J. Bradford DeLong's Blog, page 2154
November 18, 2010
Richard Tuck's Favorite Line from Keynes
Biographical essay on Francis Y. Edgeworth:
In his boyhood at Edgeworthstown he would read Homer seated aloft in a Heron's nest. So, as it were, he dwelt always, not too concerned with things of the earth.
November 17, 2010
U.C. Berkeley Fall 2010 Econ 1 File Uploads
Summer Reading Assignment
Syllabus
Essay 1 Assignment
August 30: Introduction to Macroeconomics: Audio | Slides | Notes
Articles for Section Oral Presentations: Section 2; Section 3; Section 4
Ungiven NIPA/Circular Flow Lecture
September 1: Introduction to Depression Economics: Audio | Slides | Notes
Articles for Section Oral Presentations: Sections 5-8
Problem Set 1 (due September 15)
September 8: Downturns and Financial Markets: Keynesians and Monetarists: Audio | Slides | Notes
September 13: Dealing with the "Great Recession": Audio | Slides | Notes
Review of Depression Economics
September 15: Inflation Economics: Audio | Slides | Notes
September 20: Inflation Economics II: http://delong.typepad.com/econ_1_fall_2010/2010/09/files-for-september-20-econ-1-lecture-inflation-economics-ii-j-bradford-delong-uc-berkeley-fall-2010.html
Solutions to Problem Set 1
Problem Set 3
Revised Econ 1 Syllabus
Practice Midterm
September 22: Budget Economics: http://delong.typepad.com/econ_1_fall_2010/2010/09/files-for-september-22-econ-1-lecture-budget-economics.html
September 27: Budget Economics II:
[Slides]20100922 for 20100927 Econ 1.pdf
Six Lecture on Depression Economics: http://delong.typepad.com/econ_1_fall_2010/2010/09/six-lectures-on-depression-economics.html
September 29: Growth Economics: Background:
Slides
Audio
October 1: Pre-Midterm Review Session: http://delong.typepad.com/econ_1_fall_2010/2010/10/econ-1-pre-october-4-2010-midterm-review-session.html
More In-Section Presentation Articles:
Section 13 (October 11-13): People making choices under constraints: “Box-office revenue up for 2009: It's not just higher ticket prices: More people are going to the movies, even as the recession has depressed consumer spending in nearly every other category,” by Ben Fritz. Los Angeles Times (December 14, 2009) http://latimes.com/business/la-fi-ct-boxoffice14-2009dec14,0,5678666.story
Section 14 (October 13-18): A complex division of labor coordinated by a market: Leonard Read (1958), "I, Pencil" http://www.econlib.org/library/Essays/rdPncl1.html
Section 15 (October 18-20): Supply and demand: “Food Prices Are Rising Worldwide: Weather, Oil Costs among Factors,” by Katherine Corcoran, Boston Globe, (March 30, 2008) http://tinyurl.com/8qkgnb
Section 16 (October 20-25): Incentives and rewards: “In Praise of Price Gouging,” by John Stossel. Posted at Townhall.com, September 7, 2005. http://www.townhall.com/columnists/JohnStossel/2005/09/07/in_praise_of_price_gouging
October 6: Economic Growth II:
Slides:
Audio:
Essay Assignment for October 13: http://delong.typepad.com/econ_1_fall_2010/2010/10/essay-assignment-for-october-13.html
Section Assignments from the First to the Second Midterm: http://delong.typepad.com/econ_1_fall_2010/2010/10/section-assignments-from-the-first-to-the-second-midterm.html
October 11: Introduction to Microeconomics:
Slides
Audio
Lecture Notes
October 13: Fundamentals of Supply and Demand:
Slides
Audio
October 18: Working with Supply and Demand:
Slides
Audio
October 20: Short Run and Long Run:
Slides
Audio
October 25: General Equilibrium:
Slides
Audio
October 27: Monopoly:
Slides
Audio
Monopolistic Competition:
Slides
Audio
Files for November 3 Lecture: Monopolistic Competition:
Slides
Audio
Solutions for Sample Midterm 2, and for Problem Sets 4, 5, and 6:
Practice+Midterm+2+solutions.pdf
Files for November 10 "Externalities" Lecture:
Slides
Audio
Student Oral Presentation Articles for Week of November 15:
Monday 1 PM through Wednesday 11 AM sections:
Edward Flattau: http://www.huffingtonpost.com/edward-flattau/externalities_b_778963.html
Don Cayo: http://www.vancouversun.com/technology/Cayo+Underpricing+nature+bounty+costs+trillions/3699974/story.html
Wednesday 1 PM through Monday 11 AM sections::
Robert Frank: http://blogs.wsj.com/wealth/2010/11/09/giving-by-the-rich-altruism-or-just-a-tax-write-off/
Derrick Z. Jackson: http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/01/12/state_is_too_slow_in_banning_texting_while_driving/
November 15 "Public Goods and Asymmetric Information":
Slides
Audio
From the Economists' Florida Health Care Amicus Brief
Friends really don't let friends vote Republican:
As Massachusetts Governor Romney noted when signing the Massachusetts equivalent of Section 1501:
Some of my libertarian friends balk at what looks like an individual mandate. But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on the taxpayers is not libertarian.
