Will Wilkinson has words for macro economists. He got me thinking about the political affiliations of macroeconomists. Here’s what I’ve found:
|Macroeconomist’s name ||IDEAS rank ||Political affiliation ||Views on fiscal stimulus |
|Robert J. Barro ||3 ||Republican?, no political appointments ||Tax-cuts not spending |
|Robert E. Lucas ||5 ||? ||Con, but concerned about sudden drop in consumption |
|Edward C. Prescott ||7 ||He signed a statment opposing Obama’s tax/trade policy ||? |
|Martin S. Feldstein ((Feldstein has a short NBER paper on fiscal policy (with no model) and he’s also written against Ricardian equivalence but he doesn’t usually write on macro stuff.)) ||8 ||“conservative” ||Pro, likes military spending |
|Daron Acemoglu ((Technically Acemoglu is a growth economist, but he writes about everything. EVERYTHING.)) ||10 ||? ||Con, worries about long term consequences |
|Olivier Blanchard ||13 ||? ||Pro |
|Mark L. Gertler ||14 ||? ||?, but he says monetary policy can still be effective |
|Thomas J. Sargent ||17 ||? ||Con |
|Lars E. O. Svensson ||21 ||? ||?, but has written on the effectiveness of monetary policy when interest rates are zero |
|N. Gregory Mankiw ||22 ||Republican ||Con |
|Jordi Galí ||25 ||? ||?, his research is the only legitimately modern macro that shows fiscal stimuls can work |
|Ben S. Bernanke ||33 ||Republican appointee ||His public statements are Pro, but I’m not sure what his private opinions are. His research is all money all the time. |
|Michael Woodford ||34 ||? ||?, but in a survey has said the consensus is “fiscal measures are not suitable for accurate ‘fine-tuning’, even if it is not agreed that they have little effect.” |
|John B. Taylor ||49 ||Republican appointee ||Pro, but has shown the recent tax rebate was ineffective at stimulus |
It seems most macro folks are conservative or Republican. The Gali paper on effective fiscal policy seems like it might be worth taking a look at.
You’ll notice Delong and Krugman (and Alesina, Becker, Cochrane, Fama, Murphy, and Zingales) are missing from this list of MACROeconomists. This is because they are not macroeconomists.
It seems to me the historians were calling the finance people boneheads for their ideas on macroeconomics. I wonder what the planetary scientists think about the exobiologist’s views on theoretical cosmology.
Are you an econ geek if you’re anticipating a GDP statistics release more than you did a history making presidential inauguration? Well, guilty as charged.
This Friday’s release has me giddy because we’ll have fourth quarter’s consumption expenditures numbers. If consumption is down big again its an indication that psychology matters and it would be evidence in favor of doing something to improve expectations (and the fiscal stimulus if you think it would reduce pessimism).
Bayesian update declaration: the early 90’s recession had two quarters of greater than 1.7% (annualized) consumption declines. If this quarter’s consumption decline is greater than 1.7%, then I will take it as evidence that psychology is playing a part. However, the other thing to take into account is that wealth has declined (via home prices). If people take this into account when making their consumption decisions, then the issue isn’t really “animal spirits” but rational changes in behavior due to new information. About 27% of wealth in 2007 was in housing ((See here, chart B100)). Assuming other assets remain constant in value, the 15-25% decline in housing prices since 2007 ((The Case-Shiller index shows 15% decline through October 2008. 25% is my high estimate of declines.)) corresponds to a 4-7% decline in wealth for 2008. Its not surprising, then, that consumption would fall by about those magnitudes. For updating then, an annualized decline between 1.7% and 5% will be moderate evidence that psychology matters. We’re deep in animal spirits territory if the decline is greater than 5%. BTW, the largest annual decline during the depression was nearly 9%.
Prof. Kenworthy publishes a list of links each month. The links are usually data heavy (yeah!) and occasionally come from sites on my blogroll but more often they come from somewhere “left” of it, e.g. Ezra Klein.
Anyway, there’s always something good like this exit poll that shows increasing support for goverenment intervention. Also, here’s a paper by Rebecca Blank discussing ways to improve economic statistics. I actually saw her present this paper last quarter here in Davis. She’s a pretty engaging speaker; been in Washington a long time and has a pretty good idea of how policy is actually made.
