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Showing posts from August, 2010

The economics zeitgeist, 29 August 2010

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.
The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Two worlds (fail to) collide

Thank goodness we have economics blogs to explain Ben Bernanke to us.

On Wednesday, I read at Scott Sumner's blog that:
...there are lots of simple answers (massive QE...etc.) But...for some reason our monetary authorities don’t see it this way. They view all these ideas as exceedingly risky....Scott is outraged that the Fed refuses to do more monetary stimulus to reduce unemployment because they are worried about inflation.

But it seems that other people live in a different world. On Thursday, I read at FT Alphaville that:
The current wisdom appears to be that more quantitative easing (QE) would be a good thing...Bernanke only has one playbook, which he has so far followed almost religiously. The final solution in that playbook involves helicopters and money. So, no, he will not stop printing - it's the only idea he possesses.Alphaville is concerned that the Fed is increasing monetary stimulus to reduce unemployment, and thinks they should worry about inflation.

Now clearly A…

Kocherlakota and a monetary analogy

Nick Rowe has come up recently with a couple of nice analogies for monetary policy: the pole balancer and the farmboy.

And for those of you not reading the other economics blogs, there's a bit of an uproar right now about Narayana Kocherlakota, president of the Minnesota Federal Reserve, and his claim that long-term low interest rates will lead to deflation, when surely every schoolboy knows low rates lead to inflation.

I've been trying to work out why Kocherlakota's argument is so intuitively wrong and yet theoretically consistent with standard monetary models. I think I've got it, with a bit of inspiration from Nick, Karl Smith, Andy Harless and Scott Sumner. So here's my contribution to the monetary analogy industry:

You're driving a truck, one of those big articulated lorries with a trailer full of goods and services. There are three main variables which determine the truck's acceleration:
how much you push the gas pedal (let's call it i for internal…

What exactly is data loss?

I am really confused by this article.
The UK operation of Zurich Insurance has been fined £2.27m by the Financial Services Authority (FSA) for losing personal details of 46,000 customers.What is "losing"? Did the data get accidentally deleted? Or was it accidentally leaked to, or stolen by, miscreants?

"Lost" data implies deletion - say, a disk failed and the backup was faulty. Not an uncommon occurrence, and you might need to ask your customers to confirm their details to you again. But:
"The firm also failed to ensure that it had effective systems and controls to prevent the lost data being used for financial crime."Also, they were penalised over £2 million for the loss. Both of these imply that someone else actually got the data.

But how do they know it went?
Zurich said that it had no evidence the data had been misused.So it's very unlikely that they somehow discovered a third party had copied it. And yet, the comment on the case from a law firm is:
B…

Boris bike back

I am impressed. After the last incident, my new key showed up the very next morning. It worked immediately and I have had no problems since.

What's more, I have only been charged once for each of my daily hires and not twice, as I feared.

I even made it home tonight with two shopping bags hanging from the handlebars, though I'm not sure if I'll repeat that experiment.

In fact, I have nothing to complain about at all, which is both pleasing and strangely frustrating. Sorry if that makes this post a bit boring.

The economics zeitgeist, 22 August 2010

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.
The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Tempted to give up on Boris bikes

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The latest twist in this stupid saga is that my Barclays Cycle Hire key has stopped working altogether. Seems to be a physical failure - the docking stations do not respond at all to the key being inserted.

Previously they at least showed a yellow then a red light when I tried. Now it just does nothing.

12 minutes on the phone with TFL did not improve matters: first they claimed that one of the docking stations might be faulty, then that the problem was with the auto-renew feature (same as last time). Then she claimed that I had made a journey already today (not true). Finally she charged my credit card for another day and then, as I fully expected, the key still did not work.

The new access period has been confirmed to me by email - twice - so perhaps they've charged me for two. The web interface has no record of anything that's happened today, which makes sense if it's a physical failure.

They're sending out a replacement - which will take three working days, of cour…

Thinking and attention

My former colleague Henri Yandell analyses the differences between context switching and multitasking, and between deep and shallow thinking here.

Rory Cellan-Jones has a less interesting but more...well, more BBC, take on the same subject here.

I guess they're both prompted by The Shallows by Nicholas Carr - a man with whose previous writings I have disagreed violently. Looks like the subtitle on the paperback has quietly been changed from "What the Internet is doing to our brains" to "How the Internet is changing the way we think, read and remember". Presumably the old title was provoking too much hostility.

