Monday assorted links

by on November 30, 2015 at 1:51 pm in Uncategorized | Permalink

1. Kelvin Wong and his teaching philosophy, he is a U. Minnesota student on the job market.  His papers on cohabitation look interesting.

2. How will climate change affect China? (NYT)  And Robert Stavins suggests some people to follow on Twitter for the Paris talks.

3. Fiscal extraction by ISIS (NYT, good piece).

4. Yoram Barzel’s tribute to Doug North.

5. Susceptibility to bullshit is correlated with what other personality traits? (pdf).  Were you persuaded by the article?  If so, how would you describe yourself?

6. This book is a camera.  And this book (Brazil) is a subway ticket.

Matt Rognlie on negative interest rates

by on November 30, 2015 at 12:16 pm in Uncategorized | Permalink

What Lower Bound? Monetary Policy with Negative Interest Rates (Job Market Paper)

Abstract:  Policymakers and academics have long maintained that nominal interest rates face a zero lower bound (ZLB), which can only be breached through major institutional changes like the elimination or taxation of paper currency.  Recently, several central banks have set interest rates as low as -0.75% without any such changes, suggesting that, in practice, money demand remains finite even at negative nominal rates. I study optimal monetary policy in this new environment, exploring the central tradeoff: negative rates help stabilize aggregate demand, but at the cost of an inefficient subsidy to paper currency. Near 0%, the first side of this tradeoff dominates, and negative rates are generically optimal whenever output averages below its efficient level. In a benchmark scenario, breaking the ZLB with negative rates is sufficient to undo most welfare losses relative to the first best. More generally, the gains from negative rates depend inversely on the level and elasticity of currency demand. Credible commitment by the central bank is essential to implementing optimal policy, which backloads the most negative rates. My results imply that the option to set negative nominal rates lowers the optimal long-run inflation target, and that abolishing paper currency is only optimal when currency demand is highly elastic.

The paper is here, and it contains many new analytical points.  As you would expect from Matt, it is also extremely well-written.  Here are previous MR posts related to Matt Rognlie.

Here Eric Lonergan criticizes Swiss negative interest rates.  On the blog of Miles Kimball, you will find many arguments for negative nominal interest rates, and also the abolition of currency, another topic covered by Matt in his paper.

By the way, here is the latest on Swiss bond rates, negative even at ten years out.

I see many comparisons floating around, here are a few:

Muslim refugees become terrorists at a lower rate than Americans become murderers.  And here is Alex on jellybeans.

This article suggests you are more likely to be killed by falling furniture than by a terrorist.

Somewhere in my Twitter feed I saw a claim that an American is more likely to be shot by a toddler than by a terrorist.

By a variety of metrics, European terror attacks were worse in the 1970s and 1980s than today.

Matt Yglesias argues American society is pretty robust to a bunch of people getting shot.

Nonetheless many American (and European) citizens seem to think that a murder by a foreign terrorist is much worse than a murder by a domestic nutcase, and that murder by a foreign terrorist is a major deal, these days at least.  What might be the reasons for that view?

1. A murder by a foreign terrorist occasions more fear of future murders.  Yet if anything this seems to be the opposite of the case.  “Entry” into foreign terrorism in the United States is tightly controlled, and with each murder security procedures are tightened.

2. Foreign terrorists kill us in more painful ways.  Seems unlikely, they want to get the job over with.

3. Allowing foreign terrorists to kill us signals to our foreign enemies that we are weak, and worsens our standing in international relations.  Our alliances and our deterrents become weaker, to the detriment of global peace.

4. The successes of foreign terrorists increase existential risk, so even a “simple murder” by one of them is fraught with high negative expected value.  But note here the difference between inference and causality.  A foreign terrorist murder may indicate that a WMD attack is more likely, but does it cause the likelihood of a WMD attack to up?  In fact, might it not cause that chance to go down, given tighter security precautions?

#3 and #4 at least possibly make sense.  But what’s the actual evidence?  Why don’t we spend our time debating #3 and #4?  Couldn’t we do event studies on those?  Are we willing to reject these hypotheses if the event studies turn up nothing?

And if there is something to #3 and 34, what is the MRS for “death by domestic” vs. “death from a foreign terrorist”?  10 to 1?  100 to 1?  Inquiring minds wish to know.  In other words, it really may be worse if we are killed by foreigners, but don’t we need to set some parameters on that judgment?

By the way, there is also #5: Due to our heritage as African primates, we are programmed to fear violent attacks by outsiders more than we actually need to today.

Sunday assorted links

by on November 29, 2015 at 2:48 pm in Uncategorized | Permalink

1. A new estimate of “Volkswagen deaths” for the United States.

2. Daniel Diaz-Vidal and Greg Clark on assortative mating in the history of Chile (pdf).

3. “Owning an asteroid is now legal in the Unites States, after President Barack Obama signed the U.S. Commercial Space Launch Competitiveness Act (H.R. 2262) into law, effectively reversing decades of space law.

4. “robots can legally buy drugs online for artistic purposes

5. The best of Thailand, the worst of Thailand.

6. Steve Pearlstein on how to bend the higher education cost curve.

7. dsquared on the financial sector.

