Egyptian family says 5-year-old boy slipped out of 3rd story window during a party, but a well-coordinated cop saved the day.
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沒有開始下載?Do You Feel Guilty Making Money?Grasping Reality with Both Hands: bradford-delong.com: : Econ 101b Fall 2005
If you would rather just see ...
Live from Federal Reserve Economic Data: Brad DeLong's FRED Economic Statistics Dashboard : What I want my Econ 101b students to see and think about before they come to class next January:
Most-Recent Must-Reads:
Gabriel Chodorow-Reich and Loukas Karabarbounis
George W. Evans and Bruce McGough:
Oscar Jorda, Moritz Schularick, and Alan M. Taylor:
Most-Recent Links:
Diane Coyle:
Paul Krugman:
Parth M.N. and Shashank Bengali:
Wikipedia:
Matthew Yglesias:
Hoisted from the Archives: July 17, 2009: : As of this writing, it looks as though the average unemployment rate in 2009 is going to average at least 1.5 percentage points above where last December the incoming Obama administration thought that it was likely to be. Instead of the 7.8% forecast last December, year-2009 unemployment looks to average 9.3% or higher. Year-2009 real GDP also looks to be lower than the income Obama administration was forecasting last December: $11.40 rather than $11.53 trillion. The macroeconomic news has been bad. The financial crisis that gathered force from the summer of 2007 through the summer of 2008 and then exploded after the collapse of Lehman brothers did more damage to the economy than the consensus of forecasters had imagined.
Back in the 1960s one of President Johnson's economic advisers, Brookings Institution economist Arthur Okun, set out a rule of thumb other quickly named "Okun's Law": if production and incomes--GDP--rises or falls 2% because of the business cycle, the unemployment rate will fall or rise by 1% along with it: the magnitude of swings in the unemployment rate will be half or a little less than half the magnitude of swings in GDP. Why? For four reasons: (a) businesses will tend to "hoard labor" in recessions, keeping useful workers around and on the payroll even if there is temporarily no (b) businesses will cut back hours when unemployment rises, and so output will fall more than proportionately because total hours worked will fall by more than t (c) plant and equipment will run less efficiently when hours are artificially shortened beca and (d) some workers who lose their jobs won't show up in the unemployment statistics but will instead retire or drop out of the labor force. For all four of these reasons, whatever rise in the unemployment rate we see in a recession is supposed to be a fraction of the fall we see in GDP relative to trend.
But this time we are not following this rule. This time Okun's Law is being broken. The unexpected 1.2% extra decline in real GDP in 2009 should have been accompanied by an 0.5 or 0.6 percentage-point rise in the unemployment rate, not by the 1.5 percentage point rise in the unemployment rate we are now seeing. I confess that the fact that this is happening comes as a surprise to me. But when I think back we have seen this before. In 1993--two full years after the National Bureau of Economic Research had called the end of the
recession--the unemployment rate was still higher and the employment-to-population ratio lower than it had been at the recession trough. And we saw the same "jobless recovery" after the recession of 2001: it took 55 months after the formal end of the recession in November 2001 before a greater share of Americans had jobs than had had them in November of 2001.
It is likely to be a recovery. The central tendency forecast right now is that real GDP contracted at a rate of 1% per year or less between the first and second quarters of 2009, and will grow between the second and third quarters at a rate of 2% per year or so. When the NBER Business Cycle Dating Committee gets around to it, it is most likely to call the end of the recession for June 2009, second most likely to call it's end in April, and a recession-end date later than June 2009 is a less likely possibility. One reason that we are likely to see a recovery starting... right now... is the stimulus package. It probably boosted the real GDP annual growth rate relative to what otherwise would have been the case by about 1.0 percentage point in the second quarter, and is going to boost the annual GDP growth by about 2.0 percentage points between now and the summer of 2010--after which its effects tail off.
But it will not feel much like a recovery. After the 1982 recession the turnaround in employment lagged the turnaround in GDP by only six months. Thereafter employment growth was very strong: in the eighteen months up until the end of 1984, growth in work hours averaged 4.8% per year. it took only 7 months after the 1982 recession trough for the employment-to-population ratio to rise above its trough level (1980: 2 months. 1975: 5 months. 1970: 18 months. 1961: 13 months. 1958: 4 months. 1954: 8 months.) By contrast, it took 29 months after the 1991 recession trough for the employment-to-population ratio to exceed its trough level, and 55 months after the 2001 recession trough for the employment-to-population ratio to do so. Productivity growth in the immediate aftermath of the end of the 1991 and 2001 recessions was surprisingly rapid: rapid enough to eat up all of real demand growth and more as businesses decided to take advantage of the economic downturn to slim down their labor forces and become more efficient.
Today--unless we get much faster real GDP growth than currently looks to be in the cards--we are headed for a jobless recovery. The answer to the economic question--was the stimulus sufficient to rapidly return the economy to something like normal unemployment?--is likely to be: "h--- no, it was much too small..."
If I could add one thing to the Senate bill in conference committee it would be an improvement in the actuarial values for those individuals and families with incomes in the range of 150% to 300% of the poverty line. The Senate bill provides for relatively limited benefits for those low income individuals -- much lower than the House. Given that the Senate bill covers preventive care, and caps out of pocket expenses, this is essentially a "doughnut hole" issue -- the Senate bill provides very little coverage (if any) between the preventive care and the out of pocket maximum. Essentially we are putting fairly low income individuals into high deductible plans. Moving towards the House on these actuarial values (even if we don't get all the way there) would greatly improve the insurance coverage we provide to low income populations.
When you talk to Chinese officials, they seem competent, focused and obsessed with stability (if also, sometimes, arrogant and pedantic). But occasionally you can glimpse the dangers and threats.... Wen Tianping, the spokesman for Chongqing's municipal government, told us. "We work under extreme pressures and we have a lot of difficulties." The foremost difficulty is immigration. In English we'd call it "migration," but our translators unfailingly used the word "immigration," and I began to see that it was the more accurate description of what was happening. Just as developed countries like the United States and members of the European Union face an influx of workers from the developing world, so does China: it's just that China contains both the developed and developing worlds within its borders. The way China regulates this flow is not that different from the way nation states do.... But just as walls and laws have a hard time restricting human traffic from Mexico to the United States when the economic incentives are so extreme, so do the internal regulations of the Chinese state. "They can be migrant workers forever," said Paul Mak, a Chinese-American businessman in Shanghai who has worked for the American company Mary Kay in Shanghai for twelve years. "A migrant worker cannot become a resident of Shanghai. Now if you have a college degree you can come but not without education. You have a class of people in this limbo." This marginal population freaks out the Chinese authorities because they desperately wish to avoid the experience of so many other developing countries, from Brazil to India, which have seen the growth of massive, ungovernable miserable slums in their largest cities...
