Caporale T. and Grier K. (2000) On why the sheriff still matters

Caporale, Tony and Kevin B. Grier (2000) Political Regime Change and the Real Interest Rate, Journal of Money, Credit and Banking, 32/3: 320-334.

Intro

A number of influential macroeconomic models, from Keynes to the monetarists, assume that real interest rates (i.e. discounted for inflation) change over time and are sensitive to their political environment, other words that they are policy variant. However this assumption has not been empirically tested, should this assumption be in fact contradicted, it would have important repercussions on these models’ viability. Moreover, the policy-variant hypothesis apparently conflicts with Eugene Fama’s conclusion that the mean of the real rate is essentially constant (p.322). The literature has found to match Fama’s views more closely with reality: real interest rates are “essentially constant over long periods of times but subject to infrequent mean shifts that are not related to policy regime changes”.

On cognitive functions interrupted (and the growth of two retail corporations in the US)

I haven’t been able to write much since the equivalent of a permanent shock affected my production function as well as its slope (break ups are always hard, being the dumpee is even worse, in the long run we are all dead).

I’m slowly regaining use of my cognitive functions. For I don’t want to leave Ben alone in this blog any longer, I thought of posting two maps showing the growth of two retail corporations in the US: Wal Mart (1962-2006) and Target (1962-2008).

This might interest fans of urban and regional economics (or not). Anyway, I promise that the quality of my contributions to this awesome blog will increase. Just have a little faith on me.

On the rise and decadence of Detroit (1950-2009)

Detroit, 1950-2009

Time Magazine has an interesting article by Daniel Okrent about Detroit’s fate. What was once known as America’s Arsenal of Democracy and became the fourth largest city in the United States, shows signs of accelerated decay. Unemployment rate is almost 30%, business is all but (almost) shutdown, and the town of Robocop has nothing but a gloomy future. What is relevant in Okrent’s piece is his discussion on the political economy of Detroit’s failure. Populist politicians, overconfident automobile companies and pampered unionized workers intertwined to make of this Michigan city a urban disaster. Check out the pics of Detroit’s remains by Sean Hemmerle. They’re quite scary.

Sylla R. (2008) How Alexander Hamilton founded America (singlehanded)

Sylla, Richard (2008) “The Political Economy of Early U.S. Financial Development”, in Political Institutions and Financial Development, ed. Stephen Haber, Douglass C. North and Barry R. Weingast. Stanford: Stanford University Press, 60-91.

In only seven years, from 1788 to 1795, the US underwent a dramatic financial revolution; starting from scratch and swiftly acquiring all the key components of a modern financial infrastructure. By the time the westward expansion and the industrial take-off were ready to swing into action, a strong financial system was there to back them (p.62). But what allowed the US to develop these instruments?

More on Lehman Brothers (1850-2008)

Before arcane CDOs imploded...

The Wall Street Journal presents a neat infographic on the new jobs of Lehman’s executives after its bankruptcy in September 2009.

Found via Chart Porn.

On Lehman Brothers

Those were happy times...

After the US Treasury and the Federal Reserve denied to rescue Lehman Brothers, the once almighty investment bank failed a year ago, beginning what would turn to be the mother of all financial crises.

Here is an exclusive Reuters interview with Richard Fuld, the president of Lehman at the time of its bankruptcy.

The New York Times has published three good pieces on the issue: ‘An Epidemic of Capital Destruction’, Tales From Lehman’s Crypt (showing the lives and fates of three former Lehman employees) and Lehman Had to Die So Global Finance Could Live. It also has a neat visualization showing the market capitalization of the biggest financial firms in Wall Street from October 9, 2007 to September 11, 2009.

The Economist’s Buttonwood has recently posted an interactive map showing global indebtedness, from 1999 to 2011. It’s worth visiting.

On [growing] American inequality

How much household income has received the top 0.01% of Americans since 1913?
Here’s a graph in Paul Krugman’s blog showing it.

