It has been a while since I've written a blog post and I want give some updates. I am currently working on a macro/monetary paper and I'm just starting to build the model. It's very exciting since it's the first official model I've built (even though I have built some for my classes). I will be posting more here and there.
Johan
Thursday, February 1, 2018
Saturday, November 26, 2016
Xavier Gabaix's Behavioral New Keynesian Paper
There's been an interesting paper that has been just out and it's utilizing bounded rationality (an important concept from Behavioral Economics) into the mainstream New Keynesian model. I have been expecting this for a while now and it's great that the paper has finally been written. I also expect to work on something close to this in the near future!
Friday, September 9, 2016
Very Interesting Forbes article on Behavioral Economics and Healthcare
While I might not fully agree with the author's opinions in this particular article, I find it a quite interesting short read. While behavioral economics usually reaches the right conclusions, I find the author's opinion on behavioral economics and healthcare to be quite fascinating.
Saturday, July 9, 2016
The Democrats Have Lost Me with their $15 Minimum Wage in their Platform
I believe that the Democrats have made a grave decision by including the wrong-headed $15 minimum wage by including it as part of their platform. Many people regard this as a radical idea, but I regard this as an economically inefficient and completely nonsensical idea to boost poverty in the United States. Why are they wrong? Here's my take on the idea.
1. Minimum Wage of $15 Will Almost Never Boost Poverty: Wages are generally set by the market in every sector and this corresponds almost exactly to the goods and services that our consumers purchase from that company or that organization. The minimum wage was never intended to be anything but to maintain that the person to be working at the minimum rate to receive anything but a level barely above a subsistence level. Franklin Delano Roosevelt and the New Deal government at that time never meant it to be anything but such, rather than a "living wage". There is also the moral judgement of whether we should reward workers who might not contribute enough economically to warrant such a wage. Surely it will have negative consequences on the wages of other workers.
2. Minimum Wage of $15 in an era of globalization and will cause an increase in goods and services: Minimum wages will not work in an era of globalization. With factory jobs and other positions located elsewhere, there is good impetus for companies to outsource the positions if the prices are too high for them to be located in the current location. If it is a job you cannot outsource, it will just lead to inflation on goods and services which will be extremely detrimental to the customers and also on workers. It will not really increase the wages in that sector if it will cause goods and services to adjust accordingly.
3. Minimum Wage of $15 Will Lead to Further Unemployment: A majority of empirical studies, including this one conducted by the Congressional Budget Office, listed that it will indeed cost jobs. Let's use a generalized example here: What if a business that produces $20 dollars and by hiring two workers at the current federal minimum rate of $7.25 will help it to generate a profit of $5.50. What if that business can no longer make a profit by the new minimum wage laws? They will most likely have to adjust their business strategy by laying off or not hiring any workers. This especially applies to the young that are just starting out in the labor force and unskilled laborers. This will just put more people out of work and into taking more federal welfare money. The United States already has the population roughly the size of Spain on welfare and we don't need another Spain without making the federal budget deficit even worse.
4. Fight for Fifteen? How about a fight for 25 or 50: If they have a rationale for $15 a hour, why not $25 a hour or $50 a hour? Where are they getting their numbers from? If these qualified policymakers think that increasing the minimum wage will not cause any increases in how the other factors are calculated, then the opinion from economists do not matter!
I think it's better if both parties listened to economists and realized that increasing the minimum wage above the appropriate price ceilings, it will have a detrimental effect on the economy as a whole. It will lead to unemployment, inflation on good and services and worst of all, more outsourcing! There are many other ways of increasing the welfare and the livelihood of people rather than increasing the minimum wage, which is a detriment to how the labor markets function.
1. Minimum Wage of $15 Will Almost Never Boost Poverty: Wages are generally set by the market in every sector and this corresponds almost exactly to the goods and services that our consumers purchase from that company or that organization. The minimum wage was never intended to be anything but to maintain that the person to be working at the minimum rate to receive anything but a level barely above a subsistence level. Franklin Delano Roosevelt and the New Deal government at that time never meant it to be anything but such, rather than a "living wage". There is also the moral judgement of whether we should reward workers who might not contribute enough economically to warrant such a wage. Surely it will have negative consequences on the wages of other workers.
2. Minimum Wage of $15 in an era of globalization and will cause an increase in goods and services: Minimum wages will not work in an era of globalization. With factory jobs and other positions located elsewhere, there is good impetus for companies to outsource the positions if the prices are too high for them to be located in the current location. If it is a job you cannot outsource, it will just lead to inflation on goods and services which will be extremely detrimental to the customers and also on workers. It will not really increase the wages in that sector if it will cause goods and services to adjust accordingly.
3. Minimum Wage of $15 Will Lead to Further Unemployment: A majority of empirical studies, including this one conducted by the Congressional Budget Office, listed that it will indeed cost jobs. Let's use a generalized example here: What if a business that produces $20 dollars and by hiring two workers at the current federal minimum rate of $7.25 will help it to generate a profit of $5.50. What if that business can no longer make a profit by the new minimum wage laws? They will most likely have to adjust their business strategy by laying off or not hiring any workers. This especially applies to the young that are just starting out in the labor force and unskilled laborers. This will just put more people out of work and into taking more federal welfare money. The United States already has the population roughly the size of Spain on welfare and we don't need another Spain without making the federal budget deficit even worse.
