J. Bradford DeLong's Blog, page 250

This book is fun!: Jeff Erickson: Algorithms: "'Algorithm...

This book is fun!: Jeff Erickson: Algorithms: "'Algorithm' does not derive... from the Greek roots arithmos (������������), meaning ���number���, and algos (����������), meaning 'pain'. Rather, it is a corruption of the name of the 9th century Persianm athematician Muhammad ibn Musa al-Khwarizmi. Al-Khwarizmi is perhaps best known as the writer of the treatise Al-Kitab al-mukhtasar fihisab al-gabr wal-muqabala, from which the modern word algebra derives. In a different treatise, al-Khwarizmi described the modern decimal system for writing and manipulating numbers���in particular, the use of a small circle or sifr to represent a missing quantity���which had been developed in India several centuries earlier. The methods described in Al-Kitab, using either written figures or counting stones, became known in English as algorism or augrym, and its figures became known in English as ciphers...

#noted

Equitable Growth Steering Committee member Karen Dynan an...

Equitable Growth Steering Committee member Karen Dynan and company point out a big problem. Should we be trying to pay down our debt now in order to create "fiscal space"? Our should we take secular stagnation seriously, and not fear the possibilty of a sudden downward valuation of government debt that would take fiscal space away?: Karen Dynan, Jay Shambaugh, and Eduardo Porter: What Tools Does the U.S. Have to Combat the Next Recession?: "Today's lower equilibrium interest rates make it more likely that monetary policy would need to make use of unconventional tools to spur the economy. On the fiscal front, we have a much larger level of government debt relative to GDP than we did prior to the financial crisis. However, viewing this level of debt to GDP as a reason to restrain stimulus spending in case of a crisis could make the problem worse. Whether the government uses fiscal policy to stimulate the economy will depend more on political willingness, than on the actual limits on fiscal policy...

#shouldread #fiscalpolicy

David Rezza Baqaee and Emmanuel Farhi: The Microeconomic ...

David Rezza Baqaee and Emmanuel Farhi: The Microeconomic Foundations of Aggregate Production Functions: "We provide a general methodology for analyzing...aggregate production functions by deriving their first- and second-order properties... provide non-parametric characterizations of the macro elasticities of substitution between factors and of the macro bias of technical change in terms of micro sufficient statistics. They allow us to generalize existing aggregation theorems and to derive new ones. We relate our results to the famous Cambridge-Cambridge controversy...

...Despite winning the battle, the English side arguably lost the war. Although exposed as a fiction, the ���neoclassical��� approach to modeling the production technology of an economy was nevertheless very useful. It was adopted and built upon by the real business cycle and growth literatures starting in the 1980s. Reports of the death of the aggregate production function turned out to be greatly exaggerated, as nearly all workhorse macroeconomic models now postulate an exogenous aggregate production function. Why did Robinson and Sraffa fail to convince macroeconomists to abandon aggregate production functions? One answer is the old adage: you need a model to beat a model.... Although the post-Keynesians were effective in dismantling this concept, they were not able to offer a preferable alternative.... Sraffa['s]... impact was limited.... In a world lacking both computational power and data, and in lieu of powerful theorems, it is little wonder that workaday macroeconomists decided to work with Solow���s parsimonious aggregate production function instead....

The aggregate cost function is defined as the solution of the dual planning problem which seeks to minimize the expenditure necessary to achieve real output Y given factor prices.... The first derivatives of the aggregate cost function are given by the sales shares of goods and factors.... The second derivatives of the aggregate cost function are determined by the elasticities of the sales shares of goods and factors...

#noted #economicgrowth

David Rezza Baqaee and Emmanuel Farhi: The Microeconomi...

David Rezza Baqaee and Emmanuel Farhi: The Microeconomic Foundations of Aggregate Production Functions: "We provide a general methodology for analyzing...aggregate production functions by deriving their first- and second-order properties... provide non-parametric characterizations of the macro elasticities of substitution between factors and of the macro bias of technical change in terms of micro sufficient statistics. They allow us to generalize existing aggregation theorems and to derive new ones. We relate our results to the famous Cambridge-Cambridge controversy...

