Archive for October, 2008
October 31st, 2008 - Matt Kahn Celebrates the Spirit of Cooperation
He does so here:
http://greeneconomics.blogspot.com/
Gary, Raphael and Stuart do a painstaking job of combining multiple data sets to get a sense of the wealth effect of housing, and find that it is real; the implication is that it could be a substantial drag on consumption for years to come.
When combined with the fact that consumption has been an extraordinary share of GDP (around 72 percent, which compares to a historic norm in the high 60s) and his been funded with home loans and consumer debt, it is highly likely that the next recovery will be driven from something other than consumption–such as exports or capital goods spending (for exports).
As for cooperation, let me point to a post I wrote around a year ago:
…if one looks at the top 50 research Universities as measured by The Center for Measuring University Research Performance at Arizona State, the leading metropolitan area for number of top research institutions is not Boston, nor is it Chicago, Philadelphia, or New York. It is LA, which has four in the top 50 (UCLA, USC, Cal Tech and UC-Irvine). If one stretches another 100 miles or so, UC-San Diego and UC-Santa Barbara get added to the mix.
Southern California rarely gets credit for being an intellectual mecca, but after spending a pleasant morning at UCLA and a pleasant afternoon at USC last week, I couldn’t help but think that it is. Then again, Thomas Mann, Arnold Schoenberg and William Faulkner all managed to enjoy life in LA. Randy Newman might have been onto something…
It is nice to be here.
October 27th, 2008 - Somebody needs to do a new hedonic regression
I came back to Washington this weekend to help my wife prepare for putting our house on the market. Per the instructions of the Realtor, we are working on “staging” it.
I wonder how much this really matters. Once one gets beyond structural and neighborhood characteristics, does “staging” matter to the ultimate sale price? One would need to collect data on sold houses (including some index of how well presented they were) and then run a hedonic regression that included the presentation index in order to find out.
Paul Carrillo at GW has a nice working paper where he finds that houses that are marketed on line with pictures get better outcomes than those that don’t. But the pictures could just reflect the fact that Realtors are more likely to present pictures of houses that are better looking (and therefore more valuable) in the first place.
October 27th, 2008 - Somebody needs to do a new hedonic regression
I came back to Washington this weekend to help my wife prepare for putting our house on the market. Per the instructions of the Realtor, we are working on “staging” it.
I wonder how much this really matters. Once one gets beyond structural and neighborhood characteristics, does “staging” matter to the ultimate sale price? One would need to collect data on sold houses (including some index of how well presented they were) and then run a hedonic regression that included the presentation index in order to find out.
Paul Carrillo at GW has a nice working paper where he finds that houses that are marketed on line with pictures get better outcomes than those that don’t. But the pictures could just reflect the fact that Realtors are more likely to present pictures of houses that are better looking (and therefore more valuable) in the first place.
October 20th, 2008 - The Northern Urban Fringe of Los Angeles
Here are two pictures from the Northeast side of Lancaster:
In general, I saw fewer for sale signs than I was expecting, although there was one entire subdivision (near the place photographed above) that was in default. Retail real estate is more obviously suffering. I saw many nearly empty strip shopping centers.
October 19th, 2008 - Equipment or Learning?
The idea of a “best orchestra ever” is silly; many orchestras, such as Szell’s Cleveland, Reiner’s Chicago, Karajan’s Berlin and Ormandy’s Philadelphia were pretty much perfect (I actually am not crazy about Karajan or Ormandy as interpreters of music, but they had magnificent bands, for which they are due considerable credit).
But the orchestra I have really liked since I was in high school (so for more than 30 years) is the Amsterdam Concertgebouw Orchestra. I write this because tonight I was listening to a recent Concertgebouw concert on KUSC, and damn if they didn’t have many of the same qualities they had during Haitink’s and even Van Beinum’s days. In particular, the woodwinds–especially the double-reeds–have a very specific sound. They best way to describe it, I guess, is at once rich and transparent; it is kind of like getting the best of Berlin and Cleveland wrapped into one sound.
I went to the Orchestra’s website to make sure the players weren’t all 70 years old; they are not. Indeed, the principal oboe player has only been with the orchestra for about a year; the principal flute player looks like a rather young woman.
So what brings this consistency of sound over the years? Is it learning a tradition? Or is it just the unique sound of the wonderful hall?
October 19th, 2008 - Principles of economics, translated
October 19th, 2008 - Bill Gross says to Invest in Fannie-Freddie Debt
More generally, he says to invest close to the “government umbrella:” agency securities and government guaranteed debt. He also says that he thinks LIBOR will decline sharply once the various government programs actually start getting put into operation.
Gross is the Warren Buffet of fixed-income: for example, his bond funds avoided subprime (just as Buffet avoided the tech bubble). But one thing he doesn’t mention in this Bloomberg interview is the prepayment-market risk embedded in GSE securities. I do wonder whether the increasingly tough underwriting standards for home borrowers will remain around for awhile. If they do, we should see a structural shift in prepayment behavior for a long time, with conditional prepayment rates (or PSAs) remaining low for years to come.
October 18th, 2008 - So which is it?
The McCain campaign argues:
er
(1) Obama is a socialist
(2) Obama is the second coming of Herbert Hoover
I am not an historian, but I am pretty sure that the intersection of (1) and (2) is the null set.
October 16th, 2008 - I was wrong about Karl Rove
I used to think he was an evil genius. An item in his WSJ column this morning undermines the genius part. He writes:
The Investor’s Business Daily/TIPP poll (which was closest to the mark in predicting the 2004 outcome — 0.4% off the actual result) now says this is a three-point race.
Before he wrote this, I thought Rove understood data. But polls are (more-or-less) random samples, and a group of pools will produce a distribution of outcomes. It is of course the case that one poll will come closest to the population outcome; the fact that a particular poll does says nothing about the skill of the pollster. Now, if one pollster comes closest ten times in a row, we can be sure that something real is going on–that she has insights about sampling that the others don’t. But one correct call is nothing but luck.
Every quarter, the Wall Street Journal picks a “best economic forecaster,” which is based on close an economist’s forecast to predicting economic conditions in a quarter. Check out how well that forecaster does in the following quarter. If you made any decisions based on who wins the award for one quarter, you may well be disappointed in the following quarter.
October 16th, 2008 - I was wrong about Karl Rove
I used to think he was an evil genius. An item in his WSJ column this morning undermines the genius part. He writes:
The Investor’s Business Daily/TIPP poll (which was closest to the mark in predicting the 2004 outcome — 0.4% off the actual result) now says this is a three-point race.
Before he wrote this, I thought Rove understood data. But polls are (more-or-less) random samples, and a group of pools will produce a distribution of outcomes. It is of course the case that one poll will come closest to the population outcome; the fact that a particular poll does says nothing about the skill of the pollster. Now, if one pollster comes closest ten times in a row, we can be sure that something real is going on–that she has insights about sampling that the others don’t. But one correct call is nothing but luck.
Every quarter, the Wall Street Journal picks a “best economic forecaster,” which is based on close an economist’s forecast to predicting economic conditions in a quarter. Check out how well that forecaster does in the following quarter. If you made any decisions based on who wins the award for one quarter, you may well be disappointed in the following quarter.