"How can I know what I think until I read what I write?" – Henry James
jueves, 29 de septiembre de 2016
miércoles, 28 de septiembre de 2016
As with almost everything economic, there is controversy. Those who are less alarmed argue that such debates go back at least to the Luddites and that the tendency has been for jobs destroyed by technology in one sector to be replaced with new jobs in new sectors. They also raise what might be legitimately called a paradox: if jobs are being destroyed at an extraordinary rate by machines that can do the work of humans, why is productivity growth abnormally slow rather than abnormally fast?
Evidence for the importance of demand factors comes from the decline in wages for less skilled workers, the long-lasting effects of recessions on the willingness to work, and the shift in the composition of the economy away from sectors such as manufacturing that heavily employ less skilled men. Of course, demand and supply interact. No doubt the availability of benefits and the reduction in any shame associated with not working when non-work becomes pervasive make it easier to settle into such a life.
"Cada vez resulta más evidente que los bancos centrales han estado sobrecargados durante demasiado tiempo. Como argumentamos detalladamente en nuestro último Informe Anual, es fundamental conseguir una combinación de políticas más equilibrada para guiar la economía mundial hacia una expansión más robusta, equilibrada y sostenida."
martes, 27 de septiembre de 2016
lunes, 26 de septiembre de 2016
domingo, 25 de septiembre de 2016
Permítaseme repetir que una novela es una impresión, no una discusión, y ahí debe quedar el asunto, tal como nos recuerda un pasaje que aparece en las cartas de Schiller a Goethe sobre los jueces de esa índole: «Son los que sólo buscan sus propias ideas en una representación, y premian más lo que debería ser que lo que es. La causa de la discusión, pues, reside en los primerísimos principios, y sería absolutamente imposible llegar a un entendimiento con ellos». Y luego: «Tan pronto como observo que alguien, al juzgar representaciones poéticas, considera algo como más importante que la Verdad y la Necesidad interiores, he terminado con él».
sábado, 24 de septiembre de 2016
The basic RBC model contains a production function relating output to capital (owned by individuals) and labour plus a stochastic element representing technical progress, an identity relating investment and capital, a national income identity giving output as the sum of consumption and investment, marginal productivity conditions (from profit maximisation by perfectly competitive representative firms) giving the real wage and real interest rate, and the representative consumer’s optimisation problem for consumption, labour supply and capital. (See here, for example.)What is the really big problem with this model? Not problems along the lines of ‘I would want to add this’, but more problems like I would not even start from here. Let’s ignore capital, because in the bare bones New Keynesian model capital does not appear. If you were to say giving primacy to shocks to technical progress I would agree that is a big problem: all the behavioural equations should contain stochastic elements which can also shock this economy, but New Keynesian models do this to varying degrees. If you were to say the assumption of labour market clearing I would also agree that is a big problem.However none of the above is the biggest problem in my view. The biggest problem is the assumption of continuous goods market clearing aka fully flexible prices. That is the assumption that tells you monetary policy has no impact on real variables. Now an RBC modeller might say in response how do you know that? Surely it makes sense to see whether a model that does assume price flexibility could generate something like business cycles?The answer to that question is no, it does not. It does not because we know it cannot for a simple reason: unemployment in recessions is involuntary, and this model cannot generate involuntary unemployment, but only voluntary variations in labour supply as a result of short term movements in the real wage. Once you accept that higher unemployment in recessions is involuntary (and the evidence for that is very strong), the RBC project was never going to work.So how did RBC models ever get off the ground? Because the New Classical revolution said everything we knew before that revolution should be discounted because it did not use the right methodology. And also because the right methodology - the microfoundations methodology - allowed the researcher to select what evidence (micro or macro) was admissible. That, in turn, is why the microfoundations methodology has to be central to any critique of modern macro. Why RBC modellers chose to dismiss the evidence on involuntary unemployment I will leave as an exercise for the reader.The New Keynesian (NK) model, although it may have just added one equation to the RBC model, did something which corrected its central failure: the failure to acknowledge the pre-revolution wisdom about what causes business cycles and what you had to do to combat them. In that sense its break from its RBC heritage was profound. Is New Keynesian analysis still hampered by its RBC parentage? The answer is complex (see here), but can be summarised as no and yes. But once again, I would argue that what holds back modern macro much more is its reliance on its particular methodology.One final point. Many people outside mainstream macro feel happy to describe DSGE modelling as a degenerative research strategy. I think that is a very difficult claim to substantiate, and is hardly going to convince mainstream macroeconomists. The claim I want to make is much weaker, and that is that there is no good reason why microfoundations modelling should be the only research strategy employed by academic economists. I challenge anyone to argue against my claim.
.. Romer’s most effective rhetorical strategy is to point out that the RBC core of modern DSGE models posit unobservable taste and technology shocks to account for fluctuations in the economic time series, but that these taste and technology shocks are themselves simply inferred from the fluctuations in the times-series data, so that the entire structure of modern macroeconometrics is little more than an elaborate and sophisticated exercise in question-begging.