...Despite winning the battle, the English side arguably lost the war. Although exposed as a fiction, the ���neoclassical��� approach to modeling the production technology of an economy was nevertheless very useful. It was adopted and built upon by the real business cycle and growth literatures starting in the 1980s. Reports of the death of the aggregate production function turned out to be greatly exaggerated, as nearly all workhorse macroeconomic models now postulate an exogenous aggregate production function. Why did Robinson and Sraffa fail to convince macroeconomists to abandon aggregate production functions? One answer is the old adage: you need a model to beat a model.... Although the post-Keynesians were effective in dismantling this concept, they were not able to offer a preferable alternative.... Sraffa['s]... impact was limited.... In a world lacking both computational power and data, and in lieu of powerful theorems, it is little wonder that workaday macroeconomists decided to work with Solow���s parsimonious aggregate production function instead....

The aggregate cost function is defined as the solution of the dual planning problem which seeks to minimize the expenditure necessary to achieve real output Y given factor prices.... The first derivatives of the aggregate cost function are given by the sales shares of goods and factors.... The second derivatives of the aggregate cost function are determined by the elasticities of the sales shares of goods and factors...

#noted #economcgrowth

Stephanie Victoria: "I'm a say this lil story then I'm go...

Stephanie Victoria: "I'm a say this lil story then I'm gon' let'chall get back to tweeting...: Recently, I discovered a grocery story even bougie-er than Whole Foods in my new 'hood. My addition to the list of 'approved negroes after 6PM' recently went through so my neighbors have stopped staring at me & the resident coons only give disapproving looks on trash day instead of their usual 'don't start no trouble' slave talks in the hallway...

...The store didn't even look like a grocery store but a boutique for food. But discovering this grocery store gem struck a nerve at Sundowntown HQ; my approval form didn't include this in the safe radius. The first time I went I experienced guffaws, a few elbow bumps, and stares. This time I was prepared and brought my tote bags, a tenet of membership. In true, "we got money & hate niggas fashion" the staff is all POC so, although a few are surly, most are helpful, peeped game and go out of their way to assist me and give me "extras" or special treatment.

Today, a young BM cashier opened his register for me and immediately an older WW gets in line behind me. Now, when I saw her behind me I knew what it was; I've met her before. She's a gatekeeper and her job was to both size me up and report back to Sundown Town HQ. She looked in my cart, saw my total and was disgusted. Buying an item or 2 means you wandered in. Making weekly grocery level purchases and a matching set of tote bags makes you a regular. I've triggered HQ and they've dispatched an agent. She interrupted my convo w/ the cashier & started talking about her mother living through the Depression & all the [nasty ass] recipes she created w/ no seasoning to feed her 88 kids. I listen slightly bemused as a scholar and observant to add to my #Ypipofieldnotes.

Once she saw I was #unbothered, she probes further: "Are you from around here?" This is a question of place: you must not know that this is not your place, surely you wandered in. Allow me to redirect you". I oblige her curiosity & tell her I grew up here. She reloads and cocks. "Oh, I thought maybe you were from out of state. I thought I overhead you saying you were buying all these groceries for an event and assumed you were visiting". Translation: how can you afford to shop here? An item or two is understandable but a week's worth of groceries?

Me: Nope, originally from GA but grew up here.

I dare not say that I live here. I didn't want her head to explode or, worse, she attempt to follow me home. Sundowntown hasn't remained racially monolithic w/o extreme & surreptitious tactics such as surveillance & intimidation.

Me: I said nothing about an event. He [the cashier] and I were discussing meals on the go. I like to cook but I work alot and don't have time.

Her: You know, they have these great meals by Lean Cuisine that are only like $2 at Safeway.

Now, this may seem innocuous but in 1 sentence she redirected me to "my place" by suggesting Safeway & providing me w/ a dollar amount for food. I had a decision to make: A. Smile & thank her B. Draw enough blood for her to take back to HQ & remember the name. I went w/ option B

Me: Tempting but those foods are filled w/ sodium which is very unhealthy & could lead to hypertension & heart disease. I would strongly caution you to avoid such foods. If cost is a factor, you can buy a bag of beans, boil them w/ salt & have a healthy and cost-effective meal.

