Tulipmania

Though it is always mentioned first among the list of obvious manias, no serious effort has ever been expended to investigate the market fundamentals that might have driven the tulip speculation. This paper compiles time series on individual tulip prices and examines market fundamentals potentially driving prices. Most of the "tulipmania" was not obvious madness. High but rapidly depreciating prices for rare bulbs is a typical pattern in the flower bulb industry. Only the last month of the speculation, during which common bulb prices increased rapidly and crashed, remains as a potential bubble.

Peter Garber's article was in the Journal of Political Economy in 1989, but I just learned about it. You'll need access to JSTOR to read the whole thing, which I haven't. On the other hand, This PDF in which Maurits van der Veen's explains his disagreement is accessible to the public.

Labels: bubbles in everything

- posted by S @ 12:35 AM

 
GDP

The change in real private inventories added 1.94 percentage points to the fourth-quarter change in real GDP after subtracting 1.35 percentage points from the third-quarter change. Private businesses increased inventories $56.0 billion in the fourth quarter, following a decrease of $2.0 billion in the third quarter and an increase of $39.1 billion in the second.

The release.

	I 08	II 08	III 08	IV 08	I 09	II 09	III 09	IV 09	I 10	II 10	III 10	IV 10	I 11	II 11	III 11	IV 11
Gross domestic product	-1.8	1.3	-3.7	-8.9	-6.7	-.7	1.7	3.8	3.9	3.8	2.5	2.3	.4	1.3	1.8	2.8
Services	.67	-.20	-.78	-.49	-1.07	-.76	-.04	.21	.47	1.18	.75	.61	.36	.87	.90	.10
Nondurable goods	-.53	.35	-.89	-.92	-.15	-.23	.31	.48	.75	.30	.47	.67	.25	.04	-.09	.27
Durable goods	-.84	-.23	-1.01	-2.12	.19	-.29	1.39	-.36	.70	.56	.63	1.20	.85	-.42	.42	1.07
Change in private inventories	-.66	-.14	-.73	-1.54	-2.66	-.58	.21	3.93	3.10	.79	.86	-1.79	.32	-.28	-1.35	1.94
Fixed investment	-1.36	-.80	-1.91	-4.05	-5.09	-2.26	.13	-.42	.15	2.12	.28	.88	.15	1.07	1.52	.41
Net exports of goods and services	.38	2.00	.79	-.12	2.44	2.21	-.59	.15	-.97	-1.94	-.68	1.37	-.34	.24	.43	-.11
Government spending	.58	.34	.85	.35	-.33	1.21	.28	-.18	-.26	.77	.20	-.58	-1.23	-.18	-.02	-.93

Labels: gdp

- posted by dWj @ 11:01 AM

 
FOMC statement
The FOMC statement, as revised:

Information received since the Federal Open Market Committee met in November December suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to be increasing less rapidly has slowed, and the housing sector remains depressed. Inflation has moderated since earlier in the year been subdued in recent months, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect a moderate pace of expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation will settle, over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today expects to maintain a highly accommodative stance for monetary policy.  In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.  Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.

Possibly moved phrases:
 to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through 

Labels: FOMC

- posted by dWj @ 1:15 PM

 
Income Inequality and Empirical Economics
I found this podcast less interesting for the findings presented (recent increases in income inequality are overstated) than for the issues addressed.

In particular, attempting to measure purchasing power by looking at before-tax reported income and dividing by the CPI is far from perfect. They also discuss the fact that looking at all demographic subsamples of households could have rising incomes while overall household incomes go down if the poorer subsamples grow in size. Of course, the average incomes of the subsamples aren't necessarily more important numbers than the average income of the total population, depending on precisely what question you're getting at, but it's tempting and wrong to infer from the aggregate number that some of the subsamples must have the same sign. An issue that wasn't addressed in this podcast that I've seen raised elsewhere is that rich people and poor people buy different things; measuring real income for a subset of the population by using a basket of goods for the whole population (or a different population) has problems beyond the ones raised in the podcast.

More generally, empirical proxies usually correspond somewhat with the theoretical concepts they are meant to represent, but they almost never do so perfectly. In this case CPI is specifically designed to measure inflation, and it does, but imperfectly. It irks me when a paper says, "we're going to use firm size as a proxy for liquidity" - they aren't usually quite that stupid, but I'm making up an example - and then refers to "liquidity" through the experimental portion of the paper when the author means "market cap".

If you want an introduction to the sort of thinking you have to do to do empirical social science research, that podcast would be a good place to start.
- posted by S @ 3:04 PM

 
FOMC
The FOMC statement, as revised:

Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. Nonetheless, recent While indicators point to continuing weakness some improvement in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed. Inflation appears to have has moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term , and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are Strains in global financial markets continue to pose significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

Possibly moved phrases:

 in global financial markets

Labels: FOMC

- posted by dWj @ 10:25 PM

 
FOMC
The FOMC statement, as revised:

Information received since the Federal Open Market Committee met in August September indicates that economic growth remains slow strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Recent Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest increased at a somewhat faster pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect some pickup in the a moderate pace of recovery economic growth over coming quarters but and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction

.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support was Charles L. Evans, who supported additional policy accommodation at this time.

Possibly moved phrases:
 principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities
to promote a stronger economic recovery in a context of price stability
 of rolling over maturing Treasury securities at auction
 investment in equipment and software 

Labels: FOMC

- posted by dWj @ 12:37 PM

 
GDP

	IV 07	I 08	II 08	III 08	IV 08	I 09	II 09	III 09	IV 09	I 10	II 10	III 10	IV 10	I 11	II 11	III 11
Gross domestic product	1.7	-1.8	1.3	-3.7	-8.9	-6.7	-.7	1.7	3.8	3.9	3.8	2.5	2.3	.4	1.3	2.5
Services	.58	.67	-.20	-.78	-.49	-1.07	-.76	-.04	.21	.47	1.18	.75	.61	.36	.87	1.38
Nondurable goods	.06	-.53	.35	-.89	-.92	-.15	-.23	.31	.48	.75	.30	.47	.67	.25	.04	.04
Durable goods	.19	-.84	-.23	-1.01	-2.12	.19	-.29	1.39	-.36	.70	.56	.63	1.20	.85	-.42	.31
Change in private inventories	-.77	-.66	-.14	-.73	-1.54	-2.66	-.58	.21	3.93	3.10	.79	.86	-1.79	.32	-.28	-1.08
Fixed investment	-.81	-1.36	-.80	-1.91	-4.05	-5.09	-2.26	.13	-.42	.15	2.12	.28	.88	.15	1.07	1.60
Net exports of goods and services	2.22	.38	2.00	.79	-.12	2.44	2.21	-.59	.15	-.97	-1.94	-.68	1.37	-.34	.24	.22
Government spending	.23	.58	.34	.85	.35	-.33	1.21	.28	-.18	-.26	.77	.20	-.58	-1.23	-.18	.00

Labels: gdp

- posted by dWj @ 8:41 AM