While there is some debate about whether and how much fiscal stimulus is warranted to combat a likely recession (yours truly thinks that we are in a no-win situation, with side effects likely to be as bad as the disease), some sort of program seems inevitable, particularly since this is an election year. So then […]
Read more...Today, Ben Stein, in his New York Times column, “Larry, Curly, Moe and the Economy,” uses the Three Stooges as metaphor for the Fed’s actions: the central bank, like the celluloid comics, keep hitting the wrong person on the head. According to Stein, the Fed is unduly preoccupied with inflation and it should instead engage […]
Read more...An interesting post at VoxEU by Yoonsoo Lee at Cleveland’s Fed and Toshihiko Mukoyama, economics professor at the University of Virginia, looks into the question of whether the the Schumpeter theory of “creative destruction,” that recessions are good because they clear out the excesses of boom phases, holds water. Their research is far from exhaustive. […]
Read more...In the Financial Times, former Treasury Secretary Larry Summers calls for the implementation of a fiscal stimulus package in the US in the first half of 2008. He argues that the question is not whether to prop up the economy, but how, that is, whether via monetary or budgetary actions. His view is that a […]
Read more...A refreshing article in the Financial Times by Samuel Brittan reminds us that some celebrated economists envisioned continuing progress as leading not to ever-escalating levels of consumption, but to a society where improving productivity and technology would provide higher quality goods and more leisure. The French hew to that ideal (as Paul Krugman has pointed […]
Read more...Harvard economics professor Edward Glaeser reviewed a new book, “Bad Samaritans” by Ha-Joon Chang in the New York Sun (hat tip Mark Thoma). Glaesar focuses on his objections to the book, but nevertheless concedes, Readers who believe in free trade will not find much in Mr. Chang that challenges that belief, but the book is […]
Read more...It falls to an uber economist like Nobel Prize winner Ken Arrow to look at climate change and make the economic case for prevention work without resorting to smoke and mirrors. This is a non-trivial accomplishment. For those who have not followed this aspect of the debate, one Sir Nicholas Stern prepared the so-called Stern […]
Read more...A very useful holiday shopping advisory from Eliezer Yudkowsky at Overcoming Bias. Bottom line: you get more credit from buying the top item in cheapie categories than by buying low to moderate priced items in more exclusive types of goods. But the reaction also depends on whether the recipient is able to evaluate what they […]
Read more...New York Times writer David Leonhardt, in “When Trust in an Expert Is Unwise,” cites a small scale study of car mechanics that suggests that so-called experts often aren’t very skilled, and also too often prescribe inappropriate and costly remedies to simple problems. Leonhardt suggests that the study’s findings can be generalized to fields like […]
Read more...Nassim Nicholas Taleb, seasoned trader and risk manager, and author of the provocative and well regarded book Black Swans, today in the Financial Times takes on the high priesthood of modern finance. He argues that modern portfolio theory and many of its offspring, such as the Black-Scholes option pricing model and the capital asset pricing […]
Read more...An excellent post, courtesy Mark Thoma at Economist’s View, from FactCheck.org, on why its efforts to correct the record are too often counterproductive. In essence, if ideas are falsely linked (say “Saddam Hussein” and “Al Queda”), further discussion preserves the false association. The entire post is very much worth reading; it’s a primer on how […]
Read more...Since I assume many readers work in large organizations, I pass this post from Eliezer Yudkowsky at the Overcoming Bias blog as one of those rare bits of practical advice that isn’t overwhelmingly difficult to implement and can make a real difference in the quality of outcomes: From pp. 55-56 of Robyn Dawes’s Rational Choice […]
Read more...Consider the ironies in the discussion of free trade. It’s widely depicted by economists to be a good thing, and anyone who opposed it is considered to be economically illiterate. Yet the system we have deviates considerably from the free trade ideal and is more accurately called managed trade. And in this system of managed […]
Read more...Harvard’s Dani Rodrik in a recent post questioned the role of labor market rigidities (such as restrictions on firings and generous unemployment) in Europe’s higher unemployment. (As an aside, readers will know even that factoid is disputed. Barry Ritholtz has argued that if we calculated unemployment the same way Europeans did, the rates wouldn’t be […]
Read more...It’s always dangerous for mere mortals to take issue with Serious Economists, but let’s start with Brad DeLong’s thesis (hat tip Mark Thoma): The fact that there is even a small liquidity crunch for banks implies larger liquidity crunches for less intensively regulated financial institutions, and even greater liquidity crunches for manufacturing and real-estate companies. […]
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