Sunday, November 30, 2008
#446: dear gentlemen...
via eastsidebride.
thanks for agreeing to stand by mr. tto as he commits to yours truly for the next 100 years of his life. good luck mr. tto.
we will not be going the traditional route of renting tuxes. please don your own black suit, white shirt, and black shoes. we will supply the tie.
if you don't have a black suit, let me know and we'll figure something out.
the soon-to-be-mrs.
The Next Team
What would you call a group of economists who are skeptical of regulating mortgage markets, who think unemployment insurance and unions increase unemployment, who say that tax hikes retard economic growth, and who believe that the recovery from the Great Depression was a monetary phenomenon rather than the result of New Deal fiscal policy?
No, it is not a right-wing cabal. It's Team Obama.
Here's the evidence:
These quotations also make me a bit surprised we have not heard more complaining from the left-wing of the Democratic party. But that may be still to come.
No, it is not a right-wing cabal. It's Team Obama.
Here's the evidence:
All points well taken. Indeed, quotations like these make me pleased with recent economic appointments. I just hope that the above lessons make their way into the President-elect's briefing memos and that he is persuaded by them.When Senator Christopher J. Dodd, Democrat of Connecticut, gave his opening statement last week at the hearings lambasting the rise of �risky exotic and subprime mortgages,� he was actually tapping into a very old vein of suspicion against innovations in the mortgage market.....Congress is contemplating a serious tightening of regulations to make the new forms of lending more difficult. New research from some of the leading housing economists in the country, however, examines the long history of mortgage market innovations and suggests that regulators should be mindful of the potential downside in tightening too much.
Unemployment insurance also extends the time a person stays off the job. Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months. If unemployment insurance were eliminated, the unemployment rate would drop by more than half a percentage point, which means that the number of unemployed people would fall by about 750,000. This is all the more significant in light of the fact that less than half of the unemployed receive insurance benefits, largely because many have not worked enough to qualify.
Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment. Between 1970 and 1985, for example, a state with a 20 percent unionization rate, approximately the average for the fifty states and the District of Columbia, experienced an unemployment rate that was 1.2 percentage points higher than that of a hypothetical state that had no unions.
Tax changes have very large effects on output. Our baseline specification suggests that an exogenous tax increase of one percent of GDP lowers real GDP by roughly three percent.
--Christina Romer (writing with husband David)
Given the key roles of monetary contraction and the gold standard in causing the Great Depression, it is not surprising that currency devaluations and monetary expansion became the leading sources of recovery throughout the world....the new spending programs initiated by the New Deal had little direct expansionary effect on the economy.
These quotations also make me a bit surprised we have not heard more complaining from the left-wing of the Democratic party. But that may be still to come.
Job Market Signaling
Memo to new econ PhDs on the job market: Click here immediately to get some time-sensitive news from Al Roth's blog.
Everyone else: Ignore this post.
Everyone else: Ignore this post.
Saturday, November 29, 2008
#444: next week.
i'm throwing a baby shower for one of my dear friends.
it was planned last minute so there will probably only be about 8-10 people. i loves me an excuse to host an intimate get-together.
i was inspired by emily style and researched some new recipes. if i don't use these on the day of, i think i might just cook them up for the fiance.
baked egg custard with gruyere and chives
quick sausage and mushroom lasagna
lentil soup with italian sausage and escarole
steak with parmesan butter balsamic glaze and arugula
sweet potato and kim chi pancakes
beet and goat cheese tartines
mixed berry and cassis sundaes
orzo with garbanzo beans, goat cheese and oregano
it was planned last minute so there will probably only be about 8-10 people. i loves me an excuse to host an intimate get-together.
i was inspired by emily style and researched some new recipes. if i don't use these on the day of, i think i might just cook them up for the fiance.
baked egg custard with gruyere and chives
quick sausage and mushroom lasagna
lentil soup with italian sausage and escarole
steak with parmesan butter balsamic glaze and arugula
sweet potato and kim chi pancakes
beet and goat cheese tartines
mixed berry and cassis sundaes
orzo with garbanzo beans, goat cheese and oregano
Lessons from the Crisis
As seen by Michael Spence.
Mike says a lot of smart stuff in this article. But this sentence seems to veer off in the wrong direction, or at the very least could be easily misinterpreted:
True, a few people were sounding an alarm in advance of the current crisis: Nouriel Roubini, in particular, comes to mind. And a few hedge funds have made money during the crisis. Yet that fact is not very meaningful. Given the diversity of opinion at any point in time, someone will always look right ex post. The key question is whether the event is reliably predictable ex ante.
