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February 4, 2013

Latest Posts from Economist's View

Latest Posts from Economist's View

Posted: 25 Dec 2012 03:33 AM PST
Posted: 25 Dec 2012 12:06 AM PST
Posted: 24 Dec 2012 04:05 PM PST
This repeat from previous years, Twas The Night Before Christmas, brings back many memories of when I was very young (I'm still learning "the scientific facts behind flying reindeer and such."):

L2_1 was the night before Christmas, when all through the house
Not a creature was stirring, not even a mouse;
The stockings were hung by the chimney with care
In hopes that St. Nicholas soon would be there;
G26 G4
L3 he children were nestled all snug in their beds,
While visions of sugar-plums danced in their heads;
And mamma in her kerchief, and I in my cap,
Had just settled our brains for a long winter's nap,
L4 hen out on the lawn there arose such a clatter,
I sprang from the bed to see what was the matter.
Away to the window I flew like a flash,
Tore open the shutters and threw up the sash.
L5 he moon on the breast of the new-fallen snow
Gave the lustre of mid-day to objects below,
When, what to my wondering eyes should appear,
But a miniature sleigh, and eight tiny reindeer,
G7 G8   G9
L6 ith a little old driver, so lively and quick,
I knew in a moment it must be St. Nick.
More rapid than eagles his coursers they came,
And he whistled, and shouted, and called them by name:
G10 G11
L7 ow, Dasher! now, Dancer! now, Prancer and Vixen!
On, Comet! on, Cupid! on, Donder and Blitzen!
To the top of the porch! to the top of the wall!
Now dash away! dash away! dash away all!"
G14   G15
L8 s dry leaves that before the wild hurricane fly,
When they meet with an obstacle, mount to the sky;
So up to the house-top the coursers they flew,
With the sleigh full of Toys, and St. Nicholas too.
G16   G17
L9 nd then, in a twinkling, I heard on the roof
The prancing and pawing of each little hoof.
As I drew in my head, and was turning around,
Down the chimney St. Nicholas came with a bound.
L10 e was dressed all in fur, from his head to his foot,
And his clothes were all tarnished with ashes and soot;
A bundle of Toys he had flung on his back,
And he looked like a peddler just opening his pack.
L11 is eyes—how they twinkled! his dimples how merry!
His cheeks were like roses, his nose like a cherry!
His droll little mouth was drawn up like a bow,
And the beard of his chin was as white as the snow;

L12 he stump of a pipe he held tight in his teeth,
And the smoke it encircled his head like a wreath;
He had a broad face and a little round belly,
That shook when he laughed, like a bowlful of jelly.
L13 e was chubby and plump, a right jolly old elf,
And I laughed when I saw him, in spite of myself;
A wink of his eye and a twist of his head,
Soon gave me to know I had nothing to dread;
L14 e spoke not a word, but went straight to his work,
And filled all the stockings; then turned with a jerk,
And laying his finger aside of his nose,
And giving a nod, up the chimney he rose;
L15 e sprang to his sleigh, to his team gave a whistle,
And away they all flew like the down of a thistle.
But I heard him exclaim, ere he drove out of sight,
"Happy Christmas to all, and to all a good-night."
G23 G24
Posted: 24 Dec 2012 09:24 AM PST
Greg Mankiw says he is puzzled:
A Krugman Puzzler
Brad DeLong does the unpuzzling that, as he notes, shouldn't be needed:
In Which Greg Mankiw Pretends to Be Puzzled...
PGL explains what Mankiw should be puzzled about:
Paul Krugman Puzzles Greg Mankiw
Adam Ozimek continues the discussion:
Krugman vs Mankiw on Interest Rates
Paul Krugman with more on the topic:
Bond Vigilantes and the Power of Three
Nothing to add, that pretty much covers it, but I do wonder: When Greg Mankiw asks, relative to 2003, "are circumstances different now?" just how much eggnog has he had?
Posted: 24 Dec 2012 09:21 AM PST
Haven't read these papers yet, but looks like I should (I added open links when I could find them):
First, Sachs and Kotlikoff (anything to keep these two from writing about the deficit and the accumulated debt is, in my view, a plus):
Smart Machines and Long-Term Misery, by Jeffrey D. Sachs, Laurence J. Kotlikoff, NBER Working Paper No. 18629, Issued in December 2012: Are smarter machines our children's friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants – worse off?
This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor.
We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations.
Next, Jordi Gali revisits Keynes:
Notes for a New Guide to Keynes (I): Wages, Aggregate Demand, and Employment, by Jordi GalĂ­, NBER Working Paper No. 18651, Issued in December 2012 [open link]: I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving.
Finally, Roger Farmer, Carine Nourry, and Alain Venditti on whether "competitive financial markets efficiently allocate risk" (according to this, they don't):
The Inefficient Markets Hypothesis: Why Financial Markets Do Not Work Well in the Real World, Roger E.A. Farmer, Carine Nourry, Alain Venditti, NBER Working Paper No. 18647, Issued in December 2012 [open link]: Existing literature continues to be unable to offer a convincing explanation for the volatility of the stochastic discount factor in real world data. Our work provides such an explanation. We do not rely on frictions, market incompleteness or transactions costs of any kind. Instead, we modify a simple stochastic representative agent model by allowing for birth and death and by allowing for heterogeneity in agents' discount factors. We show that these two minor and realistic changes to the timeless Arrow-Debreu paradigm are sufficient to invalidate the implication that competitive financial markets efficiently allocate risk. Our work demonstrates that financial markets, by their very nature, cannot be Pareto efficient, except by chance. Although individuals in our model are rational; markets are not.
Posted: 24 Dec 2012 09:18 AM PST
A bit late for most of you, but in case it comes up over the next few days:
Real Tree or Artificial Tree, by Tim Taylor: My family always had real Christmas trees when I was growing up. I've always had real trees as an adult. Living in my own little bubble, it thus came as a shock to me to learn that, of the households that have Christmas trees, over 80% use an artificial tree, according to Nielsen survey results commissioned by the American Christmas Tree Association  (which largely represents sellers of artificial trees). But in a holiday season where the focus is often on whether we are naughty or nice, what choice of tree has greater environmental impact? ...

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