tag:blogger.com,1999:blog-8764541874043694159.post6247178289638213091..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: Productivity, savings and financial crisesFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-8764541874043694159.post-53037009068080500432014-12-15T12:19:46.067+00:002014-12-15T12:19:46.067+00:00Powerful way to crush peyakit hemorrhoid hemorrhoi...Powerful way to crush peyakit hemorrhoid hemorrhoids without surgery, short and powerful treatmentobat wasirhttp://www.spesialiswasirambien.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-33823373365297308262013-02-22T12:39:45.467+00:002013-02-22T12:39:45.467+00:00In technology sector China is surpassing even the ...In technology sector China is surpassing even the US, in fact, China is leading the market of Smartphones. Global X NASDAQ China Technology ETF <a href="http://www.globalxfunds.com/nasdaqetfs/chinatech/index.html" rel="nofollow">(CHIB ETF)</a> is designed to reflect the performance of the technology sector in China. Invest in CHIB fund that includes computer services, internet, software, computer hardware, electronic equipments, semiconductors, and telecommunications equipment.<br />Anonymoushttps://www.blogger.com/profile/11754554118180598008noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-55683956712344206802013-02-20T08:58:19.396+00:002013-02-20T08:58:19.396+00:00You have misunderstood what I said about Minsky, a...You have misunderstood what I said about Minsky, and you haven't read the post properly. All I said about Minsky was that he didn't do a DSGE model - which is true. But in the post I also said that the DSGE model used by the ECB researchers looked inappropriate. I am generally of the view that DSGE models work over the short run but not over the long run. We are still searching for a modelling tool that works over the long run. There is a very interesting post from Noah Smith on this subject:<br /><br />http://noahpinionblog.blogspot.co.uk/2013/02/is-business-cycle-cycle.html<br /><br />Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-2700342252639252062013-02-20T01:43:44.466+00:002013-02-20T01:43:44.466+00:00Read Minsky / Steve Keen .
DSGE ( equilibrium !!! ...Read Minsky / Steve Keen .<br />DSGE ( equilibrium !!! ??? ha ha ) models so much worse than merely 'flawed'. <br />Frances , you say you read Minsky but had doubts because it wasn't DSGE friendly.<br />This is like saying ,you read Newton but disregarded on the basis he wasn't Ptolemy compliant.<br />Economics is patently obviously not an equilibrium system. chaingangcharliehttps://www.blogger.com/profile/04803774361542678154noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-83333878381670024022013-02-19T19:47:15.994+00:002013-02-19T19:47:15.994+00:00Hi Ralph,
I'm not sure you meant to leave thi...Hi Ralph,<br /><br />I'm not sure you meant to leave this comment on this post - the Carney quote is on my "floors & ceilings" post!<br /><br />There is a general view among neoclassical economists that fiscal policy works only in the long run. Their ideal is that fiscal policy should be set up to offer countercyclical support over the business cycle and then left alone. Automatic stabilisers are about the only role they see for fiscal policy. Hence my comment on my "Floors & ceilings" post that the role of fiscal tools in monetary policy is a much neglected area. I honestly don't know if anyone has actually researched this. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-64530367280418783522013-02-19T19:28:26.486+00:002013-02-19T19:28:26.486+00:00Re Carney's claim that monetary policy is more...Re Carney's claim that monetary policy is more "nimble" than fiscal, anyone know of any decent evidence to back up this claim?Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-16423627334749408752013-02-19T08:46:18.472+00:002013-02-19T08:46:18.472+00:00As for conclusions...well,
1) Risk averse econom...As for conclusions...well,<br /><br />1) Risk averse economies are NOT more prone to crashes. That's crazy. You need to say this in a different way. Fearful economies with little trust are more prone to crashes. It's self reinforcing because people know that there's a crash coming! That's why people are fearful. In a normal economy, people seek yield. Period. Bulls make money, bears make money, and you can be successful in either aggressive or conservative fashion. When nobody takes the other side of a trade, even with very favorable bait on the hook, that usually means there is a crisis--not that the specific behavior causes the crisis. I can think of how conservative behavior can cause crisis, but those are almost always an outcome of resource curses, when the safe bet drives out any other more risky proposition. In a sense, the world is all hooked up on the most complex resource curse ever, essentially channeling funky backwardation in primary goods and energy into financial products that backs up national bonds.<br /><br />2) That's true. Mostly because highly inelastic labor supply are usually an artifact of repressive political systems. Otherwise, people would try to emigrate, find hot sectors, organize, etc...Business efficiency here should be noted as pretty words for a fascist sentiment. A flexible labor system usually means that people can add labor to underutilized capital. There is usually a pretty big drive for that to happen--and you see squatter's movements and creative drug trades, so forth and on. When labor is really inflexible, there is some kind of command economy going on, overt or subvert, even when it's enforced by, say, lack of cash on Main St.