A few things: 1. In this post, I was not, despite what some readers apparently thought, endorsing the Roman Empire. I was endorsing Monty Python. 2. Some commenters took umbrage at my assertion in this post that Robert E. Lee fought in a terrible cause. The Civil War, they say, wasn&t about slavery. Well, let me pull Abraham Lincoln out from behind this sign to explain it to you. Yes it was. 3. Some commenters ask for proof that I warned early about the housing bubble. As it happens, I ran across this interesting piece from 2005, denouncing the lying liberal media & mainly me & for asserting that there was a bubble in housing.
It seems the entire world is just biding its time, waiting and hoping that asset values return to the lofty heights achieved a few years back and that people resume their mid-decade spendthrift ways. If you wait long enough, it just might work, though that theory will surely be put to a stern test in Dubai. Based on this Reuters story it looks like that's the plan.
ARE canals the most underbuilt piece of infrastructure there is? "The effects of distance on trade and of trade on income have puzzled economists for centuries. This column presents new evidence from a natural experiment – the
closure of the Suez Canal. Results suggest that a 10% decrease in ocean distance results in a 5% increase in trade. Also, it estimates that every dollar of increased trade raises income by about 25 cents." That's from a new Vox piece by James Feyrer. He uses the Suez Canal experiment to demonstrate the link between trade and income, which he then uses to support reductions in trade barriers. I'm all for that, but what about the canals? Presumably, we could use the numbers Mr Feyrer presents above to determine which potential canals are likely to generate the highest income returns, and those expected returns could be compared to the expected cost of construction. Is it really the case that using these measures, all the conceivably positive net return canals have been built already?
As central bank governor of Cyprus, Athanasios Orphanides represents one of the eurozone's smallest economies. But his voice has carried extra weight during the past year because of his expertise on past economic crises. "I was at the Federal Reserve Board in the late 1990s and became interested in following developments in Japan at that time," he says. "It was the first time in the developed world that we had experienced a deflation, and policy rates being very close to zero, since the 1930s." As such, he was one of the forces earlier this year encouraging the European Central Bank to cut its main interest rate faster and further than before and to flood the banking system with liquidity, driving market interest rates even lower.... Mr Orphanides said that while it was too early to judge fully the effectiveness of policy responses to the current crisis: "I think we can already say that we have avoided an experience as terrible, as catastrophic, as in the 1930s."... He admitted being haunted by the words of John Maynard Keynes. "In 1930, even before the Great Depression had taken hold, he was concerned that the mentality and ideas of policymakers could actually hinder the appropriate action needed to avoid the worst. During the 1930s, his concerns proved well founded. But we have learnt the lessons of history." However, the low level of eurozone inflation is a lingering concern for Mr Orphanides. The annual figure turned negative this year, before bouncing back - just - into positive territory in November, when it was 0.5 per cent. Crucially, he argues, expectations by consumers, economists and financial markets about inflation rates in the "medium to long term" remain firmly in line with the ECB's target of an annual rate "below but close" to 2 per cent. Mr Orphanides points out that underlying or "core" inflation measures are still on a downward trend. "Over the past year or so we have observed a decline in core inflation away from our definition of price stability, and that is something which personally I find to be of concern"...
This only confirms what common sense and elementary Keynesian theory would lead one to expect. In a slump there is no natural tendency for the rate of interest to fall, because people&s desire to hoard money is increasing. So printing enough money to &satisfy the hoarder& is the only way of getting interest rates or the exchange-rate down. But, of course, there is always &market sentiment& to fall back on. The government must cut its spending now, because this is what &the markets& expect. These are the same markets that so wounded the banking system that it had to be rescued by the taxpayer. They are now demanding fiscal consolidation as the price of their continued support for governments whose fiscal troubles they have largely caused. Why on earth should we take this market sentiment any more seriously than that which led to the great debauch of 2007? Markets, it is sometimes said, may not know what they are talking about, but governments have no choice but to do what they tell them. This is unacceptable. The duty of governments is to govern in the best interests of the people who elected them not of the City of London. If that means calling the bankers& bluff, so be it.
BEST NON-ECONOMICS THING I'VE READ TODAY: :
When he did it yesterday I thought maybe he was just free-associating or something, but Media Matters observes that yesterday in formal remarks on the Senate floor Lindsay Graham again argued that South Carolina deserves a fair share of Medicaid money specifically by citing the fact that black people live there. Graham seems to have some combination of the belief that all black people are poor, only black people are eligible for Medicaid, all poor people are black, or something. The reality is that South Carolina is, in fact, a state with a lot of poor people&its 15.1 percent poverty rate in 2007 put it above the national average, and the number will have only gone up since the recession hit. But of course poor people can be white, black, Asian, whatever. And Matt Finkelstein observes that there are more white Medicaid recipients in South Carolina than black ones.
9) STUPIDEST THING I'VE READ TODAY: John Micklethwait and Adrian Wooldridge (2004), The Right Nation, p. 380:
Who would have imagined that the 2004 presidential election would represent something of a last chance for the Democrats?... [C]onservatism's progress goes much deeper than the gains that the Republican Party has made... or the steady decline in Democratic registration. The Right clearly has ideological momentum on its side.... [T]he grandson of Prescott Bush has cut taxes, catered to the Religious Right, and generally governed like a Sunbelt business tycoon....Bush has reduced the Democratic Party into merely the anti-Bush party: the party of the moon rather than the sun.... [H]e seems set to conitnue with a onservative agenda, redesigning Social Security, solidifying his tax cuts, pouring more money into America's military might...
10) HOISTED FROM THE ARCHIVES: :
UNITED STATES TREASURY, May 18, 1994, MEMORANDUM FOR ASSISTANT SECRETARY FOR ECONOMIC POLICY ALICIA MUNNELL. From Brad DeLong, Deputy Assistant Secretary, Economic Policy. Subject: EQUIPMENT INVESTMENT BOOM. Isn&t this remarkable? I should figure out how much of it simply the falling price of computers coupled with the 1987 base year. But if we do not see a substantial acceleration of U.S. potential output growth over the next few years, Larry Summers and I will have a lot of explaining to do...
