Wednesday, April 01, 2009

Reason #37 to abolish the IMF

Because then we wouldn't have to put up with this foolishness:

"Irrational Exuberance in the Housing Market: Were Evangelicals left behind?" is a 30 page official IMF working paper vetted and approved for distribution by the IMF bureaucracy.

It's just so awesome:

The recent housing bust has reignited interest in psychological theories of speculative excess (Shiller, 2007). I investigate this issue by identifying a segment of the U.S. population— evangelical protestants—that may be less prone to speculative motives, and uncover a significant negative relationship between their population share and house price volatility. Evangelicals’ focus on Biblical prophecy could account for this difference, since it may enable them to interpret otherwise negative events as containing positive news, dampening the response of house prices to shocks. I provide evidence for this channel using a popular
internet measure of “prophetic activity” and a 9/11 event study.

Look, I know college professors write weird papers; I once wrote a piece (with Bob Tollison) titled "Arbitrage in a Basketball Economy"! But we were trying to make an economic point, namely that managerial tenure was tied to performance in the NBA, so probably it was in the "real world" as well. We used the NBA because we thought it was possible to measure managerial performance there (by how shots were allocated).

What is the possible policy implication of this study? That we needed a lot more evangelicals in Las Vegas and Miami and Phoenix? That we should all learn how to speak in tongues? To me the obvious policy implication is that we should ABOLISH THE IMF!!!

Hat tip to LeBron!

1 comment:

Tom said...

You made that #37?

Now I have to renumber the rest of the list.

It'll take all day.

//You WOULD find that link on April Fools Day. Now I have to wonder.