Tuesday, April 07, 2009
LUCAS: Do I need the Lucas critique for -- I'm with Barro is the short answer. (Laughter.) The Moody's model that Christina Romer -- here's what I think happened. It's her first day on the job and somebody says, you've got to come up with a solution to this -- in defense of this fiscal stimulus, which no one told her what it was going to be, and have it by Monday morning.
So she scrambled and came up with these multipliers and now they're kind of -- I don't know. So I don't think anyone really believes. These models have never been discussed or debated in a way that that say -- Ellen McGrattan was talking about the way economists use models this morning. These are kind of schlock economics.
Maybe there is some multiplier out there that we could measure well but that's not what that paper does. I think it's a very naked rationalization for policies that were already, you know, decided on for other reasons. I don't -- I'd like to talk about the Lucas critique but I don't -- I don't think we can -- (chuckles) -- deal with that issue. "
LOL, I wonder if Christy R. got the license plate of that bus as it ran over her. The whole transcript of Lucas' talk is here.
This from a fascinating new NBER working paper by Munshi & Rosenzweig.
These folks have already made up their minds!
UPDATE!!!!! And they were right in as much as Fujimori was indeed convicted:
"A special tribunal convicted former Peruvian President Alberto Fujimori of murder and kidnapping on Tuesday for death squad activities during his 10-year rule during the 1990s.
"This court declares that all four charges have been proven behind all reasonable doubt," presiding judge Cesar San Martin told a hushed courtroom.
There was no question, he said, that the 70-year-old Fujimori authorized the creation of a military death squad that killed some 50 people.
Fujimori apparently anticipated a guilty verdict. He sat alone taking notes as the verdict was read after a 15-month televised trial.
He faces a maximum of 30 years in prison and the court was expected to issue a sentence later Tuesday after a full reading of the sentence.
Fujimori is the first democratically elected former president to be tried for rights violations in his own country. His lawyers have said he would appeal the verdict."
Monday, April 06, 2009
2. If the state of Oklahoma is so homophobic, why does OU have a "Gaylord College"? Heck we even have an organization called the "Gaylord Ambassadors"!
3. Why are grown men trying to play baseball when it's cold and snowy? It was 37 in Cincinnati, 42 in St. Louis and the White Sox home opener was postponed due to snow.
The saluation, "Dear Wacko", is probably accurate in my case. But I doubt that it is effective for the purpose the spammer has in mind.
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Saturday, April 04, 2009
"Mr. Speaker, I rise to make an ass of myself"
"The gentlelady is recognized for 5 minutes"
I recently posted about the amazingly ignorant response of many US Representatives about the notion of the dollar being replaced as the major reserve currency in the world. They responded with a resolution calling for a constitutional amendment that would disallow a foreign currency replacing the dollar as LEGAL TENDER in the USA. Oooops!
Anyway Mary Fallin is a co-sponsor of this resolution. It isn't the first weird, nut-jobby deal she's co-sponsored either . Remember Ron Paul's "issue" of how NAFTA was going to create a superhighway across the USA from Mexico to Canada? She co-sponsored the resolution Rep. Virgil Goode introduced against that clear and present danger to the body politic back in 07.
According to ace political blogger Brendan Nyhan, only 12 representatives share the dubious distinction of co-sponsoring both of these gems of legislation and our Mary is one of them. We are so proud!
Here is the full hall of shame:
Michelle Bachmann (R-MN)
Spencer Bachus (R-AL)
Roscoe Bartlett (R-MD)
Paul Broun (R-GA)
John Culberson (R-TX)
Mary Fallin (R-OK)
Virginia Foxx (R-NC)
Trent Franks (R-AZ)
Phil Gingrey (R-GA)
Darrell Issa (R-CA)
Walter Jones (R-NC)
Thaddeus McCotter (R-MI)
Ron Paul (R-TX)
Zach Wamp (R-TN)
People, can this be real?? Zach Wamp?? Thaddeus McCotter??? Roscoe Bartlett?? Is this the US Congress or the Dukes of Hazard??