Policymakers at the Fed and Treasury cannot do better than rely on the consensus judgment of experts, and a couple years ago the consensus opinion was not predicting anything like what is now occurring. To suggest a regulatory system that gives an "early warning" is like saying we need to find a better crystal ball. Good luck with that.
In my view, the key to regulatory reform is not trying to predict the future with more accuracy but, instead, making the system more robust so that the economy functions better when the unpredictable inevitably occurs. In other words, our focus needs to be not on what will happen but on what might happen.
Mike says a lot of smart stuff in this article. But this sentence seems to veer off in the wrong direction, or at the very least could be easily misinterpreted:
we need a commission of top industry professionals and academics to address the challenge of measuring and detecting systemic risk and provide the underpinning of an effective �early warning� system.I see little hope of creating any kind of "early warning" system, if by that Mike means better forecasting. Crises like the current one are inherently unpredictable. If they were predictable, hedge funds and other money managers would not lose so much money during them.
True, a few people were sounding an alarm in advance of the current crisis: Nouriel Roubini, in particular, comes to mind. And a few hedge funds have made money during the crisis. Yet that fact is not very meaningful. Given the diversity of opinion at any point in time, someone will always look right ex post. The key question is whether the event is reliably predictable ex ante.
Policymakers at the Fed and Treasury cannot do better than rely on the consensus judgment of experts, and a couple years ago the consensus opinion was not predicting anything like what is now occurring. To suggest a regulatory system that gives an "early warning" is like saying we need to find a better crystal ball. Good luck with that.
In my view, the key to regulatory reform is not trying to predict the future with more accuracy but, instead, making the system more robust so that the economy functions better when the unpredictable inevitably occurs. In other words, our focus needs to be not on what will happen but on what might happen.
Friday, November 28, 2008
#443: #1 or #2?
no, not that kind.
****************************************
i'm kind of really loving april right now for these two Loverly invitation designs. you know she's all sorts of awesome because the only criteria i gave her were my three words, this picture, and the fact that i like cursive.
and she created these beauties.
#1:
#2:
which would you choose?
p.s. i don't plan to include the above rsvp return cards. it will most likely just be a separate card with instructions to rsvp online and hotel info for our out-of-towners.
p.p.s. a real conversation:
me: oh...one thing i noticed...the first word is spelled incorrectly.
april: the repondez?...i double checked the spelling...i must be missing it...
an hour later.
me: i'm a complete loser. i totally thought it was supposed to be reSpondez.
april: no problem. have a great day!
moral of the story? she's really nice. and i don't know any french. mai oui!
****************************************
i'm kind of really loving april right now for these two Loverly invitation designs. you know she's all sorts of awesome because the only criteria i gave her were my three words, this picture, and the fact that i like cursive.
and she created these beauties.
#1:
#2:
which would you choose?
p.s. i don't plan to include the above rsvp return cards. it will most likely just be a separate card with instructions to rsvp online and hotel info for our out-of-towners.
p.p.s. a real conversation:
me: oh...one thing i noticed...the first word is spelled incorrectly.
april: the repondez?...i double checked the spelling...i must be missing it...
an hour later.
me: i'm a complete loser. i totally thought it was supposed to be reSpondez.
april: no problem. have a great day!
moral of the story? she's really nice. and i don't know any french. mai oui!
#440: mrs. lemon is cool.
read how to make her centerpieces here.
instead of plumerias (which are so gorgeous), i'm thinking maybe just a jewel colored dahlia or two at each table.
BECAUSE OF THE RIOTS...
in Bangkok, the international airport is closed! So instead of Thailand, I decided I'll visit Indonesia. I'll arrive on Saturday in Jakarta where I'll spend a few days and maybe swing by Bandung later on. I'm getting used to tropical heat, though. To be continued...
Time to Start Christmas Shopping
If you are looking for a gift for someone you think should learn a little economics, check out this new book by Nariman Behravesh. The book lives up to its subtitle: "A No-Nonsense, Non-Partisan Guide to Today�s Global Economic Debates."