Carr's thesis about shallow thinking is very different to, say, Tyler Cowen's Age of the Infovore, which argues that the Internet now allows us a much deeper and more engaged experience with the narratives of our lives.

Rory's argument (and that of Douglas Adams, to whom Henri links) is that this debate has been going on for millennia and that…

Bizarre Boris bike bugs

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I've been a fan of the Barclays Cycle Hire scheme ("Boris bikes") since it launched, and have been using it regularly. It is quicker and cheaper than public transport, and has been getting me fitter too.

I did hear of a couple of anomalies from friends and media - but if I'm honest, I thought they were probably the fault of the user and not of the system. Clearly some people were not returning the bikes to the docking stations correctly - TFL has been reminding us incessantly to make sure the green light goes on when you take the bike back - and this was the reason for the extra charges.

However, when it happens to me, then clearly it is a fault with the scheme. And in the last couple of days I've had some very annoying experiences.

The first was just a bit strange. I logged onto my account and saw the following screen:


I can say with complete confidence that I did not cycle in Kensington, Hyde Park or the Strand during those days. The Milroy Walk/Abbey Orchard S…

The economics zeitgeist, 15 August 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud. The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Blind football

I was intrigued recently to learn of the existence of the World Blind Football Championship - the BBC has now written a detailed article about it so I have found out some more.

Footballs with ball bearings...some careful and limited shouting techniques between the five players on each team...rebound walls and no throw-ins...opaque eye patches to keep players on an equal footing, since some of them have partial sight and others are fully blind. Would be fascinating to watch, although I don't think it will have TV coverage.

It's interesting to read about the various compromises they've designed into the game to keep it competitive and exciting and allowing visually impaired players to fully express their talents for the game. The goalkeepers, for example, can be sighted and do not wear the eyepatches, but may not leave their areas. And there's no offside rule.

Apparently they also tried to find blind referees to officiate the matches...

...but they are all busy in the Pr…

Learning and expectations of NGDP

A response to Niklas Blanchard's post supporting Scott Sumner's NGDP level targeting proposal (also posted as a comment on that page).

My thoughts on this subject are not complete, but I've been thinking recently about how expectations are formed. I wonder about the following scenario:

Let's say the Fed does adopt an NGDP level target with a 5% annual increase, and this becomes accepted as the new orthodoxy. How will future wage negotiations proceed?

As an employee, I'd say to management: presumably you are good managers, and you expect to achieve growth in the company's revenues, profits and productivity at least in line with the economy as a whole. (I've yet to meet a manager who'd admit that they are not as good as the national average manager).

Therefore, you'd expect your top line revenues to increase by at least 5%, given a fixed amount of labour in your company. What's more, now that the Fed has successfully achieved a 5% NGDP increase fo…

Is QE deflationary: an update

Turns out quantitative easing is deflationary - at least the Federal Reserve thinks so.

Today the Fed announced that the interest and capital repayments from the bonds it bought last year will not be retired from the system (which would reduce the money supply). Instead, they will use them to buy new Treasury bonds.

Via Mark Thoma:
...the Fed will keep “securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities”Now I hate to say I told you so, but I told you so...

There is, however, a point more important than my self-satisfaction: whether this policy will work. Unfortunately this policy adjustment appears to reveal a basic uncertainty in the Fed's goals. By making ad hoc adjustments like this, the Fed keeps the rest of us off balance - we don't know what it will do next because its signals are too vague.

In some cases this kind of policy is desirable - regulators and governments …

The economics zeitgeist, 8 August 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud. The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Responsible economic journalism shock

This easy-to-mock story about the "tax" on being single is notable in a couple of ways.

The first is that - for many - being single is a lifestyle willingly chosen. Perhaps there is a price tag on that choice, but that's different from a tax. £5,000 a year does seem like a lot, but for the luxury of choosing your own holiday destinations, spending all your free time in the way you want to, and designing your living environment entirely to your own tastes, it might be worth it.

The second is that the article contains a detailed methodological critique of its own argument.
But Stuart Adam, senior research economist at the Institute for Fiscal Studies (IFS), doubts whether the situation is as clearcut as the study presents."The quarter of a million figure depends first on whether you believe their £5,000 a year finding and I'd need quite a lot of convincing that they'd got their methodology right"... It's even possible that the research is skewed becaus…

The economics zeitgeist, 1 August 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud. The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.