Mortgage Performance

Courtesy of the graphs to Prof. Smitka who made them in excel using data from CoreLogic – thank you (Apologies if they’re blurry – I couldn’t make them any better than this as they are pictures)

The data for mortgage performance can be found at http://www.corelogic.com/ for anyone who wants the specifics of numbers. You […]

Labor Force Participation Rates

The labor force participation rate is the percentage of people in the civilian noninstitutionalized (not in prison or the military) population, aged 16 and older, who are either working or actively seeking work. This rate has been gradually decreasing since the early 2000s, but appears be leveling off around 62.5% (Graph 1). There are two […]

Construction per Capita and Construction as a Percentage of GDP

A multitude of useful construction data was released last week. In addition to overall construction spending, public construction spending, and total housing starts, it is perhaps equally as telling to examine construction per capita, and construction as a percentage of GDP. These metrics are necessary to assess real estate development within a slightly more realistic […]

Full Employment

Full employment is usually defined as any level of employment under 5%. Full employment means that all eligible workers regardless of skill level are in jobs. Economists believe that unemployment falls until it reaches the “natural rate” where everyone is employed and new hires only occur when people leave their current jobs for higher wages […]

2016 Construction Industry Overview

Overall, the construction industry has experienced far from rapid growth in 2016. With oil prices low, major capital projects from firms involved in the energy and power industry saw low demand, correlating to a lackluster year within the greater engineering and construction sector. Total construction spending growth from a year ago, including residential […]

Long-run CPI trend

Long-run CPI trend

Figure 1: CPI for all items and all items less food and energy

This graph shows the long-run CPI trends since the 1950’s. Specifically, after 1955, when the reorientation of the economy following WWII was complete. There seems to be a steadily rising trend throughout the years as observed in the […]

Subjective Analysis of the CPI

Wednesday’s release of the Consumer Price Index (seasonally adjusted for All Urban Consumers) revealed inflation of .3% in December of 2016, leaving annual 2016 inflation at 2.1% before seasonal adjustment. This data release signals year over year price growth not seen since 2013 and a significant increase from the meager .7% inflation in 2015.

It […]

Solow

Try to build a simple Excel simulation of our growth model, streamlined. We can embed it in a full production function, but just use the following for simplicity:

Y0 = AK0α – output is a function of capital I0 = S0 = sY0 – investment is equal to savings K1 = K0 (1-δ) + […]

Mortgage Rates

For many people, mortgage rates are the most important rates they will consider in their entire lives. Because of this, mortgage rates need to be understood and analyzed. This post delves into correlations that mortgage rates share with other interest rates and the maximum percentage of income that people should dedicate to mortgage […]

The Logic of a Tax Cut

We frequently see claims that a lower tax rate – particularly of corporate or personal income taxes – will work miracles. That is seldom the case.

First, the stated tax rates are not the realized tax rates. While on paper someone with $500,000 in income is paying a 39.9% rate, the rate on […]

Treasures vs Corporate Bonds

Treasuries and corporate bonds are two types of investments ruled by interest rates. The interest rate on corporate bonds will always be higher due to the increased risk of default. Treasuries are less likely to default because of the guaranteed safety in investing with a world power like the United States. If the country does […]

What is the New Normal for U.S. Growth?

In his article, “What Is the New Normal for U.S. Growth,” John Fernald argues that the United States could plausibly see a decline in average GDP growth to a range of 1.5-1.75%, which is well below historic growth rates. He examines trends in demographics, education, and productivity to determine inputs into his calculation of […]

Long and Short Rates

Arbitrage. With perfect foresight and no risk premium the return one-year bond should be equal to the interest rate on a six-month bond bought today, reinvested in a six-month bond bought six months from now. (1+i1)(1+i2)=(1+yr) reflects compounding. Now rates are quoted as one-year rates, so if the six-month rate is quoted as […]

Winter 2017 Syllabus

TuTh 11:50am-1:15pm

Early-Fielding 200

under construction (duh!)

Winter 2017 Capstone TuTh 11:50am-1:15pm

“Long” Treasuries yield a scant 2.6% over 30 years. Basic theory suggests this should should equal expected growth rate plus inflation. If a rise in the CPI of 2% per annum is the Fed’s target, then do investors really expect that to never be attained? or attained but with real growth bouncing around at 1% […]

Monday’s paper

Clements, Benedict, Kamil Dybczak, Victor Gaspar, Sanjeev Gupta, and Mauricio Soto. 2015. “The Fiscal Consequences of Shrinking Populations.” SDN/15/21. International Monetary Fund.

What is “fiscal sustainability”? They provide a very specific approach.

How do they use “solow”?

What is the “demographic dividend”?

Social Security and Retirement

We will continue our discussion of intergenerational transfers and overlapping generations issues. To make it concrete, we’ll look at the US Social Security programs.

FAQs: http://ssa.gov/oact/ProgData/fundFAQ.html#&a0=-1 Current SS system stats: http://ssa.gov/pubs/EN-05-10003.pdf Summary of program and issues: http://ssa.gov/OACT/TRSUM/tr15summary.pdf The full Trustees Report: http://ssa.gov/OACT/TR/2015/tr2015.pdf Wikipedia: See in particular for the history of the […]

Fertility by Educational Attainment

A report by the Census Bureau titled, Fertility of Women in the United States: 2012 describes the characteristics of mothers by variables such as race, location, and age. The factor that this post will focus on is educational attainment.

One measure that the report uses is completed fertility for women aged […]

Youth (Non)employment

As a followup to our class conversation on summer jobs on Friday, here’s a link to an item on “What happened to summer jobs?” on the Forbes Modeled Behavior site.

A Brief Overview of Bergeaud et al.’s Paper

This paper attempts to:

compare GDP per capita level and growth across 17 advanced countries over 1890-2013. compare the level and growth of the main components (TFP, capital intensity, working time, and employment rate) of GDP per capita in order to see how they contribute to the GDP per capita difference. test the convergence hypothesis […]