Category Archives: PSST and Macro

Renewable != Sustainable

Benjamin Zycher writes, there is nothing “clean” about renewables. There is the heavy-metal pollution created by the production process for wind turbines, along with their noise and flicker effects. There is the large problem of solar panel waste. There is … Continue reading

Posted in energy and the environment, Specialization and Trade Economics Intro | 16 Comments

Is the economy illegible?

In the model of the economy as a GDP factory, the most fundamental equation is the production function, Y = f(K,L). This says that total output (Y) is determined by the total amount of capital (K) and the total amount … Continue reading

Posted in Economic education and methods, PSST and Macro | 10 Comments

Money, interest, and the economy

John Cochrane writes, Investment responds to the stock market, and the stock market moves because risk premiums move, not because interest rates move. He goes on to suggest that if monetary policy can effect the economy, it must work through … Continue reading

Posted in Monetary Economics, PSST and Macro | 8 Comments

Math and uncertainty

A commenter writes, if the math is done right, it should then say precisely that: there isn’t enough data to resolve the parameters you’re trying to impute with any reasonable degreee of confidence. The ‘anti-math’ people seem to forget that … Continue reading

Posted in Economic education and methods, PSST and Macro | 15 Comments

Elasticity of economic beliefs

Bryan Caplan writes, If you’re even mildly Keynesian, you know that downward nominal wage rigidity occasionally leads to lots of involuntary unemployment. If, like most Keynesians, you think that your view is backed by overwhelming empirical evidence, I have a … Continue reading

Posted in PSST and Macro | 7 Comments

Scott Sumner’s macroeconomics: my thoughts

He writes, I’ll use “(e)” to denote a (market) expected value. NGDP(e) is the single most important variable in macro; it should be the centerpiece of modern macro. How can we work with a central concept that is purely mental? … Continue reading

Posted in Monetary Economics, PSST and Macro, Scott Sumner is Coherent | 13 Comments

Preach it, brother John

John Cochrane writes, there is a deep lesson in their style of modeling: Heterogeneity. Misallocation. Dispersion. Inequality. The key lesson is not that “regulation is killing US firms on average.” The US as a whole is doing badly because firms … Continue reading

Posted in Housing and housing finance, PSST and Macro | 13 Comments

Bank Lending and Non-bank Lending

Daniel Nevins, in Economics for Independent Thinkers, a book I mentioned the other day, thinks of non-bank lending as coming from savings and bank lending as created by fiat. I do not think in those terms. Think of an economy … Continue reading

Posted in books and book reviews, financial markets, PSST and Macro | 7 Comments

Measuring Output of the GDP Factory

Martin Feldstein writes, More generally, as Triplett and Bosworth (2004) note, the official data imply that productivity in the health industry, as measured by the ratio of output to the number of employee hours involved in production, declined year after … Continue reading

Posted in Growth Causes and Consequences, PSST and Macro | 6 Comments

Climate Science vs. Macroeconomics

Climate change is much in the news. My view of climate science is that it shares a lot of the same problems as orthodox macroeconomics. Common features include: 1. Use of computer models in which there are a variety of … Continue reading

Posted in energy and the environment, PSST and Macro | 45 Comments