Economic links
Why spiders do not need arachno-capitalism (I laughed lots and do read the comments).
Amusing undergrad video.
The classic 1958 I, Pencil essay updated to I, Beer. Three quotes on markets.
You are poor, you cannot afford daycare, you both work and your daughter has already been stolen so, how do you ensure you do not lose your two-year old son?
Great post on the choice between fiscal stimulus and monetary stimulus. (NGDP = nominal, i.e. in current currency, GDP, AD = aggregate demand, AS = aggregate supply, MTR = marginal tax rates, BOJ = Bank of Japan.) Mapping bailout and stimulus spending around the world.
A prominent Chinese economist on difficulties with the Chinese economy. About the very vigorous economic policy debate within China.
Nice piece on the efficient market hypothesis and the literature around it:
The efficient markets paradigm is a triumph of economics because it is so counterintuitive to the layman, so restrictive in what it allows, and so pervasive in its application. A healthy respect for the rationality of markets is a hugely advantageous mindset for the researcher and practitioner. This should be the base from which one identifies anomalies, and then explains them with specific frictions or cognitive biases.
Looking at inflation hedges.
Arguing for regulatory reform of UK and US financial sectors. A survey of what those in the financial sector think (pdf) are the big concerns.
Study finds evidence that abundant natural resources (“the resource curse”: based originally on this study [pdf]) does not impede democratisation (pdf). Study finds that high oil prices do not undermine (pdf) democracy. Suggesting the resource curse is not correct:
Resource wealth is positively associated with both economic growth and institutional quality. How could that be? We then revisited the earlier papers, and it dawned on us that the resource abundance variable used in other studies is not measuring abundance at all. The Sachs-Warner resource measure is simply the ratio of primary exports divided by national income. But of course this is a measure of dependence (the extent to which a country is dependent on exports of resources) and not of abundance (which should be a stock variable).
On closer inspection we found that the causation is opposite to that usually claimed in the curse literature. There is no evidence that resource-dependent countries end up with slow growth and bad institutions. Rather, countries with bad institutions attract little investment, and as a result they grow more slowly and remain dependent on exports of commodities. But this is not a paradox at all.
Nice brief discussion of development and the resource curse.
Brad DeLong starts agreeing with John Cochrane about the GFC but ends up not. Taking a thorough view of banking reform. Whatever the last couple of decades in the US have been, an era of smaller government and deregulation is not it. A podcast on Hayek, business cycle and money.
Timeline of Greece’s fiscal crisis. Of proposed actions. Worries about possible impacts on the euro. A more sanguine view.
The EU carbon trading system hit by fraud.
Graphing US federal spending: defence spending is clearly not the big issue. Though there may be efficiencies to be had. Proposing tax increases and limited spending freezes to do something about the burgeoning US federal debt. More. (The economic literature suggests spending cuts are a more reliable way of reducing budget deficits than tax increases: the latter tend to encourage slipping in more spending.) The budget deficit will be 10% of US GDP. More on budget projections. Looking at the political and strategic implications of the projected debt. (Graph here.) The Inspector-general running TARP (the US financial bailouts) is not convinced anything much has been fixed (pdf):
To the extent that the crisis was fueled by a “bubble” in the housing market, the Federal Government’s concerted efforts to support home prices - as discussed more fully in Section 3 of this report - risk re-inflating that bubble in light of the Government’s effective takeover of the housing market through purchases and guarantees, either direct or implicit, of nearly all of the residential mortgage market.
And there is a lot more. Reminding folk of what is not in the stated federal budget. Fannie Mae and Freddie Mac continue to loom as a (huge) problem.
Considering signalling or sorting with high productivity workers and expensive housing markets. Study finds that good public school feeds into house prices in Oz. Pumping up demand in a supply-constrained market, who would have thought that would have ended badly?
ALMOST half the first-home buyers lured into the market by the Rudd government's $14,000 grant are struggling to meet their mortgage repayments and many are already in arrears on their loans.
… a survey of more than 26,000 borrowers conducted by Fujitsu Consulting revealed that 45 per cent of first-home owners who entered the market during the past 18 months are now experiencing "mortgage stress" or "severe mortgage stress". …
Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a "disaster waiting to happen".
"The grant panicked first-home buyers to rush into the market, which pushed prices up by far more than the grant itself," he said yesterday.
Australia wins the least affordable housing in the Anglosphere (but Vancouver is the least affordable city). Supply of housing in Oz is not expected to match demand (i.e. prices, including rents, will rise.) RBA does not raise interest rates: methinks they are worried. They surprised a lot of folk:
Betting agency Centrebet was even refusing to open a book on this rates decision for the first time since it started taking wagers on rate movements, because it thought the outcome was too certain.