Dean Baker complains about Ryan Lizza:
: Here are a few of the things we learned in the last 12 months:
REVISING THE CHINESE ECONOMY Many of the prices in China had not been accurately measured since the late 1980s; in 2007, new data indicated that food, rent and other items had become a lot more expensive than had been accounted for in official measurements. Higher prices, of course, mean lower Chinese real wages and a smaller size for the Chinese real economy.... China has 300 million workers & about the size of the entire United States population & earning less than a dollar a day....
IT&S NOT JUST THE LENDERS There has been plenty of talk about &predatory lending,& but &predatory borrowing& may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications.... Many of the frauds were simple rather than ingenious.... Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation....
IN MUSIC, HARDWARE RULES In 2007, album sales fell 15.3 percent.... Even if sales of 10 singles are counted as one album, sales were still down 9.5 percent. Economists... thought that greater exposure to music and the ease of online access might lead people to buy more. But in 2007 the outcome became clear: people tend to buy their favorite song from an album, online, rather than buy the whole album.... When it comes to piracy, illegal file-sharing on computer networks is
instead, computer users, especially teenagers, burn CDs for one another. The music companies don&t have a good business model for making money from this...
LETHAL COLD FRONTS Spells of extreme cold kill over 27,000 Americans each year.... [D]ays with an average temperature below 30 degrees... have more significant and longer-lasting effects on human mortality.... Extreme cold brings cardiovascular stress.... Heat waves tend to kill people who were already weakened and would h cold periods bring additional people to the verge of death.... 8 to 15 percent of the increase in American life expectancy over the last 30 years comes from people moving to warmer climates, according to research done by two economics professors, Olivier Deschenes at the University of California, Santa Barbara, and Enrico Moretti, at the University of California, Berkeley....
Many major debates of economics remain unsettled.... Knowledge is a wonderful thing, but sometimes simply knowing what we don&t know is a form of understanding. So beware the one- sometimes a good economist could use two or even three arms or more.
I think only three of these are new and surprising--"it's not just the lenders" seems to me to be mischaracterized, and not to carry the implications Tyler wishes us to drawn from it.
The fall 2005
Due in lecture on November 16.
The fall 2005
Due in lecture on November 9.
To read the extra readings on JSTOR from a computer outside the berkeley.edu domain, you may have to set up your web browser to use Berkeley's proxy server service:
Economics 101b Fall 2005
Syllabus Part II
October 14, 17: Japan's Decade-Long Slump
Readings: Paul Krugman, &Japan&s Liquidity Trap& & http://web.mit.edu/krugman/www/japtrap.html#Figure%201>
Paul Krugman, &Japan: Still Trapped&
Adam Posen, &Macroeconomic Mistake, Not Structural Stagnation&
Adam Posen, &Recognizing a Mistake: Not Blaming a Model&
October 19, 21, 24: Europe's High Unemployment
Readings: Olivier Blanchard and Lawrence Summers (1986), "Hysteresis and the European Unemployment Problem"
Olivier Blanchard and Justin Wolfers (1999), "Shocks and Institutions in European Unemployment"
Olivier Blanchard (2004), "The Economic Future of Europe"
October 26, 28, 31: America's "New Economy"
Readings: Alan Blinder and Janet Yellen (2001), The Fabulous Decade: Macroeconomic Lessons from the 1990s (New York: Century Foundation)
William Nordhaus (2004), "The Story of a Bubble"
November 2, (no class on the 4th), 7, 9: Emerging Market Financial Crises:
Readings: Michael Mussa (2002), Argentina and the Fund: From Triumph to Tragedy
Morris Goldstein (1998), The East Asian Financial Crisis
November 14, 16: America's Current Macroeconomic Dilemma
Readings: Lecture notes to be issued...
The fall 2005
Stabilization Policy and Expectations: Extensions:
The Phillips curve, expectations, and monetary policy
Aggregate supply and the Phillip curve
Unemployment
Unemployment and Okun's Law
(Y - Y)/Y = 2.5(u* - u)
Where Y* is potential output and u* is the "natural" rate of unemployment
Costs of high unemployment
Aggregate supply
The modern Phillips curve: π = πe - B(u - u*) + S
Where: π is the inflation rate, πe is expected inflation, u* is the natural rate of unemployment, and S is a supply-shock term.
What is expected inflation? We will deal with that later...
When unemployment is at its natural rate u*, inflation is at its expected value πe, and vice versa
Monetary policy, aggregate demand, and inflation
Think of the Federal Reserve choosing three numbers--a "normal" level of unemployment, a target level of inflation, and a degree of aggressiveness in response to deviations of inflation from the target--as follows:
The Federal Reserve chooses a value of the interest rate r
(A gross shortcut, but let's make it)
When the Federal Reserve's choice of the interest rate r is at its normal value, then we go to the IS curve:
Y = A0/[1-MPE] - (Ir + Xeer)/[1-MPE]
Where A0 = C0 + I0 + G + XfYf + Xee0 + Xeerrf
And find that Y is at some value Y0, and thus that the unemployment rate is at value u0--what the Federal Reserve thinks is the "normal" value of the unemployment rate
This should be, but may not be, the natural rate of unemployment u*
When inflation is higher than the Federal Reserve's desired target value πT, the Federal Reserve gets nervous and pushes interest rates up--pushing investment and exports down, pushing output down, and pushing unemployment up above u0
When inflation is higher than the Federal Reserve's desired target value πT, the Federal Reserve gets nervous and pushes interest rates down--pushing investment and exports up, pushing output up, and pushing unemployment down below u0
We model this with John Taylor's Monetary Policy Reaction Function (MPFRDF):
u = u0 + o(π - πT)
Equilibrium
u = u0 + o(π - πT)
π = πe - B(u - u*) + S
π = πe/(1+Bo) + πT/(1+Bo) - B(u0 - u*)/(1+Bo) + S/(1+Bo)
Give us a rule for understanding how inflation expectations are formed, and we will be done.
