EconLog Archive
Money and Inflation
Marshall’s scissors and the Law of Reflux
I don’t generally get into debates over monetary “disequilibrium,” as I don’t find the concept to be particularly useful. It’s too vague. But against my better judgment I’m going to take a stab at the debate between David Glasner and Nick Rowe. Nick says that an increase in bank money (deposits) will lead to an .. MORE
Behavioral Economics
Nudging consumers and regulators
About one year ago, the British Financial Conduct Authority (FCA) — which also regulates consumer credit — published an Occasional Paper aimed at explaining how it is going to take advantage of the insights of behavioral economics. For one thing, the paper wasn’t ambiguous at all. Its starting point was the notion that “people often .. MORE
Economic and Political Philosophy
I’ve Changed My Mind
I woke up this morning with an epiphany. In my political views, I’ve been on the wrong track for a long time. Specifically: 1. I think Obamacare is great. So what if it’s causing young people to subsidize the elderly? They should. After all, who was it who brought them into this world? The elderly. .. MORE
Growth: Consequences
Answering Arnold’s Challenge
Tyler publicizes a challenge from founding EconLog blogger Arnold Kling: I still want to see an economist reconcile a belief in secular stagnation with a belief in Piketty’s claim that the return on capital is going to exceed the growth rate of the economy on a secular basis. My reconciliation: Historically, the growth rate has .. MORE
Cost-benefit Analysis
You Don’t Know the Best Way to Deal with Russia
Foreign policy experts love making bold predictions. The clearer their conclusions, the wiser they sound. Unfortunately, as Philip Tetlock documents, their predictions about controversial topics are scarcely better than chance. They’re all style, no substance. The Economist’s recent editorial on Russia and NATO beautifully illustrates these pathologies. The overconfident recommendation: [T]he West should forcefully reassert .. MORE
Finance
Did Mortgage-Security Professionals Time the Housing Crash?
A forthcoming AER paper examines whether professionals in the mortgage securitization industry foresaw the housing crash. If these professionals knew that they were buying and selling toxic assets, they would betray this knowledge by their personal housing decisions. For example, if you thought that the housing market was going to crash, you wouldn’t rush out .. MORE
Economic and Political Philosophy
Please Advocate Your Special Interest Rather than Sticking up for Taxpayers
In response to something I wrote in January, I received a letter last week, postmarked January 30. Well played, U.S. Postal Service. It’s like many I’ve received over the years when the writer doesn’t like an article or blog post I wrote or a statement I made on radio or television. I’ve gotten used to .. MORE
Macroeconomics
One multiplier to rule them all! (apologies to Nick Rowe)
There’s a vigorous debate about the money multiplier taking place in the blogosphere. On one side is everyone from MMTers, to new monetarists, to market monetarists. On the other is Nick Rowe. And I’m sort of in the middle, but leaning against Nick. (Generally I’m most comfortable in Nick’s position, where everyone is against me.) .. MORE
Uncategorized
Shall we fight tobacco with “plain packaging”?
The “war on tobacco” has long been one of the priorities of governments’ healthcare policies all over the world. Libertarians tend to be skeptical of the very idea. If we deem the individual to be the legitimate owner of her own body, then we shall accept that an individual is free to damage it as .. MORE
Behavioral Economics
The Market for Less
Guest blogger James Schneider makes a thought-provoking point about the market for self-control: The market is often better at abetting good habits than it is at discouraging bad habits. Imagine an alternate world in which a lot of people aspired to smoke more cigarettes but they had trouble sticking to their preferred regimen. In this .. MORE
Cross-country Comparisons
Lessons from “The Lives of Others”
Our economic lives. A local libertarian group showed the movie, “The Lives of Others,” at the Marina Public Library last night. The group invited me to give a few remarks after the showing. What motivated them to show the movie now is the revelations by Edward Snowden of NSA’s spying on “the lives of us.” .. MORE
Economics of Crime
A Few Dangers of Heroin Prohibition
In a recent post, David Henderson commented on how people view the horrors of drugs: But what so few people seem to understand is that virtually all their horror stories about drugs occurred during a time when drugs were illegal….But if all these horror stories occurred during the drug war, it is hard to see .. MORE
Labor Market
Fracking boom won’t create many manufacturing jobs
The Wall Street Journal has an article entitled; “Gas Boom Rejuvenates Manufacturing.” There certainly are some manufacturing sectors that will be helped by the energy boom. However people shouldn’t expect too much from this development. In a recent post I pointed out that population growth in Texas had slowed since the onset of the fracking .. MORE
Cross-country Comparisons
A British Perspective on American Signaling
Fun footnote from Gregory Clark‘s new The Son Also Rises: Normal 0 MicrosoftInternetExplorer4 In my second year as an assistant professor at Stanford University, I was assigned the task of mentoring six freshmen. Each appeared on paper to have an incredible range of interests for an eighteen-year-old: chess club, debate club, history club, running team, .. MORE
Regulation
From the Vault: Reply to the Village Voice
In writing a tribute to the late Murray Weidenbaum last weekend, I came across a piece I wrote in 1979, a piece that had caused me to get in touch with Murray. I titled it “Reply to the Voice.” It was a reply to a scurrilous attack on the growing number of U.S. economists in .. MORE
Macroeconomics
Central banks do not deserve our respect
Nor (in my view) do they deserve our contempt. They should be viewed skeptically. They are trying to do a good job, but often fall well short. One such occasion occurred in 2011 when the ECB tightened monetary policy. Prior to 2011 the US and eurozone had similar unemployment rates, just under 10%. Now we .. MORE
Economic History
The Swamping that Wasn’t: The Diaspora Dynamics of the Puerto Rican Open Borders Experiment
The best part of Collier’s Exodus is his analysis of “diaspora dynamics.” In plain English, Irish like to immigrate to countries that already have a lot of Irish, Jews like to immigrate to countries that already have a lot of Jews, and Mexicans like to immigrate to countries that already have a lot of Mexicans. .. MORE
Economic Education
Pillars of Economic Wisdom in Action
I wrote earlier about a special readings course I put together for people who had done well in my Cost/Benefit course but wanted more economics than they get in our MBA curriculum. As a kind of celebration, a number of us are going next Tuesday to see the Oakland A’s play the Cleveland Indians. The .. MORE
Finance
Adding a risk mandate: A 5 bumper shot in billiards?
Jeremy Stein gave a speech that advocated adding financial risk to the Fed’s traditional dual mandate. Or at least targeting risk in the hope that it makes it easier to fulfill its traditional mandate. I see lots of potential problems, and not much upside: 1. Can the Fed correctly judge the stance of monetary policy? .. MORE
Economic and Political Philosophy
How Diabolical is Unz’s Proposal?
Ron Unz wants to raise the minimum wage to discourage illegal immigration. The mechanism: The minimum wage raises unemployment for low-skilled workers, and illegal immigrants are very low-skilled. His words: In effect, a much higher minimum wage serves to remove the lowest rungs in the employment ladder, thus preventing newly arrived immigrants from gaining their .. MORE
Economics of Health Care
Michael Cannon’s Cannon
Cato Institute’s health economist Michael Cannon is the lead economist in a legal case that takes on the IRS. The Affordable Care Act (ACA), aka Obamacare, grants tax credits to low-income people who buy health insurance in state-run exchanges. There is no provision in the the ACA for tax credits to people who buy insurance .. MORE