Nariman Behravesh is chief economist at Global Insight, the economic analysis and forecasting firm that
evolved from Otto Eckstein's DRI and Larry Klein's Wharton Econometrics. About thirty years ago, Nariman was my boss, when I spent a summer as an intern at the Congressional Budget Office. I learned a lot working for him, and now, through this book, many other people can as well.
Nariman Behravesh is chief economist at Global Insight, the economic analysis and forecasting firm that
evolved from Otto Eckstein's DRI and Larry Klein's Wharton Econometrics. About thirty years ago, Nariman was my boss, when I spent a summer as an intern at the Congressional Budget Office. I learned a lot working for him, and now, through this book, many other people can as well.As I post this, the book is number 41,218 in the Amazon sales ranking. I hope a little free advertising on this blog manages to improve that a bit. It deserves to be much higher.
Update, same day, about 15 hours later: The book is now up to number 998 at Amazon. A nice demonstration of the power of the blogosphere.
Reallocating Resources
Bob Crandall and Cliff Winston of Brookings opine on the problems facing the auto industry:
In our judgment, based on experience elsewhere in American industry, the most constructive role the government can play at this point is to provide a short-term infusion of capital with strict repayment rules that will essentially require the auto makers to sell off their assets to other, successful companies.
Thursday, November 27, 2008
Redefining "grownup" and "hack"
In a post about the Obama economic team titled The Grownups are Coming, Paul Krugman writes:
But are they really in a different class than those in the previous administration? Based a standard ranking of economists' academic accomplishments as of October 2008, here is where these three stand (out of more than 18,000 economists), together with the rankings of all the CEA chairmen appointed by President Bush:
11. Larry Summers
21. Greg Mankiw
35. Ben Bernanke
99. Eddie Lazear
132. Glenn Hubbard
249. Harvey Rosen
391. Christy Romer
653. Austan Goolsbee
Judging by this objective criterion, it looks like the two adminstrations are drawing economists from roughly the same talent pool.
Of course, if one defines "grownup" as a person who agrees with Paul Krugman, and "hack" as a person who does not, then one might come to a different conclusion.
Seriously, isn�t it amazing just how impressive the people being named to key positions in the Obama administration seem? Bye-bye hacks and cronies, hello people who actually know what they�re doing.Like Paul, I am impressed by the new economic team. I know best the three economists coming from academia--Larry Summers, Christy Romer, and Austan Goolsbee--and they are all first-rate. They are excellent choices.
But are they really in a different class than those in the previous administration? Based a standard ranking of economists' academic accomplishments as of October 2008, here is where these three stand (out of more than 18,000 economists), together with the rankings of all the CEA chairmen appointed by President Bush:
11. Larry Summers
21. Greg Mankiw
35. Ben Bernanke
99. Eddie Lazear
132. Glenn Hubbard
249. Harvey Rosen
391. Christy Romer
653. Austan Goolsbee
Judging by this objective criterion, it looks like the two adminstrations are drawing economists from roughly the same talent pool.
Of course, if one defines "grownup" as a person who agrees with Paul Krugman, and "hack" as a person who does not, then one might come to a different conclusion.
Cooley on Human Capital
NYU economist Tom Cooley wants to Prime The Pump With Education Spending.
My one addendum: As we're doing this, let's not forget to buy a lot of textbooks.
My one addendum: As we're doing this, let's not forget to buy a lot of textbooks.
Wednesday, November 26, 2008
#438: go get them.
major giveaway on style me pretty.
"The set includes 100 invitations and response cards, each with printed envelopes, all letterpressed on 100% cotton bright white paper."
you have until friday to enter to win.
p.s. i myself doth had my invitations designed courtesy of april, multi-tasker-of-the-universe, of blu sky designs fame. more to come on this.
#437: call me.
i loved the SNL cheerleaders. cheri oteri + will ferrell = geniosity.
"call me!"
*****************************************
although my soon-to-be betrothed and i live together, if we weren't already, i'd order 100 of these nuggets with our new contact information and put them in a little basket at our wedding for guests to take.
"call us!"
the mandate press via black eiffel.
they've got that simple but bad-ass vibe with designs called "the secret agent" and "the pirate".
"call me!"
*****************************************
although my soon-to-be betrothed and i live together, if we weren't already, i'd order 100 of these nuggets with our new contact information and put them in a little basket at our wedding for guests to take.
"call us!"
the mandate press via black eiffel.
they've got that simple but bad-ass vibe with designs called "the secret agent" and "the pirate".
