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- Multivariate Quantiles
by Francis Diebold in No Hesitations, 2016-02-06 19:16:00 UTC
This new paper got me thinking. How often one wishes for a natural notion of multivariate median, or more generally, multivariate quantiles. Had fun learning about centerpoints and Tukey depths .Multiple-Output Quantile Regression By: Marc Hallin ; Miroslav Šiman URL: http://d.repec.org/n?u=RePEc:eca:wpaper:2013/224753&r=ecm [...]
- Engels’ Pause: A Cause of Marx and Engels’ Hasty and False Generalisations about Capitalism
by LK in Social Democracy for the 21st Century: A Post Keynesian Perspective, 2016-02-06 11:02:00 UTC
The expression “Engels’ Pause” refers to the period of real wage stagnation or low real wage growth in Britain in the early 19th century from about 1800 to 1840, even when real per capita GDP was rising in an historically unprecedented manner. First, it is important to note that some economic historians have challenged the data on GDP and real wages in this period. For example, Gregory Clark (Clark 2001; 2005 and 2007) argues that GDP has been overestimated and real wage growth in the early 19th century underestimated, so real wages did in fact grow more than per capita output growth (Al [...]
- Costs of the living wage
by chris in Stumbling and Mumbling, 2016-02-02 13:22:11 UTC
The living wage could put some people out of work even if it has only small effects upon aggregate employment.
I say so because of a new paper by Jan Kabatek which studies the effect of the Dutch minimum wage, which increases with age for workers up to the age of 23. Mr Kabatek shows that workers are more likely to lose their jobs around the time of their birthdays*. This is consistent with employers getting rid of workers as they become more expensive, and replacing them with cheaper younger ones.
This might have implications for the living wage. It will apply only to over-25s. Mr Kabatek’s [...]
- Falling Interest Rates and Government Investment
by Stephen G. Cecchetti in Huffington Post Business, 2016-02-01 12:52:47 UTC
Note to editors: This post is coauthored with authorized HuffPo blogger Kermit Schoenholtz . Switzerland is an amazing place, not least the skiing, the chocolate, and the punctual trains. The latter is part of the country's exquisitely maintained infrastructure: there are no potholes, and no deferred maintenance of train tracks, tunnels, airports, or public buildings. Few countries go so far, but many can take a lesson: it pays to maintain infrastructure at least so that it doesn't fail. We bring this up now because financial markets are telling us that it's a very good time to build and rep [...]
- Interview with Narayana Kocherlakota
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-02-01 12:08:24 UTC
Narayana Kocherlakota, Lionel W. McKenzie Professor of Economics, University of Rochester; former President, Federal Reserve Bank of Minneapolis. Has the experience of the crisis changed your view of the central bank policy toolkit? Former President Kocherlakota: Yes. I’m going to focus on the U.S. experience—with which I am most familiar—aside from one comment later that relates to Europe. I would divide the U.S. response to the crisis into two pieces. One is the liquidity interventions that the Federal Reserve undertook, largely under the rubric of Section 13(3) of the Federal Reserve [...]
- Shrinking VAR's Toward Theory: Supplanting the Minnesota Prior?
by Francis Diebold in No Hesitations, 2016-01-31 17:50:00 UTC
A recent post, On Bayesian DSGE Modeling with Hard and Soft Restrictions , ended with: "A related issue is whether 'theory priors' will supplant others, like the 'Minnesota prior'. I'll save that for a later post." This is that later post. Its title refers to Ingram and Whiteman's 1994 classic , entitled "Supplanting the 'Minnesota' Prior: Forecasting Macroeconomic Time Series Using Real Business Cycle Model Priors." So, shrinking VAR's using DSGE theory priors improves VAR forecasts. Sounds like a victory for economics, with the headline "Using Economic Theory Improves Economic Forecasts!" We [...]
- This could be the first recession caused by falling oil prices
by firstname.lastname@example.org (James Hamilton) in Business Insider, 2016-01-26 19:31:00 UTC
Reuters/Mariana Bazo The global economy is slipping into recession. The evidence is showing up in all the usual ways: slowing output growth, slumping purchasing-manager indexes, widening credit spreads, declining corporate earnings, falling inflation expectations, receding capital investment and rising inventories. But this is a most unusual recession– the first one ever caused by falling oil prices.
