Worthwhile Canadian Initiative

Scott Sumner (http://www.themoneyillusion.com) and Nick Rowe (http://worthwhile.typepad.com/) have done an incredible job at helping me understand money and its role in the economy even though I have no training in economics. It's worth going back and reading their archives.

I feel stasticians and econometricians tend to take the mean of the log of the distribution. Recently, we started using the arcsinh instead of the log as well because the function has nice properties[1] 1. https://worthwhile.typepad.com/worthwhile_canadian_initi/2011/07/a-ran…

As a fraction of the economy it is small, but it is large as a fraction of foreign trade, and volatile. Oil prices explain most of the moves in CAD/USD that aren't explained by diverging interest rates. - https://worthwhile.typepad.com/worthwhile_canadian_initi/2010/11/kink.… - https://www.theglobeandmail.com/business/article-you-can-go-your-own-w…

Nothing, these charts are just the result of picking the wrong deflator. This chart shows what happens when you use the (correct) GDP deflator: https://worthwhile.typepad.com/.a/6a00d83451688169e20134878dba59970c-p…

Others have elaborated further; here's Felix Salmon and Nick Rowe: http://blogs.reuters.com/felix-salmon/2009/07/17/who-cares-about-futur… http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/07/we-are…

See also the macroeconomics of middle-earth: http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/the-ma…

Articles about economics are ok. This is political squabbling. If I saw the Krugman column where he called Cochrane a barbarian posted here on hacker news I would flag that also. This is full on reddit territory. Here's a link for you: http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/09/john-c…

Quoting from the link [1]: Milton Friedman's Thermostat If a house has a good thermostat, we should observe a strong negative correlation between the amount of oil burned in the furnace (M), and the outside temperature (V). But we should observe no correlation between the amount of oil burned in the furnace (M) and the inside temperature (P). And we should observe no correlation between the outside temperature (V) and the inside temperature (P). An econometrician, observing the data, concludes that the amount of oil burned had no effect on the inside temperature. Neither did the outside temperature. The only effect of burning oil seemed to be that it reduced the outside temperature. An increase in M will cause a decline in V, and have no effect on P. A second econometrician, observing the same data, concludes that causality runs in the opposite direction. The only effect of an increase in outside temperature is to reduce the amount of oil burned. An increase in V will cause a decline in M, and have no effect on P. But both agree that M and V are irrelevant for P. They switch off the furnace, and stop wasting their money on oil. [1]https://worthwhile.typepad.com/worthwhile_canadian_initi/2010/12/milto…

Maybe you should look up stuff like 'Vorratsdatenspeicherung'. The EU is literally demanding (and receiving) money from Germany because the haven't implemented this law yet. The reason they have not is that is was against the German constitution and it was rejected by the Bundesgerichtshof. Now the law is coming back and a argument of the supporters is that its about EU integration and cost. The law is very clearly against western principles, surveillance for everybody even if they did nothing. This is just one example, the EU is used to push threw laws that can not get threw on National level and then get imposed top town. The EU gets much better coverage then they deserve because people are into the idea of "Europe United, No War" but nobody really knows or cares much beyond that. > The "crisis" was mostly due to the "elected" governments of the countries which have now financial problems. Maybe you should look at this graph: http://worthwhile.typepad.com/.a/6a00d83451688169e20176155c5d48970c-pi The left the question about debt open (legally) but gave the impression that it would be common. The market assumed so, and this provided false incentives for all the governments. When the debt was not common, as you can see, the bond yields spread again and some of the nations were not able to role over their debt. Instead of fully committing to the idea of not sharing debt and letting Greece default, they don't allow that and keep Greece limping along. This is the worst…

Am I the only one who read Friedman's paper? [1] The answer to OP's question [2] - "why are economists unaware of milton friedman's thermostat" - is because the OP is misinterpreting Friedman's paper, and therefore has misattributed this nonexistent "theory". Friedman just said that the Fed acts like a thermostat, and in the linked paper, claimed that the period subsequent to 1985 had increased price stability owing to improvements in their understanding of inflation and it's relation to the quantity of money, hence their "better thermostat". AFAICT, the OP has made up this "Friedman's Thermostat" insofar as it relates to economic forecasting, and now he wants to know why no one has heard of it. As an aside, "exception that proves the rule" is an almost universally misapplied phrase, that should only be used if you're really really sure you know what it means (kind of like "begs the question"). [1] http://online.wsj.com/article/0,,SB106125694925954100,00.html [2] OP = Nick Rowe - http://worthwhile.typepad.com/worthwhile_canadian_initi/about-nick-row…

