Bryan Caplan and David Henderson

Arnold Kling: February 2009

An Author Archive by Month (55 entries)

The Future

Growth: Causal Factors
Arnold Kling
Jeff Cornwall summarizes the panel on the outlook for the economy and entrepreneurs at the Kauffman Foundation forum this past weekend in Kansas City. In a later post, I will discuss the interesting ideas that were brought up at that... MORE

Links Without Comment (almost)

Behavioral Economics and Rationality
Arnold Kling
Only because I am too busy. Grant McCracken on whether restrained consumer spending will be temporary or permanent. Virginia Postrel on the same topic, based on discussions at the Kauffman Foundation Forum. It was great to see her looking so... MORE

Intended or Unintended?

Behavioral Economics and Rationality
Arnold Kling
An article in Prospect: A company chairman is told a new project will increase profits but harm the environment. He says, "I don't care about harming the environment. Let's start the new project. I just want to make as much... MORE

Kansas City BBQ and Blogfest

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen reports on the barbecue competition. He and I, along with a Princeton University Press person, Seth Ditchick (sp?) arrived in time to go to lunch at Oklahoma Joe's. It was the best BBQ I can remember ever having.... MORE

Save the Economy or Save the Banks?

Monetary Policy
Arnold Kling
Scott Sumner writes, Many economists simply assume that the current contraction has been caused by the financial crisis. After all, isn't that obvious? Actually, no. For nearly a year after the onset of the financial crisis nominal GDP continued growing... MORE

Evening Commentary

Fiscal Policy
Arnold Kling
From Brad DeLong, Michele Boldrin, Clive Crook, and David Brooks. Thanks to Greg Mankiw for the first two pointers. Comments below.... MORE

A Few Links

Finance: stocks, options, etc.
Arnold Kling
Bill Gross writes, The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization as currently contemplated by some. As you know, I differ. I want foreclosures and bank shutdowns. Nick Schulz points me to Chistopher... MORE

Ya Gotta Believe

Behavioral Economics and Rationality
Arnold Kling
Michael Brooks, writing in The New Scientist, says, Bering considers a belief in some form of life apart from that experienced in the body to be the default setting of the human brain. Education and experience teach us to override... MORE

Another Tale of Suits and Geeks

Finance: stocks, options, etc.
Arnold Kling
Felix Salmon writes, because the copula function used CDS prices to calculate correlation, it was forced to confine itself to looking at the period of time when those credit default swaps had been in existence: less than a decade, a... MORE

What Would Keynes Do?

Fiscal Policy
Arnold Kling
I write, If you follow the news media, you may think that the economics profession is divided into two camps: the majority, who favor the stimulus bill; and a minority, who are against any stimulus. In fact, there are many... MORE

Bank Strategy: Nothing New?

Finance: stocks, options, etc.
Arnold Kling
The Wall Street Journal quotes a joint statement by U.S. bank regulators. The U.S. government stands firmly behind the banking system during this period of financial strain to ensure it will be able to perform its key function of providing... MORE

Up in the Valley

Information Goods, Intellectual Property
Arnold Kling
Marc Andreessen is the least depressing person I've heard in a long time. Listen to the whole thing. He is ready to throw the whole legacy banking system under the bus, and instead go full speed with online banking. I'm... MORE

Failing Banks

Finance: stocks, options, etc.
Arnold Kling
[update: see Woodward and Hall for an idea for handling Citicorp. I assume they mean to deal with the parent company, Citigroup.] See Simon Johnson and Tyler Cowen. Tyler argues that shutting down failing banks could be really ugly, because... MORE

Universal Human Nature

Economic History
Arnold Kling
Christopher I. Beckwith writes, Viewed from the perspective of Eurasian history over the last four millennia, there does not seem to me to be any significant difference between the default underlying human socio-political structure during this time period--that is, down... MORE

Official Takes Stand Against Auto Bailout

Political Economy
Arnold Kling
A heroic public servant speaks. "Voters picked me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories," From that bastion of heartless, free-market ideology, Sweden. Thanks to Richard Florida for the pointer.... MORE

Give Back My Wallet

Fiscal Policy
Arnold Kling
Rasmussen reports, Forty-five percent (45%) of Americans oppose the federal government subsidizing mortgage payments for financially troubled homeowners, according to a new Rasmussen Reports national telephone survey. Thirty-eight percent (38%) think government subsidies are a good idea, and 18% are... MORE

Massachusetts Health Care Reform

Economics of Health Care
Arnold Kling
These critics sound like me. Massachusetts members of the Physicians for a National Health Program released a report today faulting the state's experiment with health reform for failing to achieve universal coverage, being too expensive and draining funds away from... MORE

The Housing Bailout as a Public Good

Political Economy
Arnold Kling
Why do we have a housing bailout that spends $75 billion, plus $200 billion in "support" for Freddie Mac and Fannie Mae? By what test is this a public good? My test is this: would an overwhelming majority of Americans... MORE

Determining Bank Solvency

Finance: stocks, options, etc.
Arnold Kling
John Hempton has a must-read post in which he says that determining bank solvency is difficult. I think he understates the difficulty, because he does not get into the issue of valuing short put options that once were way out... MORE

Clive Crook reviews Animal Spirits, by Akerlof and Shiller. Likening the role of government to a parent's duty to create a happy home, the authors write: "The proper role of the parent is to set the limits so that the... MORE

Misplaced Priorities

Finance: stocks, options, etc.
Arnold Kling
Consider the following list of candidates for government assistance, via financial bailout or stimulus: a) banks and other financial institutions b) the nonfinancial business sector c) underwater homebuyers d) other consumers e) state and local governments In my view, (b)... MORE

Amar Bhide Monday

Growth: Causal Factors
Arnold Kling
In the Wall Street Journal, he writes, The depressions and panics of the 19th century ended without any fiscal stimulus to speak of, as did the gloom that followed the stock-market crash of 1987. Countercyclical fiscal policy may or may... MORE

Ross Douthat on Liberaltarianism

Political Economy
Arnold Kling
He writes, ...a bigger-tent liberalism - somewhat chastened, perhaps, by some big-government failures in the Obama era - that makes libertarian intellectuals feel welcome, engages them in conversations about smarter regulations and more efficient tax policy, and generally woos them... MORE

I Challenge Richard Florida

Growth: Causal Factors
Arnold Kling
to a bet on the future of New York City. In a must-read article in the latest issue of The Atlantic, Florida says that New York will come out of the recession in good shape. I propose a $50 wager... MORE

Evening Commentary

Fiscal Policy
Arnold Kling
Tyler Cowen writes, In my opinion the sophisticated Keynesian view is still that the stimulus won't work. Great, great sentence. Has Jeff Frankel joined the ranks of the deranged? What he writes strikes me as not terribly different from what... MORE

Another Speaking Opportunity

Upcoming Events
Arnold Kling
on markets and health care. I know the topic sounds boring these days, but it really is somewhat important as a public policy issue. If you work on or near Capitol Hill, feel free to drop by. Friday, February 20th,... MORE

Kling vs. NY Times

Econlog Administrative Issues
Arnold Kling
1. In journalism, there is a term known as fact-checking. 2. When a columnist puts a person's words in quotes, that represents a fact, which ought to be checked. 3. The quote attributed to me in Paul Krugman's column was... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
Amar Bhide writes, Regulators apparently succumbed to the idea, peddled by financiers and modern theorists, that if a little financial innovation was good, a lot must be great--even if it was far outside their capacity to monitor. Thanks to Reihan... MORE

Quoted Out of Context Again

Fiscal Policy
Arnold Kling
[UPDATE Feb. 13 2:40 PM eastern time: Andrew Sullivan of The Atlantic has done the gentlemanly thing and withdrawn the racism charge. Adam Serwer of The American Prospect has apologized for not taking into account the full context. ] I... MORE

The 1930's and Today

Economic History
Arnold Kling
The Washington Post reports on how economists are still debating the 1930's. We are, but I bet I could get a pretty broad swath of economists, left and right, to agree to the following: 1. The steps that Roosevelt took... MORE

What is Bryan's Analysis?

Economic Education
Arnold Kling
A poll says that two-thirds of the American people think they could do a better job on the economy than Congress. Forty-four percent (44%) voters also think a group of people selected at random from the phone book would do... MORE

What I Really Said at Heritage

Econlog Administrative Issues
Arnold Kling
Andrew Sullivan passes along an accusation from somebody named James Wolcott that I made a racist reference to President Obama at an event co-sponsored by the Heritage foundation. The event was taped, and I hope that Heritage will post the... MORE

Causes of the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
Mark Jickling of the Congressional Research Service produced a handy chart of causal factors for the financial crisis. I think there are at least twenty, and I personally would probably endorse at least two-thirds of them as playing some role.... MORE

Geithner Lays an Egg

Central Planning vs. Local Knowledge
Arnold Kling
I outsource my comments to Tyler Cowen.... MORE

Brink Lindsey Baits Paul Krugman

Income Distribution
Arnold Kling
Brink Lindsey has written a paper criticizing Paul Krugman's view that the period from 1950-1970 was a sort of golden era for economic policy, because it involved high economic growth with relatively little inequality. Lindsey instead sees the immediate postwar... MORE

Economics does not equal Macroeconomics

Macroeconomics
Arnold Kling
Clive Crook writes, Mr Krugman gives liberals the economics they want. Mr Barro gives conservatives the same service. They narrow or deny the common ground. Why does this matter? Because the views of readers inclined to one side or the... MORE

Confidence and the Wrong Map

Finance: stocks, options, etc.
Arnold Kling
Over at econtalk, Russ Roberts interviews Daron Acemoglu. Self-recommending, as Tyler would say. Also, here is a video featuring Daniel Kahneman and Nassim Taleb. Taleb, like me, wants to get rid of risk-taking by banks, and leave non-insured institutions free... MORE

Macroeconometrics: The Lost History

Economic Methods
Arnold Kling
A first version is here. I was thinking of submitting something like this to the AEA's new Journal Macroeconomics. Suggestions for improvement are welcome.... MORE

The Stimulus and Black Swans

Fiscal Policy
Arnold Kling
I wrote this for Cato. The present scenario analysis highlights two black swans. The first one is Depression Averted, under which a stimulus keeps the economy from falling in a downward spiral of layoffs and shutdowns. The other black swan... MORE

Getting to Recovery

Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, I have in my research instead stressed technological frictions. For example, when spending on cars abruptly falls, there is a physical, technological challenge with getting the specialized labor and capital formerly employed in manufacturing cars into some... MORE

Stimulus Bill or Reparations Bill?

Fiscal Policy
Arnold Kling
I think that President Obama set the bar ridiculously low when he said that 75 percent of the stimulus should kick in within by the end of 2010, but the House bill did not even get over that bar. Why... MORE

Regulatory Arbitrage

Finance: stocks, options, etc.
Arnold Kling
Viral Acharya and Matthew Richardson write, for years, regulation - capital requirement in particular - has targeted individual bank risk, when the justification for its existence resides primarily in managing systemic risk. It is to be expected that financial institutions... MORE

John Maynard Keynes writes, So far as employees are concerned, reductions in contributions are more likely to lead to increased expenditure as compared with saving than a reduction in income tax would, and are free from the objection to a... MORE

Morning Reading

Fiscal Policy
Arnold Kling
Greg Mankiw writes I would institute an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax. I think if you put leading economists into a room to negotiate on... MORE

Who is Advising these Guys?

Finance: stocks, options, etc.
Arnold Kling
Ed Glaeser does not like the Republican mortgage plan any more than I do. I am not sure that plan is still alive. It may have been superceded by another ill-conceived idea, a tax break for home buyers. See Tyler... MORE

Two Critiques of Macroeconometrics

Economic Methods
Arnold Kling
Menzie Chinn writes, A key reason for the academic disenchantment with these types of models included the view that the identification schemes used were untenable (e.g., why is income in the consumption function but not in the investment?). Another source... MORE

CBO Stimulus Estimates

Fiscal Policy
Arnold Kling
Doug Elmendorf writes CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by... MORE

Akerlof and Shiller Heart Higgs?

Behavioral Economics and Rationality
Arnold Kling
George A. Akerlof and Robert J. Shiller do not come to praise mainstream macroeconomics. Keynes' followers rooted out almost all of the animal spirits...that lay at the heart of his explanation for the Great Depression...They...minimized the intellectual distance between The... MORE

Morning Commentary (Feeling Angry)

Finance: stocks, options, etc.
Arnold Kling
Three things to be angry about this morning. 1. The Obama Administration's plans to save banks. I outsource my comments to Yves Smith. Thanks to Mark Thoma for the pointer. 2. Alan Blinder and David Leonhardt confusing stimulus with class... MORE

Morning Reading (Somewhat Depressing)

Finance: stocks, options, etc.
Arnold Kling
Compare this: Officials said the GOP was coalescing behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, which were seized by the... MORE

Violent Agreement

Finance: stocks, options, etc.
Arnold Kling
I guess I was supposed to debate Simon Johnson in this NPR web chat. Simon blogs at Baseline Scenario and is a major star in the economics profession. I don't feel particularly good about the chat. 1. The format seemed... MORE

Temporary vs. Permanent

Fiscal Policy
Arnold Kling
Tyler Cowen weighs in on an issue that has been bouncing around the blogosphere. Overall the Keynesian effects can mean either the permanent or the temporary spending boost has a bigger effect and there are also a number of ways... MORE

Glaeser on Housing Policy

Finance: stocks, options, etc.
Arnold Kling
Ed Glaeser writes, Ellickson's analysis suggests that this is just about the worst of all possible policy responses. By drawing out the foreclosure process, these moratoria increase the time during which homes are no-man's-land. During such periods, homes and neighborhoods... MORE

My Current Outline

Fiscal Policy
Arnold Kling
For my talk at the anti-stimulus conference. Still a work in progress.... MORE

Consumers or Businesses?

Fiscal Policy
Arnold Kling
Hall and Woodward write, One problem with the employment stimulus is that the funds go in the first instance to the owners of businesses and not to consumers generally. This criticism applies to my preferred stimulus, which is to take... MORE

Return to top