A drop in oil prices means less money in the hands of oil producers but more money in the hands of oil consumers. Currently the U.S. is importing about 5.1 million barrels a day more than we’re ex [...]
- Financing Constraints, Radical versus Incremental Innovation, and Aggregate Productivity
by Christian Zimmermann in NEP-DGE blog, 2016-01-26 14:58:18 UTC
By Andrea Caggese
I provide new empirical evidence on a negative relation between financial frictions and productivity growth over firms’ life cycle. I show that a model of firm dynamics with incremental innovation cannot explain such evidence. However also including radical innovation, which is very risky but potentially very productive, allows for joint replication of several stylized facts about the dynamics of young and old firms and of the differences in productivity growth in industries with different degrees of financing frictions. The [...]
- On Mariel
by George Borjas in LaborEcon, 2016-01-25 20:48:19 UTC
A couple of readers of early drafts of We Wanted Workers Â made some comments last spring that planted an idea in my head: perhaps it was time to revisit Mariel and see what we could learn from that supply shockÂ with the hindsight of 25-years worth of additional research.
I resisted the idea for a while, as I thought it would be a complete waste of my time. But it kept nagging me. So one Sunday morning I wakeÂ up, goÂ downstairs to my office, and start looking at the March Current Population Surveys (CPS) for the 1980s. Within an hour, my monitor was flashing a graph like this one:
And I rem [...]
- Can Margin Requirements Improve Financial Resilience?
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-01-25 17:55:46 UTC
Eight years after the financial crisis began, the regulatory reforms it spawned continue apace. Over the past year, regulators introduced total loss absorbing capacity ( TLAC ) and the liquidity coverage ratio ( LCR ) to make banks more resilient. And, with an eye toward strengthening market function, authorities continue to push for central clearing of derivatives ( CCPs ). Overlapping with these goals—and extending to nonbanks—is the recent move to establish standards for margin requirements in securities transactions: that is, the maximum amount that someone can borrow when using a give [...]
- 25/1/16: Nordic Model: Not Too Heavy Handed on Corporate Profits
by Constantin Gurdgiev in True Economics, 2016-01-25 16:16:00 UTC
Much of the tax debate nowadays has been around tax base erosion and corporate taxes. But the old issue of what to tax: capital or profits is still unresolved. One interesting myth, associated with this debate, is that Nordic countries run a more ‘balanced’ tax system that relies on corporate profit taxes and avoids the problem of so-called harmful tax competition commonly attributed to Anglo-Saxon models where, again allegedly, corporations are treated softly with low tax rates and more benign tax regimes. Well, a myth is a myth. And a recent paper, titled “ Taxing Mobile Capital and Pr [...]
- Krugman on Gordon: Both Need to Re-Read Dixit and Stiglitz
by Matthew Kahn in Environmental and Urban Economics, 2016-01-25 15:53:00 UTC
Paul Krugman has written an excellent book review of Robert Gordon's new pessimistic book� �about the future of economic growth. �Ed Glaeser also wrote an excellent review for the WSJ last week. Krugman provides a great life sketch as he compares progress in daily quality of life from 1870 to 1940 versus from 1940 to today. The key missing piece in both Krugman, Glaeser and Gordon is any discussion of variety. �Modern capitalism is constantly accelerating product differentiation. �Since none of these scholars study industrial organization (I realize that Krugman won the Nobel Prize in part for [...]
- Borjas 'On Mariel'
by Mark Thoma in Economist's View, 2016-01-25 14:11:51 UTC
George Borjas is blogging again:
Hello World (again) : About 10 years ago, I had a blog that ran for about a year or so. It quickly began to consume�too much of my time, and I realized�that I could not be a heavy blogger and a full-time researcher at the same time. So I stopped blogging after a while.
Immigration is back big time. I’ve been dragged into a public debate over some work I did last summer. And I have a book coming out in the fall that hopes to clarify many of the issues in the immigration debate.
