Comments on: The Economist doesn’t understand marginal analysis http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/ Sharpening my knife Sun, 25 Jul 2010 21:20:03 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Angry at the Margin http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7702 Angry at the Margin Thu, 06 Aug 2009 00:07:43 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7702 I really don't know. I was trying to say that I think of UI as relevant to trend/mean unemployment (e.g. the buttload of a literature on EU vs. US trend rates) and maybe less for movements at cyclical fluctuations, but you're right, in a fully specified model you probably can't break it down that way. I really don’t know.

I was trying to say that I think of UI as relevant to trend/mean unemployment (e.g. the buttload of a literature on EU vs. US trend rates) and maybe less for movements at cyclical fluctuations, but you’re right, in a fully specified model you probably can’t break it down that way.

]]> By: pushmedia1 http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7701 pushmedia1 Wed, 05 Aug 2009 20:21:14 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7701 Angry, in the search/matching literature is there a distinction made between frictional and cyclical unemployment? Just curious how those two things are modeled. Angry, in the search/matching literature is there a distinction made between frictional and cyclical unemployment? Just curious how those two things are modeled.

]]> By: Unemployment Insurance and Unemployment « Rortybomb http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7700 Unemployment Insurance and Unemployment « Rortybomb Wed, 05 Aug 2009 08:20:25 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7700 [...] seems entirely correct to me. Will Ambrosini takes issue: Strange for a magazine with such a name that they don’t know about Alfred Marshall and his [...] [...] seems entirely correct to me. Will Ambrosini takes issue: Strange for a magazine with such a name that they don’t know about Alfred Marshall and his [...]

]]> By: Angry at the Margin http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7698 Angry at the Margin Wed, 05 Aug 2009 04:30:59 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7698 There's another, more credible, argument for efficiency, within a search-and-matching framework. Without (with less) UI workers will more willing to accept a relatively worse match and the average, economy-wide quality of matches will decrease. With (more) UI, you get (a) more unemployment; and (b) better matches. With regular functional forms and standard assumptions, there's going to be a range over which the social cost implied by (a) is less than the social benefit that comes from (b). This is, of course, all about frictional (and not "cyclical") unemployment... There’s another, more credible, argument for efficiency, within a search-and-matching framework. Without (with less) UI workers will more willing to accept a relatively worse match and the average, economy-wide quality of matches will decrease. With (more) UI, you get (a) more unemployment; and (b) better matches.

With regular functional forms and standard assumptions, there’s going to be a range over which the social cost implied by (a) is less than the social benefit that comes from (b).

This is, of course, all about frictional (and not “cyclical”) unemployment…

]]> By: piero.sraffa http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7697 piero.sraffa Wed, 05 Aug 2009 04:27:50 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7697 I see it now. The paragraph in the body is less clear, he doesn't seem to support UI at all. The implication that extending UI benefits will have measurable effect on the depth of the recession is still ridiculous. Does anyone really think that ending UI will mean any more jobs will be created? Can labor supply meet non-existent labor demand? I don't really get why Casey Mulligan prefers to focus on minor factors like UI and mortgage modifications (mortgage modifications which are not actually happening http://www.msnbc.msn.com/id/32281959/ns/business-real_estate/), while downplaying things like, say, a banking crisis: "The non-financial sectors of our economy will not suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated." http://www.nytimes.com/2008/10/10/opinion/10mulligan.html Has Casey Mulligan been right about anything? I see it now. The paragraph in the body is less clear, he doesn’t seem to support UI at all.

The implication that extending UI benefits will have measurable effect on the depth of the recession is still ridiculous.

Does anyone really think that ending UI will mean any more jobs will be created? Can labor supply meet non-existent labor demand?

I don’t really get why Casey Mulligan prefers to focus on minor factors like UI and mortgage modifications (mortgage modifications which are not actually happening http://www.msnbc.msn.com/id/32281959/ns/business-real_estate/), while downplaying things like, say, a banking crisis:

“The non-financial sectors of our economy will not suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated.”

http://www.nytimes.com/2008/10/10/opinion/10mulligan.html

Has Casey Mulligan been right about anything?

]]> By: pushmedia1 http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7696 pushmedia1 Wed, 05 Aug 2009 03:52:13 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7696 Look at the list of policies he's talking about... "hike" and "extension" are common verbs seen in the list. He's talking about increases in these programs. He hasn't proposed their elimination. Look at the list of policies he’s talking about… “hike” and “extension” are common verbs seen in the list. He’s talking about increases in these programs. He hasn’t proposed their elimination.

]]> By: piero.sraffa http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7695 piero.sraffa Wed, 05 Aug 2009 03:38:59 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7695 I don't see the marginal analysis there. He is saying that unemployment benefits prolong unemployment, not that marginal unemployment benefits prolong unemployment.: "I don't quite understand this obsession with UI-apologetics, because UI (unemployment insurance) is just one of many policies that collectively (and some by themselves) create terrible incentives:" I can't see where Casey Mulligan supports a single dollar of unemployment benefits. I don’t see the marginal analysis there. He is saying that unemployment benefits prolong unemployment, not that marginal unemployment benefits prolong unemployment.:

“I don’t quite understand this obsession with UI-apologetics, because UI (unemployment insurance) is just one of many policies that collectively (and some by themselves) create terrible incentives:”

I can’t see where Casey Mulligan supports a single dollar of unemployment benefits.

]]> By: A Tale of Marginal Analysis « The Everyday Economist http://www.ambrosini.us/wordpress/2009/08/the-economist-doesnt-understand-marginal-analysis/comment-page-1/#comment-7693 A Tale of Marginal Analysis « The Everyday Economist Wed, 05 Aug 2009 03:15:25 +0000 http://www.ambrosini.us/wordpress/?p=1152#comment-7693 [...] course, this prompted a response from Will Ambrosini: “The Economist doesn’t understand marginal analysis.” [...] [...] course, this prompted a response from Will Ambrosini: “The Economist doesn’t understand marginal analysis.” [...]

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