Worth Reading from Grasping Reality: Late December 2006

  • The Future of the Equity Premium: SUMMARY: PRELIMINARY AND INCOMPLETE http://www.bradford-delong.com/2006/12/the_future_of_t.html: But we do not see any signs that Ms. Market has moved to eliminate past mistakes. The real return on the 20-year U.S. Treasury inflation-protected bond is 2.1%, while the current annual earnings yield on the S&P composite stock market index is 5.7%. These numbers suggest an expected equity premium today of 3.6%, lower than the 6% premium equity return of Mehra and Prescott (1985), but far, far higher than the value of 0.25% per year of Mehra's (2003) baseline representative-agent model for a coefficient of relative risk aversion of 2... 2006-2-26

  • The Robert Heinlein Wars, Part MDCCLXIV http://www.bradford-delong.com/2006/12/the_robert_hein.html: John Scalzi watches as Dave Itzkoff begins another round of the Heinlein Wars.... I would dispute Scalzi's claim that either Glenn Reynolds or Spider Robinson has "thoughts" on this issue. I would characterize them as having "reflexes." I think I had some "thoughts" on this issue some 10^8 seconds ago: The Starship Troopers novel I read had four layers... 2006-12-26

  • I'M PUZZLED BY MCGRATTAN AND PRESCOTT, "TAXES, REGULATION, AND ASSET PRICING" http://www.bradford-delong.com/2006/12/im_puzzled_by_m.html: "McGrattan and Prescott want to provide an equilibrium explanation for the 8% real return and claim that it is not puzzlingly high.... [But] given that returns were so outrageously high and that capital gains were roughly 5%, dividend yields had to have been 3%. That's not an explanation of why returns were so puzzlingly high. That's a consequence. What am I missing here?... 2006-12-23

  • Aftathoughts on NAFTA http://www.bradford-delong.com/2006/12/j_bradford_delo.html: J. Bradford Delong (2006), "Aftathoughts on NAFTA," Berkeley Review of Latin American Studies (Fall), pp. 16-21... 2006-12-21

  • WHAT SHOULD WE BE DOING ABOUT GLOBAL CLIMATE CHANGE? http://www.bradford-delong.com/2006/12/what_should_we_.html 2006-12-20

  • INTELLECTUAL GARBAGE COLLECTION: THE UNRELIABILITY OF ALAN REYNOLDS http://www.bradford-delong.com/2006/12/page/2/: A correspondent asks why she should presume that Alan Reynolds is wrong when he claims that statistics showing rising inequality are cynically and fraudulently manipulated.... The first reason is that Alan Reynolds is playing intellectual three-card monte. He opens his op-ed by attacking Senator-elect Webb's belief that income inequality has risen steeply since 198, but in the body of the op-ed—as he writes to economist Mark Thoma's Economist's View--"[I said that] there is no clear evidence of a sustained and significant increase in inequality since 1988.... I very carefully did not say there was no such evidence about 1981-87..." That is sufficient reason right there. However, there are more reasons... 2006-12-16