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Ask BadEconomics: Midweek Discussion Thread, 19 August 2015 (self.badeconomics)

AutoModerator[M] が 投稿 - stickied post

Welcome to the midweek discussion thread

Where you can ask any questions you have for the subscribers. Ever wonder if our team of pompous economists will mock you for an idea you've had about markets and the economy? Wondering if you are able to prax the answer?

"Is XXX bad economics?"

And also chat about any bad (or good) economic events. Remember to use the NP posts and whatnot.

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トップ新着論争中古い順Q&A

[–]IntegraldsI am the rep agent AMA 3ポイント4ポイント  (12子コメント)

Kocherlakota has come out against a rate hike.

The U.S. inflation outlook thus provides no justification for policy tightening at this juncture. Given that outlook, the FOMC should ease, not tighten, monetary policy by, for example, buying more long-term assets or by reducing the interest rate that it pays on excess reserves held by banks. Along these lines, the board of directors of the Minneapolis Fed has for the past few months been recommending a reduction in the interest rate that the Federal Reserve charges banks for discount window loans.

Brings a tear to my eye. How far we've come!

[–]say_wot_againConfirmed for Google bigwig 2ポイント3ポイント  (1子コメント)

Indeed. On a related note, can someone remind me the theoretical justification for neo-Fisherism? Not the hurr durr here's the equation approach the way Rowe outlooks, but the one that Williamson, at least, thought made sense?

[–]MoneyChurchDickey-Fuller? I hardly know her! 0ポイント1ポイント  (0子コメント)

John Cochrane has a post that doesn't really answer your question, but is sort of relevant.

[–]urnbabyurnNeoPanglossian 1ポイント2ポイント  (8子コメント)

Can someone explain the QE white paper that came out on why QE wasn't stimulative? Or at least give me the TLDR

[–]IntegraldsI am the rep agent AMA 1ポイント2ポイント  (7子コメント)

It's Steve Williamson. He never liked QE to begin with. I'll give it a fair shake and report what I find.

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (6子コメント)

Didn't he straight up assert that QE was deflationary? And start this whole neo-Fisherism mess?

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (5子コメント)

The Great Recession was a massive missed opportunity for Williamson and his New Monetarist class of models.

Here we have a recession that centered heavily around finance, liquidity, bank runs, financial instruments, and financial intermediation -- the exact cluster of topics that New Monetarist models are designed to explain. Yet I don't recall the NM's giving particularly useful policy advice, and in some cases their advice would have been actively harmful.

It's a damned shame.

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (4子コメント)

/u/MoneyChurch linked me this Cochrane blog post on neo-Fisherism. I'm trying to read through his paper to make sure that I fully understand his argument, but this really seems R1-able, no? The paper seems to see equations (my God it's obvious that Cochrane's background is in finance) and make arbitrary assumptions about what can be fixed without changing anything else. Full of math without any explanation for why the actual mechanics work that way and why the variables he claims can be moved independent of each other can in fact be so moved. Is this what most macro papers look like? Can't be, right?

[–]colacoca 0ポイント1ポイント  (0子コメント)

I could be wrong, but from my reading of the situation, it's doesn't seem like Cochrane and Wiiamson reach the same conclusions wrt the NF models. Cochrane uses it to show how some relatively believable assumptions can lead to a very perverse outcome (relative to NK models) and sees this as evidence that we should not put so much trust in NK models because of this fact.

Williamson, OTOH, is a genuine supporter of the NF model and believes it accurately represents the current macroeconomic environment.

Tagging /u/Integralds in order to correct me if I'm wrong, it's been awhile seen I looked at the Neo-Fisherite discussions.

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (2子コメント)

His post has a ton of history behind it. To understand what he's writing and why, you need to keep the following papers in the back of your head:

  • Friedman's "Role of Monetary Policy"
  • Poole's "Choice of Monetary Instruments"
  • Sargent and Wallace's papers on interest rate pegs
  • Woodford, Schmitt-Grohe, and Uribe's papers on stability and uniqueness of equilibria
  • Cochrane's own 2011 Taylor Rules paper
  • some recent stuff

Cochrane has written one good macro paper, "Determinacy and Identification with Taylor Rules." I haven't followed his most recent papers in macro because they are either neo-Fisherian or FTPL-centric, both of which I don't think are relevant for the macro problems we face right now.

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (1子コメント)

TIL I know much less macro than I thought. Thanks! I'll (maybe) dig into those some more.

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (0子コメント)

Don't bother; if you wait long enough I'll write a summary of the relevant issues.

[–]CutlasssI am the Lord your Gold 0ポイント1ポイント  (0子コメント)

Where's the others on the issue?

[–]TychoTiberiusKeynes never died, he just changed his name to Satoshi. 3ポイント4ポイント  (2子コメント)

So there's another CMV thread about humans being horses.

https://www.reddit.com/r/changemyview/comments/3hkh5j/cmv_human_labor_will_become_as_redundant_as_horse/

Can someone explain this to me in a more concise way. I understand that because of comparative advantage humans will never be completely replaced by robots and there will always be jobs where customers prefer humans to render service. But, theoretically, couldn't we create enough specific robots to the point where all jobs for which there is no preference for human interaction are automated? I feel like I'm just missing some piece of the puzzle as to why that's not likely.

[–]urnbabyurnNeoPanglossian 1ポイント2ポイント  (0子コメント)

I keep posting this, but it's definitely a nice and approachable discussion of the issue

https://www.aeaweb.org/articles.php?doi=10.1257/jep.29.3.3

[–]CALL_ME_ISHMAEBYFee-fi-fo-Friedman 0ポイント1ポイント  (0子コメント)

I think the accepted answer is that some jobs will be lost but labor supply is fluid and people will move into other sectors.

