Maggie Thatcher on the Greek crisis
17 Jul 2015 Leave a comment
in applied welfare economics, budget deficits, comparative institutional analysis, constitutional political economy, currency unions, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy, income redistribution, macroeconomics, Marxist economics, Public Choice, rentseeking Tags: Greece, growth of government, Margaret Thatcher, size of government
How to argue for inequality and neoliberalism when arguing dead set against it
17 Jul 2015 Leave a comment
in economic growth, economic history, human capital, income redistribution, labour economics, labour supply, politics - New Zealand, poverty and inequality, Public Choice, rentseeking Tags: Leftover Left, neoliberalism, top 1%
On 12 August last, Closer Together New Zealand posted a chart showing average hourly wages had been stagnant for 20 years and then started growing again in 1993. Closer Together New Zealand then rounded up the usual suspects of the Left over Left.
Later that month in a comment on that post, a chart was posted showing that inequality had been increasing quite rapidly in the late 1980s and early 1990s in New Zealand. There were a range of economic reforms Closer Together New Zealand didn’t like in the late 1980s and early 1990s.
Closer Together New Zealand did not notice their second chart showed there had been a large increase in inequality, and their first chart showed that this was followed by the return of regular average hourly wages after 20 years of stagnation.
I am not so vulgar as to suggest correlation is causation, but it is amusing to watch that one day a chart is posted showing a resumption of wages growth after 20 years of wage stagnation and the next day a chart is posted showing that the major economic developments in the preceding years were a large increase in inequality and substantial economic liberalisation.
To add to my amusement, a companion site Inequality A New Zealand Conversation posted a chart showing the top 1% had not had much at all in income growth for the last 20 years while most everyone else had. This spike in the incomes of the top 1% prior to about 1994 was followed by the resumption in average wages growth after 1994.
What group has by far the lowest jobless rate?
17 Jul 2015 Leave a comment
in economics of education, human capital, job search and matching, labour economics, labour supply, occupational choice, unemployment Tags: College premium, compensating differentials, graduate premium, labour demographics
What group has by far the lowest jobless rate? College grads on.wsj.com/1Mtk8l9 http://t.co/27ft9qYjvz—
WSJ Central Banks (@WSJCentralBanks) June 05, 2015
If government “programmes have been doing very little to help children out of poverty”, what halved child poverty in the last 20 years? Economic growth?
16 Jul 2015 Leave a comment
in economic growth, labour economics, labour supply, minimum wage, politics - New Zealand, poverty and inequality, unemployment, welfare reform Tags: child poverty, family poverty, family tax credits, in-work tax credits, social insurance, welfare reform, welfare state
RNZ: Govt advised in 2013 "social mobility" approach won't materially address child poverty. rnz.to/1RwVWoj http://t.co/nfd2gY0qcH—
Alastair Thompson (@althecat) July 14, 2015
Figure 1: child poverty (%) in New Zealand (before and after housing costs), 1982 – 2013
Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), Tables F.6 and F.7.
Unemployment rates of immigrants and natives in OECD member countries
16 Jul 2015 Leave a comment
in job search and matching, labour economics, labour supply, unemployment Tags: economics of immigration, unemployment rates
John Cochrane on a big hole in the Greek bailout (and media analysis of the bailout)
15 Jul 2015 Leave a comment
in currency unions, Euro crisis, global financial crisis (GFC), great recession, macroeconomics, monetary economics Tags: bank runs, banking panics, Greece, John Cochrane, lender of last resort, sovereign bailouts, sovereign default
An average of 41% of Greek bank assets are non-performing, with loan repayments 90 days overdue or more (Barclays). http://t.co/HfXV8uapkj—
Mike Bird (@Birdyword) July 13, 2015
There were large cross-country differences in long-term unemployment duration both before and after the GFC
15 Jul 2015 Leave a comment
in Euro crisis, global financial crisis (GFC), great recession, job search and matching, labour economics, labour supply, macroeconomics, unemployment, welfare reform Tags: equilibrium unemployment rate, Eurosclerosis, natural unemployment rate, unemployment duration
77% more long-term unemployed people than before the crisis – We need them back in work! bit.ly/1JTTzYm #Jobs http://t.co/EFRGclFVms—
OECD Social (@OECD_Social) July 10, 2015
Hysteresis in practice, Delong-Summers Variety @delong @LHSummers http://t.co/urqxQBi6NE—
Roger E. A. Farmer (@farmerrf) July 23, 2015
Unemployment rates across OECD member countries
14 Jul 2015 Leave a comment
in Euro crisis, global financial crisis (GFC), great recession, job search and matching, labour economics, macroeconomics, unemployment Tags: unemployment rates
Was the Chinese share market crash rational asset-price movements without news?