The cashier who had been watching this exchange tried not to laugh but also wanted to clap like, "yeah, sis! Do it for the culture!". I grabbed my cart, said my signature, "Y'all take care, now." and he winked at me like "I see you & thank you!".

She was silent, wondering how she would report back to HQ: "Mission failed. No further surveillance." My entry for #ypipofieldnotes: "White supremacy extends to food. Food-its quality and proximity-is becoming an indicator of status." Close data set. Label: Can a nigga live? No...

#noted #equitablegrowth

Xavir Jaravel (2017): Product innovations and inflation i...

Xavir Jaravel (2017): Product innovations and inflation in the U.S. retail sector have magnified inequality: "shifts in income distribution in the United States lead to product innovations that target high-income households, which increases purchasing-power inequality...

...Such product innovations have both a direct effect on purchasing power across income groups because they target specific groups, as well as an indirect effect through competition with products already in the marketplace. In short, wealthier households are more likely to spend on product categories where product innovations are more common and where competition is increasing, while low- and middle-income households are more likely to purchase products that face less competitive pricing pressures in the marketplace. For economic policymakers, this dynamic has important implications for the price indexation of government programs that provide support for low- and middle-income families...

#noted #equitablegrowth

According to my Grandmother Florence Richardson Usher Lor...

According to my Grandmother Florence Richardson Usher Lord, my Great-Great Uncle Abbott Payson Usher back in The Day used to teach���very boringly, she said���(1) Middle Ages, (2) Commercial Revolution, (3) Industrial Revolution, (4) Age of Modern Science, with growth accelerations in each of the four: Dietz Vollrath: Sustained growth and the increase in work hours: "Jane Humphries and Jacob Weisdorf... labor contract terms in England over several centuries... annual labor contracts starting seeing sustained growth in their value around 1650 or so, far sooner than the day wages indicated...

...This pushes back the origin of economic growth to well before the actual technological IR, and this also matches the data on GDP per capita developed by Broadberry, Campbell, Klein, Overton, and van Leeuwen in British Economic Growth, 1270-1870. One thing that I didn���t address... was whether the data on annual contracts (and on GDP per capita) indicate a rise in living standards.... What little evidence we do have on actual hours worked does seem to indicate that they increased a lot in the period around the actual Industrial Revolution.... We might assume that those workers on annual contracts, if they were part of the same labor market, would also have seen their hours rise, and hence their annual income growth was due to more work time as well.... The... reason for the rise in work hours. If they were physically coerced, then for sure you���d say that the growth in per worker annual contracts or GDP didn���t represent a rise in living standards. But on the assumption that the extra hours were not coerced, then we need to think hard about the labor supply decision.... Mark Koyama... work[s] through various ways in which work hours might rise, the implication for living standards, and how these relate to different stories about economic growth. We can see which might make sense in the English case....

Jan de Vries['s] ���Industrious Revolution���.... Some consumption is time-intense (e.g. Netflix) in that it requires a little of your money, but a lot of your time to consume it. Some consumption is good-intense (e.g. clothes) which requires a lot of your money, but very little of your time.... If time-intense consumption is cheap, then you���ll tend to buy lots of it, and that means you���ll work very little.... England prior to 1650 was a world in which time-intense consumption was cheap. Workers had little need to work more hours, because why bother? What were you going to purchase with that extra income?... But around the middle of the 17th century, in line with de Vries��� argument, new good-intense consumption goods became available, like sugar and tea. So people shifted their consumption towards these things, which did not require much time to enjoy, but did require you to purchase something. So putting more labor into the market made sense. Similarly, the price of textiles was falling at this time (yes, prior to the IR). People shifted from the time-intense activity of making ones own clothes, towards the good-intense purchase of ready-made clothing....

Let���s say that we buy the story of the Industrious Revolution, and buy that the onset of growth in annual labor contracts and GDP per capita starting in 1650 represented a real gain in living standards. One interesting implication of this is that the origin of sustained growth was associated, in large part, with the expansion of trade.... What is a fascinating question is how important trade was in sustaining sustained growth.... You could argue that the technological Industrial Revolution of the late 1700���s and early 1800���s was necessary to keep sustained growth going after trade got things started, and that technological innovation is still necessary for growth to continue indefinitely. But you could also argue that without trade creating growth to begin with, there never would have been an incentive to make those technological changes in the first place.... Did the Industrious Revolution trigger the Industrial Revolution?...

