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February 17, 2013

Latest Posts from Economist's View

Latest Posts from Economist's View

Posted: 10 Feb 2013 12:03 AM PST
Posted: 09 Feb 2013 10:28 AM PST
One more quick one before heading to the airport for that long, long flight from SF to Eugene -- Noah Smith defends the efficient markets hypothesis, and along the way he says you probably aren't as smart as you think you are when it comes to investing in stocks and bonds:
In defense of the EMH, b Noah Smith: The "Efficient Markets Hypothesis" is a popular target of anger and derision among lay critics of the econ profession. How can financial markets be "efficient" when they just crashed and took our economy down with them? And when sensible people like Bob Shiller, Nouriel Roubini, Bill McBride, et al. were screaming their heads off about a housing bubble years before the pop? Of course I have some sympathy for these complaints. But the more I learn about and teach finance, the more I learn what an important and useful idea the "EMH" in fact is. I don't want to say that the EMH is unfairly maligned, but I do think that its vast usefulness is usually ignored in the press. ...

Posted: 09 Feb 2013 10:27 AM PST
Paul Krugman:
Profits and Business Investment, by Paul Krugman: ... Below are corporate profits (after tax and inventory valuation adjustment) and nonresidential fixed investment (roughly speaking, business investment), both measured as shares of GDP. These aren't exactly matched figures, because not all business investment comes from corporations. Still, I think they illustrate an important point. Business investment isn't actually all that low... What's really out of line with previous experience is the level of corporate profits, which is arguably serving as a kind of sinkhole for purchasing power.

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