Tuesday, September 30, 2008

Maybe it's not a good time to buy a house in Geneva


This graph plots the evolution of the price of single family houses.
I found the data here.
Krugman on housing bubbles is here. Does Geneva look like a Zoned Zone?
BTW: PK thinks that the one linked above was one of his best pieces.
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New Dollar Bill




Thanks to Nada C. At least, we still have Jon Stewart.


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Monday, September 29, 2008

Smoke police, thought police

I don't smoke, but I think that anti-smokers are becoming Goebbelsques (I think I just invented a new adjective!), check this out.
BTW, do you remember the 80s song about her eyes?
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Transparency, Italian style

Italian banks have a consortium with a website (patti chiari) aimed at "at simplifying relations between banks and customers by means of tools that make it easier to compare different products and make educated choices."

Among other things, this website publishes a list of "low risk, low return" financial instruments. Basically, a list of financial instruments for conservative people who do not care about return but want to make sure that their money is in a safe place. Well, until September 15 (i.e. 1 day before Lehman's bankruptcy) this list included Lehman Brothers' bonds. WOW, talk about low risk!!!

BTW, Francesca R. is telling me that Transparency International ranks Italy Nr 55th in control of corruption (just after South Africa and just before Seychelles, at least we are still ahead of da wife, Lebanon is 102). Given that we are in self-promotion mood here is an old piece I had written for TI (page 317 of the Data & Research Part)
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Our friend Ted

James Hamilton explains.
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The beginning of the crisis...

after almost 14 months, maybe is time to go back and watch a classic Cramer video (it gets good 1:30 minutes into the video). John Authers says: It was possibly the most entertaining five minutes of financial television ever broadcast. Authers interesting analysis of the video is here.

PS
I had linked that video in a piece I had written on the crisis, but somebody deleted the link from the final version of the paper.
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End of the world delayed again

Even very smart people have (helium) leaks! I am still wondering what is going to happen to house prices in Geneva.
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Friday, September 26, 2008

Jon Stewart and the crisis

Very funny here. Thanks to Alessandro N.
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Thursday, September 25, 2008

Econ skit videos

When I was in grad school (and it is not several decades ago), end of the year skits were very basic. Using an overhead projector or a CD player was considered a great technological innovation. Now, if you don't produce a video you are a complete loser. Here are a few famous ones: Harvard recruiting skit; Stanford 2008, and here is Berkeley. Here is Harvard's Government (ie political sciences) Department.

However, econ and polisci grad students still need to learn a lot from MBAs. The best video-skit ever is the old Columbia MBA video in which Glenn Hubbard "serenades" Ben Bernanke. Click here to see I'll be watching you!
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Wednesday, September 24, 2008

Top economists...

..from A(cemoglu) to Z(ingales) and with different political views don't like the plan.
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Cool investment idea...

from Dani Rodrik. Also, new Bono-Sachs development blog.
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Tuesday, September 23, 2008

Weird instruments: The rapture index

Today I start teaching econometrics. So what about starting a thread about weird instruments (like instruments for instrumental variable estimations, if you don’t know econometrics, never mind)? The coolest I have ever seen is the Rapture Index.

The rapture index measures the probability of rapture. The rapture is an event that will take place sometime in the near future. Jesus will come in the air, catch up the Church from the earth, and then return to Heaven with the Church. (details are here).

Apparently this (interacted with evangelical population) is a good instrument for housing prices: Crowe (2008) finds that in MSAs with a larger portion of the population belonging to Evangelical churches house prices tend to rise disproportionately when the "Rapture Index" rises. This index maps current events into a subjective probability of an imminent coming of a time of "extreme and terrible" events and as such is independent from denial rates at the MSA level. We can then use the interaction term of the share of Evangelicals in the MSA population and change in the Rapture index as an instrument for house price appreciation. The paper is here

But why should somebody who believes that the end of the world is approaching buy a house? I would rather follow this guy's advice.

