Foreclosure deadweight?

Mike suggested for those interested in the foreclosure issue this paper. That paper says this paper estimates the deadweight costs of foreclosures. No it doesn’t ((This is one of those cases where something is so blindingly obvious that I think to myself that I must be missing something at a fundamental level. If this is […]

Hints about the stochastic discount factor

Its a great mystery (if you assume asset return volatility is all that matters) why investors don’t hold more stocks. Sharar Pitaru at the neat new investment tool Plantly, says: Yes, in general our rationale might lead to a greater investment in bonds then the ‘80/20 rule’ calls for. I’d suggest that the 80/20 rule […]

A model

Blanchard and Gali (2008) incorporate unemployment into the standard model. They have some interesting findings, but this one stuck out: This is the response of the unemployment rate over time to a 1% decrease in productivity of the economy (a “real” shock) WHEN the Fed has a inflation-only target (i.e. it doesn’t care about unemployment). […]

EMH and “The Market”

In comments, Mike linked to one of his posts from a couple months ago where he quotes William Easterly: The most important part of the much-maligned Efficient Markets Hypothesis (EMH) is that nobody can systematically beat the stock market. Which implies nobody can predict a market crash, because if you could, then you would obviously […]