EconLog Archive
Monetary Policy
The Vague Fed
This story says, In the testimony, Sen. Shelby asks Bernanke what everyone wants to know: what more can the Fed do for the economy, if needed. Bernanke replies that the Fed has options from lowering the interest on reserves rate, to language changes in the FOMC outlook, to balance sheet tweaks. He notes current policy .. MORE
Labor Market
Gene Healy on Terrorism: Ooh, I’m Scared
You ever get the feeling that some of these guys aren’t the sharpest scimitars in the shed? That’s what Gene Healy asks in his excellent article on terrorism. Here’s another one: The notion of “savvy and sophisticated” Islamist supervillains is “wildly off the mark,” Brookings’ Daniel Byman and Christine Fair write in Atlantic magazine. Many .. MORE
Fiscal Policy
Paul Samuelson’s Prediction for Post World War II
Arnold Kling and I have been discussing what an incredible counterexample to the Keynesian model the post-WWII years are. It occurred to me to check what Keynesians were predicting would happen after the war ended. Here’s one of them: When this war comes to an end, more than one out of every two workers will .. MORE
Economic History
The Austerity of 1945-1947, Again
In 1991, Richard K. Vedder and Lowell Gallaway wrote, The smooth transition to peace was accomplished despite the existence of a fiscal policy that was the very antithesis of Keynesian economic prescriptions to deal with falling aggregate demand. The most dramatically contractionary fiscal policy in modern American history failed to materially alter the pace of .. MORE
Economic Education
Economic Creationism
GMU’s former chairman and economic educator extraordinaire Don Boudreaux: And It said “Let there be higher wages. And there was.” […] So why are so many people enthusiastic about statutes such as this one [the living wage]? Proponents of such legislation are economic creationists. They do not grasp the fact that beneficial economic arrangements emerge .. MORE
Books: Reviews and Suggested Readings
Lyrics Without Music
Craig Wieland sent me a copy of Pointed Poems, a book of conservative poetry that he has composed. Since this is a unique book, it is difficult to know what standards to use to evaluate it. I am inclined to think of it as a collection of song lyrics, and thus to compare it with .. MORE
Economic History
The Austerity of 1945-1947
Official data are somewhat sparse. I would appreciate pointers to any better data or additional information. I am also curious about what newspapers and magazines were reporting at the time about postwar conversion–how well it was going, what was working, what was not. First, some characteristics of the civilian working-age population (then defined as age .. MORE
Cross-country Comparisons
Drugs, Death, Censorship, and Singapore
Singapore doesn’t just execute drug dealers; it censors and arrests those who expose the ghoulish process: A veteran British journalist and author promoting his book on the death penalty in Singapore was arrested in the country today for alleged criminal defamation and other offences. Alan Shadrake’s arrest came two days after Singapore’s Media Development Authority .. MORE
Business Economics
Technocracy
David Brooks writes, When historians look back on this period, they will see it as another progressive era. It is not a liberal era — when government intervenes to seize wealth and power and distribute it to the have-nots. It’s not a conservative era, when the governing class concedes that the world is too complicated .. MORE
Political Economy
Ways in Which the U.S. has Become Less Democratic
My claim is that a number of factors have reduced the impact of the “voice” (voting or other forms of political participation) of ordinary citizens. You can argue that other factors have increased the impact of ordinary citizens. You can certainly argue that prior to 1972, 18-20 year-olds had less voice than they have today, .. MORE
Politics and Economics
Paul Gregory on Communism
Although I haven’t found time to listen to more than about 20 of Russ Roberts’s Econtalk podcasts, one of his latest, his interview with our Hoover colleague Paul Gregory, is one of the best I’ve heard. Here are some of the highlights. Gregory points out the clear connection between violence and non-market allocation. Of course, .. MORE
Politics and Economics
How Does Narrative Emerge?
The Daily Caller reports, Spencer Ackerman of the Washington Independent urged his colleagues to deflect attention from Obama’s relationship with Wright by changing the subject. Pick one of Obama’s conservative critics, Ackerman wrote, “Fred Barnes, Karl Rove, who cares — and call them racists.” …Kevin Drum, then of Washington Monthly, also disagreed with Ackerman’s strategy. .. MORE
Labor Market
Hong Kong’s Impending Natural Experiment: An Opportunity for Labor Economists
Another nail in the coffin of Hong Kong’s exceptionalism: Its first minimum wage law passed. Hong Kong’s Legislative Council passed the Minimum Wage Bill on Saturday after a debate that lasted 41 hours. The law is set to take effect early next year. The bill gives the framework for a minimum wage and does not .. MORE
Economic and Political Philosophy
The Conservative Dissenter
Convincing conservatives to legalize drugs is an uphill battle for the Libertarian Missionary. But how about for the Conservative Dissenter – the conservative who tries to convince other conservatives to abandon the drug war? I’m thinking of the late William F. Buckley: How many users of illegal drugs in fact die from the use of .. MORE
Behavioral Economics
The Rational Voter?
In his post earlier today, Bryan writes: It’s possible that immigrants will vote to destroy the system that attracted them, but unlikely. Immigrants come here because they prefer life here to life at home. It wouldn’t take a marketing genius to win them over to the cause of American liberty. Commenter Pat nailed the problem .. MORE
Macroeconomics
Housing Matters
Vernon L. Smith and Steven Gjerstad write, In the immediate aftermath of most recessions, housing expands more rapidly than any other component of GDP, and inflation falls. Through the first part of the expansion, housing increases and inflation remains low. In the latter part of expansions, housing ceases to respond to loose monetary policy, but .. MORE
Uncategorized
The Macro Doubtbook, Installment 8
Previous installment is here. This one deals with international macro. However, the perspective is strictly textbook-ish. The bottom line: From an international perspective, the notion of a liquidity trap becomes more doubtful. The central bank can always buy foreign bonds. This will depreciate the currency and reduce domestic real wage rates, achieving the goal of .. MORE
Finance: stocks, options, etc.
The Macro Doubtbook, Installment 7
Previous installment is here. The new installment below discusses finance theory. I happen to think that the relationship between macroeconomics and finance is more problematic than the relationship between macro and any other branch of economics. John Hicks writing in 1937 simply did not have the perspective on capital markets that Markowitz, Sharpe, Lintner, Fama, .. MORE
Economics of Health Care
The Neo-neoliberals?
CNN Money reports, “I don’t want to see revenue as a percentage of GDP be much higher than 21%,” Bowles said. “At the same time we have to work to make the tough choices to bring spending down to the same level, to about 21% of GDP. … None of this is going to be .. MORE
Labor Market
The ZMP Hypothesis
Tyler Cowen writes, In general, which hypotheses predict lots more short-term unemployment among the less educated, but among the long-term unemployed, a disproportionately high degree of older, more educated people? This stylized fact seems to point toward search and recalculation ideas, with some zero marginal products tossed in. Do aggregate demand theories yield that same .. MORE
Economic and Political Philosophy
The Libertarian Missionary
You’ve already heard from the Conservative Missionary – the hypothetical conservative debater eager to convert libertarians to his side. Now it’s time for the Libertarian Missionary to take the podium. Why Conservatives Should Be Libertarians I agree with my conservative opponent that there are many important values. I’ll accept his whole list – happiness, prosperity, .. MORE