Thursday, August 28, 2014

A Nice Application of the Coase Theorem

Wednesday, August 27, 2014

25 Brightest Young Economists

Here is a list.  By the way, six are at Harvard, more than any other school.

Tuesday, August 26, 2014

News from Amazon

In the Business & Money category:

 
And in all books:


To users of my favorite textbooks: Thank you!  Have a great semester.

Saturday, August 23, 2014

What To Make of Corporate Tax Inversions

Click here to read my column in Sunday's NY Times.

Tuesday, August 19, 2014

Teaching Conference

I will be speaking at the annual conference of the National Economics Teaching Association, which this year is being held on Thursday, November 6th and Friday, November 7th, 2014 in San Diego, CA.  If you want to consider attending, click here for more information.
 
You can potentially win a free trip to the conference, as well as some cash, by entering this contest.

Saturday, August 09, 2014

Eric Posner and Glen Weyl on Piketty

In The New Republic.  A tidbit:
Only very extreme scenarios, where every wealthy individual does all of the following at the same time can lead to the sort of explosive inequality dynamics Piketty fears:
  1. Marries someone at least as wealthy or bequeaths all wealth to one child.
  2. Consumes very little.
  3. Avoids paying most taxes.
  4. Contributes little to charity or politics.
  5. Invests optimally while avoiding Bernie Madoff and his ilk.
And it is hard to imagine why anyone would care about the existence of such an inbred, self-denying, and politically-removed class, if it could ever exist.

Sunday, August 03, 2014

Wisdom from Thomas Sowell

Larry Kotlikoff's comment on Paul Krugman's debating style in my previous post reminded me of an email I received earlier this summer:

Hi Professor Mankiw,
 
I'm an entering graduate student at [withheld] and a long-time reader (reading your blog when I was in high school introduced me to and got me interested in economics). I was reading Thomas Sowell's A Conflict of Visions and stumbled upon a passage that immediately reminded me of you, and your debates with Professor Krugman. I think it accurately describes a lot of disputes I've seen among intellectuals.
 
If you're familiar with the basic premise of the book, you can skip this paragraph. If you aren't (or need a refresher) Sowell creates a spectrum of political visions. At one end, there is the unconstrained vision, which sees a more malleable human nature in which the reason of experts has great efficacy in solving society's problems. At the other end, there is the constrained vision, which sees man's reason as inherently limited to narrow fields, with the best social progress coming through less deliberate and more evolutionary means. Sowell would see you as closer to the perfectly constrained vision, and Professor Krugman as closer to the perfectly unconstrained vision.
 
Here is the passage that reminded me of your debates with him. I think you'll see what I mean:
 
Sincerity is so central to the unconstrained vision that it is not readily conceded to adversaries, who are often depicted as apologists, if not venal. It is not uncommon in this tradition to find references to their adversaries' "real" reasons, which must be "unmasked." Even where sincerity is conceded to adversaries, it is often accompanied by references to those adversaries' "blindness," "prejudice," or narrow inability to transcend the status quo. Within the unconstrained vision, sincerity is a great concession to make, while those with the constrained vision can more readily make that concession, since it means so much less to them. Nor need adversaries be depicted as stupid by those with the constrained vision, for they conceive of the social process as so complex that it is easy, even for wise and moral individuals, to be mistaken -- and dangerously so. They 'may do the worst of things without being the worst of man,' according to Burke. (pg 59-60)
 
You may have already​ seen this and had similar thoughts, but if you hadn't, I thought you would find it interesting.
 
Best,
[name withheld]

Saturday, August 02, 2014

A Plea for Civility

From Larry Kotlikoff. A noble effort that is likely to be in vain.

Tuesday, July 29, 2014

Interview with Larry Summers

Monday, July 21, 2014

What makes a good economist?

Monday, July 14, 2014

Commodity Money

Sunday, July 06, 2014

Some ACA Readings

Monday, June 30, 2014

NFF

Sorry that I have been out of touch with regular blog readers.  I have moved to Nantucket for the summer, and the weather here has been too great to spend much time in front of a keyboard.  (The three best reasons to be a professor: June, July, and August.)

The past few days I have been attending the Nantucket Film Festival.  I have had a chance to see some great movies before they are in general release.  Two are worth mentioning: Arlo and Julie, a small quirky comedy/mystery that is a bit Woody Allen-esque. Also, Happiness, a documentary about a boy and his family in Bhutan. 

This morning I am off to see Begin Again, which won the award for Best of Festival.

Monday, June 23, 2014

The Saddest Chart I've Seen Today

Saturday, June 21, 2014

On Inherited Wealth

How much has the Affordable Care Act reduced potential GDP?

The Affordable Care Act added "about six percentage points to the marginal tax rate faced, on average, by workers in the economy."  So estimates the University of Chicago economist Casey Mulligan

Given that labor income was already taxed by income and payroll taxes, that figure indicates the return to working fell by about 10 percent. If we apply a plausible aggregate labor supply elasticity of 0.5, this in turn suggests a decline in labor supply of about 5 percent. In the long run, as the capital stock adjusts, a fall in labor supply leads to a proportionate fall in output. So we end up with a 5 percent fall in long-run potential output.

That calculation is very, very rough, but it does indicate that the ACA could well be a significant reason why the economy is not returning to its old growth path.

Update: Casey emails me that he believes the GDP effect will be smaller than this (about 2 percent or a bit more) because the impact on less skilled workers is greater than that on more skilled workers.  As a result, the mix of skills will change, and GDP will fall by less than total hours worked.

Friday, June 13, 2014

Almost back to (the new) normal?

Torsten Slok of Deutsche Bank Research sends along the above graphic.  At face value, it indicates the labor market is almost back to normal. If so, this fact suggests that the Fed may soon need to back off its policy of near zero interest rates, and that the slow pace of economic growth experienced in recent years reflects slow growth in potential due to adverse structural forces rather than inadequate aggregate demand.

Wednesday, June 11, 2014

Monopsony

Tuesday, June 10, 2014

Retire the Penny

My long-time readers know that I have long favored getting rid of the penny.  If you agree, you can now let the White House know via this petition.

Saturday, June 07, 2014

A Wonderfully Amusing Student Talk, from Princeton University Class Day 2014