You are currently browsing the tag archive for the ‘economics’ tag.
I saw this at one of my regular lunch spots in downtown Evanston today:
They are offering $125 gift certificates at the price of $100. Should you take it? The answer is after the jump.
I watched his announcement today. I wrote an outline of what he said (mostly through gritted teeth):
here is what we think.
we have to do something big.
here is what we will do.
we will allow the american people to see what we do.
here are three more things we will do.
1. stress tests for banks.
2. we will make partnerships with private entities to buy bad assets. we don’t have a plan yet about how.
3. we will make more credit available. a big part of this is aimed at housing but we dont have a plan about what to do about that yet.
we are working with chris dodd and barney frank.
here are my two simple ways of thinking about fiscal stimulus.
from the perspective of the stimulee: the federal government is right now the cheapest source of capital. in fact capital has never been cheaper. the treasury can borrow at record low interest rates. unfortunately the banking system is not doing its job as an intermediary channeling this credit to the bridge-builders. so the bridge-builders effectively borrow directly from the source by accepting stimulus dollars and promising to pay them back in the future with taxes.
(of course there is a wedge between the amount i receive in stimulus ($X) and the amount I pay in taxes ($X/N) and this makes me inefficiently eager to accept it. this is why stimulus should focus on public projects where the benefits are dispersed equally.)
from the perspective of government. we accept that there are things government should be producing, in particular public projects where the benefits are dispersed equally. the government has flexibility in the timing of these investments. since the investment requires coupling labor with the government’s capital, the optimal timing is during times of (otherwise) unemployment when labor is relatively cheap.
so we don’t have to think about multipliers and we don’t have to think about Keynesian effective demand. The government acting optimally to smooth expenditures should spend a lot now. Yes, it means spending must be correspondingly reduced in the future and critics would worry that this won’t happen. But there will come a time when interest rates are higher and it is more costly for the government to borrow and under pretty much any theory you have of how spending is determined, at the margin at least, that will have the effect of reducing spending.
Joking. Its a huge development for economics and open access publishing: the Econometric Society and the Society for Economic Theory have agreed to bring the journal Theoretical Economics into the ES fold. A little background: about three years ago, these people had the bold plan to launch a new field journal for economic theory and to make it free in every sense of that word. We wanted to show that an open access journal could also be a top journal.
The Econometric Society has recognized our success and is seeing the light on open access. What better way to bring open access to the mainstream than to become the field journal of one of the oldest and most respected professional societies in economics.
I think one of the most entertaining ironies of this experience is that now economics (you know: laissez faire, maximize profits, invisible hand) is one of the very few disciplines which has a top journal that is fully open access.
Here is the announcement.
Cheap Talk 