Wednesday, September 21, 2011
The stork is out of the office today. The albatross will be handling his duties during his absence.
The central bank has finally acted. Here's the link. Do you think it will work?
Just after class I noticed...
This post, which discusses the interest rate framing of monetary policy. It also brings in babies, too, at least through the caption.
Monday, September 19, 2011
TBA reading for 9.21
To give you a sense of the variety of opinions over why there is not a bigger response to the economic crisis, take a look at these two articles. In reality, the divide between members of the "dovish" camp we read about is often just as big as that between them and the hawks.
http://www.themoneyillusion.com/?p=10837
http://krugman.blogs.nytimes.com/2011/09/18/hysteresis-begins/
Update:
I just noticed this other Krugman article, which goes into detail on the question of inflation we have talked about: http://krugman.blogs.nytimes.com/2011/09/19/all-banked-up-with-nowhere-to-go/#more-24353. Could be helpful.
Update to the Update:
Ok, one more libertarian post just to balance out the liberal post. But this one is really funny, and with the Federal Reserve meeting coming up this week, it is very timely. Also, the Bernanke's nickname is "Helicopter Ben." This article explains a little bit about the notion behind that name: http://www.themoneyillusion.com/?p=10888
http://www.themoneyillusion.com/?p=10837
http://krugman.blogs.nytimes.com/2011/09/18/hysteresis-begins/
Update:
I just noticed this other Krugman article, which goes into detail on the question of inflation we have talked about: http://krugman.blogs.nytimes.com/2011/09/19/all-banked-up-with-nowhere-to-go/#more-24353. Could be helpful.
Update to the Update:
Ok, one more libertarian post just to balance out the liberal post. But this one is really funny, and with the Federal Reserve meeting coming up this week, it is very timely. Also, the Bernanke's nickname is "Helicopter Ben." This article explains a little bit about the notion behind that name: http://www.themoneyillusion.com/?p=10888
Monday, September 12, 2011
TBA reading for 9.14
For Wednesday:
1. Read this. Respond to it in the comments section below this post.
2. Finish online library quizzes.
3. Start following this blog if you haven't, and start your own blog for next week. In the future, we will post responses on our own blogs, and I'll have you respond to at least two other people's posts as well.
1. Read this. Respond to it in the comments section below this post.
2. Finish online library quizzes.
3. Start following this blog if you haven't, and start your own blog for next week. In the future, we will post responses on our own blogs, and I'll have you respond to at least two other people's posts as well.
Wednesday, September 7, 2011
A quick run down on concepts from today...
Hey Gang,
Great work today sifting through a lot of complicated information. Here's a quick guide to some of the concepts we discussed.
Gold standard: In a gold standard, the government maintains a constant price for gold, either by agreeing to always buy and sell gold at that price, or by intervening in the gold market such that the price does not go above or below that figure (it was $20.67/ounce in 1933 when the U.S. left the gold standard).
Fiat money regime: a monetary system in which the government maintains the value of currency only through its "full faith and credit," that is, by guaranteeing to restrain money growth such that only a tiny amount of inflation can occur. In other words, the government guarantees to maintain a modest but upward growth in the level of prices overall, rather than maintaining a specific price for gold or some other metal.
Nominal Gross Domestic Product (NGDP): the current-dollar value of all goods and services produced. Another way to say this is that NGDP is the total level of spending on all goods and services measured in dollars NOT adjusted for inflation. So NGDP = Real GDP + inflation. NGPD is currently far below the pre-2008 trend level of growth. A period of above pre-crisis average growth would be required to return NGDP to the trajectory it was on.
Real Gross Domestic Product (RGDP): The total value of all goods and services produced, adjusted for inflation (i.e., in constant, rather than current, dollars). To arrive at this number, economists apply a "deflator" to NGDP. When people speak of a "price deflator," they are talking about a measure of inflation, for this is the amount we have to deflate NGDP to arrive at RGDP.
Inflation targeting: the current method used by most central banks to conduct monetary policy. The central bank limits the growth in prices to a certain range. Currently, the Federal Reserve (the U.S. central bank) targets between 1 and 2 percent inflation (a lower rate than before the crisis, when the target was usually 2-3 percent). In practice, central banks often use short term interest rates as a way of gauging how stimulative their policies are. When commentators speak of the Fed "lowering" or "raising" interest rates, what this means is that the government is creating more money and uses certain interest rates to measure the impact this action is having. They never directly raise or lower interest rates. By the same token, although people often speak of the government "printing" money, they don't directly print it either, but rather transfer it electronically by purchasing government bonds. By law, the government must exchange the money they create for a safe financial asset, usually government bonds. This ensures that they cannot really "print money" in the sense of creating new currency to finance the government itself, but must buy assets which in turn can be sold in order to withdraw new money from circulation.
Level targeting: a system in which the central bank targets a specific growth rate of either inflation or NGDP, but makes up for past undershooting or overshooting of the target. For example, if a central bank is targeting a 2% level of inflation, and in a particular year inflation is 1 percent, in the following year the central bank will aim for slightly above 3% inflation to return to the previous trend. Before 2008, NGDP generally grew around 5% a year. If, as happened in 2008, NGDP fell about 8% below its average growth rate, it would take a little over 17 percent growth to return to trend.