Hoisted from the Archives: Let Us Give Thanks (Wacht am Rhein Department)
November 12, 2004:
Brad DeLong's Semi-Daily Journal: A Weblog: Let Us Give Thanks (Wacht am Rhein Department): Daniel Drezner writes:
danieldrezner.com :: Daniel W. Drezner :: The dogs that don't bark in international relations: Newspapers, media outlets -- and, because we feed off them, blogs -- tend to focus on the violent hot spots in international affairs. This is entirely appropriate -- but occasionally, it's worth stepping back and remembering that there are parts of the globe where everyone has expected and predicted things to go "BOOM!" -- and yet, in fact, conditions have improved.
Yes. Let us give thanks that the most brutal and blood-soaked border in the world is quiet--a border inhabited on both sides by those bloodthirsty peoples who have been numbers one and two in terms of the most effective killers of foreigners for centuries.
Who am I talking about? The Germans and the French, of course
It is now 59 years and 9 months 65 years and 9 months since an army crossed the Rhine River bearing fire and sword. This is the longest period of peace on the Rhine since the second century B.C.E., before the Cimbri and the Teutones appeared to challenge the armies of the consul Gaius Marius in the Rhone Valley.
I Am Supposed to Talk About Lessons for Keynesians (and Monetarists!) from the Financial Crisis...
I wonder what they are? Perhaps: "Be a Minskyite!"?
The AEA Program
2011 AEA Annual Meeting Papers:
Jan 07, 2011 10:15 am, Sheraton, Governor's Square 15 American Economic Association
What's Wrong (and Right) with Economics? Implications of the Financial Crisis (A1) (Panel Discussion): Panel Moderator: JOHN QUIGGIN (University of Queensland, Australia)
* BRAD DELONG (University of California-Berkeley) Lessons for Keynesians
* TYLER COWEN (George Mason University) Lessons for Libertarians
* SCOTT SUMNER (Bentley University) A defense of the Efficent Markets Hypothesis
* JAMES K. GALBRAITH (University of Texas-Austin) Mainstream economics after the crisis
Mark Thoma Tracks Greg Mankiw on QE2
Mark:
Economist's View: Mankiw on QE2: Greg Mankiw:
QE2: ...I judge QE2 to be a small but risky step in the right direction.
Update: In his post, Mankiw says:
I do see some potential downsides. In particular, the Fed is making its portfolio riskier. By borrowing short and investing long, the Fed is in some ways becoming the hedge fund of last resort. If future events require higher interest rates, the Fed will end up making losses on its portfolio. And even if doesn't recognize these losses (by not marking to market), it could end up paying more interest on newly expanded reserves than it is earning on its newly acquired portfolio of long bonds. Such a cash-flow deficit could potentially undermine the Fed's political independence (which is already not very popular in some circles). Yet if the Fed tries to avoid these losses by failing to raise rates when needed, inflation could indeed become a problem down the road. I trust the team at the Fed enough to think they will avoid that mistake.
Economics of Contempt emails:
Pretty absurd post on QE2 from Mankiw, don't you think? Calling the Fed the "hedge fund of last resort" is about as disingenuous as it gets. If the Fed is becoming a hedge fund, it's a hedge fund that only invests in Treasuries! Is Mankiw seriously worried about the risks of the Fed owning 10YR and 30YR Treasuries? I highly doubt it.
Seems to me that the risks of not doing anything about 10% unemployment are much greater than the risks of the Federal Reserve taking on a little bit of ten-year Treasury duration risk...
Jon Chait Says that Alan Simpson Took Erskine Bowles to the Cleaners...
The Debt Commission Plan: No Deal
This comes from giving a fire chief's hat to a recidivist budget arsonist...
Throwing Milton the Red Over the Side...
Double the money stock and you double nominal aggregate, Milton Friedman and Irving Fisher always says. And the first principle of monetarism is to keep nominal GDP on a stable growth path. Now Douglas Holtz-Eakin--who really does know better--says that Uncle Milton and Uncle Irving were wrong.
This is the most amazing thing I have seen... since John McCain picked Sarah Palin to be his running mate:
Noah Kristula-Green:
Fed Critics Argue Easy Money Won’t Fix Economy | FrumForum: On November 15th, the New York based think tank e21 released an “Open Letter to Ben Bernanke” criticizing the Federal Reserve’s intention of engaging in a policy of quantitative easing by purchasing $600 billion worth of U.S. government securities.... [T]he letter... did not [propose] alternative[s]....
