Last year many economists argued that the economy needed more quantitative easing which would drive down real interest rates (whether by driving down long maturity nominal rates or by driving up expected inflation). The counter argument is that quantitative easing is not effective if there is a liquidity trap. Well we now have QE2 (since […]

Many people are afraid that US inflation is about to accelerate. I think they are totally irrational, but the point is that they can be useful too. Most people in the USA don’t know about Treasury Inflation Protected Securities with payments indexed to the CPI. The inflation chicken littles would be delighted to invest in […]

Only rarely do I think that Kevin Drum would benefit from having studied economics more in college. He almost always seems to understand economics issues better than most professional economists. Therefore I jump on an error, which, I suspect must be very widespread if Drum made it. He wrote the contribution of the airline industry […]

Karl Smith notes that the ratio of total Dividends to GDP increased from 2 to 5% since 1980 (it was 6% before the crash). He is amazed that he didn’t know this already. I am amazed that I didn’t know this already. I must admit that economists are even more determined to ignore anything which […]

Matthew Yglesias writes Ragu Rajan … his explanation of why economists didn’t predict the crisis: I would argue that three factors largely explain our collective failure: specialization, the difficulty of forecasting, and the disengagement of much of the profession from the real world. Rajan glosses a leading alternative hypothesis thusly: Finally, an answer that is […]

What is the point of BING ? Brad DeLong notes that Microsoft’s web operations are losing amazing amounts of money, and asks how that is even possible. Google notes that Bing sure seems to be using their product without attribution. They made up words and then constructed google searches which gave results when asked to […]

Paul Krugman notes that average household income has grown markedly less than GDP per household since 1973. He discusses the two most important factors. The cost of employee benefits (health insurance) have increased more than wages and are not counted in personal income, and household income is top coded — the very highest incomes are […]

Just how easy is it to use FRED ? I will find out starting four minutes ago, I am trying to set up a FRED account and generate a graph of interest (CPI inflation and nominal wage inflation plotted on time). I have an account. 19 minutes in. I have downloaded data. Not the data […]

This outstanding article about preventive care for high cost patients is outside the New Yorker paywall. It is very much worth reading. Like Ezra Klein, I found one of the drier examples very informative The firm had already raised the employees’ insurance co-payments considerably [skip] employee health costs continued to rise—climbing almost ten per cent […]

Read Brendan Nyhan. He is very convincing. The post is too good to excerpt but I was particularly struck by a figure the claim that he “transformed Americans’ attitude about government” is not well-supported. Consider UNC political scientist Jim Stimon’s measure of public mood (Excel spreadsheet [sic it is really just a *.gif]), which captures […]