Quasi-monetarism: a generally libertarian philosophy derived from the work of the right-wing Milton Friedman. Quasi-monetarists argue that Central Banks should stabilize the level of NGDP, targeting a specific rate of growth, and making up for overshooting or undershooting.
New Keynesianism: similar to quasi-monetarism, but traces its roots back to the more left-wing John Maynard Keynes. New Keynesians favor interest rate targeting until short term rates hit zero, at which point they favor level targeting of inflation (i.e., targeting a specific rate of increase in prices, but making up for overshooting or undershooting).
Here is a good graph of NGDP over the past few years, from an article in which one blogger from our list discusses another blogger from our list talking about a third blogger (not from our list). The article discusses the difference between a level target (which makes up for overshoots and undershoots) and a rate-of-growth target (which doesn't).
Update: Libertarian-leaning David Beckworth (the blogger cited in the post above by Delong) here lays out a simple method by which monetary policy could have a major positive effect on the economy.
Great work today sifting through a lot of complicated information. Here's a quick guide to some of the concepts we discussed.
Gold standard: In a gold standard, the government maintains a constant price for gold, either by agreeing to always buy and sell gold at that price, or by intervening in the gold market such that the price does not go above or below that figure (it was $20.67/ounce in 1933 when the U.S. left the gold standard).
Fiat money regime: a monetary system in which the government maintains the value of currency only through its "full faith and credit," that is, by guaranteeing to restrain money growth such that only a tiny amount of inflation can occur. In other words, the government guarantees to maintain a modest but upward growth in the level of prices overall, rather than maintaining a specific price for gold or some other metal.
Nominal Gross Domestic Product (NGDP): the current-dollar value of all goods and services produced. Another way to say this is that NGDP is the total level of spending on all goods and services measured in dollars NOT adjusted for inflation. So NGDP = Real GDP + inflation. NGPD is currently far below the pre-2008 trend level of growth. A period of above pre-crisis average growth would be required to return NGDP to the trajectory it was on.
Real Gross Domestic Product (RGDP): The total value of all goods and services produced, adjusted for inflation (i.e., in constant, rather than current, dollars). To arrive at this number, economists apply a "deflator" to NGDP. When people speak of a "price deflator," they are talking about a measure of inflation, for this is the amount we have to deflate NGDP to arrive at RGDP.
Inflation targeting: the current method used by most central banks to conduct monetary policy. The central bank limits the growth in prices to a certain range. Currently, the Federal Reserve (the U.S. central bank) targets between 1 and 2 percent inflation (a lower rate than before the crisis, when the target was usually 2-3 percent). In practice, central banks often use short term interest rates as a way of gauging how stimulative their policies are. When commentators speak of the Fed "lowering" or "raising" interest rates, what this means is that the government is creating more money and uses certain interest rates to measure the impact this action is having. They never directly raise or lower interest rates. By the same token, although people often speak of the government "printing" money, they don't directly print it either, but rather transfer it electronically by purchasing government bonds. By law, the government must exchange the money they create for a safe financial asset, usually government bonds. This ensures that they cannot really "print money" in the sense of creating new currency to finance the government itself, but must buy assets which in turn can be sold in order to withdraw new money from circulation.
Level targeting: a system in which the central bank targets a specific growth rate of either inflation or NGDP, but makes up for past undershooting or overshooting of the target. For example, if a central bank is targeting a 2% level of inflation, and in a particular year inflation is 1 percent, in the following year the central bank will aim for slightly above 3% inflation to return to the previous trend. Before 2008, NGDP generally grew around 5% a year. If, as happened in 2008, NGDP fell about 8% below its average growth rate, it would take a little over 17 percent growth to return to trend.
Quasi-monetarism: a generally libertarian philosophy derived from the work of the right-wing Milton Friedman. Quasi-monetarists argue that Central Banks should stabilize the level of NGDP, targeting a specific rate of growth, and making up for overshooting or undershooting.
New Keynesianism: similar to quasi-monetarism, but traces its roots back to the more left-wing John Maynard Keynes. New Keynesians favor interest rate targeting until short term rates hit zero, at which point they favor level targeting of inflation (i.e., targeting a specific rate of increase in prices, but making up for overshooting or undershooting).
Here is a good graph of NGDP over the past few years, from an article in which one blogger from our list discusses another blogger from our list talking about a third blogger (not from our list). The article discusses the difference between a level target (which makes up for overshoots and undershoots) and a rate-of-growth target (which doesn't).
Update: Libertarian-leaning David Beckworth (the blogger cited in the post above by Delong) here lays out a simple method by which monetary policy could have a major positive effect on the economy.
