Inequality Granger-causes growth

So say Andrews, Jencks and Leigh. For what that’s worth.

Help, Help! I’m being repressed!

I’m watching the re-re-renewed debate about academic bias against conservatives with a little more skin in the game this time around. Two facts about me: for some strange reason I’m considered conservative by my academic friends, especially by non-economists, and I have decided to take a job outside of academics. So clearly there’s bias in […]

Quit picking on Japan, part II

Will Wilkinson has been schooling the internets about division properly controlling for inflation when figuring real incomes, eliciting bored nods from those that have actually read Broda/Weinstein/Romalis (no links… too boring to write a post about) and confused indignation from those that want to talk about everything except real income inequality. Anyway, this prompted me […]

Quit picking on Japan!

Here’s the per capita GDP for the G8 countries (relative to the USA): You can take two lessons from this chart. 1) Japan hasn’t had bad monetary policy relative to, say, the continental European countries or 2) Monetary policy just doesn’t matter in the long-run Also, the more you stare at these real GDP per […]

The heartbeat of America

Here’s all the Jolts data (minus job openings): These are not seasonally adjusted so that’s why you get the inverted-U shape every year for the hiring and quits series and the inclined saw shape for firings. Still, you can see something happened the last two or three years. Firings (the pink line) spiked in early […]

Substitutability as default?

I’m jumping ahead of my own narrative, but why does it seem ingrained in people (including economists) that immigrants must be competing with native workers? Why is complementarity so much more unlikely in people’s priors? We don’t have this bias when it comes to new technologies. In fact, we have the opposite bias. Despite the […]

A story that never gets old

Or does it?

What is a catastrophe?

In the previous post, I mentioned two types of catastrophe: cliff-diving and gradual. Suppose the first is a sudden major decrease in output. How much would returns to capital have to decline to get 1% average yearly returns over a century (given 6% “usual” returns)? This is the solution to this problem: If I got […]

But innovation is endogenous, too

Risk aversion usually makes investments look less attractive. In the standard story, then, as risk aversion goes up, we would spend less money today to avert future catastrophes. Martin Weitzman argues, however, this relationship reverses when we’re uncertain about future productivity levels. For if it turns out that productivity is low in the future (e.g. […]

The problem with Economists

We have an incomprehensible, to most, outside-in view of the world. David Friedman says something correct but incomprehensible: Climate aside, we do not live in a static world—consider the changes that have occurred over the past century. The shifts we can expect to occur due to technological progress alone, even without allowing for political and […]