Believe those who are seeking cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 truth. Doubt those who find it. Andre Gide

Wednesday, September 30, 2009

And cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 New Minneapolis Fed President is...

Narayana Kocherlakota; see here.

Hmm...his biography says that he was born in Baltimore. I seem to recall him mentioning that he was born in Winnipeg. Is he Canadian, or isn't he? Someone enlighten me!

In any case, he is an excellent choice. NK is a consummate academic: clear-thinking, articulate, and persuasive. Does he have what it takes to be a successful/influential Fed president? Yes, I believe so. Apart from his academic credentials, he has a very easy manner; not many people are likely to find him a boor. He has cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 gift of skewering lame-brained ideas to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 wall, and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n making you feel good that you've learned something useful (at least, this has been my experience).

Congratulations to NK...and good luck!

Tuesday, September 22, 2009

Kocherlakota on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 State of Macro

A very nice piece by NK here. Unfortunately, you won't see something like this published in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 NYT. But naturally, we can rely on DeLong to make a comment; see here: Narayana Leaves Me Puzzled. Consider this DeLong quote:
The models thus tell us that downturns are eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 result of a great forgetting of technological and organizational knowledge, a great vacation as workers develop a sudden extra taste for leisure, or a great rusting as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 speed with which oxygen in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 air corrodes speeds up and so reduces cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 value of large things made out of metal.

This is exactly how I would expect a first-year undergraduate to interpret a model that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y've seen for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first time. And DeLong claims that he has a PhD in economics. Let me help cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 poor lad along.

Some macro models incorporate "news shocks." A news shock is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 random arrival of information that leads people to (rationally) revise cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir forecasts of future events. These forecasts may be made, for example, over future productivity, future riskiness of investments, future policies, etc. These news shocks do not seem like an implausible impulse mechanism; unexpected news arrives every day.

Investment demand today depends on forecasted productivity of investment. These forecasts will change with news; leading to variations in investment that an econometrician might identify as "aggregate demand shocks." As cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 investment matures and comes online, its actual productivity may be higher or lower than originally forecast; its realization constitutes anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r "shock."

There is no need to appeal to DeLong's childish "great forgetting" interpretation of a negative technology shock. A negative technology shock occurs when cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 realized return on investment is lower than expected. The return on an important class of investments may turn out to be terrible (think of all cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fibre optic cable planted across cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 world's oceans in anticipation of a demand that never materialized). And as Fisher Black has stressed, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se types of errors are typically correlated across agents. In short, recessions may be explained, in part, by collective mistakes on investments made in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past.

In any case, what DeLong fails to offer us what he might propose instead as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ultimate source of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 business cycle? I am guessing that he might say something like "animal spirits." So why did cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 recession occur? Because people thought that it would. Why did that boom occur? Because people believed that it would.

There may be an element of truth to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 animal spirit hypocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365sis; but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re do appear to be competing interpretations as well. If DeLong would spend less time writing his blog and more time reading cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 literature, he might one day be less puzzled with Narayana's observations.