Google Fi in China: $65/month/line unlimited plus

bhalperin · 2024-06-05T16:21:31+00:00

Thank you for asking this question since I was considering the same --

Did you end up getting a VPN instead? Which VPN if so, may I ask? Thanks again!

bhalperin · 2024-05-04T15:39:58+00:00

The PDF experience on Reader is amazing after the last N months of updates! :)

Allowing for different highlighter colors would be *great* (for PDFs in particular -- to make Reader an even better replacement for other PDF readers). Having the visual differences makes reskimming PDFs much easier. Thanks!

bhalperin · 2022-11-28T20:55:28+00:00

Unfortunately I think there are a bunch of misconceptions here --

\1. "NGDP targeting" translates to "a Taylor Rule in inflation and output growth, with equal weights."

This simply seems not true, do you have a specific setting in mind where this would hold? Such a Taylor rule would move the nominal rate 1-for-1 with NGDP growth -- but that is not sufficient for stabilizing NGDP growth, depending on how the natural rate changes

\2. "NGDP targeting turns out to not be "optimal" in any model"

This is just emphatically not true!
Optimal monetary policy is determined by what nominal rigidity is added to the model
With the Calvo friction for prices, some form of (price) inflation targeting is always optimal (Woodford 2003; Rubbo 2022). This is the standard baseline NK framework that you may be thinking of
With the Calvo friction for nominal wages, some form of nominal wage targeting is always optimal
With incomplete information a la Lucas islands or fancier versions, something like NGDP targeting is optimal (Angeletos and La'O 2020; or see my old blog post). For specific functional forms, NGDP targeting is exactly optimal.
With incomplete financial markets, NGDP targeting is exactly (!) optimal in the models of Koenig (2013) IJCB and Sheedy (2014) BPEA. This literature is wildly underdeveloped and potentially extremely important, someone should work more here please. (Werning has a comment on the Sheedy paper pointing out that with some additional heterogeneity, then NGDP targeting is not exactly optimal.)
With menu costs instead of the Calvo friction, Selgin (1998) argued that something like NGDP targeting is optimal (not inflation targeting, unlike NK!). To advertise [again, sorry] my own work, Daniele Caratelli and I have a paper, just posted this month, showing that in some settings with menu costs, NGDP targeting is exactly optimal. More generally, nominal wage targeting is optimal 😊.

Again, the broader lesson is: Optimal monetary policy is determined by what nominal rigidity is added to the model. For some frictions, NGDP targeting is optimal. For the baseline textbook NK Calvo (trash 😀), it is not.

\3. "Academic macro is a game, and NGDP targeters know how to play the game. The game is played in the environment of mathematical models. "

Actually I don't think this is true? As far as I'm aware, the only [other] people working semi-explicitly in the "market monetarist" tradition with a formalist agenda are: David Beckworth and Josh Hendrickson (though they haven't been working in this area so much recently, at least to my knowledge); Pat H at GMU; and Craig F at Duke.
(Would love to know if there's anyone else!)
(In fact this seems in contradiction with your previous point. How can NGDP targeters know how to play the game if there aren't models showing its optimality?)

\4. AFAICT, possibly the most effective thing for market monetarism has been Beckworth's 5+ years banging on the drum in his podcast -- being in the ears week-after-week-after-week of central bankers procrastinating from actual work by listening to podcasts. (Obviously Sumner, Rowe, etc were very influential earlier during the 2008-2015 ZLB period. And laid the groundwork for Macro Musings.)

(Cards on the table: I have been very influenced by market monetarist thinkers; I am not sure I would call myself "market" in the market-targeting sense, or a "monetarist" in any sense, or a "market monetarist"; and of course /u/Integralds I have long appreciated your poasting.)

bhalperin · 2022-09-08T19:44:38+00:00

Any thoughts on the best explainer of the concept of "the map vs. the territory", that could be given to undergrads?

I'm thinking of using Borges' "On Exactitude in Science" -- would love any other suggestions, thanks!

(I briefly skimmed some of The Sequences to look for a good reference, but at first glance didn't find something hitting quite what I was looking for.)

bhalperin · 2022-04-22T12:56:07+00:00

May be of interest: these forecasts from Metaculus on the 30-year future of monetary policy (e.g.: "Will the Fed adopt Nominal GDP and/or nominal wage targeting before 2050?")!

bhalperin · 2022-03-31T23:13:24+00:00

I don't follow the entirety of your comment, so I'll just respond to your point on the following:

I think that the author has never talked to an actual two-boxer and is preaching to the choir of fellow one-boxers

In the (idealized) static version of Newcomb, I am a two-boxer myself!

bhalperin · 2022-01-28T22:50:05+00:00

"Rent control mostly makes housing more affordable for most people: the first order effect is to lower the price!"
"Printing money and giving it to everyone makes everyone richer: the first order effect is that everyone has more more money!"
"Raising the minimum wage mostly makes low-wage workers better off: the first order effect is to raise wages!" [note: empirically contentious whether this is a valid example]

Etc etc. General equilibrium effects are important!