Some folks at Princeton have found, using panel data from England, that each additional inch in height is associated with 1.5-1.8% more wage income. Their suggested mechanism is having wealthy parents that feed their kids right and make sure they get more and better education leads to taller and better paid kids.
Its strange to me that to test the hypothesis that having wealthy parents leads to better economic outcomes, e.g. income, education, etc — a list of dependent variables that gets longer as Economics’ empire expands — these researchers had to use height data as a proxy for parental income. Economic historians often use height as a health, and thus an income, proxy because its very hard to find direct measures of wealth and income. This is an ok proxy because its plausible in the Malthusian period most variation in height was caused by variation in nutrition and its plausible that most of that variation was due to differences in wealth. In the modern context, most variation in height is due to genetic factors (I think… razib?) and I’m guessing most variation in nutrition are due to social factors (of which income group is one of many). Height, then, is a terrible proxy for parental income in the modern period.
For a modern test of this hypothesis, getting direct measures of parental income has to be a least as easy as getting height data. Why not directly test their hypothesis? At most, these guys have found evidence that doesn’t contradict their hypothesis. But random noise doesn’t contradict it either. Which is to say they haven’t moved me far from my priors.
Historians are bold with their findings, often telling a story of a long causal chain using a single correlation or two. I don’t mind it when they do this because they’re not working with much and not to mention, from my experience, it makes them colorful folk. Labor economists don’t and shouldn’t have this luxury.
Now that many supporters of the war have had their mea culpas, its appropriate — given the annealing process that is the transformation of public opinion to written history — for the pendulum to swing back towards the pro-war camp. Eric Posner:
The sanctions regime, which began in 1990, destroyed Iraq’s economy (reducing GDP by as much as three quarters) and impoverished millions of Iraqis. Particular attention was given at the time to its effect on children. The contemporary critics of the sanctions pointed out that before the sanctions began, the child mortality rate was about 50 per 1000; during the sanctions, on one accounting the rate soared to about 128 per 1000 (click on "basic indicators" here). More conservative estimates were in the range of a doubling of child mortality. Using the more conservative estimate, at one million births per year, this works out to an annual difference of 50,000 children surviving to the age of 5 (for various qualifications, see here). Today, the child mortality rate is below the pre-sanctions figure, and so every year in excess of 50,000 more Iraqi children survive than during the sanctions. The data are hotly contested but the trends are unmistakable and will continue to strengthen if security improves. Meanwhile, violent deaths of civilians, while still far too high, are declining; a very cautious estimate of 500-800 per month, based on the most recent reports on the Iraq Body Count website, is much lower than the avoided deaths of children compared to the sanctions regime. A conservative estimate is that more than 40,000 Iraqis survive per year today than during the sanctions regime, and probably most of them children. The tight correlation between GDP and child mortality across countries bolsters this conclusion.
Let’s suppose that the sanctions regime had continued for 10 years, from 2003 to 2013, and further that security flattens out—it doesn’t get worse, but it doesn’t get better. Under these assumptions, 400,000 Iraqi children would have died if the war had not occurred and the sanctions regime continued. Now, almost 100,000 Iraqis died during the war, and so one of the war’s benefits is that it saves the lives of 300,000 Iraqis (over 10 years).
Did I mention that I was against the war before I was for it and then abandoned the cause to only change my mind again?
This is the neatest graph I’ve seen in a while (from Davis et al 2006):
The bottom numbers are the hazard rates, e.g. if you’re employed, every month you have a 2.6% chance of getting a new employer, a 2.7% chance of leaving the labor force and a 1.3% chance of becoming unemployed.
Its interesting to see the IT industry’s reaction to the financial mess because technology expenditures are really sensitive to macroeconomic conditions ((This is one of those facts that I just know… I’m having a terrible time tracking down data to support this contention, though. The best I can do is to point at technology stocks’ high betas.)). This is a presentation a large venture capital firm gave its portfolio companies yesterday; lots of interesting data:
Someone should tell netflix — a service I otherwise adore to itty bitty pieces — that people watch movies at night:
I would have thought their market research would have picked up on that.