What's wrong with the efficient scale?
Reuters reports:
As all ec 10 students know, competitive markets push firms toward the efficient scale, defined as the level of production that minimizes average total cost. The low costs are in turn passed on to consumers in the form of low prices. These conclusions no longer hold true, however, if government policy tilts the playing field by rewarding small scale.
Update: Hal Varian's best-selling intermediate microeconomics textbook tells this story:
President-elect Barack Obama vowed on Tuesday to cut billions of dollars from wasteful government programs....An obvious example, Obama said, were reports of crop subsidies to farmers who make more than $2.5 million per year.Like President-elect Obama (but unlike candidate Obama), I am all for getting rid of farm subsidies. But why would you want to use taxpayer funds to encourage large, efficient, profitable farms to break up into smaller, less efficient, less profitable farms? Isn't that precisely what you do if you maintain subsidies only for small farmers?
As all ec 10 students know, competitive markets push firms toward the efficient scale, defined as the level of production that minimizes average total cost. The low costs are in turn passed on to consumers in the form of low prices. These conclusions no longer hold true, however, if government policy tilts the playing field by rewarding small scale.
Update: Hal Varian's best-selling intermediate microeconomics textbook tells this story:
Thanks, Hal, for sending this in.The Food Security Act of 1985 significantly restricted the payments to large farmers. As a result, the farmers broke up their holdings by leasing the land to local investors. The investors would acquire parcels large enough to take advantage of the subsidies, but too small to run into the restrictions aimed at large farmers. Once the land was acquired the investor would register it with a government program that would pay the investor not to plant the land. This practice became known as "farming the government.''...
Note that the ostensible goal of the program---restricting the amount of government subsidies paid to large farmers---has not been achieved.When the large farmers rent their land to small farmers, the market price of the rents depends on the generosity of the Federal subsidies.The higher the subsidies, the higher the equilibrium rent the large farmers receive. The benefits from the subsidy program still falls on those who initially own the land, since it is ultimately the value of what the land can earn---either from growing crops or farming the government---that determines its market value.
Tuesday, November 25, 2008
Income Elasticity of Mistress Demand
From the Wealth Report:
You know times are tough when the rich start cutting costs on their mistresses. According to a new survey by Prince & Assoc., more than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. Still, only 12% of the multimillionaire cheaters said they plan to give up on their lovers altogether for financial reasons.
#436: an essay.
i was asked to talk about my motives for starting the blog, about me, my fiance, and my personal process as it's been thus far. i responded to the person but thought it'd be fun to share the story with you as well.
*********************************************
i was working a finance job in l.a. when i met my fiance. 9 months into our relationship, i was promoted and offered a position in SF. and i decided to take it. future fiance was actively looking for another job at the time and decided to explore his options in SF. he ended up getting a great offer and we decided to move to SF together.
i happened to be a bridesmaid in 3 l.a. weddings that same year and ended up flying to l.a. at least once a month for bridal showers and bachelorette parties. i had also attended 7 weddings the year before. and i was starting to feel a bit like bill murray in groundhog day.
i witnessed a lot of the same things at the weddings - expensive dresses that looked the same, guests leaving pricey favors behind, bridal parties looking exhausted, rooms clearing immediately after dinner at the reception, and couples talking about their budgets and how much they did/didn't recoup through gifts.
and i made a few decisions.
1) i decided that i didn't want a cookie cutter wedding
2) i decided the fiance and i would pay for our own wedding
3) i decided i did not want any of our budget decisions influenced by how much we thought we would recoup
4) i decided i wanted the planning process (and day of) focused around the right things
in my gut, i knew my wedding would have to be different. not spectacular-over-the-top-different. more like...i-will-not-do-something-just-because-it's-standard-different.
without knowing much about the cost of 'all things wedding' other than knowing that my friends had spent upwards of $30,000 for their weddings, i decided that i would be comfortable with a $10,000 budget. i convinced myself that if i had the time to research and be creative, i could really make it happen. i knew there wouldn't be any obvious or easy solutions and i knew it would especially be a challenge because i'd have my own standards of satisfaction to meet...but i also knew there were a lot of things on wedding-checklists-as-of-late that i just didn't care about.
i kept these thoughts floating around in my head and never really talked about it.
until i moved. the move to SF is what really brought TTO to life. when i moved, i didn't have much to do other than my job. it was cold so i never wanted to leave the apartment, my family and friends were in l.a., and the fiance worked much longer hours than i did. i know. cry me a river, right? so i turned to the computer and began the research i had always wanted to do. i had known about weddingbee.com and read it religiously and through that site, linked to others in search of anything i thought would help me with my goal. i had the time. and no. i was not yet engaged.