FrumForum has been contacting the co-signers of the letter to find out what policies they would propose instead of monetary expansion.... Douglas Holtz-Eakin, President of the American Action Forum, told FrumForum that quantitative easing will not reduce unemployment or inflation.... He argued instead for a “pro-growth fiscal policy”, endorsing the tax reforms of the Bowles-Simpson deficit commission....
Nicole Gelinas of the Manhattan Institute argued... “The Fed should not try to be heroic in the absence of functional politics (on both sides).”... Gelinas called for solutions that bypassed the monetary policy apparatus. She called for regulators to “do their jobs when it comes to making sure that financial institutions are operating prudently and soundly” with a focus on getting foreclosures on defaulted homes....
Get rid of the bad debt, allow house prices to hit bottom, help harness future state and local government liabilities, invest in infrastructure, and create some semblance of market disciple for the financial industry, and you’re on your way to an end to the unemployment crisis.
Gregory Hess of Claremont McKenna College... [said] there was no role for monetary stimulus, “QE2 by the Federal Reserve will likely cause volatility in long term asset markets.... The reasons that banks do not want to lend and firms are hesitant to expand their activities is because of the rising size of government (which portends higher tax rates), the expiration of the tax cuts under President Bush, and the lingering air of economic uncertainty. These all inhibit growth....
Charles W. Calomiris... [said]....
I favor Ben McCallum’s proposal to target nominal GDP growth at about 5%. Since we were on track with that target before QE II.... If there were evidence of a need for further loosening to raise the growth of nominal GDP... some quantitative easing might be a reasonable proposal....
Funny. I don't remember Charlie calling on the Federal Reserve to raise interest rates in 1983-1986 when Reagan was president and nominal GDP was growing at more than 10% per year...
Ronald I. McKinnon... argued for a gradual increase of short-term interest rates... the current regime promoted “a flood of hot money” into markets in Asia and Latin America....
David Malpass argues that the crux of the debate is that quantitative easing represents an expansion of “big government”:
[U]nless Fed asset purchases are in some way necessary to the economy’s survival, the assumed harm from an expansion of government, which is at the core of our principles of limited government, argue against Fed asset purchases...
Stinking FIshwrap: The New York Times Edition
This fishwrap is wrapping a fish--a Stanley Fish, that is--that smells well-past its sell-by date.
Felix Salmon does the intellectual garbage collection:
The rhetoric of tuition inflation: Let’s say I earn $50,000 a year, and a widget costs $1,000. Then my pay goes up 3%, while the cost of the widget goes up 10%—year after year. Would you say that the widget has been getting more affordable over time? Stanley Fish would. Fish is approvingly citing a new book from Robert Archibald and David Feldman, which he quotes saying that “for most families higher education is more affordable than it was in the past.”... I fear to think what statistical sleight-of-hand might be hidden in [Fish's] qualifier about “over long stretches of time,” especially since in recent years real college costs have continued to rise fast even as real median incomes have gone nowhere or shrunk. But in general this approach to gauging affordability is absolutely bonkers.... [A]nything can be considered “more affordable than it was in the past.” If the widget rises in cost by $100 and my annual pay goes up by $1,500, that does not in and of itself settle the question of whether the widget has become more affordable. What’s more... Fish’s take does seem to be at odds with its official blurb:
A technological trio of broad economic forces has come together in the last thirty years to cause higher education costs… A college education has become less reachable to a broad swathe of the American public.... This affordability problem has deep roots...
I’m also completely unconvinced by Fish’s explanation of the main reason behind cost inflation at colleges: "Chief among these is the change in the sophistication and cost of the technology that has at once transformed the setting of higher education and become one of the areas of knowledge higher education must impart to students."... [C]omputers are more expensive than pencils, and it’s surely true that some part of the typical college-tuition fee is spent on information technology. But we’re talking about fee inflation here: in order for Fish’s argument to hold water, IT costs at colleges would have to be rising faster than inflation year in and year out. Which strains credulity in a world where IT is getting steadily cheaper.... The fact is that technology is a way of reducing the costs of education much more than it is a factor in their growth...
Why oh why can't we have a better press corps?
Domenici and Rivlin Propose a 6.5% Federal VAT...
They call it a "debt reduction sales tax."
I am skeptical because one of the heads of the enterprise--Pete Domenici--is another Republican budget arsonist who now wants to wear a fire chief's hat. I cannot remember Domenici voting against any major Republican initiative that broke open the deficit or voting for any major Democratic initiative that reduced the deficit in all his time in Congress. A willingness to put your vote on the line for deficit reduction should be a precondition for "bipartisanship" on the deficit. And I do not think Domenici meets it.
Still, looks like a vast improvement over Simpson-Bowles...
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