BTW, I need to check if the LHC is affecting housing prices in Geneva.
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Miniskirts in Uganda

Apparently they are dangerous. Saudi Arabia agrees on several other dangerous trends (see the second story here).
Found on Chris Blattman's blog.
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Sunday, September 21, 2008

Why would a stubborn conservative run a deficit?

About 20 years ago, Svensson and Persson said that a conservative could find optimal to run a big deficit to tie the hand of future, more progressive, governments. Probably they had in mind Reagan, may it happen again? Here is Matt Yglesias under the influence: ...a plan that spends $700 billion on a bailout ... and giving the taxpayer virtually no upside ... would give an Obama administration no resources with which to implement a progressive domestic agenda in 2009
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Alter-globalizers and UNCTAD memories

Here is Dani Rodrik on the topic.

I don't think I will join this version of the AG-movement very soon: Broad and Cavanagh don't pay much attention to such figures because they seem to have a somewhat romantic view of the lives of rural poor, who apparently have a relatively decent quality of life until market forces in the form of international trade and MNCs encroach upon them.
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Zingales does not like "the plan"

Check this out: It is enough to say that for 6 of the last 13 years, the Secretary of Treasury was a Goldman Sachs alumnus.

Krugman does not like it either: here and here and here. More criticism is here and here.
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Oooopsss....

Check this out.
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Beautiful graph

Another beautiful graph from Chris Blattman. Here is an older one.
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Thursday, September 18, 2008

Religion and education gender gap

The link may be different from what you think (here). An older, ungated, and longer version is here (note the self-promotion tag).
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Sovereign default and exporters

Since we are in self-promotion mood, this is a just published paper on how sovereign defaults affect export-oriented industries. Here is an older, shorter, and ungated version of the paper.
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Wednesday, September 17, 2008

Andrew talks about Sabina

Here, but what is Sabina's father doing with SB? I guess that they are a diversified family.
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The People's Republic of the USA?

Willem Buiter thinks he still sleeping, but when he realizes that what he's reading on the FT is really happening he writes a lot of interesting stuff.

This is an old paper of mine (joint with Eduardo Levy Yeyati and Alejandro Micco) on state-owned banks. An (older) ungated version is here.
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Rodrik is back to blogging

Nice paper about RER, the handbook (sorry, mindbook) of growth dignostics, and Reinhart and Reinhart on bonanzas. On the topic of bonanzas, see alos the latest news from my former employer.
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Tuesday, September 16, 2008

Reading "War and Peace" in Geneva

Economists like to quote Tolstoy, but they usually stick with the beginning of Anna Karenina: Happy families are all alike; every unhappy family is unhappy in its own way.

This is excellent when one talks about the low explanatory power of growth regressions. But economic theorists should also read War and Peace. There seems to be an analogy between some economic models (and modellers) and Pfuel’s theory of war. Check it out:

Pfuel.. had a science--the theory of oblique movements.. and all he came across in the history of more recent warfare seemed to him absurd.. so many blunders were committed … that these wars could not be called wars, they did not accord with the theory, and therefore could not serve as material for science.

In 1806 Pfuel had been … responsible, for the plan ... that ended in Jena ... but he did not see the least proof of the fallibility of his theory in the disasters of that war. On the contrary, the deviations made from his theory were, in his opinion, the sole cause of the whole disaster... Pfuel was one of those theoreticians who so love their theory that they lose sight of the theory's object--its practical application. His love of theory made him hate everything practical, and he would not listen to it. He was even pleased by failures, for failures resulting from deviations in practice from the theory only proved to him the accuracy of his theory.

I read the book in Italian, but it took me 5 minutes to find the quote in English. Project Gutenberg is amazing! The whole thing is here (Book nine, Chapter X).
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Joke

This is the best economist joke (it captures very well our obsession with the best way to allocate scarce resources), but is also the rudest. I heard it a long time ago form Fredy S. but I always think twice before telling this joke (and I do this for few jokes). Funny thing, I just told this joke to a bunch of people a couple of days ago, and now Chris Blattman has a post about it.
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Monday, September 15, 2008

Thomas Friedman

I just came out of a meeting in which we talked about Thomas Friedman. I did not share my colleagues' enthusiasm for the guy.

