Sunday, January 22, 2017

You are not entitled to your own facts

Readers of this blog will surely want to know about a new website:, a "non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. It is written by leading academic economists from across the country who belong to the EconoFact Network, and published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University."

Check it out.

Monday, January 16, 2017

Careless Headline Writing

I have noticed over the years that headline writers often try to make stories more sensational than they really are. This one at Yahoo News and Time, however, got me chuckling. The story tells us:
The gap between the super-rich and the poorest half of the global population is starker than previously thought, with just eight men, including Bill Gates and Michael Bloomberg, owning as much wealth as 3.6 billion people.
That fact is not really surprising, as many people live hand-to-mouth with hardly any accumulated wealth at all. But the headline makes a stronger claim:
Half of the World’s Wealth Is In the Hands of Just Eight Men
Of course, this conclusion does not follow from the fact reported in the story and is not even close to being true.

Thursday, January 12, 2017

History of Econ Summer Camp

Graduate students with an interest in the history of economic thought should consider this opportunity.

Tuesday, January 10, 2017

Challenges Facing the New President

You can watch the AEA session I chaired by clicking here.

Friday, January 06, 2017

Parting Words

Friday, December 30, 2016

Me at the ASSA

If you want to see me at the upcoming ASSA meeting in Chicago, here is some relevant information.

I will be chairing a session on “Economic Issues Facing the New President,” with talks from Jason Furman (Council of Economic Advisers), Glenn Hubbard (Columbia University), Alan Krueger (Princeton University), and John Taylor (Stanford University). The session is on Saturday, January 7, starting at 10:15 am in the Hyatt Regency Chicago, Grand Ballroom AB.
I will also be introducing the new edition (the 8th) of my Principles text, which has just published. You can meet me at the Cengage booth from 3 to 4 pm on Friday, 2 to 2:30 pm on Saturday, and 9 to 9:30 am on Sunday. Feel free to stop by and say hello.

Wednesday, December 21, 2016

Why Y?

A professor emails me:
My students have the pleasure to use your economics textbook. I have one question: where the symbol "Y" for GDP comes from? All the others, we could detect, such as NX , NCO, etc. My students are curious, and I could not give them a good answer.
My unsatisfying response:
To be honest, I don't know. It is an old convention to use Y to denote real GDP, and I am just following that. But I don't know where or why the convention began.
If anyone knows the history and reason for this notation, please email me.

Update 1: Several people email me that the usage goes back to the early Keynesians, which is certainly true. Others suggest that Y is the generic dependent variable, as in y=f(x), which seems an unlikely explanation to me. Still others point out that I is already used for investment, which is true but does not explain the choice of Y for income and output. Some say Y stands for "yield," which seems a useful mnemonic, but I have never seen that word used to describe GDP in a standard published source. So I still don't have a fully satisfying answer.

Update 2: One person writes:
I thought it was well understood that 'Y' is the symbol for real GDP because it is short for "Income" as in "National Income."  Since 'I' is already used for other macroeconomic variables, we use the letter that is phonemically or orthographically related to 'I,' namely 'Y' (which is known in languages like French and Spanish as "Greek i").

Maybe this is the right answer, but one thing I am sure of is that this is not "well understood," at least not by readers of this blog, judging from the many other emails I received.

Update 3: A Harvard student looks at the history:
The earliest reference to GDP as "Y" I could find is Kalecki 1937. The first articles to formalize the IS-LM model (Hicks 1937, Harrod 1937, Meade 1937) all seem to refer to national income as "I" (for income), and Cobb Douglas (1928) calls it "P" (for production). I'd be curious to see if anyone can find an earlier reference to "Y" than Kalecki 1937. It appears there as Y=f(I) (income as a function of investment), which seems like a vote in favor of the y=f(x) argument (but I agree that's not a very satisfying explanation).

Tuesday, December 13, 2016

A Possible Victory for Alan Auerbach

Tax policy is moving in fascinating directions.

You can read more about the Auerbach proposal here and here.

Saturday, December 10, 2016

Manly Men in Girly Jobs

Monday, December 05, 2016

From the Harvard Skit Party

Sunday, December 04, 2016

Summers on the Carrier Deal

Interesting observations from Larry. A tidbit:
Some of the worst abuses of power are not those that leaders inflict on their people. They are the acts that the people demand from their leaders.
Addendum: Also see Keith Hennessey on the topic.

Friday, December 02, 2016

Don't worry about the trade deficit

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

Thursday, December 01, 2016

Josh Lerner

Saturday, November 26, 2016

Memories of Fidel's Cuba

Tuesday, November 15, 2016

An Interview with Ed Conard

Click here to watch me interview Ed Conard about his new book, The Upside of Inequality: How Good Intentions Undermine the Middle Class for C-SPAN Book TV’s “After Words.”

Saturday, November 12, 2016

The Triumph of the Less Educated

In a Times column back in July, I noted that the Brexit vote was strongly correlated with education. The recent presidential election shows the same pattern: "College graduates backed Clinton by a 9-point margin (52%-43%), while those without a college degree backed Trump 52%-44%."  The graph below shows that it is unusual for the more educated and less educated to be in such substantial disagreement.


Friday, November 11, 2016

The podcast is live

Wednesday, November 09, 2016

On the Election Results

I did not support Mr. Trump, but now that he is our President-elect, I wish him well.

To my many friends who are now freaking out, I encourage you to take a deep breath and calm down. Our political and economic system is more robust than you sometimes give it credit for being.

Earlier this year, I wrote:

People often ask me whether it is frustrating to work in Washington, noting how hard it is to get anything done. Yes, in some ways, it is. This episode is only one example where our good policy (as my White House colleagues and I saw it) was subverted by an uncooperative legislature.

            Yet, over time, I have come to appreciate that frustration for those in policy jobs is not a bug in the system but rather a feature. The founding fathers, in their great wisdom, built this tension into the system. In high school civics classes, it goes by the name “checks and balances.” 

A common lament is that there is too much gridlock in Washington, and maybe there is. But imagine that your least favorite candidate wins the next presidential election. Might you be grateful when the new President and his or her CEA chair become frustrated while trying to implement their new ideas for economic policy?

Monday, November 07, 2016

What is it like to win a Nobel Prize?

Monday, October 31, 2016

Before the Flood

A movie, approximately 1 1/2 hours, on climate change, with yours truly making a brief appearance at around 59:40.  (Update: Sorry, it seems no longer to be freely available.)