Inflation expectations
Three kinds:
Static inflation expectations
Will exist only if fluctuations in inflation are small
Produces an economy that moves back and forth along a stable downward-sloping Phillips curve
π = πe/(1+Bo) + (Bo)πT/(1+Bo) - B(u0 - u*)/(1+Bo) + S/(1+Bo)
u = u0 + o(π - πT)
With static expectations, only the sticky-price model is relevant
The U.S. in the 1950s and 1960s
Rational inflation expectations
Will exist in a sophisticated economy if the variation in government policy and in inflation is large
Produces an economy with a vertical Phillips curve (except for supply shocks): unemployment = u* plus supply- changes in government policy and in the economic environment affect the rate of inflation only
π = πT - (u0 - u*)/o + S/(Bo)
Mitterand 1981
Only the flexible price model is relevant
Adaptive inflation expectations
Exponential convergence
[πt - (πT - (u0 - u*)/o)] = (1/(1+Bo))[πt-1 - (πT - (u0 - u*)/o)]
The natural rate of unemployment
Natural rate vs. NAIRU
Demography
Institutions
Productivity growth
Past unemployment rates
Optional: The money market and the LM curve
The money market and the money stock
Wealth, bonds, and the demand for money
Money supply
Money supply and money demand
Liquidity preference and the quantity theory of money: what's the relation?
Bond prices and interest rates
The LM curve
Interest rates and the LM curve
Drawing the LM curve
When is the LM curve relevant
When central banks are passive--or target money stocks
When the supply of money is given--as under a gold standard
The IS-LM framework
IS-LM equilibrium
Classifying disturbances
Optional: Aggregate supply and aggregate demand
The price level and aggregate demand
The price level and aggregate supply
Prices: stuck? sticky? flexible?
The AS-AD diagram
Understanding demand and supply shocks
The fall 2005
Note: I forgot to hand this out in lecture today, but here it is...
The fall 2005
October 5: Investment, Net Exports, and the Real Interest Rate: The IS Curve
Last time we started with our behavioral relationships:
C = C0 + Cy(1-t)Y; consumption function
I = I0 - Irr; business investment demand
G = G; government purchases
IM = IMyY; import demand
X = XfYf + Xee; export demand
e = e0 + er(rf - r)
And we made the key sticky-price assumptions:
r is now a fixed, given variable--the result of Federal Reserve policy (or of the current money stock and money demand) plus other influences
C + I + G + (X - IM) = Y is now an equilibrium condition--not an identity
And we derived:
Output as a function of autonomous spending A:
A = I + G + X + C0
Y = A/(1-(Cy(1-t) - IMy))
The multiplier: 1/(1-(Cy(1-t) - IMy))
Now let's go one step further...
Investigating the dependence of autonomous spending on the real interest rate r, and thus of output on the real interest rate r...
Interest Rates and Planned Expenditure
The importance of investment spending
The interest rate is not set in the loanable funds market in the sticky-price model
The interest rate is set by a combination of
Demand and supply for liquidity--money, and
The term structure of interest rates
Hence no presumption that fluctuations in investment--whether driven by "animal spirits" or movements in interest rates--are stable or stabilizing
Why investment depends on the real interest rate
The long-term, risky, real interest rate
Exports and autonomous spending
The exchange rate depends on the interest rate
Exports depend on the exchange rate
Hence exports are another interest-sensitive component of autonomous spending
The stock market as an indicator of investment
The IS Curve
Autonomous spending and the interest rate
From the interest rate to investment to planned expenditure
The slope and position of the IS curve
(Inverse) Slope: (1-MPE)/(Ir + Xeer)
Position: A0/((1-MPE)
Equilibrium
Moving the economy to the IS curve
Interest rates adjust immediately
Inventories: output and demand levels adjust more slowly
Shifting the Is curve
Example: a change in government purchases
Moving along the IS curve
A change in monetary policy: open market operations
Difficulties in monetary management
Using the IS curve to understand the U.S. economy
The 1960s: Federal Reserve keeps i Great Society and Vietnam War shift the IS curve outward
The late 1970s: The Volcker disinflation--raising real interest rates
The early 1980s: The Reagan deficits
The late 1980s: easing monetary policy as inflation dangers recede
The 1990s: initial sharp inward shift of IS subsequent "new economy" boom
The 2000s: inward shift of IS curve coupled with substantial reduction in real interest rates...
October 3: Sticky-Price Unemployment Business-Cycle Model
We now consider a time span too short for wages and prices to adjust to guarantee "full employment"...
So output Y is not necessarily equal to full-employment potential-output Y*...
We need a new equilibrium condition. Here it is: businesses adjust employment and production to keep their inventories stable--to match aggregate demand...
Other than this change of equilibrium condition, the model remains pretty much the same--but it behaves very differently.
We still have our behavioral relationships:
C = C0 + Cy(1-t)Y; consumption function
I = I0 - Irr; business investment demand
G = G; government purchases
IM = IMyY; import demand
X = XfYf + Xee; export demand
e = e0 + er(rf - r)
But there are two differences:
r is now a fixed, given variable--the result of Federal Reserve policy (or of the current money stock and money demand) plus other influences
C + I + G + (X - IM) = Y is now an equilibrium condition--not an identity
Sticky prices
Consequences of sticky prices
Flexible-price logic: prices adjust
Sticky-price logic: quantities adjust
Expectations and sticky-price logic
If expectations are fulfilled, then there will never be cases when price stickiness matters: it's only price stickiness plus surprising changes to economic policy or the economic environment that causes deviations from the full-employment model of chapters 6 and 7
*Why are prices sticky?
Menu costs
Lack of information--confusion of real and nominal magnitudes
Sociology: the social consequences of wage cuts
Simple "money illusion"
Income and expenditure
Building up total planned expenditure
Consumption function
Investment spending
Government purchases
Net exports: exports minus imports
Autonomous spending A
The marginal propensity to expend on domestic goods: Cy(1-t) - IMy
Sticky-price equilibrium: Y = A/(1-(Cy(1-t) - IMy))
The multiplier: 1/(1-(Cy(1-t) - IMy))
The multiplier used to be much more important than it is today...
The process of inventory adjustment
The fall 2005
October 5: Investment, Net Exports, and the Real Interest Rate: The IS Curve
Last time we started with our behavioral relationships:
C = C0 + Cy(1-t)Y; consumption function
I = I0 - Irr; business investment demand
G = G; government purchases
IM = IMyY; import demand
X = XfYf + Xee; export demand
e = e0 + er(rf - r)
And we made the key sticky-price assumptions:
r is now a fixed, given variable--the result of Federal Reserve policy (or of the current money stock and money demand) plus other influences
C + I + G + (X - IM) = Y is now an equilibrium condition--not an identity
And we derived:
Output as a function of autonomous spending A:
A = I + G + X + C0
Y = A/(1-(Cy(1-t) - IMy))
The multiplier: 1/(1-(Cy(1-t) - IMy))
Now let's go one step further...