<br /><br />3) In virtually every go-go period, contract enforcement and general common sense declines, and this is usually encouraged by the elites. Think Alan Greenspan and his encouragement for people to switch to adjustable rate mortgages. In general, easy credit *always* does this. It almost doesn't make sense to anticipate continued discipline in manufactured bubbles. The Cossacks answer to the Tsar.<br /><br />4) Eeeeh. I don't think there are technological shocks per se, rather than the shocks generated by creating infrastructure for said technological advancement. The usual shocks have to do with advancements that changes land values, like railroads or standard box cargo shipping. And much of that has to do with new flavors of corruption among a general dispossession of land or other newly useful resources (like water rights) by elites. I don't think technology really does much to genuinely lower the economy or wages directly. Just new tools for a previously existing elite rapacity. Robotics doesn't even have to lower manufacturing jobs. Just that those new capital resources weren't used that way.<br /><br />shah8https://www.blogger.com/profile/04537529816304128000noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-17820872746020894682013-02-19T08:45:40.164+00:002013-02-19T08:45:40.164+00:00Most productivity miracles are driven by the inter...Most productivity miracles are driven by the intervention of fascist or otherwise highly statist administration. You merely have to shift motivations around on the principles mentioned to see this:<br /><br />1) Unusually high and rising productivity, relative to national history? That's catchup growth fueled by easy international credit and importation of international advanced machinery. See: Spain, Brazil, etc, etc, all the way to where China is now, with Michael Pettis poking in its side gently.<br /><br />2) Sustained period of above average productivity are *fueled* by unsustainable credit. It's simply not easy to grab easy bucks without leverage. You have to buy out politicians, exercise monopoly behavior, or control resources (or all of these elements). <br /><br />3) High level of household savings usually happen because authorities force those savings to be high via real negative interest rates, or effectively so. Or they happen because that particular country has few services and no safety net at all. In either case, this is not a sustainable pattern. There eventually becomes no safe place to put money at all, for lack of new viable investments. And of course, a wretched third world country is prone to getting pnemonia from international financial flus, or some other disasters wipes out whatever middle class' savings exist, and boom, economy goes into reverse.<br /><br />shah8https://www.blogger.com/profile/04537529816304128000noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-63948716886604638022013-02-18T16:45:48.412+00:002013-02-18T16:45:48.412+00:00Isn't "Rising productivity" just a e...Isn't "Rising productivity" just a euphemism for rising returns to capital? Falling productivity is a rising return to labour.<br /><br /><br />Regarding the 1,2,3,4:<br /><br />1) Risk averse economies are more prone to crises.<br />4) Higher uncertainty is conducive to crises.<br /><br />Makes sense. Uncertainty and risk aversion both increase incentives to hedge. An increase in hedging can only be accomplished in aggregate by balance sheet expansion since by definition an increase in hedging must be an increase in the exposure to the real assets/equity of others.<br /><br /><br />2) Economies with a highly elastic labour supply are more prone to crises.<br /><br />I suspect this is depends on the rate of change of technology, the rate of change of environment and the rate of change of available energy inputs to the economy. When these things are in flux labour must be more flexible. However when these things are in flux that must mean increased likelihood of shock due to the rate of change. So this is maybe more related to the pace of change rather than the labour flexibility which is more likely a symptom of fast change.<br /><br />3) Contract enforceability and efficient banks reduce the likelihood of crises. <br /><br />The link between extreme efficiency and lack of robustness is well known in ecology and complex systems. So this makes sense.<br /><br />This all suggests that maybe the crisis is ultimately the result of one thing - rapid technological and social change which lead to uncertainty and increased efficiency with the consequences noted above.<br />scepticusnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-78087779442577217152013-02-18T12:50:59.203+00:002013-02-18T12:50:59.203+00:00Apple has no debt to repay and is responsible for ...Apple has no debt to repay and is responsible for a significant proportion of the world's corporate cash pile (and probably even more of the incremental adding to it each year). It could be said that people who buy an iPhone are making themselves redundant.cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-18465521984143578672013-02-18T12:40:31.576+00:002013-02-18T12:40:31.576+00:00The productivity dip is a bit of a puzzle (and a s...The productivity dip is a bit of a puzzle (and a surprise to me). I can't believe people suddenly lost their ability to do things, so the bulk of the effect must be that they kept being paid with less to do, that is employers didn't shrink the workforce as fast as the demand went down.