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 […]

Dynamic Scoring

I post expanded notes from my weekly radio show at Autos and Economics on blogspot.com. This week I was asked to comment on Trump’s tax proposals. That’s a moving target, so I shifted my focus to another theme of the Republican candidates: tax cuts will pay for themselves.

Can you add graphs on […]

Consumer Price Index

An index is used to compare economic data, typically price or quantity against a base value. Specifically, the Consumer Price Index is used to measure changes in prices of a bundle of goods and services over different periods of time for consumers. It covers a variety of goods and services that the BLS consolidated into […]

Capstone Topic

My topic of interest is import-substitution. Governments in developing economies sometimes try to protect developing industries by taxing or disallowing importation of the good or service produced by this industry. Most literature says that open trade policies are most beneficial to helping an economy grow. But, I would ideally like to try and find two […]

Capstone paper topics

My paper topic idea is to look at the intersection of Stolper-Samuelson and the benefits of international trade for US workers. Essentially if unskilled workers are the scare factor in Stolper-Samuelson then their wages should have gone down and they would be worse off. Evidence from the past few decades confirms that in labor markets […]

Paper Topics

My idea is to look at the studies of the Great Depression in the 1930s and the U.S. subprime mortgage crisis in 2008 since the decades before both events are similar (both with an increase in liquidity, low inflation rate, etc.). Nordic countries happened to outperformed most other Western countries during the 1930s, I want […]

Possible Paper Topics

My first choice for a paper topic is the relationship between FDI and trade. I want to see if increases in FDI will lead to an increase in trade between the countries involved, a reduction in trade, or no change. It will be interesting to see how FDI and trade respond to each other since […]

Shifts and movements along the aggregate production function

Robert Solow’s Paper “Technical Change and the Aggregate Production Function” details a method of distinguishing shifts of the aggregate production function from movements along it. The aggregate production function describes output as a product of labor, capital, natural resources, and other inputs. Solow returns to the function to discuss how to segregate changes in output […]