Saturday assorted links

by on November 28, 2015 at 7:46 am in Uncategorized | Permalink

1.”$50bn Nicaragua canal postponed as Chinese tycoon’s fortunes falter“; I say “postponed” is a very polite word to use there.

2. Dialogue of Brian Eno with Varoufakis, it ends with:

YV No, I must get on. I have to meet Slavoj Žižek.

BE I’ll see you out. See you soon.

3. New numbers on prostitution in Greece.

4. The ten most boring places to live in Connecticut.

Rosanna Smart, a job market candidate from UCLA, has a very interesting job market paper (pdf) on this question.  Here is the abstract:

Almost half of the US states have adopted \medical marijuana” laws (MMLs),and 58% of Americans now favor marijuana legalization. Despite public support, federal law continues to prohibit the use and sale of marijuana due to public health concerns of increased abuse, drugged driving, and youth access. Using evidence from MMLs, this is the first paper to study whether growth in the size of legal marijuana markets affects illegal use and its associated health consequences. By collecting new data on per capita registered medical marijuana patient rates, I investigate how state supply regulations and changes in federal enforcement affect the size of this legal market. I then study how illegal marijuana use and other health outcomes respond to changes in legal availability. I find that growth in the legal medical marijuana market significantly increases recreational use among all age groups. Increased consumption among older adults has positive consequences in the form of an 11% reduction in alcohol- and opioid-poisoning deaths. However, increased consumption among youths leads to negative externalities. Raising the share of adults registered as medical marijuana patients by one percentage point increases the prevalence of recent marijuana use among adolescents and young adults by 5-6% and generates negative externalities in the form of increased traffic fatalities (7%) and alcohol poisoning deaths (4%).

Those results are consistent with my intuitions.  When it comes to “those who already are screwed up,” namely the older generation, it is best to shunt them off into pot, compared to the relevant alternatives.  But when it comes to the younger generation, the new norm that “pot is OK” may in fact not be best in the longer run.  So in sum,while I (TC, not the author necessarily) favor marijuana decriminalization, we should hold mixed moods towards its practical effects.

Friday assorted links

by on November 27, 2015 at 10:24 am in Uncategorized | Permalink

1. Claims about pho.

2. Mitch Albom in Haiti.

3. How CRISPR actually will prove useful.  And “We’re going to see a stream of edited animals coming through because it’s so easy…

4. A list tracking student demands from around the country.

5. “The study was conducted in the RAND StoreLab (RSL), a life sized replica of a convenience store…

6. John Wallis on Doug North.  And Kevin Bryan.  And Martin Sandbu on North.

Following up on my earlier post on Syria, Alexander Burns sends me this very interesting email:

Dear Professor Cowen,

Thanks for your reply tweet regarding your Marginal Revolution post on modelling Syria / Islamic State. I enjoy your books and blog.

I’m writing a thesis at Australia’s Monash University that synthesises Jack Snyder’s work on strategic culture / strategic subcultures with Martha Crenshaw and Jacob Shapiro’s work on terrorist organisations. Two recent presentations:

1.       Mid-Candidature Review Panel slides: http://www.alexburns.net/Files/MCR.pptx

2.       Monash SPS Symposium Presentation on Islamic State: https://t.co/Ju11zvFBSP

Several weeks ago I discussed Islamic State with my Mid-Candidature Review panel whilst also reading Gary Antonacci’s Dual Momentum Investing and the Dan Zanger interview in Mark Minervini’s Momentum Masters interviews book. It struck me that Islamic State were like momentum traders for several reasons:

(1) Islamic State have grown rapidly in foreign mujahideen; control of parts of northern Iraq and Syria; and have grown in power projection capabilities. This dynamic is very much like successful momentum traders have worked in a financial markets context using Jesse Livermore’s trend-following approach, William O’Neil’s CANSLIM system, or Paul Tudor Jones II’s speculative activity in Eurodollar and foreign exchange markets.

(2) Islamic State have to-date survived aerial bombardments and have exploited a range of weaknesses in their enemies (e.g. jihadist beheading videos as psychological warfare against the Iraqi Army; Turkey’s borders with Iraq and Syria; and alliance manoeuvers around the Assad regime and the Syrian civil war).

(3) Events like the capture of Mosul, Iraq; combat experience in the Syrian civil war; involvement in oil black markets; and the proclamation on 29th June 2014 of a worldwide caliphate have momentum-like qualities, particularly in terms of creating the psychological climate for nation-building.

(4) Islamic State has outperformed their peer jihadist groups in their growth and ideological impact.

(5) Islamic State’s use of social media to amplify ideological propaganda is more hypermodern and sophisticated than other terrorist groups.

(6) Their rapid growth has led to spillover effects such as the refugee crisis in Europe.

(7) The Western media’s concerns about Islamic State — and their cultural impact — feel like the 1998-2000 part of the 1995-2000 dotcom speculative bubble, albeit in a counterterrorism context.

