Friday, September 19, 2008

Crazy things I tell myself

I actually worked up the nerve to say this at dinner last night with colleagues and this week's seminar speaker, Matt Harding:

"Y'know, I think there's a better chance that Greenspan will go down in history as the worst Fed chair than that Bush will go down in history as the worst president."

Really, I do.

Here is a fun Greenie slam that includes this great quote from April 2005:

“Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending.”


Good news for Johnny Mac

NBA star Josh Howard enthusiastically endorses McCain for president:

Thursday, September 18, 2008

Tyrone don't play

For those of you who thought Tyler's alter ego Tyrone was just an imaginary friend, KPC has found video of Tyrone and he packs quite a punch.

Your Brazil roundup

Last month, Argentina beat Brazil in the Olympic soccer tournament and went on to win the gold medal which may have helped prompt Brazilian president Lula da Silva to say last week that the Argentine players had an awesome fighting spirit and that Argentina's Lionel Messi is the best player in the world.

Not surprisingly the Brazilian players didn't take too kindly to their Prez lauding their arch-rivals.

Here's goalie Julio Cesar (no I am not making that up): "He should go and live in Argentina, become an Argentine citizen, resign as president, and maybe Brazil will improve in some way or another," Cesar said. "The president doesn't think twice before speaking (taken from this article). "

Maybe Lula thought his remarks would fire up the Brazilian squad, but they didn't as Brazil recently tied lowly Bolivia 0-0, which then prompted Lula to opine that Brazil no longer has the best football in the world.

Meanwhile, Brazilian politicians are changing their names to Barack Obama in order to help win election (again, not making this up):

Finally, Lula gave soccer a break and has decided to give "logistical support" to Bolivian president Evo Morales' attempt to try and (re?) gain control of Bolivia's Pando province

Wednesday, September 17, 2008

Michael Kinsley: Almost as dumb as Donald Luskin?

Brad Delong and I agree on at least one thing: Donald Luskin is mighty dumb (see Brad here and me here). Now Slate's Mike Kinsley has ventured very near to Luskin territory in this piece.

He gives figures for inflation, unemployment and real per capita income growth from 1959 - 2007 which show better average performance under Democratic presidents than Republican presidents and uses this information to conclude that Democrats are better for the economy than Republicans.

Now people, you know I like gridlock, but I am not a Republican, and I believe that it is quite possible that Democrats are better for the economy than Republicans, but comparing sample averages does not provide any relevant information about who is better.

One reason is the potential of reverse causation. Suppose for example, that when the economy is going bad, voters turn to the Republican party to "fix" the problem, and when the economy is booming voters turn to Democrats to advance a non-economic agenda. If this is true then it's the economy is causing the party of the president, and it's not the party of the president causing the economy.

A second reason is the lack of a counterfactual. What we really need to know is if all circumstances were exactly the same except for the party of the president, would the outcomes differ, and if so, in what way. One way to impose the counterfactual would be to use a multiple regression and control for all the other relevant external factors that affect economic performance.

A third reason is that much responsibility for economic policymaking in the US resides with the Federal Reserve, which is supposedly independent from partisan politics, and even if they are not, presidents do not automatically get to pick a new FOMC when they take office.

Please don't read this as an apology for the Republicans. Read it as a plea for numeracy among our chattering class.

I need to fire my broker

Man oh man. Housing is in the toilet, uncertainty and risk are everywhere, and my broker keeps buying and buying housing related firms and financially troubled firms for my portfolio. It's too late for me, I think I am doomed. I sure hope none of you guys have put your money into the brokerage house of Bernanke, Paulson & Co.!!

Plus I must be some kind of moron because I appear to have signed a deal where they can made purchases on my account without my approval, I can't take my money out, and they can buy stuff now and finance it with claims on my future earnings!


Mungowitz, as your friend, I advise you to stay in Australia. Get your papers and then send for your family. I am looking for a way to get me, Mrs. Angus and Mr. Pluto across the border (Welcome to Tijuana, con el coyote no hay aduana!).

Tuesday, September 16, 2008

KPC Job Fair!

There are at least two kinds of jobs. One kind is where the wage is posted and known and if you are offered the job, it's take it or leave it at the posted wage. Another kind is where the wage is not explicitly posted and the prospective employee may be able to bargain with the employer over the wage. There are at least two kinds of workers. One kind is unemployed and looking for work. Another kind already has a job but is looking for something better.

Well, curiosity got the better of Bob Hall and Allen Krueger (H&K, ungated paper is here) so they went out and surveyed (probably the NSF paid a firm to have the survey done) around 1400 job acceptors to see what were the relative frequencies of the different types described above in the US labor force.

H&K found in both cases the split is fairly even. Between 22% and 54% (depending on the stringency of the definition of "knowing") knew in advance what the wage would be and that it was take it or leave it. Also, around 40% of the job acceptors reported that they could have stayed in their current jobs when they took a new one. They also find that taking a posted wage job is strongly negatively correlated with education.

With a brand new PhD in hand I thought my initial job at George Mason would be a bargaining type situation. HA. Here are a list of the things I asked for and was denied: more money, a course off, summer money, a computer (this was back in 1984), moving expenses. Once I got there, Jim Bennett found money for me to get a computer, and a couple years later Bob Tollison arrived at the Public Choice Center and hooked me up with generous summer money, but at the time I was stunned. After all I'm Scottish. We are the second greatest bargainers in the world (I have to give the honor of #1 to Moroccans)! I must have improved or made myself a more valuable commodity because ensuing jobs did involve bargaining and counter-offers.

However, one big difference was that in the GMU case I was unemployed when "bargaining" with them and in later cases I could have stayed at the job I eventually left.

Monday, September 15, 2008

Sticky Prices vs. Sticky Information: A False Dichotomy?

A new NBER working paper by Coibon and Gorodnichenko (C&G, ungated version here) suggests that the two approaches may be complements rather than subsitutes. The paper assumes that firms can follow one of 4 pricing schemes, a basic sticky price (Calvo) set up, a sticky information (Mankiw & Reis) regime, a full information flexible price regime and a rule of thumb regime. C&G then estimate the fraction of firms in these four regimes in the context of a more or less straightforward New Keynesian DSGE model.

C&G find that a combo of sticky price and sticky information firms in roughly equal proportions is best for matching the population moments they use to estimate their model. Rule of thumb and full information firms are estimated to be a small and not very important fraction of total firms.

This is a very cool paper. But that's not all on this front.

In a paper forthcoming in the Review of Economic Studies (ungated version here) Dupor, Kitamura, and Tsuruga consider a model where all firms face both a sticky price and sticky information scenario. They compare this dual stickiness model to both a pure sticky price and a pure sticky information model and find that data prefer the dual model. They also argue that the dual model fits the data better than a hybrid model that contains some sticky price and some rule of thumb firms.

It's like Reese's Cups people, you don't have to choose between peanut butter and chocolate!

Sunday, September 14, 2008

David Foster Wallace dies

Incredibly sad news that one of Mrs. Angus and I's favorite writers has taken his own life at age 46.
"Infinite Jest" would be on my list of the top 5 novels of the 1990s and his essays, especially "A Supposedly Fun Thing I'll Never Do Again" about the cruise ship experience and "Up, Simba" about the John McCain campaign of 2000 are superb. This is a tragic turn of events.