TTO was supposed to be more of a journal than anything else. a place to help me keep my eye on the prize and organize all my research in one place. but, as you know, it's become much more than that. it's become a forum for me (and hopefully others) to gain support, face constructive criticism, and receive advice. and since TTO, i've gotten engaged and learned even more.
if you've read my blog for a while, you'll know i have an affinity for fashion, food, and travel aka i like expensive sh*t. and at the time when i started TTO, i was working really hard to spend really hard. meaning...i didn't not have the means to spend more than $10,000.
but it's funny how things work.
2 months ago, my fiance was offered a job opportunity in l.a. and we decided he should accept it. knowing we'd be moving back to l.a. from SF, i tried to transfer within my company but...as you know, the great world of finance isn't doing so hot and there wasn't a spot available for me. so with the fiance's support, i quit my job and we made the move.
i decided to take the opportunity of being unemployed (for the first time in my life!) to explore one of my 'passions'. and so now i'm in fashion. i'm clinging to the bottom rungs of the industry along with a 70% paycut, but still completely grateful to be experiencing it. *finally*
point being, the 'budget' aspect of our budget has become more prominent all of a sudden. and i appreciate TTO now more than ever.
have some of the choices i've made been a direct result of having TTO? i'd say most of them have.
and am i glad? i'd say i'm thrilled.
do i sometimes want to yell at people or hesitate about my choices when asked about "white wedding shoes" or "favors" or "flower girl dresses"? i'd say fo sho.
but then i remember that it's not about right and wrong. it's about what's right for you.
and what i've done so far in my wedding planning (both mistakes and successes) has been completely right for me.
*********************************************
i was working a finance job in l.a. when i met my fiance. 9 months into our relationship, i was promoted and offered a position in SF. and i decided to take it. future fiance was actively looking for another job at the time and decided to explore his options in SF. he ended up getting a great offer and we decided to move to SF together.
i happened to be a bridesmaid in 3 l.a. weddings that same year and ended up flying to l.a. at least once a month for bridal showers and bachelorette parties. i had also attended 7 weddings the year before. and i was starting to feel a bit like bill murray in groundhog day.
i witnessed a lot of the same things at the weddings - expensive dresses that looked the same, guests leaving pricey favors behind, bridal parties looking exhausted, rooms clearing immediately after dinner at the reception, and couples talking about their budgets and how much they did/didn't recoup through gifts.
and i made a few decisions.
1) i decided that i didn't want a cookie cutter wedding
2) i decided the fiance and i would pay for our own wedding
3) i decided i did not want any of our budget decisions influenced by how much we thought we would recoup
4) i decided i wanted the planning process (and day of) focused around the right things
in my gut, i knew my wedding would have to be different. not spectacular-over-the-top-different. more like...i-will-not-do-something-just-because-it's-standard-different.
without knowing much about the cost of 'all things wedding' other than knowing that my friends had spent upwards of $30,000 for their weddings, i decided that i would be comfortable with a $10,000 budget. i convinced myself that if i had the time to research and be creative, i could really make it happen. i knew there wouldn't be any obvious or easy solutions and i knew it would especially be a challenge because i'd have my own standards of satisfaction to meet...but i also knew there were a lot of things on wedding-checklists-as-of-late that i just didn't care about.
i kept these thoughts floating around in my head and never really talked about it.
until i moved. the move to SF is what really brought TTO to life. when i moved, i didn't have much to do other than my job. it was cold so i never wanted to leave the apartment, my family and friends were in l.a., and the fiance worked much longer hours than i did. i know. cry me a river, right? so i turned to the computer and began the research i had always wanted to do. i had known about weddingbee.com and read it religiously and through that site, linked to others in search of anything i thought would help me with my goal. i had the time. and no. i was not yet engaged.
TTO was supposed to be more of a journal than anything else. a place to help me keep my eye on the prize and organize all my research in one place. but, as you know, it's become much more than that. it's become a forum for me (and hopefully others) to gain support, face constructive criticism, and receive advice. and since TTO, i've gotten engaged and learned even more.
if you've read my blog for a while, you'll know i have an affinity for fashion, food, and travel aka i like expensive sh*t. and at the time when i started TTO, i was working really hard to spend really hard. meaning...i didn't not have the means to spend more than $10,000.
but it's funny how things work.