In this post, I just want to highlight one of the favorite catch-phrases of modern macroeconomics which serves as a kind of default excuse and self-justification for the rampant empirical failures of modern macroeconomics (documented by Lipsey and Carlaw as I showed in this post). When confronted by evidence that the predictions of their models are wrong, the standard and almost comically self-confident response of the modern macroeconomists is: All models are false. By which the modern macroeconomists apparently mean something like: “And if they are all false anyway, you can’t hold us accountable, because any model can be proven wrong. What really matters is that our models, being microfounded, are not subject to the Lucas Critique, and since all other models than ours are not micro-founded, and, therefore, being subject to the Lucas Critique, they are simply unworthy of consideration. This is what I have called methodological arrogance. That response is simply not true, because the Lucas Critique applies even to micro-founded models, those models being strictly valid only in equilibrium settings and being unable to predict the adjustment of economies in the transition between equilibrium states. All models are subject to the Lucas Critique.
viernes, 23 de septiembre de 2016
jueves, 22 de septiembre de 2016
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
miércoles, 21 de septiembre de 2016
martes, 20 de septiembre de 2016
Las expectativas de beneficios en un futuro determina el deseo del inversionista o emprendedor de pedir financiación externa y la voluntad de banco (u otro tipo de intermediario) de arriesgar su dinero en un proyecto. Nótese aquí la falacia de los austriacos, que dicen que el problema bancario de la inestabilidad es porque la reserva bancaria es fraccional: los depósitos de los clientes suman mucho menos que el crédito total de la economía. Esta falacia se deshace con la práctica bancaria del colateral o garantía, que cubre el riesgo de impago de del préstamo realizado. Salvo crisis sistémica, en que todos los precios de los colaterales se hundirían, no ha descubierto de crédito. Lo que puede haber es insuficiencia de capital social para el caso de unos impagos elevados, pero eso es un problema de política de solvencia del capital, no de depósitos.
... Thus, in a capitalist economy the past, the present, and the future are linked not only by capital assets and labor force characteristics but also by financial relations. The key financial relationships link the creation and the ownership of capital assets to the structure of financial relations and changes in this structure. Institutional complexity may result in several layers of intermediation between the ultimate owners of the communities' wealth and the units that control and operate the communities' wealth.
El punto crucial determinante del sistema es el beneficio del emprendedor, la fuente de donde van a salir los recursos para devolver los intereses y el capital prestado. En un esquema sencillo,
Expectations of business profits determine both the flow of financing contracts to business and the market price of existing financing contracts. Profit realizations determine whether the commitments in financial contracts are fulfilled--whether financial assets perform as the pro formas indicated by the negotiations.
Los banqueros son unos emprendedores más, igual de interesados en el beneficio de la empresa endeudada, siendo éste lo que justifica el pasivo del banco. Se establece una cadena de contabilidades del pasivos y activos del banco que son a su vez pasivos de los empresarios, que lo respaldan con la inversión como colateral y el beneficio esperado como fuente de cancelación de la deuda.
the key determinant of system behavior remains the level of profits.
In the skeletal model, with highly simplified consumption behavior by receivers of profit incomes and wages, in each period aggregate profits equal aggregate investment. In a more complex (though still highly abstract) structure, aggregate profits equal aggregate investment plus the government deficit. Expectations of profits depend upon investment in the future, and realized profits are determined by investment: thus, whether or not liabilities are validated depends upon investment. Investment takes place now because businessmen and their bankers expect investment [& Profits]to take place in the future.
Se establecen tres tipos de economías según sea la fuente de cancelación de deuda y pago de intereses.
The financial instability hypothesis, therefore, is a theory of the impact of debt on system behavior and also incorporates the manner in which debt is validated. In contrast to the orthodox Quantity Theory of money, the financial instability hypothesis takes banking seriously as a profit-seeking activity. Banks seek profits by financing activity and bankers. Like all entrepreneurs in a capitalist economy, bankers are aware that innovation assures profits. Thus, bankers (using the term generically for all intermediaries in finance), whether they be brokers or dealers, are merchants of debt who strive to innovate in the assets they acquire and the liabilities they market. This innovative characteristic of banking and finance invalidates the fundamental presupposition of the orthodox Quantity Theory of money to the effect that there is an unchanging "money" item whose velocity of circulation is sufficiently close to being constant: hence, changes in this money's supply have a linear proportional relation to a well defined price level.
Lo que dice Minsky es que la estabilidad trae inestabilidad. La confianza creciente a los inversores, que van reduciendo su apreciación del riesgo por el optimismo reinante generalizado cada vez más. Tarde o temprano se da el salto de una economía "seria", que no rebasa los límites de los flujos de caja con los financieros de pasivo, a una que ve menos riesgo en anticipar más y más beneficio, y cada vez a más corto plazo. El ejemplo característico es la burbuja pre crisis de antes de 2008.
If I could, I would rewind time by many, many years so that I could better prepare myself and the whole government and all those in positions of responsibility for the situation that caught us unprepared in the late summer of 2015,” Ms Merkel said.The chancellor also distanced herself from her phrase — “Wir schaffen das — we can do it” — which captured Germans’ belief last summer in their capacity to integrate the newly arrived refugees. She said it had become “a simple slogan, almost an empty formula” that underestimated the scale of the integration challenge.