Month: June 2005

Vermont Fact of the Day

I’m in Vermont singing Eagles songs and toasting marshmallows while gathered around a campfire.  I know, know, but I have only one vote!  One the positive side, it is has been a long time since I’ve really seen the stars.

Here’s an interesting tidbit from our guidebook:

The 1870s saw the maximum of cleared land in the state – at that time as little as 20% of the state was in forest – the figure today approaches 85%.

I can’t vouch for the specific fact but the general idea is certainly correct.  Forestland is up not down.  We think of the city as the enemy of the environment but in fact the main constraint on forest is farmland and better technology has meant that we are producing more food from less land than ever before.  See here for more.

Thanks to Monique van Hoek for the pointer.

Markets in everything

Apollo moon mission astronaut Neil Armstrong has threatened to sue a barbershop owner who collected Armstrong’s hair after a trim and sold it for $3,000…

Sizemore said he sold the hair to an agent for John Reznikoff, a Westport, Connecticut, collector listed by Guinness World Records as having the largest collection of hair from historical celebrities. The collection, insured for $1 million, includes hair from Abraham Lincoln, Marilyn Monroe, Albert Einstein and Napoleon.

Here is the full story.

My Ph.d. Macro reading list

Books: J. Bradford DeLong: Intermediate Macroeconomics, and Paul Blustein, And the Money Kept Rolling in (and Out)

Real Business Cycles

Stadler, George. “Real Business Cycles,” Journal of Economic Literature, December 1994, 1750-1783.

Long, John B. and Plosser, Charles. “Real Business Cycles,” Journal of Political Economy, 1983, 39-69.

Barsky, Robert and Miron, Jeffrey. “The Seasonal Cycle and the Business Cycle,” Journal of Political Economy, 1989, 503-534.

Prescott-Summers debate, Quarterly Review, Minneapolis Fed., “Theory Ahead of Business Cycle Measurement,” “Some Skeptical Observations on Real Business Cycle Theory,” and “Response to a Skeptic.”

Bils, Mark. “The Cyclical Behavior of Marginal Cost and Price,” American Economic Review, 1987, 838-55.

Romer, Christina. “Changes in Business Cycles,” Journal of Economic Perspectives, Spring 1999, 23-45.

Black, Fischer. “Noise,” Journal of Finance, 1986.

Mehrling, Perry. “Understanding Fischer Black,” you can find this paper at:

Finance and interest rates

Ross, Stephen. “Finance,” In The New Palgrave, pp.322-336.

Chapters six and seven, “Objects of Choice,” and “Market Equilibrium”.

Jagannathan, Ravi  and McGrattan, Ellen. “The CAPM Debate.” Federal Reserve Bank of Minneapolis,  Fall 1995, 2-17.

Campbell,  John Y. and Vuolteenaho, Tuomo, “Bad Beta, Good Beta,” American Economic Review, December 2004, 1249-1275.

Campbell, John, “Some Lessons for the Yield Curve,” Journal of Economic Perspectives, Summer 1995, 129-152.

Siegel, Jeremy and Thaler, Richard. “The Equity Premium Puzzle,” Journal of Economic Perspectives, Winter 1997, 191-200.

Kocherlakota, Narayana R. “The Equity Premium: It’s Still a Puzzle,” Journal of Economic Literature, March 1996, 42-71.

Lee, Charles, Shleifer, Andrei, and Thaler, Richard. “Anomalies: Closed End Mutual Funds,” Journal of Economic Perspectives, Fall 1990, 153-164.

Keynesian Economics

Cowen, Tyler. “Why Keynesianism Triumphed Or, Could So Many Keynesians Have Been Wrong?”, Critical Review, Summer/Fall 1989, 518-530.

“Symposium: Keynesian Economics Today,” Journal of Economic Perspectives, Winter 1993, 3-82.

“Is There a Core of Practical Macroeconomics That We Should All Believe?” American Economic Review, symposium, May 1997, 230-246.

Taylor, John. “Reassessing Discretionary Fiscal Policy,” Journal of Economic Perspectives, Summer 2000, 21-36.

Bernheim, B. Douglas. “A Neoclassical Perspective on Budget Deficits,” Journal of Economic Perspectives, Spring 1989, 55-72.

Eisner, Robert. “Budget Deficits: Rhetoric and Reality,” Journal of Economic Perspectives, Spring 1989.

Stiglitz, Joseph E. “The Causes and Consequences of the Dependence of Quality on Price.” Journal of Economic Literature, March 1987, 1-48.

Hall, Robert E. “Employment Fluctuations with Equilibrium Wage Stickiness,” American Economic Review, March 2005, 50-65.

Summers, Lawrence. “The Scientific Illusion in Empirical Macroeconomics,” Scandinavian Journal of Economics, 1991, 129-148.

Monetary Policy

Blinder, Alan. “What Central Bankers Can Learn From Academics – and Vice Versa,” Journal of Economic Perspectives, Spring 1997, 3-20.

Bernanke, Ben and Mishkin, F. “Inflation Targeting,” Journal of Economic Perspectives, Spring 1997, 97-117.

Aiyagari, S. Rao, “Deflating the Case for Zero Inflation,” Federal Reserve Bank of Minneapolis, Quarterly Review, Summer 1990, 2-11.

“Symposium on the Monetary Transmission Mechanism,” Journal of Economic Perspectives, Fall 1995, 3-96.

Roberds, William. “What Hath the Fed Wrought? Interest Rate Smoothing in Theory and Practice,” Federal Reserve Bank of Atlanta, Economic Review, January/February 1992.

Shafir, Eldar, Diamond, Peter, and Tversky, Amos. “Money Illusion,” Quarterly Journal of Economics, May 1997, 341-374.

