Inventory and GDP

How inventory affects GDP.

Diarrhea-Constipation Cycle

Which school of thought do you belong to?

Here's Keynes' own take on managing business cycles and the digestive health of our children:

http://thinkmarkets.wordpress.com/2010/02/18/keynes-on-the-bismuth-castor-oil-cycle/

Good Advice

Seminar: Ed Lopez

Our next department seminar will be Tuesday, February 23^rd at 4:00 in room 229 Wimberly.  Ed Lopez (San Jose State) will present “The Holdout Problem as a Guide to Policy.”  Upper division economics majors.  A copy of the paper is here.

Positive vs. Normative.

A false dichotomy.

Subsidy for Health Insurance

via MarginalRevolution:

James Kwak gives us his back-of-the-envelope estimate:

The median family household had income of $62,621 in 2008, which means it has a marginal tax rate of 15%. (We’re pretty close to the 25% threshold, so I’ll use 20% in what follows.) So without the exclusion, the typical family plan would cost about $16,000 in pretax dollars, not $13,000; the exclusion gives the median family a discount of 20%. Only about 60% of people get health insurance through an employer plan, so the average discount across the population is only 12%. Given that the price elasticity of health care is almost certainly a lot less than one (if you double the price, demand won’t fall in half), the overconsumption due to the tax exclusion must be less than 12%. Yet our per-capital health care expenditures are more than 60% above those of any other advanced country.

In other words it matters, but not as much as many people claim.