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March 5, 2012 • 9:39 am 0

Economists and crises: my take on Krugman’s take on economists’ take on The Big One.

Krugman gave a speech on receiving an honorary degree in Lisbon; he reprints the full text here: http://nyti.ms/z30HDM

Krugman’s general story: the field of macroeconomics was better, descriptively and predictively, back in the 1970s, but at the cost of being coherent and complete. In the intervening years, a number of economists sacrificed completeness and consistency for external validity, and that blinded us (well, them; I’m not a macroeconomist) to the causes and cures of the recent financial crisis. He pitches it as a saltwater v. freshwater battle, which maybe it is.

Then again, maybe it’s a matter of getting high off your own supply. Read the rest of this entry »

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March 2, 2012 • 1:20 pm 0

How do people decide what they like? Atlanta commute with and without train tracks and decision under risk and uncertainty.

So I’m trying to put something together here with some coauthors and I thought it might be useful to put down some really back-of-the-envelope thoughts to see if I can get some of this articulated, as well as any comments or criticisms anybody might like to offer.

The question I/we are grappling with is this: how do people decide what they like?

The anecdote that got me interested in this particular question is this: when I lived in Atlanta, I would regularly (2x a week) have to drive from my friends’ house in Clarkston, where my daughter would stay for the day, to the train station at Edgewood/Candler Park. There are two routes between the two locations (clearly there are more, but let’s say there are two routes). One of the routes is shorter but has a set of train tracks across it. The other is longer, but manages to circumvent the train tracks by going under a railway bridge. Read the rest of this entry »

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February 29, 2012 • 11:45 am 0

Economist smacks down skeptics for misreading his research

A fantastic write-up of an even more fantastic reply to misinterpretation from William D. Nordhaus (http://www.nybooks.com/articles/archives/2012/mar/22/why-global-warming-skeptics-are-wrong/).

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February 29, 2012 • 9:26 am 0

Stupid subsidies are stupid. Economists know this. Obama’s proposed manufacturing subsidy may be good politics but it’s bad policy..

Matt Yglesias is great here. Seriously? What possible argument can there be for manufacturing subsidies?

It’s not an infant industry. It’s not clear that we have huge returns to capital in manufacturing that are being ignored by the private markets. And if we do, lowering the corporate tax rate and broadening the base is the right solution–why would we favor manufacturing jobs over other jobs? It just means less jobs.

 

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February 28, 2012 • 8:31 am 0

Wikipedia article of the day: Durable goods; Durable goods orders slump by 4%

Not so hot news: Durable Goods Orders in U.S. Slump 4%, Most in Three Years

Maybe not too surprising, as there were tax reasons to shift orders into 2011, but still. Ouch.

The stories should probably just read “Boeing has bad month”, because that seems to be a lot of what’s going on.

What is a durable good? One that doesn’t wear out, like a car or plane or washing machine, as opposed to, say, a dog biscuit. Unrelated to the news, but interesting to read: in a market for durable goods, do monopolists have the upper hand or do consumers?

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