EconLog Archive
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
Uncategorized
Vacation until August 17
I’ll be back on August 17. Meanwhile, the comment threads remain open.
Macroeconomics
Is the Recession Over?
I say that the recession continues, according to an indicator of capacity utilization in the labor market. From March of 2001 through November of 2001 — the respective dates for the beginning and the end of the recession, according to the NBER — labor utilization fell from 97.8 percent to 94.5 percent. Since November of .. MORE
Income Distribution
Information Goods and Income Distribution
James Miller has an interesting thesis concerning information goods. Since most of the cost is up-front research and development, he argues that these goods will be priced attractively for mass consumption. As easily copied informational goods become more important to the U.S. economy, the differences in consumption between the rich and middle class will continue .. MORE
Economics of Education
Comment of the Week, 2003-08-06
On the continuing lively discussion of school vouchers, Boonton writes, The graduates of those ‘horrible’ [American public] schools went on to build not only an economic boom but one with heavy concentration in knowledge industries. This is the exact opposite of what you would expect to happen in a country with a failing educational system. .. MORE
Economics of Health Care
Health Care Reform
The pundits seem to be more radical than the politicians these days. The Washington Post’s Steven Pearlstein writes, First, in a rich country with an employer-based system, firms should have to provide a basic health insurance plan to all employees and their families… Second, all but the poorest among us have to get used to .. MORE
Microeconomics
Steven Levitt
The New York Times profiles Steven Levitt, the recent Clark Medal winner. Using data from more than 50,000 home sales in Cook County, Ill., he compared the figures for homes owned by real-estate agents with those for homes for which they acted only as agents. The agents’ homes stayed on the market about 10 days .. MORE
International Trade
China Menace?
The Washington Post’s Steven Pearlstein warns about China, now on the fast track to becoming a dominant player in the global economy and causing major disruptions along the way. Here in the United States, entire industries are being quickly wiped out as production is shifted across the Pacific Arguing differently is The Wall Street Journal’s .. MORE
Social Security
The Long-term Budget Outlook
In testimony before the House Budget Committee, William Gale of the Brookings Institution says, there is another big part of the problem: namely, the sunsets that are in the tax code. If all of those sunsets were removed, revenue would fall by 2.4 percent of GDP on a permanent basis. If, in addition, the alternative .. MORE
Information Goods, Intellectual Property
Terrorism Futures
A number of economists and others are defending the idea of a futures market to predict terrorism. This idea was abandoned after Senators objected to it. Hal Varian writes, The Iowa Electronic Markets has been predicting election results for 12 years using a system very much like the one that the Defense Advanced Research Projects .. MORE