Amusing undergrad video.
The classic 1958 I, Pencil essay updated to I, Beer. Three quotes on markets.
You are poor, you cannot afford daycare, you both work and your daughter has already been stolen so, how do you ensure you do not lose your two-year old son?
Great post on the choice between fiscal stimulus and monetary stimulus. (NGDP = nominal, i.e. in current currency, GDP, AD = aggregate demand, AS = aggregate supply, MTR = marginal tax rates, BOJ = Bank of Japan.) Mapping bailout and stimulus spending around the world.
A prominent Chinese economist on difficulties with the Chinese economy. About the very vigorous economic policy debate within China.
Nice piece on the efficient market hypothesis and the literature around it:
The efficient markets paradigm is a triumph of economics because it is so counterintuitive to the layman, so restrictive in what it allows, and so pervasive in its application. A healthy respect for the rationality of markets is a hugely advantageous mindset for the researcher and practitioner. This should be the base from which one identifies anomalies, and then explains them with specific frictions or cognitive biases.
Looking at inflation hedges.
Arguing for regulatory reform of UK and US financial sectors. A survey of what those in the financial sector think (pdf) are the big concerns.
Study finds evidence that abundant natural resources (“the resource curse”: based originally on this study [pdf]) does not impede democratisation (pdf). Study finds that high oil prices do not undermine (pdf) democracy. Suggesting the resource curse is not correct:
Resource wealth is positively associated with both economic growth and institutional quality. How could that be? We then revisited the earlier papers, and it dawned on us that the resource abundance variable used in other studies is not measuring abundance at all. The Sachs-Warner resource measure is simply the ratio of primary exports divided by national income. But of course this is a measure of dependence (the extent to which a country is dependent on exports of resources) and not of abundance (which should be a stock variable).
On closer inspection we found that the causation is opposite to that usually claimed in the curse literature. There is no evidence that resource-dependent countries end up with slow growth and bad institutions. Rather, countries with bad institutions attract little investment, and as a result they grow more slowly and remain dependent on exports of commodities. But this is not a paradox at all.
Nice brief discussion of development and the resource curse.
Brad DeLong starts agreeing with John Cochrane about the GFC but ends up not. Taking a thorough view of banking reform. Whatever the last couple of decades in the US have been, an era of smaller government and deregulation is not it. A podcast on Hayek, business cycle and money.
Timeline of Greece’s fiscal crisis. Of proposed actions. Worries about possible impacts on the euro. A more sanguine view.
The EU carbon trading system hit by fraud.
Graphing US federal spending: defence spending is clearly not the big issue. Though there may be efficiencies to be had. Proposing tax increases and limited spending freezes to do something about the burgeoning US federal debt. More. (The economic literature suggests spending cuts are a more reliable way of reducing budget deficits than tax increases: the latter tend to encourage slipping in more spending.) The budget deficit will be 10% of US GDP. More on budget projections. Looking at the political and strategic implications of the projected debt. (Graph here.) The Inspector-general running TARP (the US financial bailouts) is not convinced anything much has been fixed (pdf):
To the extent that the crisis was fueled by a “bubble” in the housing market, the Federal Government’s concerted efforts to support home prices - as discussed more fully in Section 3 of this report - risk re-inflating that bubble in light of the Government’s effective takeover of the housing market through purchases and guarantees, either direct or implicit, of nearly all of the residential mortgage market.
And there is a lot more. Reminding folk of what is not in the stated federal budget. Fannie Mae and Freddie Mac continue to loom as a (huge) problem.
Considering signalling or sorting with high productivity workers and expensive housing markets. Study finds that good public school feeds into house prices in Oz. Pumping up demand in a supply-constrained market, who would have thought that would have ended badly?
ALMOST half the first-home buyers lured into the market by the Rudd government's $14,000 grant are struggling to meet their mortgage repayments and many are already in arrears on their loans.
… a survey of more than 26,000 borrowers conducted by Fujitsu Consulting revealed that 45 per cent of first-home owners who entered the market during the past 18 months are now experiencing "mortgage stress" or "severe mortgage stress". …
Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a "disaster waiting to happen".
"The grant panicked first-home buyers to rush into the market, which pushed prices up by far more than the grant itself," he said yesterday.
Australia wins the least affordable housing in the Anglosphere (but Vancouver is the least affordable city). Supply of housing in Oz is not expected to match demand (i.e. prices, including rents, will rise.) RBA does not raise interest rates: methinks they are worried. They surprised a lot of folk:
Betting agency Centrebet was even refusing to open a book on this rates decision for the first time since it started taking wagers on rate movements, because it thought the outcome was too certain.