for a discussion of economics and public policy. Reflecting on his work as deputy assistant secretary in the Treasury Department in the Clinton administration, Professor DeLong discusses the dilemma posed by the breakdown of the political center, the strengths and weaknesses of the NAFTA agreement, and Alan Greenspan's record at the Federal Reserve. He also reflects on the quality of public discussion of economic issues."
The video opens with some of Brad's personal history.
Thursday, September 30, 2010
Austan Goolsbee, Chair of the Council of Economic Advisers, "tackles the tax cut fight and what it means that Congressional Republicans are 'holding middle class tax cuts hostage'"
Monday, September 20, 2010
Saturday, August 28, 2010
Wednesday, August 18, 2010
The slides accompanying the video are in the bottom frame.
There are additional lectures here from Yacine Ait-Sahalia ("Asymptotic Theory and Continuous-Time Methods in Financial Econometrics"), Michael Brandt ("Linear Factor Models and Event Studies"), and Andrew Lo ("Financial Econometrics in Action: Analyzing Hedge Funds and Systemic Risk").
Friday, July 02, 2010
Tuesday, June 29, 2010
Cutting government spending, raising taxes, raising interest rates, and hoping the rest of the world does the same as some have called for is not the answer to the threat of a depression. If people don't begin to see unemployment falling soon, or some strong signal that employment markets will improve soon, pessimism is going to build -- the optimism some people may have felt is fading and you can feel it building now, and that's one of Shiller's worries. Cutting monetary and fiscal stimulus at a time when people are becoming more pessimistic about the economy's prospects will make things worse, not better. As I've said before, and will continue saying so long as these misguided ideas persist, if anything, monetary and fiscal policy should be more aggressive right now.
Monday, June 07, 2010
Use the play button at the bottom to avoid triggering the pop-up.
Any comments on the spill?
Wednesday, April 28, 2010
Tuesday, April 27, 2010
- Aaron Brown, Risk Manager, AQR Capital Management; Author, The Poker Face of Wall Street and A World of Chance
- Colin Camerer, Robert Kirby Professor of Behavioral Finance and Economics, California Institute of Technology
- Stacy-Marie Ishmael, Reporter, Financial Times
- Myron Scholes, Nobel Laureate, 1997; Chairman, Platinum Grove Asset Management
- Bruce Tuckman, Director of Financial Markets Research, Center for Financial Stability
Moderator: Glenn Yago, Executive Director, Financial Research, Milken Institute
Update: See also:
What's Wrong with Risk Models, by John Cassidy: First up, sincere apologies to the organizers and attendees of the Milken Global Forum, in Los Angeles, where I was due to appear this afternoon at a session about economic models of risk. I was looking forward to engaging the other panelists, who included Nobel laureate Myron Scholes, of “Black Scholes” fame; Colin Camerer, a Cal-Tech behavioral economist I’ve written about in the past; and Aaron Brown, a former Wall Street risk modeler. Unfortunately, my early morning flight from Ottawa, Canada, where I had another speaking engagement last night, was canceled...
Anyway, here is roughly what I would have said ...
At this session yesterday, Michael Gough (on behalf of Adobe) and Hal Varian (on behalf of Google) identified similar strategies that the two companies have adopted to try to maintain the hunger that drives innovation. The problem is the complacency that sets in after a company has grown and attained some success. Both said that they try to set up smaller units external to the company to compete with "the mothership". Apparently, the smaller units -- often in other countries -- are very anxious to show up the hotshots at the main company and will work very, very hard to show that they can do it better. And they often do.
Nothing earth shattering, I just found it interesting.
Here's the video (the above is just a small part of the session):
Thursday, April 15, 2010
Wednesday, April 14, 2010
Persuasions and Norms
Friday, March 19, 2010
Listening to this now is almost surreal. Budget surpluses as far as the eye can see? Greenspan starts at the 2:40 mark:
[CSPAN is now offering all their archived video.]
Moving forward to today, Greenspan attempts to defend the Fed under his leadership:
Greenspan reiterated his view that Fed policy under his chairmanship did not lead to the housing bubble and the financial crisis by keeping interest rates too low for too long. Instead, a global savings glut led to low mortgage rates and a housing boom, he said.
Mr. Greenspan, once celebrated as the “maestro” of economic policy, has seen his reputation dim after failing to avert the credit bubble that nearly brought down the financial system. Now, in a 48-page paper that is by turns analytical and apologetic, he is calling for a degree of greater banking regulation in several areas.
The report, which he is to present Friday to the Brookings Institution, is by no means a mea culpa. But ,,, Mr. Greenspan, who has long argued that the market is often a more effective regulator than the government, has now adopted a more expansive view of the proper role of the state.
