Tuesday, November 26, 2013

Well worth reading

1. Forward interest rates and monetary tightening, by Jim Hamilton at Econbrowser. This is a nice refresher of forward interest rates, and an application of the Gurkaynak-Sack-Wright data set (xls).
2. A summary and critique of Summers' "great stagnation" hypothesis, by Stephen King at the FT. King makes an important distinction between "supply side" and "demand side" theories of the stagnation. Tyler Cowen already pointed the discussion in that direction a few days ago.
3. NBER working paper by David Dollar and Benjamin Jones, on the link between China's institutions and its "unusual" macroeconomic performance.
China presents several macroeconomic patterns that appear inconsistent with standard stylized facts about economic development and hence inconsistent with the standard neoclassical growth model. We show that Chinese macroeconomic patterns instead appear consistent with an environment where state control of factor markets can promote aggressive output goals. We consider the micro-institutional features that can sustain this behavior, emphasizing the hukou system and state control over capital allocation, and present a simple model built on these features. The model can explain several puzzling facts about the Chinese economy, including its unusually low labor share and unusually high saving and investment rates. Interestingly, the model also shows that free-market reforms can initially take the economy further from global macroeconomic norms.
4. John Hussman on his usual crusade to show that we should expect meager returns from U.S. equities. I find his charts persuasive--until he starts trying to show that the Philips curve is incorrectly specified, or that there is a tiny correlation between unemployment and the stock market. (I don't disagree with the theses, but with the methods.)

No comments: