Friday, November 20, 2015

The Birth of Economic Theory

Source.  Thanks to Laura M. for the pointer.

Tuesday, November 17, 2015

Regulatory Complexity

I enjoyed reading these remarks from University of Chicago economist Steve Davis.  The chart below, taken from Davis, is particularly striking.

What I've been watching

A student recommended to me the direct-to-Netflix TV show Narcos.  It is a docudrama about the Colombian drug kingpin Pablo Escobar.  I just finished the first season of ten episodes, and it is indeed very good.

Next up: The direct-to-Amazon show The Man in the High Castle, which will be released shortly.

Thursday, November 12, 2015

Obamacare as Redistribution

When students ask me about the Affordable Care Act, I often say that the policy was motivated as much by the desire to redistribute income as it was to reform the health care system. I recently ran across the following chart from Brookings economists Henry Aaron and Gary Burtless that shows the degree of redistribution that the act entails.

Wednesday, November 04, 2015

Where I'll be this week

On Friday I will be speaking at this Economics Teaching Conference.

Thursday, October 29, 2015

Presidential Probabilities

Now that Intrade is gone, here is one place to see who is ahead based on betting odds.

Update: A friend emails me:

It's clear from the numbers that this market doesn't expect a credible third-party candidate.  Interestingly, this means that the reported unconditional probability of becoming president (the third column) is the product of the reported probability of winning a party nomination (one of the first two columns) and the implied conditional probability.

Clinton's implied probability of getting elected conditional on winning the Democratic nomination is 60.3%.  That means that, "on average," the Republican nominee has a 39.7% chance of winning.  The market's view of the relative strengths of the Republican candidates can then be seen by comparing their implied conditional probabilities to this 39.7% figure: 

Rubio    41.9%
Trump   42.0%
Bush      55.4%
Carson  38.8%
Cruz      36.6%

Monday, October 26, 2015

Cochrane on Economic Growth

Saturday, October 24, 2015

Keep the Cadillac Tax

Click here to read a piece I co-authored with Larry Summers, which is coming out in Sunday's New York Times.

Thursday, October 15, 2015

American Obesity

Critics of the U.S. health care system often say things like, "The United States spends more money than anyone else on health care but some other nations have better life expectancy." The next time someone starts making statements like that, keep in mind this chart.  It is a useful reminder that differences in health outcomes depend on a lot more than differences in the system for delivering medical care.

Source. Click on graphic to enlarge.

Monday, October 12, 2015

The Case for a Carbon Tax

Thursday, October 08, 2015

A Feature, Not a Bug

A few weeks ago, a poll asked people what were the first words that they thought of when they heard the names of the various presidential candidates.  For Hillary Clinton, "liar" and "untrustworthy" ranked high.  Many commentators saw this result as a problem for her.

I bring this up now because Clinton just came out against the TPP trade deal, even though the Obama administration strongly favors it and Clinton previously favored it.  I don't know of any poll of economists on TPP, but an overwhelming majority of the profession agrees that "Past major trade deals have benefited most Americans."  I would guess that TPP would also poll well among economists.  FYI, here is CEA chair Jason Furman singing the praises of TPP, and here is an open letter from a sizeable group of past CEA chairs.

So, will those economists who like Clinton start to turn against her?  I doubt it.  My guess is that most of them don't believe what she is now saying.  They expect that once she moves back into the White House, she will return to the moderate view of trade deals that her husband championed.  In other words, they are counting on her being untrustworthy.  If they had reason to doubt her mendacity, then they would start to worry.

Friday, October 02, 2015

Olivier Blanchard

A profile (though I doubt the headline applies to readers of this blog).

Tuesday, September 29, 2015

What I am doing today

Today, I am wearing my political theory hat.  If you happen to be a student at Brown, you can find me here.

Hillary's Plan for Pharmaceuticals

Thursday, September 24, 2015

Nobel Predictions

Wednesday, September 16, 2015

Feel-the-Bern Fiscal Policy

From the Wall Street Journal (news article, not editorial page):
Sen. Bernie Sanders, whose liberal call to action has propelled his long-shot presidential campaign, is proposing an array of new programs that would amount to the largest peacetime expansion of government in modern American history. In all, he backs at least $18 trillion in new spending over a decade, according to a tally by The Wall Street Journal....To pay for it, Mr. Sanders, a Vermont independent running for the Democratic nomination, has so far detailed tax increases that could bring in as much as $6.5 trillion over 10 years, according to his staff.

Monday, September 14, 2015

What to do when the natural rate of interest declines

Increase the inflation target, according to this new paper, which uses the dynamic model of aggregate demand and aggregate supply from my favorite intermediate macroeconomics textbook.

Wednesday, September 09, 2015

Twelve reasons to like Jeb’s tax plan

Jeb Bush has released a tax plan.  Here are some elements of it that I find attractive:
  1. It lowers the top rate on personal income to 28 percent, the same rate as the bipartisan 1986 tax reform.
  2. It broadens the base by capping the use of itemized deductions.
  3. It eliminates the deductibility of state and local taxes, so low-tax states and towns no longer subsidize high-tax ones.
  4. It maintains the deductibility of charitable giving, encouraging private solutions to social problems.
  5. It reforms the tax treatment of secondary earners and seniors, who are more responsive to tax incentives than primary earners.
  6. It eliminates the stealth marginal tax rates from PEP and Pease.
  7. It eliminates the estate tax, so the tax system no longer penalizes those who want to help their children and grandchildren.
  8. It lowers the corporate tax rate to be close to international norms.
  9. It moves from a global to a territorial tax system, like most other nations have.
  10. It eliminates the deductibility of interest expenses, putting debt finance and equity finance on a more level planning field.
  11. It includes full expensing of investment expenditure, moving the system toward a consumption-based tax.
  12. It expands the earned income tax credit for childless taxpayers, strengthening the social safety net.
Here is an assessment of the plan by John Cogan, Martin Feldstein, Glenn Hubbard, and Kevin Warsh.

More Competition

Friday, September 04, 2015

The Path to a Carbon Tax

Click here to read my column in Sunday's NY Times.