Fairly Recently: Must- and Should-Reads, and Writings... (December 11, 2018)

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  1. John Holbo: Hack Gaps and Noble Lies: "I actually find that sort of thing very painful. If I were saying something so oversimple that It feels like a lie – rather than a partial truth–I wouldn’t say it. I would feel compelled to flag and label it as a heuristic model. You say ‘there’s a more complicated story but let’s start here, even though ultimately I think we end up thinking about it very differently.’ Some warning label like that. I never try to make my students believe a proposition that I myself think is just out-and-out false. I guess I just think it’s so rare for good ideas to be indefensible on the merits (because your audience is too morally/intellectually disordered) yet falsely defensible on the demerits, as it were...

  2. Paul Krugman: "The Paul Ryan question isn't why he has proved to be a phony. It's why so many commentators took him seriously in the teeth of his obvious fraudulence. I called him out from the beginning—but was dismissed and attacked as being 'partisan'. The irony was that the real judgment-distorting partisanship was on the part of centrists, whose ideology demanded that there be Serious, Honest Conservatives to justify bothsidesism. Ryan was neither serious nor honest, and it took almost no work to figure that out. But centrists needed someone to fill the box, so they promoted Ryan into that role. It was a massive moral as well as intellectual failure. Has anyone learned from it?...

  3. *Niskanen Center Live Stream *: Starting Over: The Center-Right After Trump

  4. Ian Dunt: Week in Review: All May's faults come home to roost: "For two and a half years we have been forced to watch Theresa May's cack-handed administration trundle on.... The agreement she's come back with... It hugs the EU tight enough to remove control, but keeps it distant enough to still take ruinous economic damage. It is like a recipe book on how to injure yourself with crockery.... Indeed it is hard to think of a single genuine supporter of it outside Downing Street...

  5. It is such a bad idea for a central bank to invert in the yield curve. If central bankers kendo only one thing, that is probably the thing they should know: Glenn D. Rudebusch and John C. Williams: Forecasting Recessions: The Puzzle of the Enduring Power of the Yield Curve: "For over two decades, researchers have provided evidence that the yield curve... contains useful information for signaling future recessions.... Professional forecasters appear worse at predicting recessions a few quarters ahead than a simple real-time forecasting model that is based on the yield spread...

  6. Note that the model also predicts that if bonds outperform stocks over the next 10 years, then strocks are nearly certain to outperform bonds by much more in the following 10 years: Christopher G. Collins and Joseph E. Gagnon: The Stock Market Correction in Context: Are Equities Cheap or Expensive?: "Stock prices are indeed expensive in historical context. Nevertheless, stocks are likely to outperform bonds over the next 10 years; the model implies about a 25 percent chance that stocks perform worse than bonds. Moreover, if earnings in 2018 and 2019 come in close to their levels after 2009 rather than their levels in 2008 and 2009, and if stock prices and bond yields remain at their October 31 level through the end of 2019, then the ex ante EP would rise to 2.1 and the model would suggest only a 20 percent probability that stocks would perform worse than bonds over the following 10 years...

  7. This is something that is not getting enough airplay: if Democrats do not win the House vote by more than 4%-points in 2020, they lose the House. Things, of course, will change in 2022, but that is the map America faces in 2020. And that is without additional voter suppression: Paul Krugman: We Had a Narrow Escape. We're Still Very Much at Risk of Being Hungary Writ Large: "I've been doing some electoral math using the Cook House popular vote tracker, and it's kind of disturbing. Before the election, it was widely asserted that Dems had a big structural disadvantage due to gerrymandering and geographical concentration of minority voters. In the end, though, they turned an 8.6% lead in the popular vote into a roughly 8 percent lead in seats.... But Dems won the median seat by 4.1%—i.e., they probably would have failed to take control if their margin had been less than that. That's a couple of points lower than most pre-election analyses suggested, but still a lot... #politics #orangehairedbaboons #neofascism

  8. Chenzi Xu: Reshaping Global Trade: The Immediate and Long-Run Effects of Bank Failures: "The unexpected failure in May 1866 of Overend and Gurney, London’s largest interbank lender... led to widespread bank runs in London that caused 12 percent of British multinational banks to fail. These multinational banks played a dominant role in financing international trade during the 19th century... #economichistory #finance #financialcrises

  9. Paul Krugman: The Economic Future Isn’t What It Used to Be: "Lehman failed ten years... ago.... In honor of the anniversary, there have been approximately 1,000,000,000 pieces reflecting on the 2008 financial crisis and its effects. Many have suggested, rightly, that the political fallout continues to shape our world today. But as far as I can tell, surprisingly few have focused on the long-run economic effects.... These effects were huge.... Antonio Fatás and Larry Summers have been banging on this drum for years, as has Larry Ball.... More than 11 percent as of 2018.... The U.S. economy is as far below pre-crisis expectations now as it was in the depths of the Great Recession, even though we have supposedly recovered from the crisis... #hysteresis

  10. Continuing the project of assessing how huge of a deal the birth control pill was it is:* Martha Bailey*: Momma’s Got the Pill: : How Anthony Comstock and Griswold v. Connecticut Shaped US Childbearing: "The 1960s ushered in a new era in US demographic history characterized by significantly lower fertility rates and smaller family sizes. What catalyzed these changes remains a matter of considerable debate. This paper exploits idiosyncratic variation in the language of 'Comstock' statutes, enacted in the late 1800s, to quantify the role of the birth control pill in this transition. Almost 50 years after the contraceptive pill appeared on the US market, this analysis provides new evidence that it accelerated the post-1960 decline in marital fertility...

  11. A great interview with my Berkeley colleague the wise Hilary Hoynes: Equitable Growth: In conversation with Hilary Hoynes: "Our social safety net... very much moved toward toward work-contingent types of activity.... Some quantification or estimation of the question: Does providing more assistance through the social safety net, particularly aimed at children, lead to differences in where children end up in adulthood?... #socialinsurance #equitablegrowth

  12. Antonio Fatas: Global Rebalancing: "Prior to the Global Financial Crisis the world economy experienced a period of increasing global imbalances.... Today the world displays smaller imbalances than at the peak of 2008 but what it was more interesting is the extent to which rebalancing had happened between different country groups...

  13. Lend freely at a penalty rate on collateral that is good in normal times: David Warsh: What Have We Learned Since Bagehot?: "Fighting Financial Crises: Learning from the Past... by Gary Gorton and Ellis Tallman... offer five 'guiding principles' for dealing with financial crises in the future. Find the short-term debt.... Suppress bank-specific information... emergency lending facilities.... Prevent systemically important institutions from failing.... And consider that certain laws and regulations need not be applied during a financial crisis... #finance #centralbanking #monetarypolicy #financialcrises

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