Investigating the dependence of autonomous spending on the real interest rate r, and thus of output on the real interest rate r...
Interest Rates and Planned Expenditure
The importance of investment spending
The interest rate is not set in the loanable funds market in the sticky-price model
The interest rate is set by a combination of
Demand and supply for liquidity--money, and
The term structure of interest rates
Hence no presumption that fluctuations in investment--whether driven by "animal spirits" or movements in interest rates--are stable or stabilizing
Why investment depends on the real interest rate
The long-term, risky, real interest rate
Exports and autonomous spending
The exchange rate depends on the interest rate
Exports depend on the exchange rate
Hence exports are another interest-sensitive component of autonomous spending
The stock market as an indicator of investment
The IS Curve
Autonomous spending and the interest rate
From the interest rate to investment to planned expenditure
The slope and position of the IS curve
(Inverse) Slope: (1-MPE)/(Ir + Xeer)
Position: A0/((1-MPE)
Equilibrium
Moving the economy to the IS curve
Interest rates adjust immediately
Inventories: output and demand levels adjust more slowly
Shifting the Is curve
Example: a change in government purchases
Moving along the IS curve
A change in monetary policy: open market operations
Difficulties in monetary management
Using the IS curve to understand the U.S. economy
The 1960s: Federal Reserve keeps i Great Society and Vietnam War shift the IS curve outward
The late 1970s: The Volcker disinflation--raising real interest rates
The early 1980s: The Reagan deficits
The late 1980s: easing monetary policy as inflation dangers recede
The 1990s: initial sharp inward shift of IS subsequent "new economy" boom
The 2000s: inward shift of IS curve coupled with substantial reduction in real interest rates...
October 3: Sticky-Price Unemployment Business-Cycle Model
We now consider a time span too short for wages and prices to adjust to guarantee "full employment"...
So output Y is not necessarily equal to full-employment potential-output Y*...
We need a new equilibrium condition. Here it is: businesses adjust employment and production to keep their inventories stable--to match aggregate demand...
Other than this change of equilibrium condition, the model remains pretty much the same--but it behaves very differently.
We still have our behavioral relationships:
C = C0 + Cy(1-t)Y; consumption function
I = I0 - Irr; business investment demand
G = G; government purchases
IM = IMyY; import demand
X = XfYf + Xee; export demand
e = e0 + er(rf - r)
But there are two differences:
r is now a fixed, given variable--the result of Federal Reserve policy (or of the current money stock and money demand) plus other influences
C + I + G + (X - IM) = Y is now an equilibrium condition--not an identity
Sticky prices
Consequences of sticky prices
Flexible-price logic: prices adjust
Sticky-price logic: quantities adjust
Expectations and sticky-price logic
If expectations are fulfilled, then there will never be cases when price stickiness matters: it's only price stickiness plus surprising changes to economic policy or the economic environment that causes deviations from the full-employment model of chapters 6 and 7
*Why are prices sticky?
Menu costs
Lack of information--confusion of real and nominal magnitudes
Sociology: the social consequences of wage cuts
Simple "money illusion"
Income and expenditure
Building up total planned expenditure
Consumption function
Investment spending
Government purchases
Net exports: exports minus imports
Autonomous spending A
The marginal propensity to expend on domestic goods: Cy(1-t) - IMy
Sticky-price equilibrium: Y = A/(1-(Cy(1-t) - IMy))
The multiplier: 1/(1-(Cy(1-t) - IMy))
The multiplier used to be much more important than it is today...
The process of inventory adjustment
September 30: Lecture: First Midterm
September 28: Lecture: Review
September 26: Lecture: Money, Prices, and Inflation
"Outside" money
"Inside" money
Money as readily-spendable wealth
Its convenience yield
Avoids the problem of the coincidence of wants
Medium of exchange
Store of value
Unit of account
The Quantity Theory of Money
Demand for money
The quantity equation: MV = PY
Supply of money: reserves, cash, and the banking system
Definitions of money...
Money and prices
The price level
Measuring the price level
The inflation rate
Inflation and the nominal interest rate: the Fisher effect
The costs of moderate inflation
Disrupting the tax system
Degrading the efficiency of the price system
Expected and unexpected inflation
The costs of hyperinflation
The sources of hyperinflation
If the government doesn't balance its budget, the market will--by levying the inflation tax...
When money demand depends on the interest rate...
Stopping hyperinflation then requires a large increase in the real money stock--a neat trick if credibility depends on not printing too much money...
September 23 Lecture CANCELED
September 21: Lecture: Equilibrium in the Flexible-Price Full-Employment Business-Cycle Model
Full-Employment Equilibrium
Flexible prices and full employment
Look at the flow of funds through financial markets to understand what's going on
Equilibrium prices: the real interest rate r and the exchange rate e
The circular flow principle: balance in the flow of funds through financial markets means balance in the sense of aggregate demand equals output
We could also look at the flow of purchasing power for output in the "goods market"--but that is less transparent
Savings = Investment
The real interest rate adjusts to make the flow of funds balance...
What things depend on the real interest rate?
Exports (indirectly through the exchange rate)
Investment
Using the Model: Examples
Changes in saving
Household saving
Government saving (the deficit)
Foreign saving
Changes in business demand for funds for investment
More examples...
September 19: Lecture: Building Up the Flexible-Price Full-Employment Business-Cycle Model
For the past couple of weeks we have been looking at long-run growth. Now we turn to looking at much shorter-run phenomena: business cycles. For the next couple of weeks we are going to be in a halfway house: looking at the economy over a period short enough that we can take its productive capacity to be fixed, but long enough that we can take wages and prices to be sufficiently flexible that supply and demand in the labor market balance and that the economy is as a result at "full" or "normal" employment.
Potential Output
In this model, actual output is equal to the economy's productive potential (as discussed in the long-run economic growth section).
And by the circular flow principle output == national income == aggregate demand
Why? Because wages and prices are flexible so that unused and idle resources are few
A mystery: why is the average--the "natural"--rate of unemployment so high? Why is it 5% or so rather than 1%?
