Bob Shiller had an outstanding comment on Krugman and his New Trade Theory.
[This was] “His most famous paper before he became a newspaper writer”
It’s funny that even people whom Krugman praises in his article are making fun of him. Krugman is loosing it, that’s for sure…
Rich Indonesian families seek refuge in luxurious hotels as their servants make their annual pilgrimage at the end of Ramadan.
I wonder to what extent is this exodus of rich families phenomenon of last years, during which has Indonesia experienced fast GDP growth.
source : nationmaster.com
Couple of months ago we were talking with my girlfriend about the impact of season of your birth on your intelligence, and health. My theory was that less educated, poor people are more likely to conceive a child in the winter. Children born in fall and early winter are more likely to underperform their peers simply because they are more likely to come from a family with low socioeconomic status.
Guess what, NBER published a paper “SEASON OF BIRTH AND LATER OUTCOMES: OLD QUESTIONS, NEW ANSWERS, 2008” that is supporting my theory. The sad thing is, that I am not the author of the paper, the cool thing is that they got it wrong! They argue that less educated, poor man are more likely to be exposed to temperature extremes. Such exposure lowers their sperm count and they are less likely to conceive a child. Fine, but I think I have a more plausible explanation.
In my opinion the differences are caused by opportunity costs of making a baby. The less intelligent baby is likely to be conceived in december, january, february , and march. All of these are rather cold months.
In my opinion richer people have significantly wider choices of entertainment during the winter, but the gap narrows during the summer. In the summer you can hike, go to a park, sun bath, swim in the lake, jogg all of these without having to pay a single penny. What can you do for free in the winter? Virtually nothing! While the rich ones have wide range of possible pastimes in the winter (skiing, snowboarding, going to movies, going for a dinner and thousands more) and would have to give them in order to have a romantic evening, the poorer ones have way simpler choice: “Shall we watch TV or make love?”. And this is what in my opinion drives the difference, opportunity costs of romantic evenings! On average smartest children are conceived in the months when the gap between opportunity costs of making a baby for a rich and poor are smallest. The least intelligent are conceived when the gap between the opportunity costs is the largest…
There is more to being an economist than research, teaching, conferences… Test how much of an economist you really are.
(Link recommended by LM)
It all started with Krugman’s blog post “How Did Economists Get It So Wrong?“. I must say I didn’t like the article. It is heavily biased – It can be summed up in one sentence: “Everything Krugman and friends ever did is right, the rest is a garbage…”
Within two weeks Cochrane came up with an excellent, but personal (one might say that Krugman deserves it) respons. How did Paul Krugman get it so Wrong?
To my knowledge second respons by a big shot is Levin’s Open Letter to Paul Krugman. In his critique Levine does exactly the same thing as Krugman does in his posts, he is personal, arrogant, and twists facts… Not cool at all…
I’ve read nice article by Akerlof and Romer: “Looting: The Economic Underworld of Bankruptcy for Profit, 1993.” Where they describe how in the 80s financial institutions were looted by their shareholders on the expense of depositors (better: on the expense of state that guaranteed the deposits). It’s scary how well the description of the 80s fits the Subprime crisis.
The looters then were owners/shareholders, the loot were (among other things) excessive dividends.
The mean to artificially inflate financial performance were (among other things) high risk construction project with very high interest rate. In the end, the government picked up the check.
The looters today were managers and the loot excessive bonuses…
The mean to artificially inflate financial performance were high risk mortgages with very high interest rate.
After the bubble bursted, the government picked up the check.
The last sentence of the paper says:
If we learn from experience, history need not repeat itself.
p.s. (In general, I agree with big bonuses in the financial industry. In certain cases – Freddie Mac and Fannie Mae the bonuses were in my opinion basically above described loot… )
Economists tend to be arrogant, especially when talking to other social scientists. This post might enhance the stereotype, but I think it’s too funny to keep it just to myself…
Professor of Quantitative methods class: If conditions a),b),c), and d) are satisfied then the estimator is unbiased.
Political Science PhD: Blah, blah, blah, blah, blah… So if a),b),c), and d) are satisfied it can be unbiased?
Professor of Quantitative methods class: No, it is!
Political Science PhD: Ah, so when a) says random it really means random?
Taken from the Amazon.com review of The New Era of Wealth (Brian Wesbury, 2002):
First, the good news: smart investors will continue to get rich. Brian S. Wesbury, an economist and respected economic forecaster, believes the trends that led to so much wealth creation in the last two decades of the 20th century–a boom in productivity from technological innovation, smaller government, and anti-inflationary U.S. Federal Reserve policies–will continue in the first two decades of the 21st century. As Wesbury sees it, people who worry about the soaring stock market leading to a repeat of 1929 are looking for the wrong bogeyman.
It’s ironic, that in 2004 he was named by USA Today one of the top 10 economic forecasters. (By the way, when they say an economist, they mean he has a BA in economics…). Anyway, I am not judging the book as such, (I haven’t read it yet - but in general I am a “bit” sceptical about investor’s handbooks), I just think the review is funny or maybe ironic?
p.s. has anyone read it?
I am taking “Energy Market Strategy” at the SOM. As a (graded) part of the class we get to play an OPEC simulation game. Teams of three people represent an OPEC country (I am with the Iran team 
. The point of the game is to maximize profits given reserves, production capactity and some information about the demand curve. There are three parallel worlds, so we are not only competing with each other, but also with other worlds (if they’ll collude and we won’t, we’ll loose…). So the winning strategy is collusion. I found a nice quote characterizing our situation (and probable future development) in “Akerlof Shiller: Animal Spirits“.
Experimental subjects initially play with some degree of cooperation, but if the games are repeated they first learn that some other players are defectors and then they themselves increasingly defect. After many repetitions of the game all players are playing selfishly. The behavioral pattern is very basic: it has been documented in monkeys as well as in humans.
I wonder how the notion that we are competing against other worlds (that may adher to collusion for longer) changes the outcome. Would then humans beat monkeys? We’ll find out in less than a week…
China unexpectedly ratcheted up pressure on the United States in a widening trade dispute on Sunday evening, taking steps toward imposing tariffs on American exports of automotive products and chicken meat in retaliation for President Obama’s decision late Friday to levy tariffs on tires.
NyTimes 13/9/09
I am not sure whether imposing tariffs on (unimportant) products will solve the US-China trade deficit. It will surely wake up waves of stupid (irrational) nationalism, something you don’t want before the G-20 meeting.
On the other hand there is no question something has to be done about the US-China trade deficit (or surplus, depending on what shore of the Ocean you stand). The ball is in China’s court though (Read: China needs to float its currency.).
The US needs to pressure Chineese government to float, while giving them a chance to justify such step to the public, starting petty tariff wars is not the way to go…