So I’m going to try�blogging one more time. I’ve�learned my lesson; I don’t [...]
- Complexity, & BBC bias
by chris in Stumbling and Mumbling, 2016-01-25 14:07:40 UTC
We heard yesterday a neat example of BBC’s ideology. On Broadcasting House, Paddy O’Connell asked people about the “personality of the market”:
It’s an angry toddler, a fickle teenager, an ex-lover you can’t shake off, your master, your slave…an attention-seeking drama queen ( 21'03" in )
The horrible mixedness of this metaphor should draw attention to a big problem. The stock market is NOT like a person. Share price moves are the product of complex emergent processes which cannot simply be reduced to individual behaviour. Sometimes, stupid investors can generate a rational mar [...]
- How healthy is the labor market, really?
by ? in FRED blog, 2016-01-25 14:00:22 UTC
Economists, policy wonks, and the public often look at the unemployment rate to quickly assess the U.S. economy. Although the unemployment rate provides some understanding of the cyclical state of the labor market, it doesn’t account for those who have dropped out of the labor force. The labor force participation rate captures that information. Both rates (shown in the top graph) have declined since the end of the Great Recession, which may imply that thereâs unmeasured slack in the labor market.
Andreas Hornstein and Marianna Kudlyak from the Federal Reserve Bank of Richmond and Fabian Lan [...]
- Potential supply, the output gap and inflation
by bankunderground in Bank Underground, 2016-01-25 07:30:48 UTC
Potential supply matters!Â If an economy is producing less output than it could, then there are resources that are being wasted.Â And when these resources are human â that is unemployment â this carries an additional social cost.Â But why, specifically, should it matter for an inflation-targeting central bank?Â Presumably, because it is a good indicator of inflationary pressure!Â The trouble is that there are good reasons to think that this is not actually the case.Â And economic theory suggests there is a much better measure of inflationary pressure we can use.
A c [...]
- Can lower oil prices cause a recession?
by James_Hamilton in Econbrowser, 2016-01-24 21:47:17 UTC
Donald Luskin writes in the Wall Street Journal:
The global economy is slipping into recession. The evidence is showing up in all the usual ways: slowing output growth, slumping purchasing-manager indexes, widening credit spreads, declining corporate earnings, falling inflation expectations, receding capital investment and rising inventories. But this is a most unusual recession– the first one ever caused by falling oil prices.
A drop in oil prices means less money in the hands of oil producers but more money in the hands of oil consumers. Currently the U.S. is importing about 5.1 million [...]
- Armed Conflict Database
by kdmtz in Devecondata, 2016-01-23 21:59:00 UTC
The data is freely available here along with the codebook etc. For each conflict coded in the dataset, the list of scholarly references is now available here .Miguel et al. (2004) popularize the use of this dataset for measuring civil wars among economists. See this paper for why this dataset may be better than the COW data .Most recently used by Besley and Persson (2011) .A spin-off data is the Conflict Site Dataset , which provides the centroid and the radius of the zone of each conflict recorded in the�Armed Conflict Database. A grid-cell (0.5 x 0.5 arc-degree) version is available as part [...]
- A Ph.D. Microeconomics Research Dissertation Topic Suggestion: LDC Resilience to Storm Risk
by Matthew Kahn in Environmental and Urban Economics, 2016-01-23 15:49:00 UTC
I have visited the Philippines once. � This is a highly populated developing nation featuring "bad geography" in the sense that it gets hit with many natural disasters. �Its proximity to China is both an economic advantage and perhaps a regional power disadvantage. �I would like to see a development economics student study the following issues sketched in this article. � 1. �Given that the Philippines suffers from typhoons and other nasty storms, what investment choices are private investors and government making to reduce risk exposure? �Are private and public investments complements or subst [...]
- Workplace surveillance
by chris in Stumbling and Mumbling, 2016-01-21 14:18:13 UTC
Last week I took my car in for a service, and the following day I was emailed the video of the job being done – something I found so spooky I’ve not watched it. This seems to corroborate Sarah O’Connor’s claim that workplace surveillance is on the rise.
