Thursday, September 30, 2010

Chinese Manipulation?

House Passes Bill Aimed At Chinese Currency: Listen here and read article here.
"The Chinese ought to be aware that Congress is serious about confronting their currency manipulation," Schumer said in a statement.
Apparently when China engages in active monetary policy it is called manipulation. What is it when the US does it? I do not believe currency interventions can persistently affect the real exchange rate for long periods. If the Chinese currency is truly undervalued, the process of selling RMB and buying dollars has to dramatically increase domestic Chinese inflation.

But maybe the currency isn't really that undervalued? Here is one paper which suggests that its not. Here is a more recent paper by Menzie and others. Their conclusion:

To sum up, absolute PPP suggests (log) undervaluation of about 50% (67% using Mac
parity). The Penn Effect suggests essentially no misalignment (our estimates), or between 13.5% to 38.8% undervaluation (according to Subramanian). The Goldman Sachs BEER implies slight undervaluation against the dollar, and 23.1% against the euro. The Cline-Williamson FEER based estimate implies a 33% undervaluation, while the Goldstein-Lardy estimate is for 22.3% to 28.8% (for zero current account surplus), or 12.8% to 17.4% (for halving the surplus). These estimates are summarized in Figure 3.
The real test? If you think the RMB is undervalued have you mortgaged your house to go long on it?

Monday, September 27, 2010

The Onion or NYT?

I thought this was a headline pulled from the Onion.

Segway Owner Dies in Segway Crash

Bank Failures

Tracking bank failures.


Definitions matter. Talking about levels versus changes, or why economists are often misunderstood. NYTimes: Most Americans Don’t Think Recession Is Over
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Sunday, September 26, 2010

Darwinian Marriage

Alison Schmauch (28) and Ilya Somin (37) were recently married. And Tyler Cowen delivers a eulogy speech by citing Darwin.
It being proved necessary to Marry

When? Soon or Late?

The Governor says soon for otherwise bad if one has children— one’s character is more flexible—one’s feelings more lively &; if one does not marry soon, one misses so much good pure happiness.—

But then if I married tomorrow: there would be an infinity of trouble & expense in getting & furnishing a house,—fighting about no Society—morning calls—awkwardness—loss of time every day. (without one’s wife was an angel, & made one keep industrious). 11 Then how should I manage all my business if I were obliged to go every day walking with my12 wife.— Eheu!! I never should know French,—or see the Continent—or go to America, or go up in a Balloon, or take solitary trip in Wales—poor slave.—you will be worse than a negro— And13 then horrid poverty, (without one’s wife was better than an angel & had money)— Never mind my boy— Cheer up— One cannot live this solitary life, with groggy old age, friendless & cold, & childless staring one in ones face, already beginning to wrinkle.— Never mind, trust to chance—keep a sharp look out— There is many a happy slave—

Wednesday, September 22, 2010

Monday, September 20, 2010


1. When taxes are too high, and when they vary dramatically by region, a bloody black market is not far behind.

2. The Price of Weed. Wow that makes cigarettes look cheap.

3. Structural changes in employment. Embrace the digital age.

Organ Donation

Iran leads the way in market principles. More here.

Apple CEO Steve Jobs' move to Tennessee, where waits are short, from California, where waits are long, to get a liver transplant served as a boldface reminder last year of the enduring problem. "There's no question there are patients chasing organs rather than the organs coming to the patients," Dr. James Pomposelli, a transplant surgeon told the Wall Street Journal at the time.

Now, would you believe that Iran may have cracked the problem by paying living donors a modest amount, practically eliminating kidney shortages. The Iranian government pays living donors the equivalent of about $1,200 and throws in a year of some health coverage. Recipients give the donors a few thousand dollars more through a sanctioned, nonprofit intermediary.

Wording Matters

Wording choice matters.


Here is a good opportunity to learn a little about the debt.

Series of forums on national debt begin Sept. 28

Find out about national debt at a series of three forums beginning Tuesday, Sept. 28.

Forum I will be held from 6-9 p.m. Tuesday, Sept. 28, in 102 Wing Technology Center.

Wednesday, September 08, 2010

Study Habits

From the NYT:

Take the notion that children have specific learning styles, that some are “visual learners” and others are auditory; some are “left-brain” students, others “right-brain.” In a recent review of the relevant research, published in the journal Psychological Science in the Public Interest, a team of psychologists found almost zero support for such ideas. “The contrast between the enormous popularity of the learning-styles approach within education and the lack of credible evidence for its utility is, in our opinion, striking and disturbing,” the researchers concluded.

Cognitive scientists do not deny that honest-to-goodness cramming can lead to a better grade on a given exam. But hurriedly jam-packing a brain is akin to speed-packing a cheap suitcase, as most students quickly learn — it holds its new load for a while, then most everything falls out.

When the neural suitcase is packed carefully and gradually, it holds its contents for far, far longer. An hour of study tonight, an hour on the weekend, another session a week from now: such so-called spacing improves later recall, without requiring students to put in more overall study effort or pay more attention, dozens of studies have found.