<br /><br />Also there's a question of timeframe in all these things: a flexible workforce for example is bad in a (sudden) crisis, but it's good in the long term that people can do jobs they're good at rather than being stuck in lifetime jobs they're not good at (which tends to make them safe but miserable as well). Same "robots ate my job" also means "cool now I have a washing machine I can spend my days doing nuclear physics instead of washing underwear".<br /><br />As for people saving too much in aggregate, I think the turnaround is near. It seems to me that American consumers are too impatient to keep at it much longer. You can also see it when you listen to the corporate noise, the paying down debt/sitting on cash thing is getting tired as well, they're largely done cleaning up the noughties' excess and are ready to move on. And you need just enough people saving less to tip the balance and get the ball rolling (and save Europe in the process).cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-88998070622261070222013-02-18T00:10:01.001+00:002013-02-18T00:10:01.001+00:00George,
I've read Minsky, thanks. Minsky did ...George,<br /><br />I've read Minsky, thanks. Minsky did not do a DSGE model of his hypothesis.<br /><br />The ECB researchers mention Minsky early in their paper. But their analysis does not stem from his work - it appears to be completely independent and reached via a different (and much more difficult) route. They also deduce the critical importance of productivity growth from first principles, despite the fact that this had already been more-or-less covered by Goodwin. Reinventing the wheel is the modus operandum in Europe, it seems. But this is an important piece of research from the ECB, given the dangerous situation in the Eurozone and the apparent blindness of the political and monetary authorities to the risks they are running.<br /><br />I've added a link to Steve Keen's paper on Minsky's financial instability hypothesis, which incorporates Goodwin's growth cycle model too. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-21978471185386136592013-02-17T23:13:19.570+00:002013-02-17T23:13:19.570+00:00This comment has been removed by the author.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-616568802108951022013-02-17T23:10:05.527+00:002013-02-17T23:10:05.527+00:00I recommend you revisit the work of Hyman Minsky, ...I recommend you revisit the work of Hyman Minsky, specifically his<br />Instability Hypothesis.<br /><br />He covered all this 40 years ago.<br /><br />INDYDr. George W. Opriskohttp://www.publicresearchinstitute.orgnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-60694867590280735142013-02-16T21:20:03.456+00:002013-02-16T21:20:03.456+00:00The fact that corporates are sitting on cash and N...The fact that corporates are sitting on cash and NOT paying down debt is a mystery rather similar to the productivity puzzle....lots of people have theories as to why this is happening but no-one really knows the answer. Read this FT Alphaville post and follow the links to Cochrane, Cowan and Roche, and also to Karl Smith and Scott Sumner in the comments.<br /><br />http://ftalphaville.ft.com/2013/02/13/1384802/on-cash-hoarding/Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-14891737519125867662013-02-16T21:09:17.537+00:002013-02-16T21:09:17.537+00:00I was thinking about large profitable corporates w...I was thinking about large profitable corporates with cash piles not being re-invested. Had assumed some profits/ cash would be used to pay down debt.Anonymoushttps://www.blogger.com/profile/05872436416541604727noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-39254021410157115582013-02-16T20:58:16.464+00:002013-02-16T20:58:16.464+00:00Fiona, much of the evidence at the moment is that ...Fiona, much of the evidence at the moment is that gains go to highly-paid workers rather than shareholders - so the labour market itself is splitting in two. Shareholders - many of whom are ordinary people, through their pension investments, not the "rich" - are also being squeezed. <br /><br />It's not meaningful to talk about gains going to "corporates". Corporate profits go to management, workers, shareholders, customers (in the form of lower prices), government (through taxes) or are reinvested in the business, which benefits future management, workers, shareholders, customers, government.....My gripe is that management appears to be benefiting disproportionately at the expense of the other stakeholders. That's what the labour statistics show and why I provided the link to my post on labour market bifurcation.<br /><br />At present companies are sitting on high cash balances, but they also have high debts. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-86674113641472969372013-02-16T20:23:23.718+00:002013-02-16T20:23:23.718+00:00Yes thanks for the summary but some of the ECB ana...Yes thanks for the summary but some of the ECB analysis seems a bit vague as you point out.<br />Thinking about crises following periods of increasing productivity could the fact that gains from this productivity are not going to labour be part of the problem? If the gains are going to small percentage of the rich and corporates, rich will save proportionatly more and corporates borrow than the general population.<br />less.Anonymoushttps://www.blogger.com/profile/05872436416541604727noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-91521908568095295272013-02-16T19:34:48.280+00:002013-02-16T19:34:48.280+00:00Great stuff as usual Frances. Great stuff as usual Frances. Anonymousnoreply@blogger.com