I first heard of Thomas Friedman when I was about to move to Lebanon and my Lebanese wife gave me a copy of From Beirut to Jerusalem. I thought that the book had some interesting points hidden into pile of junk (actually, I liked the book more than my friend Pask who also has a Lebanese wife but is much smarter than me). More annoyingly, the book has a strong us versus them tone (which became much worse in Friedman's later writings in the NYT).

Then I started reading the Lexus and the Olive Tree and thought that if the guy had something to say about international affairs, he really had no clue about economics. This was proven by the masterpiece the World is Flat. A funny review of the book is here. It ends like this: How the *$#! do you open a window in a fallen wall? More to the point, why would you open a window in a fallen wall? Or did the walls somehow fall in such a way that they left the windows floating in place to be opened?

Here is a more serious (bus still funny) and academic review by Ed Leamer (one of the world's top trade economists).

What about Friedman's McDonald's theory of war (countries that have McDonald's restaurants don't go to war against each other)? Didn't he ever have a Big Mac in Ain el Mreisseh or a kosher burger in Givat Ram? Yet, he lived in Beirut and Jerusalem.
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So, Summers was right after all?

Lawrence Summers lost his job as Harvard President for discussing possible genetic reasons for the gender gap in science. Now, the data say that he may have been into something, but the spin is in a different direction. Here is Alex Tabarrok. Here is Mankiw on the same topic.

In the meantime, Harvard missed an opportunity to hire a top female economist. People at Berkeley are very happy, but the decision by Harvard's first female president is hard to rationalize.
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Thursday, September 11, 2008

Q&A?

HERE and HERE are the Qs, what about the As? Found on MR.
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Facebook, Economists, and Panizzas

So, I am here sipping a cocktail on a terrace on the beach and decide to check my email (yes, I don’t have anything else to do). The first thing I find is a rant against the new Facebook. So, I decide to log in and check it out.

While I am here, let’s look at my friends. Wow, people say economists are boring but my two “friends” with the highest number of friends are well-known economists. Greg Mankiw has more than 3200 friends and Nouriel Roubini has more than 1200 friends (OK, I must admit that while I know Nouriel pretty well --see here--, I never met Greg Mankiw in person. However, I read many of his papers, taught out of his books, and my Ph.D. advisor was Larry Ball who is Mankiw’s good friend and co-author, so when Mankiw posted a call for friends on his blog I couldn’t resist).

I also have another group of “friends” who I have never met. These are the members of the Panizza group originally created by Steve from Minnesota. The group has 38 members. Let’s check out the geographical distribution of the Panizzas (yes, I really have nothing else to do. Italian mothers always say that after you eat you need to wait for 3 hours before going into the water). The results are as follows: 10 from Italy, 8 from Australia, 6 from the US, 5 from Argentina, 2 from Chile, and 2 from Canada (several other countries with one member, Colombia, Spain, France, ..). Does this match the distribution of Panizzas around the world? Let’s check the white pages (yes, I know what you must be thinking now) of the 4 countries with the highest number of Panizzas on Facebook. I find 1283 Panizza families in Italy (22 for each million inhabitants); 105 Panizza families in Australia (almost all the Australian Panizzas are in West Australia) divide by the population and you get 5 Panizza families for each million of Australian; 250 Panizza families in Argentina (6.25 for each million Argentineans), and 92 Panizza families in the US (1/3 of a Panizza family for each million inhabitants).

So, high density of Panizza in Italy, Argentina, and Australia. Facebook was not so off the mark after all. I guess that now I can go in the water.
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Tuesday, September 9, 2008

Going to the beach...

Off to Ischia (dove si mangia si beve e si fischia), of course not as good as Java, but better than staying in Geneva waiting for the end of the world :).

Check this out: Professor Otto Rössler, a German chemist....said: "CERN itself has admitted that mini black holes could be created when the particles collide, but they don't consider this a risk. "My own calculations have shown that it is quite plausible that these little black holes survive and will grow exponentially and eat the planet from the inside.

