Paul Krugman thinks jump-start is the wrong word to use when talking about the recovery plan. Instead, policy should be focused on improving employment in longer term because this is going to be a long recession.
Archive for January 12th, 2009
What the Smith Barney/Morgan Stanley joint venture implies on the future of American banking (esp. investment banking) industry:
A very good discussion.
Six Degrees of Martin Feldstein
by Justin Lahart at WSJ
Martin Feldstein might never win the Nobel for economics, but he may be the most influential economist of his generation.
A Republican who advised Ronald Reagan, the Harvard economist has close ties to many of the economists who have been tapped to work in the Obama administration. Then again, any administration would end up picking economists with close ties to Mr. Feldstein.
As a sophomore, Lawrence Summers, who will head the National Economic Council, was a research assistant for Mr. Feldstein. Mr. Feldstein was later Mr. Summer’s dissertation adviser. Douglas Elmendorf, another of Mr. Feldstein’s students, is the new head of the Congressional Budget Office. So was, Jeffrey Liebman, a Harvard economist and Obama campaign adviser.
Austan Goolsbee, the Chicago economist who will serve as chief economist on President’s Economic Recovery Advisory Board, wasn’t taught by Mr. Feldstein, but by James Poterba, the MIT economist who took over from Mr. Feldstein as head of the National Bureau of Economic Research last year.
Mr. Poterba, a Republican who was a member of President Bush‘s tax advisory panel, was one of Mr. Feldstein’s students.
So were Lawrence Lindsey, who directed the National Economic Council from 2001 to 2002, and Glenn Hubbard, who was chairman of the president’s Council of Economic Advisors from 2001 to 2003. Harvard’s Greg Mankiw, who chaired the CEA from 2003 to 2005 was on the team of young economists that Mr. Feldstein took with him to Washington when he held the job from 1982 to 1984. (Mr. Summers was in that group, too, as was Princeton economist and tireless Bush critic Paul Krugman.)
But Mr. Feldstein’s most influential role was as the long-time head of the National Bureau of Economic Research, which he built over three decades into the nation’s most important research network for academic economists. Being named an NBER researcher — there are now over 1000 of them — is seen as an important step in an economist’s career, and NBER grants and fellowships have helped sustain many top economists as they were starting out. Mr. Feldstein also formalized the NBER’s role as the arbiter of business cycles by creating the Business Cycle Dating Committee in 1978.
One of the most important contributions Mr. Feldstein made was in how economics research is disseminated. He started the practice of mailing out collections of yellow-bound booklets of working papers by NBER researchers (known as “yellow-jackets”).
“I just wanted to make sure that the research that was being done was being more widely disseminated,” Mr. Feldstein says.
As a result, economic research has become available much more quickly to a much wider audience than it was when it only appeared long after the fact in often obscure journals. When the Internet took hold, Mr. Feldstein was quick to begin posting working papers to the NBER’s website. One of the reasons that academic economists have been so quick in their analysis of the economic crisis is that the ties they established through the NBER and the Centre for Economic Policy Research (a European research network set up in imitation of the NBER) allowed them to work with far-flung colleagues. And the tradition of providing research online that Mr. Feldstein pioneered allowed them to broadcast their ideas.
The popularity of economics in recent years also owes something to Mr. Feldstein. Under his leadership, the NBER focused on empirical work that is often far more accessible to the general public than the more theoretical areas that some economists work on. And the availability of research on the NBER’s website meant that reporters had easier access to it. They were quick to pick up the sexiest papers, of course — the stuff written by Chicago economist Steve Levitt, of Freakonomics fame.
Mr. Levitt, by the way, was a student of Mr. Poterba. Who studied under Mr. Feldstein.
Now with oil bubble deflated, 60 Minutes yesterday had a nice review of how we got there. The conclusion is that it was largely driven by speculations and deregulation.
Like any other bubbles, this oil bubble had a nice attractive story/theme: demand from China and India. But what eventually drove oil price to $147 peak was not supply-demand equation, but human's greed. Investment banks and deregulation just facilitated it.
When comes to digesting this oil boom and bust, I find it always useful to read Jim Hamilton's paper on understanding oil prices, and of course, you can always review my earlier posts on this topic here and here.