EconLog Archive
Finance: stocks, options, etc.
High-Beta Houses
Kenneth Harney reports that prices for condominiums rising have shot up. whereas the nationwide median price of single family resale homes was up by 7.4 percent during the past year (to $169,900 at the end of the second quarter), the median resale condo price was up 15.1 percent during the year (to $163,500). There are .. MORE
Fiscal Policy
Budget Analysis
The Washington Post lead editorial for August 29 adjusts the baseline budget forecast for several factors. The largest is discretionary spending, which they argue will grow at the rate of the economy rather than at the rate of inflation. The next largest is extension of most of the Bush tax cuts beyond their scheduled expiration .. MORE
Economics of Education
Academia vs. Reality
I probably need to wear an asbestos suit after posting this essay. A few years spent working in a corporate or government setting would benefit professors by giving them first-hand knowledge of organizational behavior and politics in practice. I think that both our society and our universities would be improved if professors were required to .. MORE
Microeconomics
Demand Too Elastic?
London’s congestion charge, which seemed like such a good idea from an economic perspective, may have run afoul of elastic demand, according to an article by Iain Murray. economists…estimated that a reduction in traffic of 15 percent would require that £5 fee. Unfortunately, they got their sums wrong. The reduction in traffic has been far .. MORE
Economics of Health Care
Canadian Health Care
Pierre Lemieux discusses the distortions in measured costs under a socialized system. Criticizing an article in the New England Journal of Medicine that reports on lower administrative costs in Canada than in the United States, he writes, Canada’s long waiting lines saves the health system money but at a cost to patients… The second category .. MORE
Macroeconomics
Comment of the Week, 2003-08-27
On the topic of the economic impact of the New Deal, Patrick Sullivan pointed to an interesting article by Cole and Ohanian. They make two points. One is that the recovery from the downturn of 1929-1933 was unusually weak. The second point is that the New Deal discouraged the normal forces of competition from operating. .. MORE
Fiscal Policy
Did the Bush Tax Cut Fail?
This group of economists with strong Democratic Party ties says that we needed fiscal policy that provided more stimulus in the short run and a lower deficit in the long run. Robert Solow says, There are three characteristics you want a stimulus package to have. One – that it stimulates. Two – that it be .. MORE
Fiscal Policy
Did the New Deal Fail?
Cato’s Jim Powell makes the case against the New Deal. Among the material Powell cites: Richard K. Vedder and Lowell E. Gallaway, in their 1997 study Out of Work, estimated that by 1940 unemployment was eight points higher than it would have been in the absence of higher payroll costs imposed by New Deal policies. .. MORE
Energy, Environment, Resources
Auction Toxic Waste?
How should the location of undesirable land uses, such as toxic waste dumps or prisons, be determined. Citing Julian Simon, Herbert Inhaber suggests using a reverse auction, in which the Federal government offers to compensate local residents for living near the undesirable site. the price would rise, every week or month. The rising price, as .. MORE
Economic Growth
Australia’s Economic Miracle
Peter Gallagher links to a speech by Gary Banks, Chairman of Australia’s Productivity Commission, on that country’s high productivity growth of the past several years. He credits improvements in policy. As you know, the reforms really began with the lowering of barriers to foreign competition in goods and financial markets in the 1980s. As tariff .. MORE
Growth: Consequences
Libertarian Manifesto
Irving Kristol recently wrote a neoconservative manifesto. It is hopeful, not lugubrious; forward-looking, not nostalgic; and its general tone is cheerful, not grim or dyspeptic. Its 20th-century heroes tend to be TR, FDR, and Ronald Reagan. Such Republican and conservative worthies as Calvin Coolidge, Herbert Hoover, Dwight Eisenhower, and Barry Goldwater are politely overlooked. In .. MORE
Economics of Health Care
Comment of the Week, 2003-08-20
This week I got some well-deserved pushback on a couple of posts. Peter Gallagher was not impressed with the story of robots and comparative advantage. (Update: Gallagher posted a new comment with a more favorable interpretation of the robot example.) On the health care thread, where I borrowed Nordhaus’ question about improvements in health vs. .. MORE
International Macroeconomics
Economics of Outsourcing
Brad DeLong makes another attempt to explain the economics of outsourcing. Remember: few would be worried about “outsourcing” if the U.S. unemployment rate were still close to four percent, rather than at the above six percent level that it is. To the extent that a structural cure is being proposed for what is really a .. MORE
Energy, Environment, Resources
Electricity Economics
In the wake of the electricity blackout, I have been disappointed that economists have contributed more noise than signal in their comments. For example, Paul Krugman wrote, Under the old regulatory system, power companies had strong incentives to ensure the integrity of power transmission — they would catch the flak if something went wrong. But .. MORE
Information Goods, Intellectual Property
Robots and Comparative Advantage
Using the theory of comparative advantage, James Miller explains why robots cannot replace humans completely. Now, assume that in our simple wine/cake world robots begin large-scale manufacturing. They could easily change the relative prices of wine and cake. Perhaps if they just made cake, cake would become cheap and so you could buy 1000 cakes .. MORE
Monetary Policy
Consensus Macroeconomics?
Milton Friedman describes the consensus in macroeconomics as having moved in his direction. That Keynesian vision was thoroughly discredited by experience in the ’70s and ’80s. It has since been replaced by what has become known as New Keynesian Economics, which incorporates some key quantity theory (monetarist) propositions: that inflation is always and everywhere a .. MORE
Economics of Health Care
Benefits of Health Care Spending
Does America spend too much on health care? Has health care been immune to productivity increases and contracted Baumol’s cost disease? David Warsh has some answers. “cost disease” is mostly bunk — because it relies on measures of input prices instead of output prices…great as are the resources we put into [health care], the value .. MORE
Economics of Education
Labor Supply and Demand
About a year ago, the big story in our local suburban newspaper was the adoption of a “living wage” bill in our county. This summer, the big story was the shortage of teenage jobs here. I was tempted to write a letter to the editor suggesting that one could connect the dots. Ed Tinsley, the .. MORE
Behavioral Economics
Co-operation Hormone?
Paul Zak reports on measuring the level of the hormone oxytocin in experimental subjects after they have played a game involving trust and co-operation. People were recruited and paid $10 for showing up. Then they took seats in a large computer lab and were matched up in pairs, but this done completely anonymously so that .. MORE
International Macroeconomics
Trade Deficit a Concern?
To what extent is the large trade deficit reported for the U.S. a cause for concern? In my Bubbleheads essay a couple months back, I discussed some of the fears about the deficit and the apparently-overvalued dollar. Brad DeLong wonders how much we should really worry about the trade deficit. So there you have it. .. MORE
Macroeconomics
Productivity and Labor Utilization
Brad DeLong has influenced my thinking on the current state of the economy. In a recent post where he looks at data on output relative to hours worked, he writes, CEA Chair Greg Mankiw said last week that the 3.5% per year real GDP growth rate that the administration is projecting should make the unemployment .. MORE