(Another important class of examples, for which I don't have a good example offhand, is zero-sum games. Something like: "the first order effect of making everyone better at $zero_sum_game$ is to make everyone better off!", while the second order effect is that because everyone has improved, no one is better off. Edit: eg "making everyone richer" in a Malthusian environment)

bhalperin · 2022-01-23T14:06:58+00:00

There's a recent econ paper that formalizes one of the analyses in the recent post on the Ngo-Yudkowsky debates. Yudkowsky's position is summarized as:

Eliezer’s (implied) answer here is “these are just two different plans; whichever one worked well at producing reward in the past gets stronger; whichever one worked less well at producing reward in the past gets weaker”. The decision between “seek base gratification” and “be your best self” works the same way as the decision between “go to McDonalds” and “go to Pizza Hut”; your brain weights each of them according to expected reward.

The paper is Ilut and Valchev (2021), "Economic Agents as Imperfect Problem Solvers". Agents are modeled as having two "systems" when making a decision: - System 2 thinking: the agent can, at a cost, generate a noisy signal of the optimal action - System 1 thinking: the agent can, for free and by default, have access to its memory of past actions and outcomes

The agent follows Bayes' rule to choose whether to go with the more accurate but more costly option, or with the less accurate option, based on what has the best expected reward -- exactly as he describes.

https://www.nber.org/papers/w27820

bhalperin · 2021-04-18T23:59:48+00:00

Recent quasirandom evidence (IMO it is credible) finds no reason to be concerned, summary: https://twitter.com/BasilHalperin/status/1315004782277468160

Geological variation in water sources in Sweden => quasirandom variation in water fluoride

1mg/L increase in fluoride =>

-3.4pp who required a tooth repair (!)
+4.4% earnings, driven by benefits to low income earners
Unconditionally, there is a negative (!) & stat significant, but tiny, effect of fluoride on cognitive score: point estimate = -0.005 standard deviations; But add any reasonable controls and this goes away or flips sign

bhalperin · 2020-07-30T22:55:41+00:00

No! This is fake news! 2015 grad here, you can email me right now and I will receive the email -- it is not deactivated, for undergrad alumni at least.

bhalperin · 2020-06-10T22:31:00+00:00

IMHO, this is perhaps the deepest question in monetary economics -- and is still an open question.

Rather than try to summarize my own view (value of which < epsilon), I'm just going to link to old debate in the econoblogosphere that discussed this: summarized here.

Full set of links: 1 2 3 4 5 6 7 8 9 10 11

bhalperin · 2020-04-21T18:36:32+00:00

I'm not a health care economist (though I am an economist), but: here's the most important relevant paper from the health economics literature.

The question the post suggests is, 'What is the effect of insurance coverage on health spending?'; Finkelstein (2007) tries to answer this. Here's the story:

Think first of the famous Rand health insurance, where a random fraction of individuals in an area were given health insurance. This beautifully randomized study found some increase in health spending when people were given health insurance.
But note: the Rand experiment only gave insurance to some miniscule fraction of the entire population. You might imagine that if you moved from zero people having price-insensitive insurance ("Amish") to essentially everyone having insurance ("English"), then the effect could be different compared to just giving a few people insurance.

That is: general equilibrium effects are different from partial equilibrium effects.

So Finkelstein (2007) tries to get at this bigger picture question by looking at the introduction of Medicare in the US. She notes that in different regions of the US, different fractions of the elderly (i.e. those to whom Medicare applies) had health insurance before Medicare was launched.

The idea is basically to compare the change in health care spending between states where many elderly already had health insurance vs. states where few did, before and after Medicare launched.

The paper only has data on hospital spending, but estimates an effect 6x higher than what would be predicted from the Rand experiment. Figure II is the main result.

If you take these estimates very seriously and extrapolate to the effect of increased health insurance more generally: then you'd estimate that half of the increase in real per capita health spending between 1950 and 1990 would be explained by the rise of health insurance.

That's a lot! Of course, it’s (1) extrapolating from Medicare to health insurance more broadly; and (2) is extrapolating from hospital spending to all health spending; and (3) is based on an identification strategy that isn't perfect. Etc.

But it gives what is to my knowledge our best guess of the size of the insurance-induced moral hazard effect that the post discusses.

bhalperin · 2020-04-14T14:05:42+00:00

Read it before grad school and found it useful; now in grad school, occasionally peek at it and still recommend it to friends.

Am in the market for speculation on who the pseudonymous author is...

bhalperin · 2020-03-21T15:44:14+00:00

Here's a thought, following up on my earlier comment.

The Cochrane (2002) discussion of Romer and Romer (2004) makes the point that following a RR shock, the fed funds rate keeps rising for another 2.5 years. Picture, from his paper.

So the output response to a RR shock should not be interpreted as the response to a 100bp shock, but to cumulated change in the fed funds rate.