He argues that regulators should enforce collateral and capital requirements, limit or ban certain kinds of concentrated bank lending, and even compel financial companies to develop “living wills” that specify how they are to be liquidated in an orderly way.
And he acknowledged shortcomings in regulation...
“For years the Federal Reserve had been concerned about the ever-larger size of our financial institutions,” Mr. Greenspan wrote. Fed research has not been able to find economies of scale as banks grow beyond a modest size, he said, and in a 1999 speech, Mr. Greenspan warned that “megabanks” formed through mergers created the potential for “unusually large systemic risks” should they fail.
Mr. Greenspan added: “Regrettably, we did little to address the problem.”
The former Fed chairman also acknowledged that the central bank failed to grasp the magnitude of the housing bubble but argued, as he has before, that its policy of low interest rates was not to blame.
Here is the paper:
Alan Greenspan is presenting a paper at the BPEA conference today - his draft is here.
I don't think Greenspan can prevent the conclusion that "The Maestro" played a few bad (and ultimately harmful) tunes.
Tuesday, March 16, 2010
The Paul Krugman, C. Fred Bergsten, Robert E. Scot video is on the continuation page:
Tuesday, March 09, 2010
(clearer version of the graph in the presentation)
Here's the full set of videos from the conference:
- Introduction: Make Markets Be Markets Roosevelt Institute President & CEO Andrew Rich kicks off the Make Markets Be Markets conference at the Time Warner Center on March 3, 2010.
- Joseph Stiglitz: Make Markets Be Markets Nobel Laureate and Chief Economist at the Roosevelt Institute, Joseph Stiglitz sets the frame for why we need to make markets be markets.
- Simon Johnson on the Doom Cycle Simon Johnson on the Doom Cycle that produces (and predicts) increasingly greater financial crises.
- Raj Date on Eliminating Fannie & Freddie Raj Date on the need to eliminate Fannie Mae and Freddie Mac.
- Elizabeth Warren on Consumer Protection Elizabeth Warren on consumer protection.
- Richard Carnell on Regulator's Incentives Richard Carnell on regulators' incentives.
- Lawrence White on the Credit Rating Agencies Lawrence White on the credit rating agencies.
- Joshua Rosner on Securitization Joshua Rosner on securitization from the Make Markets Be Markets report, sponsored by the Roosevelt Institute.
- Michael Konczal on a 21st Century Glass-Steagall Mike Konczal on creating a 21st century Glass-Steagall framework.
- Frank Partnoy on Off-Balance Sheet Transactions Frank Partnoy on off-balance sheet transactions.
- Michael Greenberger on Over-the-Counter Derivatives Michael Greenberger on over-the-counter derivatives.
- Robert Johnson on Resolution Authority Robert Johnson on building a credible resolution authority.
- Roundtable w/ Soros et al: Make Markets Be Markets George Soros, Joseph Stiglitz, Jim Chanos, Peter Solomon, Bowman Cutter, Judge Stanley Sporkin, and Lynn Turner discuss the need for and ramifications of financial reform.
- Q&A from Make Markets Be Markets George Soros, Joseph Stiglitz, Elizabeth Warren, Robert Johnson, and more discuss the ramifications of financial reform.
Thursday, March 04, 2010
Friday, February 26, 2010
Tuesday, February 23, 2010
Wednesday, February 10, 2010
Here's an explanation of the Fed's exit strategy, including why the Fed is planning to raise the interest rate it pays on reserves rather than the more traditional strategy of using open market operations to control the federal funds rate:
Thursday, January 21, 2010
John Taylor answers a few of my questions in one part of an interview at Big Think (transcript and video of entire interview, video broken into parts). My biggest disagreement with his answers comes when he says it's time to start "letting interest rates rise appropriately and reducing the amount of quantitative easing," a theme that appears repeatedly in his answers to my questions and to those submitted by others. It's far too early for that, and if anything the Fed should be doing more to combat the slow recovery of labor markets. Where we agree the most is when he says the most important unresolved questions in monetary economics are about the connections between the financial sector and monetary policy. [As a lead-in, Dean Baker asks the first question below, and my questions follow. Questions were emailed in advance of the interview.]:
...Question: Would you advocate an aggressive strategy of
John Taylor: Well, the question is; given that the Taylor Rule has large negative interest rates right now, would I want more quantitative easing? First of all, I don't think the Taylor Rule does show a large negative interest rates right now. That's kind of a myth. The Taylor Rule is pretty simple. It just says, the interest rate should equal 1 1/2 times the inflation rate, plus 1/2 time the GDP gap, plus 1. Well, if you plug in reasonable estimates for what inflation is and what the GDP gap is, I get a number that’s pretty close to zero. Not minus four, minus five, not numbers like that. So, in fact I would say the amount of quantitative easing could be reduced right now. I hope it is reduced in a gradual way. Some of the mortgage purchases I think could be slowed down and then actually reversed.
