Archive for November, 2008
November 29th, 2008 - John Taylor insists that Permanent Tax Cuts are the answer
In doing do, he leans on the permanent income and life-cycle hypotheses. While these are totems of economic theory, they do not stand up particularly well when tested against data.
As George Akerloff emphasized in his magnificent AEA Presidential address, the five famous neutrality results in macroeconomics don’t hold up especially well when tested against data. Akerloff notes:
“Each of the neutralities is based on the assumption that the respective decision makers are utility maximizers. But in each case the utility functions of the decision makers have been very narrowly described. They depend only on real outcomes. For example, in the consumption- neutrality models, utility depends on consumption and leisure; in Modigliani-Miller it depends only on the discounted real return to shareholders.
But as early as the beginning of the Twentieth Century, Vilfredo Pareto pointed out that
such characterizations of utility missed important aspects of motivation. According to Pareto people typically have opinions as to how they should, or how they should not, behave. They also have views regarding how others should, or should not, behave. Such views are called norms, and they may be individual as well as social.”
[I am having difficulty figuring out how to do block quotes in Safari].
The events of the past 18 months suggest to me that we should regard the neutrality results with more suspicion than ever–and that we should be most suspicious of policies whose foundation is in the neutrality results. (Paul Krugman and Mark Thoma have their own criticisms of Taylor’s policy recommendations).
November 28th, 2008 - Looking for quality real estate articles?
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You can get useful mortgage payment advice about lowering the payment can be found at edubook.com which is really an issue of thinking ahead. This site is offering to-the-point tips for your consideration. These terms are must to attain and they advice you to move on to another company if where you are going to sign up cannot meet their terms. Because taking a mortgage means, you have to surely pay it off.
Before applying for a mortgage it is wise to review the mortgage application guide of edubook.com. You will get important guidelines there about applying procedure, determining value of your property, lower the mortgage payment and getting maximum from the mortgage.
November 25th, 2008 - Download Games- Fun and Learning at Your Fingertips
Download games and you will have hours of fun and learning right in front of you. These free downloads are great for everyone in the household. Children especially enjoy them. You can even find free games online that are educational, but still fun. There are a wide variety of games out there to download, ranging from casino games to math games. Do you have a child that is having trouble learning math, reading or spelling? There are many word games that will teach your child while having fun. As well as the math games, card games will also help teach your child math. As long as you have the space on your computer, download as many games as you want. Whether you are having trouble in teaching your child, or you just need a break from everyday life, go ahead and get some relief by playing online games on the internet.
November 24th, 2008 - FDR explains how liquidity crises happen
November 24th, 2008 - Free games at no cost download
The advancement of internet has created revolution among the people and they grant incredible perks and offers to people. Free games online is one such exclusive advancement, where you can enjoy the thrill of fun and adventure. While considering free games online, you can find varied strategy and of course try with different methodological handlings. Tower defense is absolutely an excellent game available online, and it could be getting started with easy download. Download games and give your start on playing the games, whereby you can enjoy good deal of fun. While making little research over the net, you can find quite several websites offering wide ranging free games online. You can sign up with those sites with a formal registration and start playing the games. It is certainly not a hard deal, because these games are interesting and impressive. They give you hours of fun and enjoyment, where you will turn addicted with the game.
November 23rd, 2008 - Public Works
I watched President-Elect Obama’s weekly address this morning on You-tube, in which he called for a massive public works programs to help us crawl out of recession.
November 23rd, 2008 - Public Works
I watched President-Elect Obama’s weekly address this morning on You-tube, in which he called for a massive public works programs to help us crawl out of recession.
November 23rd, 2008 - Talking Heads Live - Cities - Germany
An Urban Economics Anthem?
November 22nd, 2008 - Morris Davis Answers a Question
He is asked, “Obama has espoused changes such as a 90-day foreclosure moratorium, allowing bankruptcy judges to modify mortgages, and other ideas to prop up the housing crisis. What are your thoughts? “
He replies:
The underlying issue for both the high foreclosures and big bank failures we’ve observed is that house prices are falling. When the price of any asset (such as housing) falls, losses are incurred.
Equity holders suffer the first losses. In the case of housing, the equity holders are the homeowners. If the losses are large enough to wipe out the equity, the ownership of the asset is transferred from the debt holder to the equity holder. (In the case of housing, this is foreclosure). Debt holders then absorb any other losses. With housing, the holders of the debt are the institutions or people that own the mortgage notes.
The price of housing has fallen rapidly enough that many homeowners had their equity wiped out — leading to high rates of foreclosure. The losses were steep enough that in many cases the debt holders have also taken losses, which led to the high rate of failure of mortgage holders (such as Lehman Brothers, etc.).
The point of all this is to say that someone needs to take losses because of falling house prices. A “foreclosure moratorium” or widespread “mortgage modification” would reduce the losses suffered by homeowners (equity holders) and increase the losses suffered by mortgage holders (banks and financial institutions). Thus, a moratorium does not correct the fundamental problem, the decline in house prices. It just shifts losses around.
A policymaker might say, “Let’s just let those ‘greedy’ banks and financial institutions absorb the losses.” There are two problems with this. First, our banking system appears quite fragile right now. Many economists are worried about a deep recession because lending institutions, i.e. banks, are not lending very much right now because of the losses they have already absorbed. Any future losses absorbed by banks might make them even more hesitant to lend. Second, because of FDIC insurance, the government is effectively a large debtholder in many financial institutions. Thus, any moratorium on foreclosures or widespread forced mortgage modifications would effectively shift losses from many households engaged in somewhat speculative behavior (i.e. zero-down mortgages) to mostly responsible taxpayers (i.e. those households that chose not to refinance their housing with zero-down).
Personally, I think a brief foreclosure moratorium is worth considering as a method for developing an orderly process for dealing with the large number of defaulted mortgages. We just don’t have the servicing infrastructure to deal with them all right now.
November 22nd, 2008 - Brad Delong explains why things will get better
Here are the talking points for Obama-Biden administration personnel selections. They have the added advantage of being true:
1. The bench is very deep right now. Practically everyone competent and qualified for high executive office has come over to the Democratic Party over the fourteen years since the coming of Gingrich. Thus there are a huge number of superb choices available for every position.
2. Everyone being considered for high federal office is intellectually honest: they understand not just the advantages of their own views, but their flaws and disadvantages as well; they understand the pluses of views opposed to theirs. Policy will be realit-based: it will depend upon our collective best guesses as to the way the world works, and not the idiosyncratic intellectual hobbyhorses of ex-AEI staffers.
3. Everyone knows that the American people have elected Barack Hussein Obama and Joe Biden–not their staffs. Everyone knows that the jobs of staffers will be to present Obama and Biden with the options, their pluses and minuses, and then strive to implement their choices as best they can. The policies of the Obama-Biden administration will be Obama-Biden policies.
4. Everyone thinks it would be a great honor to work for the Obama-Biden administration.
5. Everyone knows that the bench is deep, and that their chances–however qualified they are–are low.
6. Everyone’s knows that this is bigger than any of us, and that the right attitude is to ask for an oar, find a place on a bench, and start rowing. There is an awful lot to do.
Based on the little I know (I did a modest amount of work for the campaign), this is exactly right.