2. The top ten martial arts movies (but where is Drunken Master 2 on the list?).
2. The top ten martial arts movies (but where is Drunken Master 2 on the list?).
From the comments, Stephen Williamson quotes/writes:
“…but it’s not nearly a close enough engagement with the evidence, which does pretty clearly show some short-run effects [from QE] are still operating, even if those effects are diminishing with time.”
I’d be curious to know what “evidence” it is that “clearly” shows this. My guess is you’re making this up.
In the first part he is quoting me, the “I’d be curious” paragraph is his own words. Overall, I would say here that the word “guess” is an accurate, albeit unfortunate description of how he is assessing the relevant evidence.
The background story is that Steve is arguing that QE should be deflationary rather than expansionary. What does the evidence say?
Here are Krishnamurthy and Vissing-Jorgensen on the United States (pdf):
…evidence from inflation swap rates and TIPS show that expected inflation increased due to both QE1 and QE2…
On Japan, here are Girardin and Moussa:
…we propose new empirical evidence supporting the ability of quantitative easing to provide stimulation to both output and prices.
Or try Joyce, Miles, Scott, and Vayanos, from The Economic Journal:
…a growing literature has begun to provide estimates of the macroeconomic effects. In one of the first studies of this nature, Baumeister and Benati (2010) estimate a time-varying parameter structural VAR to investigate the macroeconomic impact of lower long-term bond spreads during the 2007–09 recession period. In all, the countries they analyse – the US, Euro area, Japan and the UK – they find a compression in the long-term yield spread exerts a powerful effect on both output growth and inflation and their counterfactual simulations indicate that unconventional monetary policy actions in the US and UK averted significant risks both of deflation and of output collapses.
p.F285 of that paper discusses some other literature in detail, again indicating that QE increases the rate of price inflation. This piece is also useful for showing how empirical studies of QE provide decent evidence for asset segmentation and “preferred habitat” theories of bond markets (which responds to another of Steve’s points).
Or try Chung, et.al. from the Fed (since published in the JMCB):
…we find that the asset purchases have probably prevented the U.S. economy from falling into deflation.
This is all consistent with the observation from Scott Sumner:
For God’s sake the dollar fell by 6 cents against the euro on the day QE1 was announced! Does anyone seriously think a 6 cent depreciation in the dollar is deflationary?
There is plenty of (justified) debate as to how strong these effects are, and we all know the difficulties of doing proper empirical work in macroeconomics, and on top of that the time to produce research means these papers are not analyzing the very latest data. But I cannot find a serious — or for that matter non-serious — empirical study suggesting that QE is deflationary in its impact.
Addendum: David Glasner makes a very good point: “…if Williamson’s analysis is correct, the immediate once and for all changes should have been reflected in increased measured rates of inflation even though inflation expectations were falling. So it seems to me that the empirical fact of observed declines in the rate of inflation that motivates Williamson’s analysis turns out to be inconsistent with the implications of his analysis.”
3. White and Asian per capita incomes, in South Africa, are up significantly since Mandela’s election victory in 1994.
4. Innovation changes everything, by Seth Roberts.
6. The increasing inequality of art prices, and from the story I liked this line: “The beauty of art is that there is a lot of it.”
1. Ted Gioia’s 100 best albums of 2013. Ted understands the acoustical nature of music, and the creation of alternative sound worlds, better than any other music critic I read. Someone constructed a playlist from Ted’s picks here. And The Economist picks best books of the year. It is the best “best books” list so far this year.
5. The winning essays on the “Cowen vs. Mokyr” theme, I think they are very good.
6. Matt Zwolinski defends the guaranteed annual income idea.
A study (abstract available here) being released today suggests that it may be coming from a broader range of academic departments, but from a smaller number of elite scientists…
The analysis is based on a look at the top-ranked departments and the top scientists (as judged by output of citation-weighted papers) in evolutionary biology from 1980 through 2000. The research found two apparently contradictory trends:
- The share of citation-weighted publications produced by the top 20 percent of departments fell from approximately 75 percent to 60 percent.
- The share of papers produced by the top 20 percent of individual scientists increased from 70 percent to 80 percent.
In other words, the role of the individual star became more important at a time that the role of the star department (while still significant) fell.
There is not only more collaboration, but collaborations are taking place across a wider range of “quality” of institutions:
And the average distance in rank of institutional departments increased as well. In 1980, it was about 30 (meaning someone at an institution ranked 20th, say, was collaborating with someone at an institution ranked 50th). By 2005, the average rank gap was 55.
I see a common trend at mid-tier universities to care less about the research quality of the average faculty member, and care more about the quality and reputation of the stars, while “marketing” those stars more intensely than before. And there are many more good researchers at lower-tier institutions, but they may not command much of a premium in terms of pay or working conditions. Their specialized knowledge can make them very valuable as co-authors on the right project and so they end up in some high quality collaborations.
…the pace of actual trade settlement in renminbi has failed to keep up [with its role in finance]. It still accounts for just 0.8 per cent of the global total, a lower share than the Thai baht or the Swedish krona.
That is from the FT, via Amni Rusli. The recently reported fact that the renminbi is now the #2 trade financing currency seems to be simply measuring the carry trade, not the true ascendancy of the Chinese currency as a global reserve currency.
