EconLog Archive
Economic Growth
The Language Barrier, II
The Economist notices that the English language is gaining in importance. This trend was spotted earlier by yours truly, and before that by Paul Krugman. Brad DeLong echoes my view that the use of English by India’s educated elite is likely to reinforce the position of English as the dominant language for international commerce.
Microeconomics
Economics of Obesity
Economists Shin-Yi Chou, Michael Grossman, and Henry Saffer attempt to weigh in on the issue of why obesity is spreading. These data show that more household time is going to market work. There is correspondingly less time and energy available for home and leisure activities such as food preparation and active leisure. The increases in .. MORE
Efficient Markets Hypothesis
Inefficient Market?
If you believe in efficient markets, then you should be very skeptical of the rest of this post. Ohio State’s J. Huston McCulloch, a leading authority on bond pricing, said on 2003-01-31, Frankly, stocks are so reasonably priced relative to earnings at present, and real rates on TIPS [inflation-index Treasuries] are now so low, that .. MORE
Supply-side Economics
Supply-side Dissatisfaction
Some folks are reportedly bitter about the appointment of Greg Mankiw to succeed Glenn Hubbard as Chairman of the Council of Economic Advisers. N. Gregory Mankiw, whom Mr. Bush nominated on Wednesday to lead his Council of Economic Advisers, wrote a popular economics textbook in which he ridiculed the supply-side tax cuts of President Ronald .. MORE
Game Theory
Comment of the Week 2003-02-27
This week, I give the award to this comment by Zimran. Talking about the issue of airline profitability, he writes in part the airline industry also has perennial over capacity. Companies may enter and exit the market, but the planes never leave. It is this that puts downward competitive pressure on prices, not the high-fixed .. MORE
Energy, Environment, Resources
Economics for Environmentalists
At the fascinating Longbets web site, Robert A. Freling of the Solar Electric Light Fund makes this bet: By the year 2020 solar electricity will be as cheap or cheaper than that produced by fossil fuels I wish that environmentalists knew basic economics. In a free market, the price of electricity is the same regardless .. MORE
Game Theory
The Airline Union Game
‘Jane Galt’ gives an explanation for airline bankruptcies . In single-union negotiations, money left on the table now can be partially reclaimed by demanding higher wages in the next round of negotiations. Not so with multi-lateral arrangements. Any money left on the table by one union will be picked up by another one, since negotiations .. MORE
Social Security
Milton Friedman on Social Security
My choice for last week’s comment of the week generated a lot of comments! It refers to this article by Milton Friedman, who describes a conceptual scheme for transitioning out of Social Security. Based on the comments, I can tell that people are challenged by Friedman’s idea. Let me try to explain it. Suppose that .. MORE
Economic Growth
Moore’s Law
Economics teachers and students will want to read Jon “Hannibal” Stokes’ article on Moore’s Law, because 1. In my opinion, Moore’s Law is the most important economic phenomenon of our time. See also William Nordhaus, The Progress of Computing, and Brad DeLong’s commentary on my arithmetic. 2. Moore’s Law is packed with economic issues. For .. MORE
Regulation and Subsidies
FCC Policy Issues
In the age of the Internet, the FCC has become a pivotal regulatory body, as I pointed out in The Economics of the Wireless Last Mile. In a new essay, I argue that In the United States today, companies that license spectrum are like Third-World squatters. They do not have clear title to their spectrum, .. MORE
Information Goods, Intellectual Property
Is Copyright Necessary?
Douglas Clement does an outstanding job of providing background on the way that economists have dealt with the issue of copyright in the context of economic growth. (An earlier version of Clement’s article first appeared here.) Clement’s article revolves around a controversial proposition articulated by Michele Boldrin and David K. Levine. They argue that copyright .. MORE
Energy, Environment, Resources
Economics of Hydrogen
Gregg Easterbrook lets a lot of the air out of the hydrogen balloon. Pure hydrogen is not an energy source, except to stars. As it will be used in cars or to power homes and offices, hydrogen–like a battery–is an energy medium, a way to store power that has been obtained in some other way…hydrogen .. MORE
Efficient Markets Hypothesis
Stock Prices and Scandals
Jeff Madrick describes disparate economic views on whether stock prices should guide managers. The modern theory typically depends on the idealized efficient-markets theory, which asserts that at any given moment the stock price is not only the best measure we have of the future value of a company, but usually an accurate one. The stock .. MORE
Social Security
Comment of the Week
Because the comments that people are submitting here are unusually good, I think I’ll feature at least one every week. This week’s “comment of the week” is from Jim Glass on the Deficit Argument IV thread. He links to an interesting article by Milton Friedman suggesting a way to immediately transition from Social Security to .. MORE
Efficient Markets Hypothesis
The Risk Premium
Surfing while snowbound, somehow I started with this post on Asymmetrical Information and wound up reading this article by Robert D. Arnott and Peter L. Bernstein on the equity risk premium. It is an exhaustive study that covers many fundamental issues in finance, so it is not easily summarized here. Their main conclusion is that .. MORE
Tax Reform
Consumption Taxation
Writing in Slate, Tim Noah discusses consumption taxation, an idea for tax reform that goes back well over half a century. Lester Thurow, a liberal economist, made the case two decades ago for a consumption tax that would include a generous income-based refundable credit to help people at the lower end of the income scale. .. MORE
Microeconomics
Congestion Tax Works
The first day of London’s “congestion tax” began well, according to this report. There were complaints and small demonstrations around London, but traffic was lighter than normal and did not appear to back up around the edges of the restricted zone, as expected by opponents of Mayor Ken Livingstone’s charging plan. Video cameras enforce the .. MORE
Finance: stocks, options, etc.
Risk Spreads Widen
The Economic Report of the President notes that after September 11, all measures of risk spreads widened. the uniformity of stock market movements around the world suggests that a key driver of U.S. stock prices in 2002 was a worldwide decrease in tolerance for risky assets combined with lower projected earnings growth The report also .. MORE
Game Theory
Romance or Signalling Game?
Economists sometimes seem to be incurable anti-romantics. Consider James Miller’s treatment of Valentine’s Day as a signalling game. Even a woman who hates flowers would be rational in getting mad at her boyfriend for not buying her flowers on Valentine’s Day, because by not wasting resources on her the boyfriend has signaled his disinterest. For .. MORE
Social Security
The Deficit Argument, IV
Hal Varian gives a clear account of the concern with long-term deficits. A recent study by the economists Alan J. Auerbach, William G. Gale, Peter R. Orszag and Samara R. Potter, “Budget Blues: The Fiscal Outlook and Options for Reform,” lays out the facts… According to the economists’ projections, the spending on Social Security, Medicare .. MORE
Growth: Consequences
Growth in Flour
Back in December, Virginia Postrel marveled at being able to buy a 5-pound bag of flour for 69 cents. In response, Brad DeLong on his weblog calculated the cumulative gain in productivity over the last 500 years, using flour as the unit of measurement. I used this as an opening anecdote in a talk that .. MORE