Tuesday, September 6, 2011
TBA reading for 9.7
Check out the following NY Times piece, which discusses views on The Federal Reserve. In the future, I'll try to post the Wednesday reading before Monday's class to give everyone time to do their own blog post (remember to start a blog on this site and follow our classes page!) and to respond to two other blog posts. For now, though, just leave a quick comment on this post. Somewhere in your response, provide a provocative, thesis-like statement that we can discuss tomorrow.
Thursday, September 1, 2011
MLA and Baker
For more information on MLA, see here.
For more information on the new Dean Baker book, see here.
Basic summary of MLA: It consists of a Works Cited list starting on the top of a separate page at the end of the paper, which contains all the various sources you refer to in the body of the paper whether in paraphrasing or in quoting, and of in-text citations in parentheses. To cite paraphrases, just place the author's last name and the page number at the end of the sentence in parentheses, with the period outside the parentheses [example (Freud 8)]. For quotes, just add in quotation marks around the direct quotation and place the citation again in parentheses at the end of the sentence. If you refer to the author in the sentence and are not referencing a specific page, then you do not need an in-text citation beyond the mention of the name.
The basic rule-of-thumb for MLA is to give as much information in the Works Cited as needed so that a reader can find your source (author, title, publisher, date of publication, title of publication if the work appears in a journal or magazine or newspaper, translator, etc.); for the in-text citations, list only as much information as needed to find the source in the list at the end of the paper. The custom is to start with author's last name and page number, then add a shortened version of the title, and finally a first initial if there is still confusion.
So: (Freud 8), (Freud, Dreams 8), and (S. Freud, Dreams 8)
For more information on the new Dean Baker book, see here.
Basic summary of MLA: It consists of a Works Cited list starting on the top of a separate page at the end of the paper, which contains all the various sources you refer to in the body of the paper whether in paraphrasing or in quoting, and of in-text citations in parentheses. To cite paraphrases, just place the author's last name and the page number at the end of the sentence in parentheses, with the period outside the parentheses [example (Freud 8)]. For quotes, just add in quotation marks around the direct quotation and place the citation again in parentheses at the end of the sentence. If you refer to the author in the sentence and are not referencing a specific page, then you do not need an in-text citation beyond the mention of the name.
The basic rule-of-thumb for MLA is to give as much information in the Works Cited as needed so that a reader can find your source (author, title, publisher, date of publication, title of publication if the work appears in a journal or magazine or newspaper, translator, etc.); for the in-text citations, list only as much information as needed to find the source in the list at the end of the paper. The custom is to start with author's last name and page number, then add a shortened version of the title, and finally a first initial if there is still confusion.
So: (Freud 8), (Freud, Dreams 8), and (S. Freud, Dreams 8)
Essay 1
Essay 1: Finding our way between Ethics and Economics
For this first essay, we will compose a short (3-4) page essay focused primarily on developing a thesis and supporting it. We will focus more on research later; for now, let’s just practice developing a claim and supporting it. For this essay, you can write about almost anything that has something of a connection to our readings or to our class discussions. Here’s some general topics you might consider writing about:
1. Compare and contrast the ideas of two different theorists we have read, and develop a thesis that shows how their different assumptions about ethics leads to different ideas about economics. Don’t worry about explaining everything about their ideas. This isn’t a report, but rather a paper focused on developing your own argument. An easy way to approach this paper would be to pick a quote from each writer and focus your paper entirely on showing the important differences that develop from the different ideas each writer expresses in those quotes.
2. Apply some of the ideas we have been discussing to current events. Pick an idea or two from a writer or two and attempt to explain what these show about a contemporary debate in current affairs. What would Hobbes say about the way we finance pharmaceutical research, for example. What would Mandeville think of restrictions on immigration? These are just a few examples of what you could write about. You could also combine this with option 1 and write about differences in how classical theorists might explain contemporary events.
3. Pick a provocative quote from one writer we have read and explain some of its larger implications about the relationship between ethics and economics. If you had a strong reaction to something one of the writers we read said, try to formulate in a more formal, analytic language what that is and then explain the nature of your reaction. What larger implications does this quote present?
4. Take a look at the new Dean Baker book, which IS available for free online. Here Baker goes into a lot more detail about some of his claims. Evaluate some of Baker’s more detailed analyses. Explain or define the relationship between this more extensive presentation and what we read earlier. Rather than just agreeing or disagreeing with Baker, try instead to demonstrate how things become more complicated as the details become more specific.
Whatever option you pick, or whether or not you pick one of the above options, try to avoid falling into the twin dangers of offering a book report or a harsh polemic. Avoid opinionated language like “I think,” “I believe,” “is wrong,” “is right,” “is good,” “is bad,” “contradicts him/herself,” etc. Also avoid summarizing or listing a series of facts without connecting them back to your thesis or explaining why they are important. The easiest way to do this is to present a clear thesis that sympathetically approaches your subject matter without becoming overly enamored of it.
I’ll primarily be looking for three things: a clearly defined and argumentative thesis; formal, analytic language; and a detailed analysis of the thesis and its implications. For citations, use MLA style (a works cited list with in-text citations). Bring a rough draft of ~2 pages for 9/9. The final is due 9/16.
Download the Word file here.
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