4. Fight for Fifteen? How about a fight for 25 or 50: If they have a rationale for $15 a hour, why not $25 a hour or $50 a hour? Where are they getting their numbers from? If these qualified policymakers think that increasing the minimum wage will not cause any increases in how the other factors are calculated, then the opinion from economists do not matter!
I think it's better if both parties listened to economists and realized that increasing the minimum wage above the appropriate price ceilings, it will have a detrimental effect on the economy as a whole. It will lead to unemployment, inflation on good and services and worst of all, more outsourcing! There are many other ways of increasing the welfare and the livelihood of people rather than increasing the minimum wage, which is a detriment to how the labor markets function.
Monday, June 20, 2016
A Well Written Short History/Introduction to Behavioral Economics
Here is a short history and introduction to Behavioral Economics for those that are interested in the field. I find it a good introduction to Behavioral Economics even though Richard Thaler's Misbehaving: The Making of Behavioral Economics is a better and a more in-depth breakdown of the field.
Tuesday, June 14, 2016
Good Hoover article on the Rise of Scientism
Just reading through a plethora of online articles, I found something that can be applied to economics, which is the idea of rise of "Scientism". Here is the article that is posted on the Hoover Institution website. It's quite interesting to think of how it relates to all of the 'competitive discussion' within the economics community. All of theories in each of the competing different schools of economic thought comes to mind! A good article and good food for thought for those who are interested in trying out new ideas or just a good read in general as "Scientism" is something to be entirely avoided in our field.
Friday, June 10, 2016
June Reading List
Since I have started to be busy this month working on more important details, I will list my June AND July Reading List this month. I will also catch up on the books that I have not completed from the previous months and they will not be listed on this list. This means the list I have here will be much more brief than previous lists.
Econ Books:
1. Nahid Aslanbeigui & Guy Oakes - The Making of a Cambridge Economist
2. James Rickards - The Death of Money
3. Robert J. Shiller - Irrational Exuberance
Non-Econ Books:
1. Graham T Allison - Essence of Decision: Explaining the Cuban Missile Crisis
Econ Books:
1. Nahid Aslanbeigui & Guy Oakes - The Making of a Cambridge Economist
2. James Rickards - The Death of Money
3. Robert J. Shiller - Irrational Exuberance
Non-Econ Books:
1. Graham T Allison - Essence of Decision: Explaining the Cuban Missile Crisis
Sunday, May 1, 2016
May Reading List
Here's my May Reading List:
Econ Books:
1. Robert J. Gordon - The Rise and Fall of American Growth (from April)
2. Akerlof/Shiller - Phishing for Phools: The Economics of Manipulation and Deception
3. Paul Samuelson (edited) - Inside the Economists' Mind
Non-Econ Books:
1. Martha Nussbaum - The Frontiers of Justice (continued reading)
Thursday, April 14, 2016
Great Paper on the New Keynesian model
As I was scourging through interesting papers, I found a very interesting paper written by Cohen-Setton, Hausman and Wieland on the New Keynesian model. Within the contents of the paper, they discuss the New Keynesian model and it's effect on supply-side shocks in depressed economies. They utilized a very interesting example in France and its economy after a special measure where they had lifted the gold standard and set interesting economic measures. The results are quite fascinating and the paper goes into quite detail utilizing time series and a fantastic model to describe what had happened in detail. I'm still reading the paper, but it looks like they have found the key to the current debate over structural reforms within both the United States and the European Union. By utilizing these structural reform measures that were recommended before, the example shows that it doesn't particularly work very well in times of rare financial crises. A good read for anyone who is interested in these pressing matters, along with observing the model that they had utilized.
Friday, March 25, 2016
New Economic Theory Missing the Point or Could Be Right On Point?
This latest blog post will explore some ideas that I have gathered by reading Noah Smith's blog. In a blog post about two interesting articles read by Noah Smith about new paradigms in economic theory, it is definitely interesting to think about new possible paradigms in economic theory as the field of theory has somewhat stagnated as of late. While it is interesting to think about all of the stuff Nick Hanauer and Eric Liu have to offer, I want to nail it down to an idea that I have on what they have written.
In the article, they talk about social preferences and cooperative games. I have explored both of these interesting concepts in previous thought bubbles, with some of the others as well and it has given me an excellent idea to write a working paper on this particular issue, which excentuates what some others have worked on in social preferences and cooperative games. What I'm going to do differently in this working paper is utilize them to talk about methods of how it interacts with certain fields in Political Economy. While I can elaborate in person about these issues, it would be utmost difficult to surmise that I can find a solution here to the question at hand right away. For those who are interested in these new possible paradigms in Political Economy, I am also combining it with other more established methods of research that has been conducted it before. For those who are interested in what Hanauer and Liu have written in this short, but rather informational piece, the link is here.
In the article, they talk about social preferences and cooperative games. I have explored both of these interesting concepts in previous thought bubbles, with some of the others as well and it has given me an excellent idea to write a working paper on this particular issue, which excentuates what some others have worked on in social preferences and cooperative games. What I'm going to do differently in this working paper is utilize them to talk about methods of how it interacts with certain fields in Political Economy. While I can elaborate in person about these issues, it would be utmost difficult to surmise that I can find a solution here to the question at hand right away. For those who are interested in these new possible paradigms in Political Economy, I am also combining it with other more established methods of research that has been conducted it before. For those who are interested in what Hanauer and Liu have written in this short, but rather informational piece, the link is here.
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