Caplin, Andrew and Spulber, Daniel. “Menu Costs and the Neutrality of Money,” Quarterly Journal of Economics, November 1987, 703-725.

Sargent, Thomas and Wallace, Neil. “Some Unpleasant Monetarist Arithmetic,” Federal Reserve Bank of Minneapolis, Quarterly Review, 1985, 1-17.

Wallace, Neil. “A Legal Restrictions Theory of the Demand for “Money” and the Role of Monetary Policy,” Federal Reserve Bank of Minneapolis Quarterly Review, Winter 1983.

Posen, Adam. “Why Central Bank

Independence Does Not Cause Low Inflation: There is No Institutional Fix for Politics,” in Finance and the International Economy, edited by Richard O’Brien, 1993.

Garrison, Roger, “The Austrian Theory of the Business Cycle,” At  href=""

Krugman, Paul. “The Hangover Theory,” at

Cowen, Tyler. Risk and Business Cycles, chapter three.

Savings and social security

Hubbard, R. Glenn and Skinner, Jonathan. “Assessing the Effectiveness of Savings Incentives.” Journal of Economic Perspectives, Fall 1996, 73-90.

Choi, Laibson, Madrian, and Metrick, “Optimal Defaults,” American Economic Review, May 2003, also at ttp://

Samwick, Andrew. Voxbaby weblog, read the entries on social security.

International Economics

Current issues:

“If I Believed in Austrian Business Cycle Theory,” by

Tyler  Cowen, on

Brad Setser’s WebLog.

Dornbusch, Rudiger. “Purchasing Power Parity,” in The New Palgrave.

Friedman, Milton. “The Case for Flexible Exchange Rates.” In Essays in Positive Economics, 1953, University Chicago Press.

Mundell-Fleming model, see Brad’s book.

The World


Krugman, Paul R. “It’s Baaack:

Japan’s Slump and the Return of the Liquidity Trap,” Brookings Papers on Economic Activity, 1998, 29, 2, 137-87.

Kashyap, Anil K. “Sorting out Japan’s Financial Crisis,” Federal Reserve Bank of Chicago Economic Perspectives, 2002, 26, 4, 42-55.





Developing Nations



Bordo, Michael D. “Essays in Exploration: A Survey of the Literature,” Explorations in Economic History, 1986, 339-415.

“Symposium: The Great Depression,” Journal of Economic Perspectives, Spring 1993, 3-102.

Romer, Christina H “What Ended the Great Depression?” Journal of Economic History, 1992, 52, 4, 757-84.

Here is a searchable link to Brad DeLong’s website:

Penalties for bad central bankers

A former Thai central bank governor has been fined 186bn baht ($4.6bn;
£2.5bn) for his leading role in the country’s 1997 financial crash.

Rerngchai Marakanond spent that figure trying – and failing – to prop up the country’s currency during the crisis.

The Bangkok Civil Court has now ordered that Mr Marakanond must reimburse the Bank of Thailand within a month.

Otherwise he will face the seizure of his personal assets. The case was brought by the Thai government.

Dan Drezner has the scoop.  Cannot the guy testify that the fiscal authority was to blame?  And will Thailand ever see a dirty float again?

Cell phones for (beneficial) social control?

Smoking cessation programmes that use text messaging can double the
quit rate in young smokers, according to a clinical trial in New

trial led by Anthony Rodgers, director of the Clinical Trials Research
Unit at the University of Auckland, NZ, is the first to test the use of
mobile phones as an aid to giving up smoking.

the study, over 850 young smokers who wanted to quit received text
messages, such as: “Write down 4 people who will get a kick outta u
kicking butt. Your mum, dad, m8s?”

smokers, whose average age was 25 years old, received five messages a
day for a week before their designated “quit day”, and for the
following four weeks. Then they received three messages a week for a
further five months. They were also given one month of free personal
texting, starting on their quit day, as an incentive.

similar group of young smokers received one month free texting six
months after their designated quit day, but no text messages designed
to help them quit.

weeks after quit day, 28% of the group that received the texts claimed
to have quit, compared with 13% of the control group. To check these
self-reported results, the team analysed levels of cotinine, a nicotine
breakdown product, in the saliva of one in 10 of the participants. The
results were the same for both groups – about half of those who claimed
to have given up were actually still smoking. Quit rates appeared to
remain high after six months, although the results are less certain
because many of the participants were lost to follow up.   


Repetition does matter; here is the story.


Two of the four — the bald ones — looked like villains from a Bruce Willis movie.  The other two looked like late-career managers after seven years of Arbeitslosigkeit, laid off by Lufthansa due to insufficient downward real wage flexibility.

They didn’t play instruments, nor did they sing.  Well, one of them would, every few  minutes or so, bark something into a kind of mike.  He ejaculated phrases like "Carbohydrat" [sic] and "Tour de France" [at least his country supported the EU Constitution].

All four stood at laptop computers, with, well, "that look."  You know, the look you have when you just blogged something that you took just a little too seriously.  Hey, maybe they were blogging.  [What did you expect Tyler, Elisabeth Schwarzkopf? a ten-minute accordion solo?]

Nor am I the one to call them stiff.  I arrived at the 9:30 club – one of DC’s coolest venues — at 7:30, armed with my copy of Oscar Edward Anderson’s 1953 Refrigeration in America: A History of a Technology and its Impact, just in case the proceedings at hand should prove too slow for my tastes.

But I was not to read the book.  As a matter of pure accident, I ran into Henry Farrell, of CrookedTimber fame.  Here is his excellent recent post on Turkey and the EU.

The bottom line: The music was great, and the show started exactly on time.