14 Jul 2015 1 Comment
in business cycles, entrepreneurship, financial economics, macroeconomics Tags: competition as a discovery procedure, dot.com bubble, entrepreneurial alertness, event studies, learning by doing, sharemarket bubbles, sharemarket crashes
Large share market crashes such as over the recent months in China and the 1987 Wall Street crash do not necessarily imply an economic slowdown.
As the stock market gets rocked, let's remember this one thing about the crash of 1987 businessinsider.com/lets-remember-… http://t.co/BDgy5h5UN0—
Elena Holodny (@elenaholodny) August 21, 2015
The majority of major share market movements occur without any particular news hitting the market. Studies of the 50 largest share market movements in the US stock market between 1946 and 1987 found that the majority of them could not be explained by news. That includes the 1987 share market crash. In October 1987, shares fell by 20% in one day for no obvious reason.
China's stock market selloff explained in 6 charts bloom.bg/1HStJSe http://t.co/0CpoU21RpY—
Bloomberg Business (@business) July 13, 2015
David Romer explained these booms and busts, including the 1987 share market crash in two ways: investor uncertainty about the quality of other investors’ information; and dispersion of information and small costs to trading:
Asset prices can change because initially the market does an imperfect job of revealing the relevant information possessed by different investors and because developments within the market can then somehow cause more of that information to be revealed…
The possibility of imperfect aggregation implies an alternative to external news and irrationality as a potential source of asset-price movements: some price changes may be caused by “internal” news.
That is, asset prices can change because initially the market does an imperfect job of revealing the relevant information possessed by different investors and because developments within the market can then somehow cause more of that information to be revealed.
Either of these models are perfectly plausible. Investors learn from each other through trading and improve their estimations of the value of various shares.
#China Reality Check: #Stocks Are Still Too Expensive for @MarkMobius bloom.bg/1Monzct via @business @frostyhk http://t.co/e3Lv3KwgTZ—
Fion Li (@fion_li) July 13, 2015
As such, through internal learning and discovery within the share market there can be booms and crashes despite no new information, no communication, and no coordination among the participants in trading. Underneath the surface, there is a gradual updating of information by the participants and at a certain point in time, this causes a sudden change of behaviour.
Dow and Gorton made similar points to David Romer about how share market learning is a process of learning, judgement and error correction rather than an instant adjustment:
Strategic interaction and the complexity of the information result in a protracted price response.
Indeed, equilibrium price paths of the model may display reversals in which the two traders rationally revise their beliefs, first in one direction, and then in the opposite direction, even though no new information has entered the system.
A piece of information which is initially thought to be bad news may be revealed, through trading, to be good news.
Bubbles and crashes are consistent with private information held by a few slowly dispersing among market participants until this knowledge was reflected in stock prices as in Hayek’s (1945) analysis of the price mechanism as a means of communicating information.
HT: The one thing you should remember about the stock market crash of 1987 | Business Insider.
Greek and US great depressions compared
14 Jul 2015 Leave a comment
in business cycles, currency unions, economic growth, economic history, Euro crisis, global financial crisis (GFC), great depression, great recession, job search and matching, labour economics, macroeconomics, unemployment Tags: Greece
https://twitter.com/ianbremmer/status/620570062538309632/photo/1
Greek Depression vs US Depression:
Unemployment http://t.co/81efYi5Ajy—
ian bremmer (@ianbremmer) July 13, 2015
Greece’s possible currency outcomes, from today’s euro to the drachma
13 Jul 2015 Leave a comment
in currency unions, economic history, macroeconomics Tags: currency reforms, EU, Euroland, Greece, sovereign defaults
Greece’s possible currency outcomes, from today's euro to the drachma (and several in between) on.wsj.com/1ew3Yvs http://t.co/nEWtz84WTG—
Sudeep Reddy (@Reddy) July 05, 2015
Major sovereign bond defaults in recent history
11 Jul 2015 Leave a comment
in currency unions, economic history, Euro crisis, international economics, law and economics, macroeconomics Tags: Argentina, Greece, Russia, sovereign defaults
via Defaulting Debtors.
Financial crises surprisingly common, but few countries close their banks
10 Jul 2015 Leave a comment
in business cycles, currency unions, economic history, economics of regulation, Euro crisis, financial economics, global financial crisis (GFC), law and economics, macroeconomics, monetary economics, property rights Tags: bank runs, banking crises, banking panic, financial crises, Greece, sovereign default
Financial crises surprisingly common, but few countries close their banks pewrsr.ch/1NQyz2P #Greece http://t.co/pK0sfB49Ka—
PewResearch FactTank (@FactTank) July 09, 2015
Utopia, you are standing in it! 
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