This, I suspect has been going on for years. For “middle class” workers (or erstwhile middle class ones) it has taken the form of the assertion of management power - such as the REF in universities – and to a demise of office pranks and liquid lunches. For other workers, technical change such as CCTV and containerization has reduc [...]
- Measuring and comparing local economies: Memphis vs. Nashville
by ? in FRED blog, 2016-01-21 14:00:23 UTC
When we want to assess the national economy, we typically look at the growth rate of gross domestic product (GDP), as it accounts for all goods and services produced in the economy. Similar data are also available for local economies in a measure called gross metropolitan product (GMP).
Unfortunately, local GMP data are calculated only once per year and released with a nine-month lag. For more timely information, we use factor analysis to estimate the common trend (or factor) underlying the movement in 12 variables of regional economic activity. This common factor is used to produce an index [...]
- The New Economics of Coastal City Adaptation to Climate Change
by Matthew Kahn in Environmental and Urban Economics, 2016-01-20 21:56:00 UTC
There is an interesting debate stirring in academic economics focused on urban adaptation to climate change.. �In one corner, I sit as the reigning optimist. �Read my new post p ublished today in the Harvard Business Review blog.� � Read my 2010 book Climatopolis. � � In the other corner sit some top economists. There is my friend Klaus Desmet and his co-authors who have written th is coastal flooding paper and there is my friend Guy Michaels and his co-authors who have written this e mpirical paper. �Let the debate continue. A longer version of my vision for how we wi ll adapt is published he [...]
- Time-Varying Dynamic Factor Loadings
by Francis Diebold in No Hesitations, 2016-01-20 17:32:00 UTC
Check out Mikkelsen et al. (2015) .� I've always wanted to try high-dimensional dynamic factor models (DFM's) with time-varying loadings as an approach to network connectedness measurement (e.g., increasing connectedness would correspond to increasing factor loadings...). �The problem for me was how to do time-varying parameter DFM's in (ultra) high dimensions. �Enter Mikkelsen et al. �I also like that it's MLE -- I'm still an MLE fan, per Doz, Giannone and Reichlin . �It might be cool and appropriate to endow the time-varying factor loadings with factor structure themselves , which might be a [...]
- Long-run Estimates of Interfuel and Interfactor Elasticities
by email@example.com (David Stern) in Stochastic Trend, 2016-01-20 10:11:00 UTC
A new working paper coauthored with Chunbo Ma on estimating long-run elasticities. This is one of the major parts of our ARC DP12 project , the "Present" part of the title: "Energy Transitions: Past, Present, and Future". We just resubmitted the paper to a journal and I thought that was a good time to post a working paper with the benefit of some referee comments. Both my meta-analysis of interfuel elasticities of substitution and Koetse et al .'s meta-analysis of the capital-energy elasticities of substitution show that elasticity estimates are dependent on the type of data – time series, [...]
- More Uber Economics: How its Rise Will Accelerate the Development of High MPG Vehicles
by Matthew Kahn in Environmental and Urban Economics, 2016-01-18 23:00:00 UTC
Today on a walk to the local coffee shop, I sketched my recent Uber post to my wife and she pointed out that I only told half of the story. �To recap, �Uber's drivers drive more miles than individual households do. �Uber drivers are profit maximizers (not utility maximizers). Both of these facts incentivize Uber drivers to drive higher MPG vehicles than typical drivers. �Ignoring rebound effects, this greening of technique will decouple greenhouse gas emissions from private driving. �All hail Uber! �(pun intended). Now, I ignored induced innovation here. �Never forget Acemoglu and Linn (2004). [...]
- Economics Rules by Dani Rodrik
by Mainly Macro in Mainly Macro, 2016-01-17 10:22:00 UTC
I didn’t want to talk about this book before I had finished it: I somehow think Noah’s contrary approach has its shortcomings! The first and most important thing to say is this is a great book. Not because it gave me some huge new insight or knowledge, although I did learn quite a bit about other parts of economics, but because it had a way of putting things which was illuminating and eminently sensible. Illuminating is I think the right word: seeing my own subject in a new light, which is something that has not happened to me for a long time. There was nothing I could think of where I dis [...]