Boom and Bust: Rap

From econstories.tv:

Chinese Inflation

I have long wondered why if China's exchange rate policy (ie. their peg) is so far away from the "true" market exchange rate, then how has that monetary expansion not lead to a rapid pick up in Chinese inflation? James Hamilton offers an explanation. Its there, just hidden in relative prices:

So why hasn't domestic inflation in China undone the stimulus from the exchange rate? I've been forming the opinion that U.S. inflationary dynamics may be more governed by relative price changes than was historically the case, and raise the possibility that China could be ground zero for this phenomenon. Specifically, I'm wondering if the pent-up inflationary pressure takes the form of inducing consumers and businesses in China to try to acquire any hard assets they can, with the result that rather than overall inflation we see remarkable increases in the relative prices of such items. I've commented before on this interesting account from last September:

Strategic Thinking Class: J-Term

Strategic Thinking Using Game Theory

Great leaders understand and use strategic thinking. Most learn it on the job. Some study it and then apply it. The basis of most strategic thinking among successful leaders is an application of game theory.

This Winter Session (J-Term) you have the opportunity to learn how to see the whole at a glance. Several games will be used as the springboard for you to begin the art of thinking strategically.

The course will be taught by Charles Swayne, recognized for his application of game theory. He is a frequent speaker at the World Series of Poker Academy Camps, teaches poker online with Daniel Negreanu, is the creator of the N-SPAT (The Negreanu-Swayne Poker Aptitude Test), is an honorary member of the Global Strategic Poker Thinking Society, and his new book, Swayne’s Advanced Degree in Hold’em, is the most comprehensive book on the market for the serious poker player. He is currently working on a new book, Heads Up Poker, with champion Paul Wasicka. Swayne has combined his education and lessons of mathematics, statistics, total quality management, industrial engineering, operations research, entrepreneurship, finance, economics, investments, marketing, leadership, strategy and ethics, to help you to become a more global thinker.

Where and When: University of Wisconsin – La Crosse
Winter Session (J-Term)
Time and Days: 9am-2:10pm (bring your lunch), Monday-Thursday
11-14 Jan and 19-22 Jan 2010
Credits: 3
Course Details: REC 375; Workshop in Recreation Management
University Information: If you are not a UW-L student, contact UW-L Admissions at 608.785.8939
More Course Information: Contact Charles Swayne at swayne.char@uwlax.edu or 608.397.2783

An interesting talk on India

This is quite an interesting talk on India. What makes it more interesting is that Shashi Tharoor is a dynamic speaker

Here is the link:

http://www.ted.com/talks/shashi_tharoor.html

Better Data

We need better data.

The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture.


The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.


American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.


“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”

Seminar: Michael Murray

There will be an economics department seminar this Friday, November 13, 4:30-5:30pm in room 230 Wimberly Hall. Michael Murray will be presenting a paper titled, "Modeling Keynes with Pasinetti: A Dynamic Schema for Full Employment."

Michael Murray is a former student and graduate of UWL's economics department. Michael went on to graduate school for Economics at the University of Missouri - Kansas City and is now an Assistant Professor of Economics at Central College in Pella, Iowa.

Increasingly Selective

UW-L is has increased selectivity over the years, often attributed to the rising quality of faculty. A much as I like the compliment it is probably not causal. I think this comports better with my views on why that has happened. From MarginalRevolution

Caroline Hoxby reports:

This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.

A summary of the paper. The ungated version is here.