2 months ago, my fiance was offered a job opportunity in l.a. and we decided he should accept it. knowing we'd be moving back to l.a. from SF, i tried to transfer within my company but...as you know, the great world of finance isn't doing so hot and there wasn't a spot available for me. so with the fiance's support, i quit my job and we made the move.
i decided to take the opportunity of being unemployed (for the first time in my life!) to explore one of my 'passions'. and so now i'm in fashion. i'm clinging to the bottom rungs of the industry along with a 70% paycut, but still completely grateful to be experiencing it. *finally*
point being, the 'budget' aspect of our budget has become more prominent all of a sudden. and i appreciate TTO now more than ever.
have some of the choices i've made been a direct result of having TTO? i'd say most of them have.
and am i glad? i'd say i'm thrilled.
do i sometimes want to yell at people or hesitate about my choices when asked about "white wedding shoes" or "favors" or "flower girl dresses"? i'd say fo sho.
but then i remember that it's not about right and wrong. it's about what's right for you.
and what i've done so far in my wedding planning (both mistakes and successes) has been completely right for me.
SYDNEY - bye-bye australia, paddington, 11/25/08
Australia has been a brillant adventure. I found on this continent more uniqueness and personnal creativity that I would have expected and more that I usually find on most of my trips. In the match Sydney vs. Melbourne, I'm afraid not to be able to decide who's the winner. Both cities have got a high standard of refinement, just in two different ways. Conclusion, I'll be back here soon.
Competing Alliteration
Instead of fiscal stimulus that is temporary, targeted, and timely, John Taylor suggests that it be permanent, pervasive, and predictable.
What the Obama administration is aiming for, it seems, is helpful, hopeful, and humongous.
Critics fear it might end up pointless, political, and pork-filled.
-----
Update: A reader emails me that Larry Summers now calls for stimulus that is speedy, substantial, and sustained.
Other readers think it will be:
- big, bloated, and borrowed.
- immodest, immoral, and imbecilic.
- clumsy, corrupt, and counterproductive.
- expansive, extensive, and expensive.
- weighty, worrisome, and wayward.
- politicized, pandered, and pathetic.
- socialized, silly, and sorry.
- random, record-setting, and ridiculed.
- ultimate utilitarian utopianism.
- absolutely abjectly apocalyptic.
Monday, November 24, 2008
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$280,000 per job
The Washington Post reports:
Facing an increasingly ominous economic outlook, President-elect Barack Obama and other Democrats are rapidly ratcheting up plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years....Obama has set a goal of creating or preserving 2.5 million jobs by 2011.Dividing one number by the other, that works out to $280,000 per job.
What is going on here? Logically, it must be one of three possibilities:
1. The fiscal stimulus is going to be much smaller than is being reported.
2. The new administration is setting a low bar for itself when it comes to job creation.
3. The Obama team believes in very small fiscal policy multipliers.
Let me amplify the last point with a rough back-of-the-envelope calculation. The average weekly earnings of production and nonsupervisory workers is about $600, or about $60,000 over a two-year period. Granted, labor income is only about two-thirds of national income, and we have to add a few supervisors into the mix. So let's say each job created means $100,000 of extra national income. If we are generating $100,000 of income with $280,000 of government spending, the multiplier is only 100/280, or 0.36. By contrast, traditional Keynesian models suggest a multiplier closer to 2.0.
----
Update: Readers have sent me several suggestions for how to reconcile the multiplier numbers. First, annual GDP per worker is larger than the $50,000 figure implicit in the above calculation. Second, because of labor hoarding in downturns, the percentage change in GDP could be larger than the percentage change in employment. Third, part of Obama stimulus may take the form of tax cuts rather than spending hikes; the traditional Keynesian multiplier for a tax cut is about 1.2 rather than 2.0. Finally, as I noted in my original post, the Obama plan could well be less than $700 billion. All good points.
Sunday, November 23, 2008
#435: butter.
$349 butter by nadia dress via diy bride.
diy bride is having an "under $500 bridal ensemble contest". see all entries here.
p.s. speaking of butter, we took the challenge and we're making the butter version right now. can't wait to taste it.
#434: the placecards.
we've collected about four of these since i was first inspired to do so. and we have 6 months left to collect even more.
i was thinking about using them to make my invitations but, well, i don't need to anymore (more on this later).
however. i still need placecards. so i'm planning to cut up the cardboardish things to direct peoples to their tables.
and i'm pretty happy about it.
#433: "what are your favors?"
i was asked this question over the weekend.
and i didn't have an answer.
if i had space in my budget, i would have definitely thought a lot harder about what to give the guests as a parting gift. but i didn't. plus, i felt like a lot of favor ideas were done and done again. and what's unique about that. so i had kind of stopped thinking about it.
but now i'm seriously considering this whole favor thing again.
because i thought of something.
via lawrys.
why salt?! oh, i don't know. maybe this?
besides, couldn't everyone always use some extra spice? natch.
and i didn't have an answer.
if i had space in my budget, i would have definitely thought a lot harder about what to give the guests as a parting gift. but i didn't. plus, i felt like a lot of favor ideas were done and done again. and what's unique about that. so i had kind of stopped thinking about it.
but now i'm seriously considering this whole favor thing again.
because i thought of something.
via lawrys.
why salt?! oh, i don't know. maybe this?
besides, couldn't everyone always use some extra spice? natch.
FACEHUNTING IN SOUTHEAST ASIA
I'm gonna finally leave Amazing Australia on Wednesday and visit a few cities "nearby":
Nov. 26-28: Singapore
From Nov. 29: Bangkok
Hopefully I'll be able to survive to the heat...
Nov. 26-28: Singapore
From Nov. 29: Bangkok
Hopefully I'll be able to survive to the heat...
The Outlook
This figure, from Menzie Chinn, shows log real GDP, from 26 Sep 08 final release (red), from 30 Oct 08 advance release (blue), potential GDP (black), the mean forecast from the Wall Street Journal's October survey of forecasters (pink circle), and from the November survey of forecasters (teal triangle).
Real GDP a year from now is forecast to be about 5 percent below potential.
Saturday, November 22, 2008
Summers to the NEC
Larry Summers is going to be director of the National Economic Council.I wonder: What role will the Council of Economic Advisers have in the new Obama administration? And how will the CEA and NEC get along?
When I worked for President Bush as CEA chair, the NEC and CEA had distinct and complementary roles. The CEA was staffed by professional economists, many from academia, whose expertise was economic analysis. By contrast, the NEC was staffed by those with experience on Wall Street and Capitol Hill. The NEC's main role was to coordinate the policy process, to act as an honest broker, to make sure that all points of view were heard, and to facilitate discussion among the relevant departments so all felt they had a fair shot to make their case. Steve Friedman, formerly of Goldman Sachs, ran with NEC with impressive intelligence, humility, and diplomacy.
But the situation will likely be very different with Larry as head of the NEC, and perhaps Jason Furman as his deputy. Their skill set will overlap substantially with the three members of the CEA. In other words, the NEC and CEA will be more like substitutes than complements.
Only time will tell how well this alternative organizational structure will work.
News Flash
Wall Street Journal: Bankruptcy Is Option to GM Board
Associated Press: GM says board doesn't see bankruptcy as option
Associated Press: GM says board doesn't see bankruptcy as option
Treasuries as Negative Beta Assets?
As the above graph illustrates, the relationship between Treasury securities and inflation-indexed bonds has been very odd of late. The blue line is the yield on 5-year nominal Treasuries. The red line is the yield on 5-year inflation-indexed Treasuries.My colleague Robert Barro suggests a hypothesis:
Greg:
Had an interesting discussion with [xxxxx] about the odd recent behavior of indexed-bond rates. The basic idea is that, in the present environment, nominal Treasuries have a negative beta. If we go into Depression, the expectation is that this will be accompanied by substantial deflation, so that Treasuries will do well in real terms. In contrast, the typical pattern is different--perhaps bad times are usually accompanied by high inflation or at least average inflation. Therefore, especially at the shorter end, the relation between indexed and conventional Treasuries has shifted--the real rate on indexed bonds now has to be well above the expected real rate on nominal bonds. This observation also means, particularly at the shorter end, that the spread provides little information about expected inflation.
Of course, there are also liquidity stories, concerning the thinness of indexed bond markets. But I don't think this would apply particularly to shorter maturities. And the market has always been relatively thin.
Robert
Thanks, Robert.
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