The name "inverse hyperbolic sine transformation" or "IHS transformation" is common in econometrics. https://marcfbellemare.com/wordpress/12856 https://worthwhile.typepad.com/worthwhile_canadian_initi/2011/07/a-ran… https://www.nber.org/system/files/working_papers/w29998/w29998.pdf https://blogs.worldbank.org/en/impactevaluations/interpreting-treatmen… https://academic.oup.com/ectj/article-abstract/24/2/334/5948096 https://marcfbellemare.com/wordpress/wp-content/uploads/2019/02/Bellem…

> 1. This doesn't make any sense. The easiest way for the government to impose more taxes is to raise the percentages on the taxes they already collect. Private filing has nothing to do with it. To raise the percentage rates, politicians have to vote to raise those rates. Private filing means that everyone is very aware of how much they’re paying in taxes. It’s not just an invoice they receive listing how much was withheld. They have to recalculate it. That makes them much more sensitive about voting for politicians who vote for higher taxes. > 2. Americans don't have the lowest tax rates in the developed world. Mexico, Ireland, Chile, Turkey, and South Korea all have lower tax rates[1]. I don’t think people would consider Chile and Mexico to be developed countries. You’re right that Ireland and South Korea are lower (depending on the year, Ireland cut taxes significantly recently). But they’re together with the US in the bottom band. > And in some cases the governments provide more services with less money because they're not spending half their budget on occupying other countries. I think it’s true that other countries do more with less. But it has little to do with the military budget. US government spending as a percentage of GDP is 38%, meaning all levels of US government spend $7.3 trillion annually. The military budget is just 10% of that, or 3.2% of GDP. That’s high compared to Europe, but not a big difference compared to overall government spending. The US…

So the author is discovering Say's Law [1] - basically supply can create it's own demand. Now if you talk to an economist they'll tell you Say's Law is bunk and has been for quite a while, supply doesn't create it's own demand. But let's say you don't mention Say's Law and you talk to an immigration economist, they'll say something like immigration is good because the supply of new labor actually creates even higher demand for labor than what they displace, basically Say's Law but disguised. Which is all to say, does supply drive it's own demand? Hard to say but regardless YIMBYs need to deepen their explanations of the economics behind the issue, supply and demand graphs are good for introducing undergrads to the basics, they're not good for justifying very expensive and highly redistributive policy. [1] https://en.wikipedia.org/wiki/Say%27s_law sidenote: draw a supply and demand graph. Now draw a second graph but make demand slightly upward sloping. Increase supply. What happens to price? Just googling around I found several articles about upward sloping demand in housing. It appears to be contentious (urban economics isn't an area I know too much about) but is something that should be…

pseut: "so you can estimate the parameters as \hat parameters = argmin (average_over_t speed(gas_t, slope_t, parameters) - const)^2" No you can't. Think about it. 1. If the driver has as much information as the econometrician, setting both parameters on slope and gas equal to 0 will fit the data equally well. 2. If the econometrician observes slope and gas and speed with error (as will almost always be the case), then GMM will estimate both parameters on slope and gas as zero (if those 3 errors are independent of each other), even if the true parameters aren't. 3. If the driver observes gas or slope with error, and the econometrician doesn't, then the econometrician can indeed actually estimate the parameters. How likely is 3? Only a stupidly arrogant econometrician would assume a priori that he knows better how to drive the car than the guy actually driving it. (OK, maybe the econometrician has final revised data, and the driver has only real time data, and the final revised data is better than the real time data. But even then the driver will be observing other indicators that the econometrician doesn't have data on, so the econometrician will interpret the driver's response to those omitted variables as "gas pedal shocks", and will screw up the estimation royally. Yep, all that Sims VAR stuff is wrong. Here, read…