Of course, everything has its own silver lining.
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Digital intimacy

This is a long but really, really, really good article on facebook, digital intimacy, and twitter. By the way, I have a twitter account but I never used it. I need to convice my friends in DC and Lebanon to get one as well.
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Monday, September 8, 2008

English as a second language, the LPG tour

The story is here. What about teaching them comparative advantages?
Thanks to Dan D.
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No Mara, tu no

La situazione e' difficile, dobbiamo stringere i denti. No Mara, tu no.
Grazie a AU.
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Kings...

Francesca R. sent me this interesting article (shoudl I tell, the airplane story? Maybe another time). Ah, the French.
Blogged from my iphone!
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Sunday, September 7, 2008

Need to get a Maserati!

Women are turned on by the roar. The story is here, and the insurance company that did the testing is called Hiscox!!!
I found this on Marginal Revolution.
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Friday, September 5, 2008

Chrome

I just intalled it, and I am using it right now.  I am not sure why is better (a part from the fact that it is not MS), but John Gapper says that it may end up being a big deal (here)
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Philippe Petit

Chris Blattman reports on a documentary on Petit's amazing walk (here). Wikipedia on how he did it (here).
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Sarah and Sarah

My friend Sarah Wildman talks about Sarah Palin (here). Here is SW's web page and here is a TV show about Sarah (W) and the Italians.
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Thursday, September 4, 2008

The cost of war

Data on the cost of US Wars are here. (These data only include military costs, total costs are likely to be higher, these are Stiglitz's estimates of the costs of the war in Iraq)
The figures are adjusted for inflation, suggesting that the Iraq war is already close to being the 2nd most expensive war in US history (only $20 billion away from the Vietnam war). Moreover, the Iraq war costs about $130 billion per year, the Vietnam War costed about $65 billion per year (WWII costed about $1 trillion per year). I don't know whether these are marginal costs (i.e., over and above normal military expenditure in time of peace) or total costs.
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Wednesday, September 3, 2008

Iraq, China, and Oil

Interesting post by James Hamilton (yes, the guy who wrote "The Hamilton")
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There are conservatives and conservatives

Andrew Sullivan is often labelled as a "conservative blogger." If only all conservatives were like him (here).
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Enquirer

I always made fun of SiL Rori for believing in the Enquirer. She may be right, after all (here)

Update: Ezra Klein on the Enquirer
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The problems of the very very very rich...

Michael has a serious problem. He is 31 years old and, for reasons that only the very rich will understand (????), he needs to donate 70 million dollars (or maybe it’s $50 million, Michael can never remember). So he seeks professional advice (here).

In the second instalment of the story (here), Michael is joined by his sister Cathy who also has “small sum of money” to donate. Apparently she can only give away $45 million, she must really feel bad.

In the third part of the story (here), we learn more about Michael and how he paid $19,000 to 3 consultants who gave him advice on how to give away money ($19,000 is not much, but if he comes to Geneva I can give him a good price on the Pont du Mont-Blanc and the Jet d'eau).

In the fourth (and best) part of the story (here), Michael tries to spend a week-end with a homeless (Curtis) and he wonders why poor people don't buy fresh fruit. Curtis also tells Michael that having a rug is very important. This reminded me of the Hitchhiker's Guide to the Galaxy (don't forget to bring your towel!).

On a more serious note, Michael thinks that his money should not leave the US. When I give to charity I have the opposite principle, I never give money to charities that benefit residents of rich countries. My idea is that you get a much bigger bang for your charity buck in a poor country. Too bad Michael has $70 million and I have much less.

Sudhir Venkatesh is amazing. Here is an old post on sex-workers
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Monday, September 1, 2008

Does death penalty reduce crime?

Justin Wolfers surveys the evidence. Here is a blog post, and here and here you can find more details.
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One-stop shopping for international aid data

I found this amazing web page on Chris Blattman's blog
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Technical progress and universities...

Brad De Long ponders on the future of University professors (need to ponder on this when you go on the job market)...here
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African maps...

with tigers (???) and all that...here
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