Arnold Kling  

Good Issue of JEL

Opposition to the Bail-Out: St... Political Put-Down of the Year...

Ordinarily, I don't care much for the Journal of Economic Literature, the American Economic Association's periodical selection of survey articles and book reviews. But the September 2008 issue is excellent. If any diligent commenters can find links to any of the articles, please report them.

The survey articles are:
--Jonathan Gruber on covering the uninsured
--Eric Hanushek and Ludger Woessman on cognitive skills and economic development
--Peter Temin on real business cycle models of the Great Depression
--Jesus Fernandez-Villaverde reviewing Ray Fair's latest book on macroeconometric modeling
--Clifford Winston reviewing a book on the perils and promise of transparency, about consumer protection using disclosure laws.

Gruber writes,

Massachusetts recently enacted legislation that transforms the nature of the insurance market...This is truly a comprehensive reform that brings the state as close to universal coverage as anywhere in the United States.

He fails to mention the fact that the Massachusetts plan has been a disappointment. Nor does he mention his own deep involvement in the plan, which might affect his objectivity in the matter.

The paper I really wish I could link to is Fernandez-Villa Verde. His section 3 is subtitled "Death," referring to several powerful criticisms of macroeconometric models that emerged in the 1970's and 1980's. These influenced me greatly. I think that what has happened with the economics profession since then has been an interesting example of self-selection. Economists like me, who took the critiques seriously and decided that empirical macro is fraught, left the macro field. Economists who stayed in the field did so in spite of the critiques.

So there is this unique professional divide regarding macroeconometrics. I mean, I am not a labor economist, but that is not because I don't believe in labor economics. On the other hand, the reason that I am not a macroeconometrician is that I don't believe in what they are doing.

Comments and Sharing

CATEGORIES: Macroeconomics

COMMENTS (2 to date)
Bob Goldberg writes:

Good pick on the Gruber piece.. Gruber also fails to mention that such programs simple replace private coverage and personal responsibility for payment with public assumption of the costs and risks. By about 50 percent. Talk about inefficiency. He should know since both he and David Cutler (one of the most thoughtful health care economists around and most substantial) wrote about a decade ago. (See, David M. Cutler and Jonathan Gruber, “Does Public Insurance Crowd Out Private Insurance?” The Quarterly Journal of Economics, Vol. 111, No. 2 (May 1996), pp. 391–430. And also, Jonathan Gruber and Kosali Simon, “Crowd-Out Ten Years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance?” NBER Working Paper No. w12858, January 2007, and Noelia Duchovny and Lyle Nelson, “The State Children’s Health Insurance Program,” Congressional Budget Office, May 2007. In turn, the underwriting models that would normally apply in insurance are tossed out the window. When you make the purchase of a good or service nearly risk free -- as with housing or home ownership -- guess what happens? Markets can't sustain the subsequent behavior without continued government expansion of subsidies, support and regulation and then costs at some point become prohibitive and lead to rationing.

David Thomson writes:

Why does Arnold Kling shy away from more important matters? Our next president may be a proven radical who will do enormous damage to our nation's economy. Kling needs to get his priorities straight:

“WHAT exactly does a “community organizer” do? Barack Obama’s rise has left many Americans asking themselves that question. Here’s a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit.

In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers.

In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.”

Comments for this entry have been closed
Return to top