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What explains the rise in job vacancies? A reply to Ashok Rao
Ashok Rao has a post highlighting JOLTS data that shows that despite a steady rise in job openings since 2009, hiring has pretty much been flat. In particular, this graph (blue is openings, red is...
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Fed independence is important – examples from history
When Larry Summers was still a candidate for Fed Chair, and the econoblogosphere was still debating whether or not he ought to be nominated, it became oddly fashionable to argue that it would be a good...
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Stylized facts versus statistical tests
From Matt Rognlie, an interesting point: "A few years ago, I read an aside in Stiglitz’s Nobel autobiography that really shook me: Economists spend enormous energy providing refined testing to their...
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Updated Romer and Romer (2004) Measure of Monetary Policy Shocks
I’ve updated the Romer and Romer (2004) series of monetary policy shocks. The main takeaway is this graph of monetary policy shocks by month, since 1969, where the gray bars indicate recession: When...
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Updated Romer and Romer (2008): Or, the FOMC is Still Bad at Forecasting – In...
In 2008, Christina and David Romer published an interesting paper demonstrating that FOMC members are useless at forecasting economic conditions compared to the Board of Governors staff, and presented...
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Thoughts on Secular Stagnation (Eggertsson and Mehrotra 2014)
Some thoughts on Eggertsson and Mehrotra (2014), the first formalization of the “secular stagnation” thesis. Nothing innovative here, I just wanted to collect my thoughts all in one place. Model...
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Using the Solow model to understand why land is important for (the lack of)...
I found an interesting 1970 AER paper that adds land to the Solow model in continuous time and verifies the result, discussed last week, that as the rate of return on capital approaches the growth rate...
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A practical critique of NGDP targeting
Summary: NGDP growth is equal to real GDP growth plus inflation. Thus, under NGDP targeting, if the potential real growth rate of the economy changes, then the full-employment inflation rate changes....
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Would Greece still not have independent monetary policy even if it leaves the...
JP Koning makes the case that even if Greece were to leave the Eurozone and institute a new currency (call it the New Drachma), Athens would still not have independent monetary policy: if households...
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Can the natural rate of interest be negative?
I comment on Josh Hendrickson's interesting post. While it certainly is hard for me to believe that the natural rate of interest could be negative, it's difficult to find a satisfying alternative...
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The Fed’s preferred model says that now is not the time to raise rates
Until very recently – see last month’s WSJ survey of economists – the FOMC was widely expected to raise the target federal funds rate this week at their September meeting. Whether or not the Fed should...
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What I've been reading
In the spirit of Tyler Cowen, I’ve decided to do 1-3 sentence book reviews. Without further ado: What I've been reading, November 2015: Fischer Black and the Revolutionary Idea of Finance, by Perry...
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Loss aversion is not what you think it is
Behavioral economists have a concept called loss aversion. It’s almost always described something like this: “Loss aversion implies that one who loses $100 will lose more satisfaction than another...
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Stylized facts versus statistical tests
From Matt Rognlie, an interesting point: "A few years ago, I read an aside in Stiglitz’s Nobel autobiography that really shook me: Economists spend enormous energy providing refined testing to their...
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Monetary misperceptions, food banks, and NGDP targeting
I. Marx vs. Smith and food banks When Heinz produces too many Bagel Bites, or Kellogg produces too many Pop-Tarts, or whatever, these mammoth food-processing companies can donate their surplus food to...
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NGDP targeting and the Friedman Rule
This post continues the discussion from Scott Sumner’s thoughtful reply to my critique of NGDP targeting from 2015. (Note to frequent readers: I previously published a reply to Scott, which I have...
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Yes, markets are efficient – *and* yes, stock prices are predictable
The Efficient Market Hypothesis (EMH) was famously defined by Fama (1991) as “the simple statement that security prices fully reflect all available information.” That is, you can’t open the Wall Street...
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Behavioral biases don’t affect stock prices
Most people are probably somewhat overconfident. Most people – myself surely included – probably typically overestimate their own talents, and they (we) are overly confident in the precision of their...
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The "Efficient Restaurant Hypothesis": a mental model for finance (and food)
I. The efficient market hypothesis says that you can’t pick out which stocks are undervalued versus which are overvalued. Likewise, I claim that you can’t pick out which restaurants are underpriced...
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NGDP futures via blockchain: Market monetarism meets cryptocurrency (And: how...
Scott Sumner has famously proposed that the Fed stabilize monetary policy by pegging nominal GDP futures contracts in such a way to ensure that expectations for nominal income growth remain steady. For...
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