The richest 0.01% individuals in America and their income

The graph was made with the tables and figures updated to 2007 prepared by Emmanuel Saez, Professor of Economics at the University of California at Berkeley and the most recent winner of the John Bates Clark medal.

Mexican Economic History courses online

Diego Rivera's Pan American Unity mural, Panel 3, City College of San Francisco.

I have finished the last details of the website for the Mexican Economic History course  at UNAM, of which I am a teaching assistant. Here is part I and here is part II. I’m pretty sure the bibliography in the course is a neat overview of recent economic history in this country.

By the way, here’s an article published in the Washington Poston about rising unequality in the USA by Gregory Clark, Professor of Economics at UC Davis and author of A Farewell to Alms. A Brief Economic History of the World.

A little bit of marketing history

Changes in the design of Coke and Pepsi logos, 1886-2009

Found via FlowingData.

By the way, there’s a Hartman Center for Sales, Advertising & Marketing History in Duke’s Special Collection Library and a Conference on Historical Analysis & Research in Marketing, if you want to know more about marketing history.

Web shopping: Lucas, Skidelsky, Statistics, Protectionism, and Male Purses (!)

• Robert Lucas, Professor of Economics at the University of Chicago and 1995 Nobel Prize in Economics, wrote a welcome defense of the predictive power of economics-as-it-is, on occasion of The Economist’s recent criticism on the discipline.
• Lord Robert Skidelsky, Keynes’s biographer and Emeritus Professor of Political Economy at the University of Warwick, also argues in defence of economics in spite of the Queen’s interpellation to the discipline. Here you can read it in the Financial Times and here in his personal website.
• An interesting article in the NYT on statistics as a profession that faces growing demand and even better salaries.
• A neat note in The Economist on “The Slide to Protectionism in the Great Depression: Who Succumbed and Why“, an NBER working paper by Barry Eichengreen, Professor of Economics and Political Science in the University of California at Berkeley, and Douglas Irwin, Professor of Arts and Sciences in Dartmouth College.
• An article in The Economist on a new Museum of Handbags and Purses in Amsterdam, with historical evidence of the non-metrosexuality of male purses. Here’s an excerpt:

The very first object on display—the oldest in the collection—proves that man bags are nothing new. It is a 16th-century pouch made of creamy white kid skin. The surface is decorated with rosettes and 18 tiny pockets of the same soft leather. It was probably made for a travelling merchant. At the time men’s clothes did not have pockets, and the bag provided a quickly accessible sorting system for multiple currencies, each pocket reserved for the coins of a particular city.

That’s it for now. I can’t wait to read Ben’s opinion on the WEHC in Utrecht.

Web shopping: Schwartz’s view of the Fed’s monetary policy

Professor Schwartz

Recently Michael Hirsh interviewed monetary historian Anna Schwartz for Newsweek. She doesn’t sound happy at all about the state of monetary policy in the face of the financial crisis. Excerpts:

Anna Schwartz is 93 and has been working at the same place since 1941. She’s that rarity in economics, or indeed any field: a living legend from another era who hasn’t lost a step mentally and who grasps everything that’s going on around her in the present. Or at least she seems to—but more on that later. Schwartz is one of the most renowned monetary scholars in the world. She’s the woman who authored, with Milton Friedman, The Monetary History of the United States—the book that launched the free-market counterattack against Keynesianism in the early ’60s. And now, as she surveys the wreckage of the last two years, Schwartz has one thought: if only Milton were here. “Ever since his death I have lamented the fact that he has not been around to express his views on what’s going on,” she told me the other day at her mid-Manhattan office at the National Bureau of Economic Research.

Web shopping: On Minsky revisited

"…the first thing we do when we discuss Prof. Minsky is show reverence."

Via Brad DeLong: Here is a nice entry by Interactive Investor on financial cycles and crisis. The chart above is theirs.

Also, don’t hesitate to read this (fake) Goldman Sachs Internal Memo.