In Box

It is a please of beingness an economist how many fascinating papers come upward through the inward box. It is a deep frustration that I don't accept the fourth dimension to read them all.  Here are a few on my in-box today, courtesy of NBER, SSRN, as well as AEA electronic mail lists. Disclaimer: I've entirely read the abstracts then far. (If yous can't teach NBER working papers, Google unremarkably finds ungated versions on authors' webpage or ssrn.)

1. The Demise of U.S. Economic Growth: Restatement, Rebuttal, as well as Reflections yesteryear Robert J. Gordon. http://papers.nber.org/papers/W19895

The USA achieved a 2.0 percentage average annual growth charge per unit of measurement of existent gross domestic product per capita betwixt 1891 as well as 2007. This newspaper predicts that growth inward the 25 to xl years after 2007 volition hold upward much slower, peculiarly for the non bad bulk of the population. Future growth volition hold upward 1.3 percentage per annum for labor productivity inward the total economy, 0.9 percentage for output per capita, 0.4 percentage for existent income per capita of the bottom 99 percentage of the income distribution, as well as 0.2 percentage for the existent disposable income of that group.

The main displace of this growth slowdown is a laid of 4 headwinds, all of them widely recognized as well as uncontroversial. Demographic shifts volition cut down hours worked per capita, due non only to the retirement of the infant smash generation but likewise every bit a lawsuit of an move out from the labor strength both of youth as well as prime-age adults. Educational attainment, a key driver of growth over the yesteryear century, stagnates at a plateau every bit the U.S. sinks lower inward the the world league tables of high schoolhouse as well as college completion rates. Inequality continues to increase, resulting inward existent income growth for the bottom 99 percentage of the income distribution that is fully one-half a indicate per twelvemonth below the average growth of all incomes. Influenza A virus subtype H5N1 projected long-term increment inward the ratio of debt to gross domestic product at all levels of authorities volition inevitably atomic number 82 to to a greater extent than rapid growth inward taxation revenues and/or slower growth inward transfer payments at about indicate inside the side yesteryear side several decades.

There is no demand to forecast whatever slowdown inward the mensuration of time to come excogitation for this gloomy forecast to come upward true, because that slowdown already occurred 4 decades ago. In the 8 decades earlier 1972 labor productivity grew at an average charge per unit of measurement 0.8 percentage per twelvemonth faster than inward the 4 decades since 1972. While no forecast of a time to come slowdown of excogitation is needed, skepticism is offered here, peculiarly most the techno-optimists who currently believe that nosotros are at a indicate of inflection leading to faster technological change. The newspaper offers several historical examples showing that the time to come of technology tin hold upward forecast 50 or fifty-fifty 100 years inward advance as well as assesses widely discussed innovations anticipated to move on over the side yesteryear side few decades, including medical research, small-scale robots, 3-D printing, big data, driverless vehicles, as well as oil-gas fracking.

Ouch, I promise he's wrong. "Exit from the labor strength both of youth as well as prime-age adults" sounds similar a self-inflicted wound, every bit does "educational attainment,... the U.S. sinks lower inward the the world league..''

I'm however a techno-optimist. In my mind, Gutenberg sparked the scientific revolution. Knowledge is costly, as well as if yous cannot communicate it in that location is no argue to teach it. Communication costs only dropped to essentially zero. Hold on to your hats, unless self-inflicted wounds kill the golden goose.

2. An Optimizing Neuroeconomic Model of Discrete Choice yesteryear Michael Woodford http://papers.nber.org/papers/W19897

Influenza A virus subtype H5N1 model is proposed inward which stochastic selection results from dissonance inward cognitive processing rather than random variation inward preferences. The mental procedure used to brand a selection is nonetheless optimal, dependent area to a constraint on available information-processing capacity that is partially motivated yesteryear neurophysiological evidence. The optimal information-constrained model is institute to offering a amend check to experimental information on selection frequencies as well as reaction times than either a purely mechanical procedure model of selection (the drift-diffusion model) or an optimizing model alongside fewer constraints on viable selection processes (the rational inattention model).

Wow. It has long struck me that what is sometimes called "irrationality" or "psychology" is only a proficient laid of rules of pollex for dealing alongside an information-rich environment. And that our measure model of information -- hither is a pack of cards, nosotros both know yous picked one, I don't know which 1 yous picked -- is only non upward to the task. But I'm non a proficient plenty mathematician or theorist to write downwards a useful model of information overload. I can't await to run across what Mike, a master copy theorist,  has come upward up alongside here.

3. High Discounts as well as High Unemployment yesteryear Robert E. Hall http://www.stanford.edu/ rehall/HDHU012414, http://www.nber.org/papers/w19871

In recessions, the stock marketplace position falls to a greater extent than than inward proportion to corporate profi t. The discount charge per unit of measurement implicit inward the stock marketplace position rises. All types of investment fall, including employers' investment inward task creation. According to the leading stance of unemployment -- the Diamond-Mortensen-Pissarides model -- when the incentive for task creation falls, the labor marketplace position slackens as well as unemployment rises. Employers recover their investments inward task creation yesteryear collecting a part of the surplus from the job relationship. The value of that catamenia falls when the discount charge per unit of measurement rises. Thus high discount rates imply high unemployment. This newspaper does non explicate why the discount charge per unit of measurement rises then much inward recessions. Rather, it shows that the ascent inward unemployment makes perfect economical feel inward an economic scheme where the stock marketplace position falls substantially inward recessions because the discount rises.

Well, I intend I accept a proficient model of why discount rates ascent inward recessions -- "By strength of habit." For about fourth dimension now, it's been on my dorsum burner to unite that mechanism, or similar mechanisms from property pricing that deliver high jeopardy premiums inward recessions, alongside a production side inward gild to generate a total draw of piece of work organization wheel model. That model volition hold upward driven yesteryear jeopardy premiums, non yesteryear the riskless involvement rate, a fundamental modify inward macroeconomics. It seems similar Bob has a proficient move of that worked out!

4. Gorton, Gary, as well as Guillermo Ordoñez. 2014. "Collateral Crises." American Economic Review, 104(2): 343-78. https://www.aeaweb.org/articles.php?doi=10.1257/aer.104.2.343

Short-term collateralized debt, someone money, is efficient if agents are willing to lend without producing costly information most the collateral backing the debt. When the economic scheme relies on such informationally insensitive debt, firms alongside depression lineament collateral tin borrow, generating a credit smash as well as an increment inward output. Financial fragility is endogenous; it builds upward over fourth dimension every bit information most counterparties decays. Influenza A virus subtype H5N1 crisis occurs when a (possibly small) stupor causes agents to all of a precipitous accept incentives to hit information, leading to a reject inward output. Influenza A virus subtype H5N1 social planner would hit to a greater extent than information than someone agents but would non e'er desire to eliminate fragility.

I accept been a big fan of Gary's view, alongside diverse coauthors, that nosotros suffered a "systemic run" when previously "informationally insensitive" securities -- nobody pays much attending to annual reports when entering a repo contract -- all of a precipitous buy the farm "informationally sensitive," thus dependent area to asymmetric information-induced illiquidity. I can't await to read through the detailed published version.

It's snowing difficult inward Chicago, as well as it would hold upward non bad to ringlet upward yesteryear a strength out place, read these papers as well as write detailed weblog posts on each one. Alas,  it's fourth dimension to teach dorsum to my hateful solar daytime job.