(8) Your perspective on Islamic State as hypermodern may also be relevant to the proto-Marxist work on accelerationism and postcapitalism (Nick Srnicek and Alex Williams’ Inventing the Future; Steven Shaviro’s No Speed Limit; and Benjamin Noys’ Malign Velocities): contemporary terrorist groups operate in a different political / technological / ‘average is over’ context.

With his permission I reproduced the email as is, though added in a few extra paragraph breaks for ease of reading.

Thanksgiving assorted links

by on November 26, 2015 at 10:17 am in Uncategorized | Permalink

1.  Robust monetary rules.  And American Airlines stops accepting Argentine pesos.

2. Can France integrate its Muslims?

3. Dr. Seuss and comparative advantage.

4. “If Pleistocene megafauna — mastodons, mammoths, giant sloths and others — had not become extinct, humans might not be eating pumpkin pie and squash for the holidays, according to an international team of anthropologists.”

5. John Cochrane on health insurance churn.

6. Why Turkey shot down the plane and who will be the biggest losers (good, analytical piece, NYT).

7. Chris Mooney on the global warming “pause.”

I can’t say I understand this FT article so well, but I suppose that is the point.  Which are two groups/persons implicated in buying oil from ISIS, or otherwise enabling such trades to take place?

First, Syria.  Or is that “Syria.”

Second, the head of the world chess federation, namely Kirsan Ilyumzhinov: “he is best known for his belief in aliens — he has repeatedly recounted an instance when he was abducted in 1997 by “people in yellow spacesuits”.”  And this:

Mr Ilyumzhinov has a diverse business empire, stretching from sugar to banking, and a network of contacts to match. He regularly meets the Dalai Lama, and he played chess with Libyan president Muammer Gaddafi shortly before his overthrow.

He also has been working with the Syrian central bank.  Here is NYT coverage, here are other sources.  As the old Haitian proverb states, if you’re not confused, you don’t know what’s going on…

Wednesday assorted links

by on November 25, 2015 at 12:53 pm in Uncategorized | Permalink

1. Book hotel in Japan.  That is book used as a noun, not a verb.  And good photos of Porto, Portugal.  Zach Lowe: how small can the NBA go?

2. The world’s largest cloning factory, guess where?  Yesterday my paper copy of the FT printed on its front page the pun “Factory to turn out 1m cows a year as China raises steaks in cloning research,” though I cannot find it on-line.  And “Biologists induce flatworms to grow heads and brains of other species.

3. “Why, then, is 29-year-old Laurence the only full-time forensic pollen analyst in the United States?

4. Schmalensee and Stavins survey the history of cap and trade programs (NBER).

5. What do we know about ultra high net worth individuals?  And Republicans prefer politicians with deep voices.

6. Henry Aaron argues that ACA is still doing OK.

Greg Ip on why safety can be dangerous

by on November 25, 2015 at 3:44 am in Uncategorized | Permalink

Greg Ip presented his new book Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe at Mercatus/GMU, with an emphasis on financial crises and a bit on forest fires too.  I was the moderator, and the commentators were Alex J. Pollock and Jared Bernstein.

The video and short summary is here.  My previous review of Greg’s book is here.

Douglass North links

by on November 24, 2015 at 8:28 pm in Uncategorized | Permalink

1. David Henderson on North.

2. A Fine Theorem on North.

3. Michael Sykuta on North.

4. NYT obituary of North.

5. Henry Farrell on North.

6. Dan Klein on North.

7. Art Carden on North.

8. Arnold Kling on North.

9. Ryan Avent on North.

10. Check Barry Weingast’s Facebook page, I believe the post on Doug is open.

11. John Nye on Doug North.  And yet another take from Nye.

If there are new good links on North, I’ll addend them tomorrow morning, so check back if you are interested.  He was a frequent visitor at George Mason and also at Mercatus, so many of us will miss him very much.

Tuesday assorted links

by on November 24, 2015 at 1:52 pm in Uncategorized | Permalink

1. Interview with James Poterba.

2. South Korean zombie companies?  And good WSJ survey piece on premature deindustrialization., and the Dani Rodrik paper again, revised (pdf).

3. How agriculture shaped human DNA (NYT)

4. The market-oriented reformist wins in Argentina.

5. Anne-Marie Slaughter on the Wilson School renaming controversy (not my views, by the way, but she has run the Wilson School and worth reading how she sees the world).

6. “At 12:45 p.m., a window pops open on a system called FedTrade and plays a sequence of musical notes—F-E-D—to open trading, traders said.

7. Why are engineers more likely to become terrorists?

Monday assorted links

by on November 23, 2015 at 12:13 pm in Uncategorized | Permalink

1. Liquidity premium > carrying costs, all of a sudden.

2. Debt to gdg ratios, and the distribution of how they change (China fact of the day).

3. The aging of the NPR audience.

4. Why doesn’t NYC know where its subway trains are?

5. “Lord’s Prayer advert banned before ‘Star Wars’…In a snub to the Church of England, an advert that was planned to coincide with the new film “The Force Awakens,” has been rejected by most UK cinemas due to fears it could be offensive.”  I call that one Ross Douthat bait…

6. The age-related savings glut is about to reverse.