“Narrow networks may seem like a bad idea,” David Dranove and Craig Garthwaite blogged last month. The two Northwestern University professors acknowledged that excluding some providers from health plans offered through the exchanges runs the risk of disrupting care patterns.
But the model is “not some cruel attempt to limit patient choice foisted upon us by the insurance industry,” the professors added. “Instead, these plans may provide our best opportunity for harnessing market forces to lower prices.”
The simple equation: Insurers say that limiting the size of the network allows them to steer patients to high-quality facilities and doctors; participating providers, meanwhile, may agree to price cuts in exchange for new volumes. (A previous edition of “Road to Reform” took a closer look at the narrow network model.)
And narrow networks aren’t necessarily a new idea, Darius Tahir points out at National Journal. In some ways, it’s the same concept behind payers’ attempts in the 1980s and 1990s to limit their network size, which met with criticism and helped create Any Willing Provider laws.
Could narrow networks be better perceived — and received — with better phrasing? Industry consultant Vince Kuraitis thinks so.
We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit in four sub-intervals spanning the period from 1985 to 2009. We show that these models provide a good approximation to the wage structure and can explain nearly all of the dramatic rise in West German wage inequality.
…two-thirds of the increase in the pay gap between higher and lower-educated workers is attributable to a widening in the average workplace pay premiums received by different education groups. Increasing workplace heterogeneity and rising assortativeness between high-wage workers and high-wage firms likewise explain over 60% of the growth in inequality across occupations and industries. Finally, we investigate two potential channels for the rise in workplace-specific wage premiums: establishment age and collective bargaining status. Classifying establishments by entry year, we find a trend toward increasing heterogeneity among establishments that entered the labor market after the mid-1990s, coupled with relatively small changes in the dispersion of the premiums paid by continuing establishments. The relative inequality among newer establishments is linked to their collective bargaining status: an increasing share of these establishments have opted out of the traditional sectoral contracting system and pay relatively low wages.
I would put it this way: there are “high human capital firms” and “low human capital firms” to a greater extent than before. This change represents increasing German wage inequality fairly well, although it cannot be inferred that this increasing segregation causes the inequality increase.
Since newer firms reflect higher inequality and higher segregation, and I don’t foresee a major return of unionization, I take this as prima facie evidence that wage inequality in Germany (and many other places) is likely to continue to rise. This is another example of “the great reset,” as the newer firms offer a greater glimpse into the German economic future.
By the way, it is papers like this which increase my skepticism about the signaling model of education. The relevant signals being fed into these markets haven’t changed that much. Wage patterns are changing a lot.
For the pointer I thank Christian Odendahl.
5. The mood sweater.
Whether you’re a casual user of social media sites like facebook and twitter or an avid online dater accessing eHarmony or Match.com, chances are you’ve created a personal online profile and been faced with a decision: What should you post for your profile picture? Many people post head shots or selfies, while others opt for pictures of their children, spouses, pets, or even favorite quotes or symbols. If your goal is to be perceived as attractive (and let’s be honest, whose isn’t?), then new research by Drew Walker and Edward Vul at the University of California, San Diego suggests your best bet is to opt for a group shot with friends.
A photo with friends conveys the fact that you are amiable and well-liked, but oddly enough that is not what makes you more appealing. Instead, the new research shows that individual faces appear more attractive when presented in a group than when presented alone — a perceptually driven phenomenon known as the cheerleader effect.
And why does this work?:
Walker and Vul posit that the cheerleader effect arises from the interplay of three different visuo-cognitive processes. First, whenever we view a set of objects like an array of dots or a group of faces, our visual system automatically computes general information about the entire set, including average size of group members, theiraverage location, and even the average emotional expression on faces. Thus although the group contains many individual items, we naturally perceive those items as a set, and form our impressions on the basis of the collective whole.
In addition, the impression that we have of the group as a whole influences our perception of any one individual item. We tend to view individual members as being more like the group than they actually are. Thus when we see a face in a crowd, we tend to perceive that face as similar to the average of all the faces in that crowd.
As it turns out, we find average faces very attractive. Composite faces, which are generated by averaging individual faces together, are rated as significantly more attractive than the individual faces used to create them. According to Walker and Vul, if presenting a face in a group causes us to perceive that face as more similar to the average, we are likely to find that face more attractive.
In one experiment, the researchers found that a group of four was large enough to create that effect. Does this have implications for rock and roll?
1. A guy who wants to pretend there is no danger in sex and attraction. It is nonetheless an interesting albeit highly flawed meditation on focal points and communication games.
6. Daily Telegraph on Average is Over, click through to p.9.
3. Ty Fyter writes an open letter to me on the Paleo movement.
4. Lunch with Ha-Joon Chang (FT gate).
5. There is a new Hilton Root book: Dynamics Among Nations: The Evolution of Legitimacy and Development in Modern States. The MIT Press website is here, and the book’s own home page is here.
3. How to spot good vs. bad curry houses. And Oklahoma is hiring in time series econometrics. And more on the 85-year-old American arrested in North Korea, plus the deteriorating relationship between Japan and South Korea.