#noted #economichistory #berkeley

Davie: "0, 179, 465, 654���what is the next number in thi...

Davie: "0, 179, 465, 654���what is the next number in this series? Stephen Moore claims it is obvious, and gestures at it with an 'and so on'": "Davie's master is also blocked by paywall, but given the quote about 'compounding', Davie would diffidently suggest that the mathematical error is more basic: The sequence should read 179, 365, 554. That is, from the second number in the sequence on, Mr. Moore accidentally added 100 to the total. Davie has seen his master make similar errors while not recognizing them, under the influence of Alzheimer's-type dementia. Davie would therefore gently suggest that Mr. Moore be checked for dementia...

...Davie would also wonder if Mr. Moore is comparing apples to oranges. It would seem credible that Mr. Moore did something like compare the total deficit projected by the Congressional Budget Office over the next 10 years under entirely different assumptions to the total increase in GDP he is projecting. It appears that the correct approach would be to take the projected decrease in government tax revenue directly caused by the tax cut in any given year compared to, say, 2017, times the government borrowing rate in one-year T-bond equivalents (now above 2 %) and compare it to the government tax revenue generated by increased GDP (with a lag). Both sides of the comparison would be compounded in a 10-year comparison (because Mr. Moore assumes a one-shot tax effect), but the government tax deficit would be compounded by (1 plus the government borrowing rate), while the positive tax effect of increased GDP would be compounded by (1 plus the percentage increase of GDP due to the tax in 2018), which Mr. Moore seems to suggest is about 2 %). In other words, under reasonable assumptions, if the tax cut has a one-shot effect and has not been paid back in full via increased GDP in 2018, it is highly likely the deficit will continue to increase over the next 8 years.

But what does Davie know? Davie is only a cat...

#commentoftheday

Yet another Polanyiesque critique of the modern neolibe...

Yet another Polanyiesque critique of the modern neoliberal order: Wolfgang M��nchau: The Crisis of Modern Liberalism Is Down to Market Forces: "Kartte was an old-fashioned German ordoliberal.... The macroeconomics of German ordoliberalism is somewhat dodgy. But they excelled at one particular thing. Their intellectual leaders explained better than anyone else how the German liberal order of the 1920s collapsed and how it drove a majority of the population away from supporting it. The short, flippant answer is that the Weimar Republic favoured the big guy...

...When the ordoliberals finally came to power in postwar Germany, they began by tilting the playing field in the other direction by creating a corporate and financial infrastructure to support small and medium-sized companies. Germany���s Mittelstand is both a reason for German robustness, but also for stagnation. And one of the main lessons of modern economic history is we cannot be oblivious to the distribution of income and wealth. This is not an argument about redistribution. This is about actively managing capitalism���s playing field to ensure that the majority of the population stays on it....

What often leads the supporters and defenders of modern liberal democracy astray in their analysis is their addiction to macroeconomic aggregate variables such as gross domestic product and the officially recorded rate of unemployment. The decade before the Brexit referendum was a decade of reasonable GDP growth.... [But] household income after housing costs stagnated for the 60 per cent of households towards the bottom of the income distribution between 2002 and 2015. The current wave of discontent in France also contrasts with relatively solid GDP growth since the financial crisis. But a study by the McKinsey Global Institute showed that income growth came to an abrupt halt for almost all households in the advanced economies.... Any system that leaves behind 60 per cent of households will eventually fail. It is the ultimate irony: liberalism is failing because of market forces...

#noted

Delany Crampton: Veterans in the U.S. Labor Market Face B...

Delany Crampton: Veterans in the U.S. Labor Market Face Barriers to Success That Can and Should Be Addressed: "Anna Zogas of the University of Washington observes in her 2017 research that the U.S. military does an extremely effective job of training veterans to operate within the military and an extremely poor job of preparing them, especially young servicemembers, for post-military job...

#noted