The production function (go back to your "economic growth" notes and to chapter 4)
Supply and demand in the labor market
Labor demand: firms with fixed capital stocks and diminishing returns to labor...
Labor supply: fixed (we may relax this assumption later)
Labor market equilibrium: supply equals demand
With our Cobb-Douglas production function, the economy-wide equilibrium real wage is (1 - [alpha])(Y/L)
Domestic Spending
Consumption spending
Household decisions
Our consumption function: C = C0 + Cy(1-t)Y
Note our notation convention for parameters like C0 + Cy...
Baseline consumption and consumer confidence
The marginal propensity to consume
What's left out
Consumption depending on wealth...
Using your house as an ATM: how much does consumption depend on the interest rate?
Consumption depending on ability to borrow
Financial sophistication, the relaxation of liquidity constraints, and the falling MPC Cy
Investment spending
Firm decisions
Expected profits
Interest rates
Real, long-term, risky interest rates (not the short-term nominal safe interest rates the Federal Reserve directly controls)
Our investment function: I = I0 - Irr
Types of investment
Residential construction
Non-residential construction
Business equipment
Inventories
Government capital
Baseline investment and animal spirits
The interest sensitivity of investmen
Tax credits and investment
How much does investment depend on cash flow--and thus on the level of output Y?
In this our model, we say that consumption depends on Y (but not on r) and that investment depends on r (but not on Y). If we have time we may relax this assumption and allow both to depend on both)
Government purchases G we leave to the political scientists
Note: government purchases, not government spending
The International Sector
Imports depend on Y alone: IM = IMyY
Exports depend on foreign incomes and on the exchange rate:
Our exports equation: X = XfYf + Xee
Note: the peculiar sign of our exchange rate convention...
The exchange rate
Greed and fear--speculators fear capital losses but want current income
Our exchange rate equation: e = e0 + er(rf-r)
Today we have done nothing but build up the behavioral relationships that are the building blocks of our flexible-price full-employment business-cycle model. Putting the pieces of this model together we will do on Wednesday.
Even after Wednesday, we will still be far from having a complete picture of business cyles. We won't have integrate we won't have even started to think about demand-driven fluctuations in out and we won't have thought about the price level and the inflation rate.
Lecture: September 16: Drawbacks of and Extensions to the Solow Model
Productivity Speed-Ups and Slow-Downs...
More Heads vs. Exhaustion of Ideas...
Eventual stasis
The revenge of Malthus?
Singularities
Important Things Left Out of the Solow Model
Government Capital: Infrastructure
Government Capital: Rule of Law
Government Capital: Basic Research
Private Capital: Ideas
Private Capital: Organizations
Human Capital
The Problems of Intellectual Property...
Paying for Goods with Increasing Returns...
Lecture: September 14: Our Unequal World
*We live in a world in which output per worker levels vary by a factor of nearly 100--evenat purchasing power parities.
We live in a world in which America today is roughly eight times as rich as China today...*
Using the Solow growth model to decompose differences in productivity today:
E(0): differences in where countries started (guns, germs, steel, and colonialism-imperialism)
g: differences in ability to adapt (or invent) better technologies and organizations
These two are most of the ballgame
n: countries that have not yet gone through the demographic transition are at a deep disadvantage
Vicious circle: if you're poor, you probably have high population growth--making you poorer
Aside: what to do when your model can be used by the architects of China's "mandatory abortion" policy?
Amartya Sen: take the objective to be not GDP per capita but human freedom
savings and investment
Budget deficits, et cetera
Vicious circles: if you're poor capital goods are very expensive--especially imported capital goods
This model provides a framework for understanding and evaluating differences in growth...
The case for neoliberalism and free trade as a way of maximizing economic and cultural contact--and we don't know how else to aid technology-and-organizational transfer.
Lecture: September 12: Using the Solow Model
How to Use the Solow Model: Three Steps
What is the steady-state growth path?
Figure out where the economy is now relative to its steady-state growth path?
Calculate how the economy converges to its steady-state growth path
Basic Formulas:
(K/Y)(t) = [(s/(n+g+d)) + [(K/Y)(0) - (s/(n+g+d))]exp[-(1-a)(n+g+d)]]
(Y/L)(t) = ((K/Y)(t))^(a/(1-a))E(0)exp(gt)
Steady State:
(K/Y)* = s/(n+g+d)
(Y/L)* = (s/(n+g+d))^(a/(1-a))E(0)exp(gt)
Numerical Experiments:
due at start of lecture on September 16.
The handout here
serves as lecture notes for this lecture.
Lecture: September 2: Economic Growth Since Deep Time
U.C. Berkeley Economics 101b, Fall 2005
The East African Plains Ape Becomes Human
Very big brains
Manipulation of environment
(Some) Humans Move Out of Africa
50000 years ago?
No signs of interbreeding with other non-African proto-human populations
Genetic differences?
2000 generations is not a long time for Uncle Charles Darwin to work
Facial features, hair, lactose-tolerance, sickle cell and anemia resistance, Tay-Sachs
And, of course, melanin: rickets, vitamin D, melanoma
Skin color as a marker of slave status in the Americas: it kept slavery going for centuries after indentured servitude (which did not use skin color as a marker) broke down
Woolier and unsubstantiated stories:
Jared Diamond on how people in Papua New Guinea are smarter than the rest of us
In northern latitudes keeping warm is important: selection for dumpy and less athletic body types?
But don't go there: evolutionary behavior is still nothing more than a source of just-so stories, and has been a source of immense ignorance and terror in the past
The way to think of it, I have been told, is that there is less genetic variation in the entire human race than in a single baboon troop
Hunter gatherers
Pretty ferocious--even East African Plains Apes of two million years ago could drive hyenas from their dens
Sophisticated Cro-Magnon technology
Sophisticated Cro-Magnon culture--doing a lot of things that mark them as fully human
Life was nasty, brutish, and short--but athletic
Cro-Magnon hunter-gatherers
Average menarche at 16?
Life expectancy of 25?
Seven pregnancies to term?
But infinitesimal population growth means ferocious infant mortality
But they were buff: adult male heights of 5'8" or so
Neolithic Revolution
Herd animals to be domesticated
Plants with big seeds
Corn--an amazing plant
Agriculture sees like an enormously good deal at the start
Well-nourished and easy-living agricultural populations expand rapidly
Farm sizes diminish
And Thomas Robert Malthus shows up
Agriculture allows human race to grow from ca. 3 million (or less) in 10000 BC to ca. 170 million (or so) in 1
Agriculturalists stomp hunter-gatherers, and usually herdsmen
Exception: people on horses with bows can hold their own
In fact, people on horses with bows can sometimes do much more than hold their own: Atilla, Temujin--until reliable firearms
What Is Agricultural Life Like?