So, the question is a good one, and I'm glad it was asked because there is a lot I think, of misinformation out there about what the Taylor Rule says. The Taylor Rule is very simple, as I just mentioned. You can say it in a sentence and you plug in the numbers, you don't get minus five, minus six percent. You get something much closer to zero where the interest rate is now. Now, that of course has implications going down the road because it says, to the extent that real GDP picks up; I hope it does, or if inflation picks up; hope it doesn't. But if either of those occur, then you'd have to see interest rates starting to move above the zero to 25 basis point range. And if we don't then we're going to be back in the same kind of situation we were in 2002 through 2004, and that of course could begin to induce bubbles and we certainly don't want that to happen.
Question: Would quantitative easing speed the recovery?
John Taylor: No. I don't think quantitative easing at this point would effectively smooth the recovery. I think right now, based on historical experience, the interest rate is about where it is, it's not that we don't need a lot of quantitative easing. We've had some and I think the job of the Fed now is to bring it back. They're talking about doing that, which is good. But I think, for me, the most important thing now for policy to have a good recovery is to reduce this tremendous amount of uncertainty that exists with both monetary policy and fiscal policy and the uncertainty for monetary policy is, we don't know how rapidly the quantitative easing will be reversed. We don't know what's going to happen with interest rates. There is a lot of questions there. So I’d say, get back to the things that were working during the great moderation period, the '80's and '90's primarily, and that means letting interest rates rise appropriately and reducing the amount of quantitative easing; getting back to where it was through most of policy of the '80's and '90's.
Question: What is the most important unresolved question in monetary economics?
John Taylor: I think the most important unresolved question of monetary economics is the interaction between the financial sector and monetary policy. There's been lots of thinking about it over the years, some of it actually done here at Stanford, e.g. Gurley and Shaw. A lot of it done by Tobin at Yale, Ben Bernanke has done some of it. But I think the most promising part is the combination of the newest work on pricing of bonds and securities. A lot of it's done by [people who] combine that with monetary policy so that you have a sense of what's going to happen to longer term rates when the short rate is reduced. What's going to happen to credit flows and how much are credit flows going to impact the economy?
This crisis has been very clear in demonstrating that more work on the connection between the financial economics and monetary policy is needed. In fact, there's still a lot of questions out there in policy about whether the financial markets performed well, or not. It seems to me, if you look at them, they absorbed a tremendous shock from policies. It's effectively a panic induced by some ad hoc policy changes and they responded quickly and they responded in a way which has been smooth, as the markets themselves. The institutions, the financial institutions of course, have been in great difficulty, but the markets themselves have worked well.
So, to me, where we should focus our attention really is this connection between the financial markets, including the financial institutions and the monetary policy itself.
Question: How important is Fed independence?
John Taylor: I think we need to have both independence and accountability. They go together. It's not one or the other. So, in answer to the question, how important is Fed independence? I say it is very important, but it needs to be matched with accountability.
A lot of the concerns that you're seeing in the Congress, in the country about the Fed; the Ron Paul bill, I think that's a reaction to what looks like a very interventionist action by the Federal Reserve. Not a lot of descriptions of how it actually occurred, there's no reports on what's called a Section 13-3 Intervention. Section 13-3 of the Federal Reserve Act which allows for such actions, but there’s very little reporting on how it actually took place.
So, I think the best thing the Fed can do to get back some of its independence, and quite frankly, I think it's lost a little bit in this crisis. The best thing it can do is be very accountable about some of the interventions in Section 13-3, that's where most of the transparency concerns exist at this point, and then of course to emphasize that the policy that has worked most well was the policy of the '80's and '90's and when we got off track on that, things deteriorated.
I think that some recognition of interest rates being so low for so long in the '02 to '04 period by the leadership would be very important. It’s discussed in the Fed system, is discussed by other central banks, it's discussed quite widely, but some recognition of that seems to me would be important in terms of bringing back some of the independence that the Fed lost.
So, I think that independence, just to summarize, is really important, it's essential, we've seen evidence over time about how it is. But it has to be matched with a strong sense of accountability to the Congress and to the American people of what the Fed is actually doing. ...
Wednesday, December 09, 2009
[The discussion begins at the 2:30 mark on the video. Source and transcript.]
The main issues they debate are whether another stimulus package is needed at this point, and if so, whether money allocated to the TARP program should be redirected to job creation.