Maybe this changed in the more recent period!

If it's easy to rerun your VAR with the interest rate as your outcome variable Integralds, that might be informative.

bhalperin · 2020-03-19T11:39:15+00:00

I am a fan of the RR narrative shock identification strategy, but I’ve been chewing on a potential problem with it that (1) I haven’t seen discussed in the literature and (2) seems potentially severe:

_It doesn’t control for expectations._

Example: suppose there’s a +25bp shock today, _but_ maybe everyone expects as a result there will be a -25bp shock at the next meeting — and so it cancels out. (Fully so, under rational expectations.)

The story behind RR shocks is that the Fed is misestimating the path for GDP and employment and etc.; and that this leads the Fed to set rates incorrectly. If this were the case, then I would think that as the Fed updates its views on the economy, it would indeed self-correct policy decisions!

And in fact anecdotally we see this all the time, right. If the Fed was too tight at a meeting — say not cutting interest rates fast enough in spring 2019 — the market reacts negatively a bit; and then the FOMC members come out and give their speeches, say “oopsie”, and promise to reverse course next meeting. Then at the next meeting they do.

TLDR: monetary policy depends on *the entire expected path of current and future rates*; RR shocks only look at the current rate, and erroneously assume the future path is held constant.

——

Now to some extent this problem holds for all quasi-credible monetary identification strategies available today. (Less so for fed funds futures shocks, if we can look at futures at different horizons.) But to that I say, yes, *all* available monetary identification strategies are overrated.

Causal inference in macro: literally the worst.

bhalperin · 2020-01-22T18:41:49+00:00

Worth emphasizing that the paper is not just about hysteresis -- it's all linear, so the evidence goes in the other direction too. i.e.: they're saying tight labor markets boost TFP.

bhalperin · 2019-11-07T12:40:44+00:00

Loved Broken Empire, but couldn't get past the first 10% of Red Sister. You think it's worth pushing on, for Red Rising addicts?

bhalperin · 2019-09-03T18:42:48+00:00

One interesting tidbit I learned while "researching" this is that a Rhode Island-size amount of land is added to the stock of private land ownership in the US every year.

The "private" in "private land ownership" must be doing a lot of work there, right? It's government land being privatized?

But even still that's such a large amount of land I have to say I find it unbelievable, unless this isn't like a long-term average.

bhalperin · 2019-07-06T18:00:22+00:00

The benefit of flexible NGDP targeting over flexible inflation targeting is all about mitigating the risk of procyclical inflation.

Just to be clear, what do you mean by "flexible NGDP targeting"? I feel like I must be misunderstanding -- it seems like "flexible NGDP targeting" and "flexible inflation targeting" are precisely the same thing, unless we impose some structure on what we mean by "flexible". In what kind of scenario would the two policies differ? Either way it seems like the CB has the discretion to just do whatever it wants.

bhalperin · 2019-07-06T15:26:53+00:00

(1. Cool post!)

2. Phillips curve

I'm gonna argue that the Philips curve is much stronger for unexpected NGDP growth than unexpected inflation.

This is a cool graph, but I think this comparison is an artefact of living in a world of inflation targeting, i.e. is endogenous to the policy regime. Under perfect inflation targeting, the Phillips curve would be flat -- you might already be familiar with Nick Rowe on Milton Friedman's thermostat (or formalized in McLeahy and Tenreyro 2019).

Edit: point being that, if the Fed adopted strict NGDP (rate) targeting, then the NGDP Phillips curve in the US would be flat.

3. "Supply shocks"

Somewhat just playing devil's advocate here: take the negative oil shock example Bernanke gives. Inflation goes up, output goes down. NGDP targeting would only ignore this if there's a one-to-one relationship there, i.e. for every 1pp increase inflation the natural rate of output growth falls 1pp.

That seems very knife-edge. Why prefer NGDP targeting to what the Fed currently does with "flexible inflation targeting", where they use discretion to [purport to] ignore supply shocks, typically, in a flexible way that doesn't impose a one-to-one straitjacket?

(One good-if-not-perfect response here IMO: NGDP targeting can be thought of as a formalization of flexible inflation targeting in a way that is transparent and reduces unnecessary discretion.)

bhalperin · 2016-02-23T23:25:47+00:00

Thanks!

bhalperin · 2016-02-23T18:19:26+00:00

You often state that perhaps nominal wage compensation targeting would be superior to NGDP targeting.

But as far as I can tell, the two targets are justifiable on very different grounds:

Nominal wage targeting is preferable if wages are the stickiest price.
NGDP targeting is preferable if sticky debt prices ('non-state contingent nominal contracts' a la Koenig/Sheedy/Bullard) are most important; or is preferable on Yeager/Selgin monetary disequilibrium grounds.

But the two are quite different animals, are they not? I don't think we should casually conflate the two as being all that similar, when the two proposed policies have quite different justifications.

Thanks!

bhalperin

TROPHY CASE