I first met Gordon when, as a new PhD candidate, I went on a job interview at GMU (it helps the story to remember that this was 1984, pre-Google, y’all!). I began my seminar with a discussion of why my topic was interesting/important, and then moved to a literature review. When I finished the review, Gordon raised his hand and asked “Is that it?” I replied that while I had all of my own work yet to talk about, that, yes, that was it for the lit review. To which Gordon said, “Well then we may as well stop the seminar right now because you don’t even know the literature in your own field. You are completely ignoring the most important paper”. Yikes!! About a million thoughts race through my mind and I decide to go humble and see what happens, so I say that I’m very sorry for the omission, and would he please give me the citation to the paper so that I could find it and incorporate it into my work. Gordon’s answer was this: “The paper is in my desk drawer, it was submitted to Public Choice last week”. To which I replied “Man, I am so dumb, of course any good literature review should start in Gordon’s drawers.” I got the job, and Gordon was always a strong (though sarcastic) supporter of me and my work.
There will be tables and chairs
Pony rides and dancing bears
There'll even be a band
'cause listen after the fall there'll be no more countries
No currencies at all
We're gonna live on our wits
Throw away survival kits
Trade butterfly knives for adderal
And that's not all
There will be snacks, there will
There will be snacks!
--Andrew Bird, 2005
Friday, April 03, 2009
Thursday, April 02, 2009
The ex CU Professor "won" his wrongful dismissal case against the University, which after deciding they couldn't directly fire him because of his 9/11 "little Eichmanns" essay, fired him later on some various academic misconduct charges they dug up.
I put won in quotes because Ward was awarded $1 in damages.
Ward said that he didn't ask for money and was happy, but his attorney had asked the jury to send a message via a monetary judgment against the University.
There is another hearing coming to see if Churchill will get his job back.
Is this a great country, or what?
Sadly I can't find an ungated version, so I will quote at length from the introduction:
This work presents a simple New-Keynesian model illustrated by Aggregate Demand (AD) and Aggregate Supply (AS) graphical analysis. In its simplicity, the framework features most of the main characteristics emphasized in the recent literature. The AD and AS equations are derived from an intertemporal model of optimizing behavior by households and firms respectively.
The AD equation is derived from households’ decisions on intertemporal consumption allocation. A standard Euler equation links consumption growth to the real interest rate, implying a negative correlation between prices and consumption. A rise in the current price level increases the real interest rate and induces consumers to postpone consumption. Current consumption falls.
The AS equation derives from the pricing decisions of optimizing firms. In the
long run, prices are totally flexible and output depends only on real structural factors. The equation is vertical. In the short run, however, a fraction of firms keep prices fixed at a predetermined level, implying a positive relationship between other firms’ prices, which are not constrained, and marginal costs, proxied by the output gap. The AS equation is a positively sloped price-output function.
As in Keynesian theory, the model posits some degree of short-run nominal rigidity. Nominal rigidity can be explained by the fact that price setters have some monopoly power, so that they incur only second-order costs when they do not change their prices. In the long run, the model maintains the classical dichotomy between the determination of nominal and real variables, with a vertical AS equation.
The analysis is consistent with the modern central banking practice of targeting
short-term nominal interest rates, not money supply aggregates. The mechanism of transmission of interest rate movements to consumption and output stems from the intertemporal behavior of the consumers. By moving the nominal interest rate, monetary policy affects the real interest rate, hence consumption-saving decisions.
This simple framework allows us to analyze the impact of productivity or mark-up disturbances on economic activity and to study alternative monetary and fiscal policies. In particular, we can analyze how monetary policy should respond to various shocks. That is, a microfounded model yields a natural objective function that monetary policy could follow in its stabilization role, namely the utility of consumers. This objective is well approximated by a quadratic loss function in which policymakers are penalized, with certain weights, by deviating from a price-stability target and at the same time by the fluctuations of output around the efficient level. In the AS-AD graphical plot, optimal policy simplifies to just an additional curve (labelled IT for “Inflation Targeting”)
seems pretty cool. Here is an interesting tidbit given our current policy debates:
The impact of the fiscal multipliers on output and the output gap can be quantified showing that a short-run increase in public spending has a multiplier less than one on output and a much smaller multiplier on the output gap.
Wednesday, April 01, 2009
Hat tip to LeBron!