Nasty, brutish, short--and definitely not buff
Menarche at 18?
Life expectancy of 25?
6? pregnancies to term
Huge childhood mortality--population growth is once again glacial--except for initial settlement phases
Alleviation of Malthusian misery (partial) by European household marriage or Asian lineage family
Psychological stress produced by these social institutions--telling your daughter she can't marry her boyfriend until he has a farm, or telling your younger brother he can't have a wife...
Agriculturalists definitely not buff--adult male heights of 5'2" or so
Agriculture means thugs with spears--rulers and warrior castes
Agriculture means thugs with pens--star watchers who keep records and can tell you when to plan become priests
By the Yeqr 1, the Human Race Was Biologically and Technologically Successful--But Pretty Miserable
Lecture: August 31: Thinking Like a Macroeconomist
U.C. Berkeley Economics 101b, Fall 2005
Macroeconomics and Microeconomics: Similarities
Retains focus on incentives and opportunity cost
Retains focus on aggregating up behavior
Retains focus on equilibrium conditions
Macroeconomics and Microeconomics: Differences
Ruthless simplification: representative agents
Focus on general equilibrium: this is a system, not a market
Differences in equilibrium conditions: balanced growth, quantity adjustment
Six Key Macroeconomic Variables
Real GDP (also per capita for living standards, and per worker for productivity)
The unemployment rate
The inflation rate
The real interest rate (term structure)
The real value of the stock market
The real exchange rate
Uncle Simon Kuznet and the Creation of the National Income and Product Accounts
The Circular Flow of Economic Activity
The flow of spending power
The flow of goods produced
The flow of incomes
All of these should add up to the same thing--a system with checks and balances
Economics 101b Fall 2005 Problem Set 1: Basics
A simple problem set to fix some concepts and give some confidence. Due at lecture on Friday September 9:
A. Explain whether or not, why, and how the following items are included in the calculation of GDP:
Increases in business inventories.
Fees earned by real estate agents on selling existing homes.
Social Security checks written by the government.
Building of a new dam by the Army Corps of Engineers.
Interest that your parents pay on the mortgage they have on their house.
Purchases of foreign-made trucks by American residents
B. Calculating real magnitudes:
When you calculate real GDP, do you do so by dividing nominal GDP by the price level or by subtracting the price level from nominal GDP?
When you calculate the real interest rate, do you do so by dividing the nominal interest rate by the price level or by subtracting the inflation rate from the nominal interest rate?
Are your answers to (a) and (b) the same? Why or why not?
C. Suppose that the appliance store buys a refrigerator from the manufacturer on December 15, 2005 for $600, and that you then buy that refrigerator on January 15, 2006 for $1000:
What is the contribution to GDP in 2005?
b. How is the refrigerator accounted for in the NIPA in 2005?
c. What is the contribution to GDP in 2006?
d. How is the refrigerator accounted for in the NIPA in 2004?
D. In what sense can a line on a graph "be" an equation?
E. Why do DeLong and Olney think that the interest rate and the level of the stock market are importnant macroeconomic variables?
F. What are the principal flaws in using GDP per worker as a measure of material welfare? Given these flaws, why do we use it anyway?
G. Suppose a quantity grows at a steady proportional rate of 3% per year. How long will it take to double? Quadruple? Grow 1024-fold?
H. What, roughly, was the highest level the U.S. unemployment rate reached in
a. the 20th century?
b. the past fifty years?
c. the past twenty years?
I. Do you think there is a connection between your answer to the qeustion above and the fact that Federal Reserve Chair Alan Greenspan received a five-minute standing ovation at the end of the first of many events marking his retirement last wekend?
J. Suppose we have a quantity x(t) that varies over time following the equation: dx(t)/dt = -(0.06)x + 0.36.
a. Without integrating the equation, tell me what the long-run steady-state value of x--that is, the limit of x as t approaches in infinity--is going to be.
b. Suppose that the value of x at time t=0, x(0), equals 12. Once again, without integrating the equation, tell me how long it will take x to close half the distance between its initial value of 12 and its steady-state value. How long will it take to close 3/4 of the distance? 7/8 of the distance? 15/16 of the distance?
K. Now you are allowed to integrate dx(t)/dt = -(0.06)x + 0.36.
a. Write down and solve the indefinite integral.
b. Write down and solve the definite integral for the initial condition x(0) = 12.
c. Write down and solve the definite integral for the initial condition x(0)=6.
L. Suppose we have a quantity z = (x/y)b. Suppose x is growing at 4% per year and that b=1/4. How fast is z growing if y is growing at 0% per year? If y is growing at 2% per year? If y is growing at 4% per year?
M. What is the difference between the nominal interest rate and the real interest rate? Why do DeLong and Olney think that the real interest rate is more important?
N. What (briefly!) does Robert Heilbroner think of Karl Marx?
O. What (briefly!) does Robert Heilbroner think of John Maynard Keynes?
Brad DeLong
Office Hours: W 11-1 Evans 601, or by appointment
Suresh Naidu
Office Hours: MW 11-12 place tba
Lecture Meets: MWF 10-11, 70 Evans
Sections Meet: MW 9-10, WF 8-9, 41 Evans
This is the syllabus for the first half of Economics 101b, Macroeconomics. It carries the course up until October 12. The syllabus for the second half will be distributed at the end of September. It will depend on (a) how well the class does in the month of September, and (b) what are currently "hot topics" in the economic news. The U.S. budget deficit, the looming possibility of a major U.S. dollar-financial crisis, the dilemmas of Federal Reserve policy, and the ongoing industrial revolutions in East and South Asia will certainly be on the second-half syllabus, but there will be other topics as well.
This is the go-faster and do-more version of macroeconomics--the study of the determination of output, production, income, employment, and prices in the economy as a whole. Four books are required:
The intermediate macroeconomics textbook I am most comfortable with is the one that I and Marty Olney have written. DeLong and Olney (2005), Macroeconomics 2nd ed. (New York: McGraw-Hill/Irwin) . Here is our explanation of why we wrote it the way we did:
The Economic Report of the President, available online at . (You might also browse, for recent economic data, the CEA-JEC Economic Indicators .