[–]Jericho_Hill 1ポイント2ポイント  (2子コメント)

Damn. I was trying to lead a revolt.

GET IT TOGETHER OR I WILL BE BACK WITH PITCHFORKS

[–]besttrousers"Then again, I have pegged you for a Neoclassical/Austrian." 0ポイント1ポイント  (0子コメント)

The mods are trying distract us from the real problems.

[–]CutlasssI am the Lord your Gold 0ポイント1ポイント  (0子コメント)

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcT8KO-R1qIhI4b2UF2A1rFNeeGjLF6aYZQDdXUwaRyk-BeHdCk8WcE-EbU

[–]wyman856I think, therefore I am a horse 1ポイント2ポイント  (0子コメント)

Does anyone know what has been up with the lack of content recently from IGM? From what I can tell, they have historically had 1-3 posts/polls a month, but they still haven't had any update since July 4th.

I really look forward to those...

[–]UltSomnia 1ポイント2ポイント  (3子コメント)

  1. Humans act.

  2. Taking math classes is an act.

  3. Anyone else taken real analysis or differential equations before? I'm taking part 1 of both this semester and wondering if you guys have any thoughts. I know some people say they're hard but people complain about taking precalc here so I don't know

[–]PonderayFollows an AR(1) process 3ポイント4ポイント  (2子コメント)

Diff eq shouldn't be much different then your calc classes. Analysis will require a ton of work and will make you feel like you know nothing about math.

[–]_Rory_T.K. Whitaker's Ghost 1ポイント2ポイント  (0子コメント)

When ever an American mentions a mathematics course they're taking my first reaction is "What the hell is that" then I Google it and discover I've covered it. This is the pain of having maths classes integrated with your course.

[–]grevemoeskrHumans are horses! 1ポイント2ポイント  (0子コメント)

After having real the wiki for real analysis, I agree with this. It's like the weird parts of my mathematical and numerical analysis course and the easy part of my measure and integration course

[–]CutlasssI am the Lord your Gold 1ポイント2ポイント  (4子コメント)

R1?

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (3子コメント)

Not sure why ocamlmycaml deleted xorchids' comment to kick off the /r/economics sticky. Yes, she's annoying, but that was actually some funny, quality trolling for once.

[–]besttrousers"Then again, I have pegged you for a Neoclassical/Austrian." 1ポイント2ポイント  (0子コメント)

That comment (which I didn't see) was not deleted by the mods.

[–]CutlasssI am the Lord your Gold 0ポイント1ポイント  (1子コメント)

I didn't see it.

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (0子コメント)

She had the first comment there: "RI?"

Ocamlmycaml responded by quoting the actual rule 1 from the /r/economics sidebar.

She then responded "Removed for violation of Rule {large number in Roman numerals}"

He responded "There are five rules; you can see them all on the sidebar."

It was delightful.

[–]urnbabyurnNeoPanglossian 0ポイント1ポイント  (3子コメント)

IT WORKED!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Also, I'm first muthafuckers

[–]Homeboy_JesusCogito ergo sum equus 1ポイント2ポイント  (2子コメント)

Not quite :D

[–]urnbabyurnNeoPanglossian 2ポイント3ポイント  (1子コメント)

fuck...

[–]Homeboy_JesusCogito ergo sum equus 0ポイント1ポイント  (0子コメント)

You'll get 'em next time tiger

[–]prillin101Fiat currency has a 27 year lifespan 0ポイント1ポイント  (2子コメント)

I've actually been wondering this for a while, is it still possible to be socialist while having a free market? Like, you just make every company a workers commune but have a free market?

I don't think this is a good idea, but I was just thinking and was curious about what necessarily IS socialism, is it when workers own the means of production AND decide prices or only when they own the means of production?

[–]fmn13"How can our predictions be real if our models aren't real?" 1ポイント2ポイント  (0子コメント)

Isn't that the definition of anarchism? Considering that socialists come in as many varieties and tastes as wine, if you look hard enough, you're bound to find a sect within Our Lord Marx's gospel that fits within your preferred ideology.

So, taking the intellectually lazy route, I guess it depends on which socialism you want.

[–]weezer3989 0ポイント1ポイント  (0子コメント)

Market socialism is a thing (Yugoslavia instituted a variety of market socialist policies), and some flavors of anarchism (anarcho-syndicalism Springs to mind) would work fine with markets to a greater or lesser extent.

[–]irondeepbicycleI got 99 problems but technological unemployment ain't one 0ポイント1ポイント  (0子コメント)

Just a sticky to appease the masses and distract us from JH's sticky campaign.

[–]NewmanTheScofflawVoted as 'most' during graduation 0ポイント1ポイント  (0子コメント)

http://fivethirtyeight.com/features/science-isnt-broken/

Guys science isn't broken it is hard. I wish someone can let the world know, it is not all weed and space.

[–]NuclearZeitgeist 0ポイント1ポイント  (0子コメント)

What are the thoughts of education economists on Hillary's plan to eliminate debt for students attending state schools? Mark Cuban has obviously come out against it, but haven't heard a lot from serious economists.

[–]Homeboy_JesusCogito ergo sum equus 0ポイント1ポイント  (2子コメント)

I guess the benevolent central planner saw fit to bless us with another sticky.

Praise be unto it.

[–]say_wot_againConfirmed for Google bigwig 0ポイント1ポイント  (1子コメント)

Praise Helix urnbabyurn!

[–]grevemoeskrHumans are horses! 0ポイント1ポイント  (0子コメント)

Praise him