Matt Nolan

Is qualitative easing a partial default?

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The Fed is going to buy some government bonds.

Now, if they fund this buy printing money – doesn’t this effectively imply that they are shifting the burden of their recession from taxpayers to bond holders? If so, isn’t this equivalent to a partial default on debt.

I don’t think other countries would be allowed to do this.

What am I missing?

Update: CPW points out why I’m wrong – effectively I’m presuming that the Fed won’t stick to a future inflation target anymore, which is not really a fair assumption.  He pointed me to this very good post as Econbrowser, and I also really enjoyed this post on Greg Mankiw’s blog.  I’m nervous about the Fed’s willingness to pull back the QE/lift rates in the future – but this is no different to the usual concern I hold during the whole economic cycle.  The introduction of QE hasn’t actually changed this issue.

Matt Nolan

Why I’m sick of hearing about “productivity”

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There is nothing wrong with productivity, I love productivity. But why does this government have to bang on about it like it is an issue they actually have control over.

Increasing productivity implies that we can make more stuff for the same amount of labour and capital – now this is a completely good thing, we can be wealthier without any more work! However, surely when I put it this way alarm bells must start to ring!!!!

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Matt Nolan

Tarot card reading and Economic forecasting

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So I’ve started reading the moral philosophy and economics book I was discussing, and on the eighth page I found this quote:

The idea that studying ethics could help people do economics or policy analysis may seem far-fetched.  Why not consult tarot cards instead?

Now I do not agree with the first part of the above paragraph – policy analysis requires value judgments to reach conclusions, and understanding ethics helps to inform value judgments.

But my focus is on the second part of the paragraph.  Why the dig at tarot card reading?

My impression that his focus is on the broader form of economics that requires value judgments in order to reach conclusions – however, if this is what he is focused on tarot card reading is virtually equivalent.  Let’s discuss why:

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Matt Nolan

Keep an eye on migration tomorrow

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My economics tea leaves are suggesting to me that there will be fewer than 4,747 departures to Australia in the February figures. If this is the case, the number of departures to Australia will be LOWER than in Feb 2008.

It is this sort of speculation that is giving me dreams suggesting that net migration will pick up quite quickly, very interesting.

The reason I think it is important to keep an eye on this is because I’m getting hacked off with news stories talking about the “huge outflow to Australia” when its growth has been drastically slowing since the end of 2008 😛

Update:  Realised today is Wednesday – not Thursday.  The numbers are out on Friday 😛

jamesz

Where the streets have no signs

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Eric Crampton points to an example of offsetting behaviour in driving reported by Popular Mechanics:

…modifying roads and intersections so drivers are less comfortable—by making driving, in some ways, more dangerous—forces people to slow down and pay attention, producing a change in behavior that, paradoxically, results in more safety. This is also true for pedestrians, who Vanderbilt says are more cautious away from crosswalks than within them because they don’t know if cars will actually stop.

It reminds me of the idea of shared space that’s gained some popularity, particularly in Europe. Read more

Matt Nolan

Moral Philosophy’s role in economics

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I always felt that the role of moral philosophy in economics entered when value judgments appeared – and as a result, it would be possible to separate this issue from the domain of economic science.

However, a book I just purchased (Economic Analysis, Moral Philosophy, and Public Policy – by Hausman and McPherson) appears willing to attack this belief of mine:

Our job will be … to show how knowing moral philosophy helps one do economics and policy evaluation better

Given how heavily another Hausman book (The Philosophy of Economics:  An Anthology) helped shape my view of the economic method, I am sure that this book will end up with me talking like a very different economist.  You have been warned 😉