Robert Heilbroner's The Worldly Philosophers (New York: Touchstone) .
Alan Blinder and Janet Yellen's (2001) The Fabulous Decade (New York: Century Foundation) .
If you want alternative takes at the subject matter, let me recommend two alternative textbooks: Greg Mankiw's Macroeconomics , and Olivier Blanchard's Macroeconomics .
Since this is a go-faster do-more course, we will go faster and do more. As a group, the class will be made up of people comfortable using calculus, so we'll feel free to use it in lectures, handouts, and in problem sets (and on exams). If you aren't comfortable using calculus, you probably don't belong here and may well not have a good time...
We--Suresh Naidu and I are keenly aware that almost everybody signing up for this course could alternatively take and do very well in Economics 100b. We are anxious not to have students vote with their feet for an easier course and learn less because they fear the consequences of lowering their grade point average. Therefore this course will have a high curve: the idea is that nobody should get a lower grade than they would have gotten had they decided to take Economics 100b instead: Grades will be based on the following:
30% from a (short: two hours long) Final Exam to be given Tuesday December 13 8-11 AM
20% from a first Midterm Exam to be given Wednesday September 28. (This is really early to give a midterm. Nevertheless it is important to give a midterm exam early in the course to serve as a reality check: so that students in trouble can figure out how much trouble they are in, and also--more important--so that at least one of us (DeLong) can figure out how unrealistic and detached from reality his beliefs about his teaching effectiveness are.)
20% from a second Midterm Exam to be given November 13.
20% from Problem Sets and other assignments to be due at the start of section. Problem Sets will be graded either 0 points (didn't hand it in at start of section), 1 point (handed it in but didn't make an effort), and 2 points (made an effort--whether successful or not--to solve all the problems).
10% on section participation.
No makeup exams will be offered. Students who miss one of the three exams will have their scores for the other exams reweighted to add up to 70%. Students who miss two of the three exams should not expect to pass.
Preliminaries
DeLong and Olney (2005), Macroeconomics 2nd ed., chs. 1-3
Heilbroner, The Worldly Philosophers, entire.
M Aug 29: Introduction to Course, and National Income Accounting
W Aug 31: The Index Number Problem, and Key Economic Variables
F Sep 2: How Macroeconomists Think (problem set 1 issued)
Sections: erosion of Okun's Law Handout .
Long-Run Economic Growth
DeLong and Olney (2005), Macroeconomics, chs. 4-5.
Michael Kremer (1993),
Quarterly Journal of Economics 108:3 (Aug 1993), pp. 681-716. ()
W Sep 7: Patterns of Economic Growth and Divergence: Facts
F Sep 9: Theories of Economic Growth and Divergence: The Solow Model (problem set 2 issued/problem set 1 due)
Sections: only one section this week.
M Sep 12: Using the Solow Model
W Sep 14: Inadequacies of the Solow Model
F Sep 16: Extensions and Puzzles (problem set 3 issued/problem set 2 due)
Sections: Kremer (1993) QJE on the question was an industrial revolution inevitable?
If There Were No Business Cycles Proper
Readings: DeLong and Olney (2005), Macroeconomics, chs. 6-7.
M Sep 19: Components of Aggregate Demand: C, I, G, NX
W Sep 21: Flexible-Price Equilibrium
F Sep 23: Using the Flexible-Price Model (problem set 3 due/mock midterm handed out)
Sections: Go over problem set 2. Cover wealth in the
behavioral the cash flow and investment.
Monetary Economics When Prices Are Flexible
Readings: DeLong and Olney (2005), Macroeconomics, ch 8.
M Sep 26: The Quantity Theory of Money
W Sep 28: FIRST MIDTERM EXAM
Sections: one section only this week.
Business Cycles Proper
DeLong and Olney (2005), Macroeconomics, chs. 9-12.
Olivier Blanchard (1981), "Output, the Stock Market, and Interest Rates," American Economic Review 71:1 (March), pp. 132-43 .
J. Bradford DeLong (1997), "America's Peacetime Inflation," in Christina Romer and David Romer. eds., Reducing Inflation: Motivation and Strategy (Chicago: University of Chicago Press, 1997)
James Galbraith (1997), "Time to Ditch the NAIRU," Journal of Economic Perspectives Vol. 11, No. 1. (Winter), pp. 93-108 .
Joseph Stiglitz (1997), "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives Vol. 11, No. 1. (Winter), pp. 1-8. .
F Sep 30: Sticky Prices, Consumption, and the Multiplier (problem set 4 issued)
M Oct 3: Investment and the IS Curve
W Oct 5: Using the IS Curve to Understand the Economy
F Oct 7: Inflation and the Phillips Curve (problem set 5 issued/problem set 4 due)
Sections. Go over midterm. Cover Blanchard (1981).
M Oct 10: The Natural Rate of Unemployment and the Federal Reserve
W Oct 12: From the Short Run to the Long Run
F Oct 14: Understanding American Business Cycles Using the Phillips Curve/Monetary Policy framework (problem set 6 issued/problem set 5 due)
Sections: go over problem set 4, and supply shocks.
Brad DeLong's
Looking Forward to Four Years During Which Most if Not All of America's Potential for Human Progress Is Likely to Be Wasted
With each passing day Donald Trump looks more and more like Silvio Berlusconi: bunga-bunga governance, with a number of unlikely and unforeseen disasters and a major drag on the country--except in states where his policies are neutralized.
Nevertheless, remember: WE ARE WITH HER!
The purpose of this weblog is to be the best possible portal into what I am thinking, what I am reading, what I think about what I am reading, and what other smart people think about what I am reading...
"Bring expertise, bring a willingness to learn, bring good humor, bring a desire to improve the world—and also bring a low tolerance for lies and bullshit..." — Brad DeLong
"I have never subscribed to the notion that someone can unilaterally impose an obligation of confidentiality onto me simply by sending me an unsolicited letter—or an email..." — Patrick Nielsen Hayden
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"Blogs are an outlet for unexpurgated, unreviewed, and occasionally unprofessional musings.... At Chicago, I found that some of my colleagues overestimated the time and effort I put into my blog—which led them to overestimate lost opportunities for scholarship. Other colleagues maintained that they never read blogs—and yet, without fail, they come into my office once every two weeks to talk about a post of mine..." — Daniel Drezner
"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787
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