Items of interest and curiousity, as detailed by an economics professor. Specializing in macroeconomic topics. Please note that the focus on The Wall Street Journal is because that is required reading for my classes.

Wednesday, October 22, 2003

I asked a question on Exam 1 that referred to the Washington Consensus: the list of ten basic policies that Latin American governments are recommended to pursue to clean up their economies. I had no trouble finding this at the time I wrote the question, but we all had trouble finding it later on. This is the cite that I found so easily the first time around. It sounds stupid in retrospect, but the trick was to just put "washington consensus" into Google and this site comes up at the top of the list. My apologies for sending some of you on a wild goose chase.

Thursday, October 16, 2003

In November 2002, I put together a random list of who I thought might win the "Nobel Prize" in economics over the next few years. The 2003 winners are on there, and I even picked them to win together, although I argue below that they should have won seperately.
Here is a discussion by an economics professor of why Engle and Granger deserved the "Nobel prize" in economics. He also includes some recommendations for prizes in the near future - the award cannot be made posthumously, so he's got some seniors on his list. One was also my secondary guess for this year's prize.
The 2003 "Nobel Prize" in economics was awarded to Robert Engle and C.W.J. Granger. They were on everyone's long list, but not everyone's short list. I thought they'd win eventually, but a few years down the road. I'm also a bit surprised that Engle won with Granger, and for the topics they did. They both work in time series analysis, and Granger is really the seminal force in that field. Engle, along with Christopher Sims and P.C.B. Phillips really built on work that Granger did. The other two will get Nobel prizes in the next few years, and perhaps Engle got his this time because he actually wrote with Granger. Another issue is the ideas that they were awarded for: ARCH and cointegration. Engle dreamed up ARCH (autoregressive conditional heteroscedasticity), and it is really a fantastic concept worthy of its own Nobel prize. My view is that it is a great technique that needs to be better connected to theory, and that it they should have waited a decade or so. But that's just my opinion. Cointegration is a much more fully developed and critical concept, that is much more tightly integrated with economic theory. It absolutely deserves a Nobel prize, and it is not too soon either. What bugs me is that it is built on an earlier and more primitive idea called integration that should have gotten an award too (for those of you who took my ECON 3020 class, integration is option 2 for how economic and financial variables grow). Cointegration couldn't be an issue of importance until Dickey and Fuller had developed a test for integration, and Nelson and Plosser had shown that it characterized most economic variables. If I had my way, Granger should have gotten an award by himself, followed by Dickey, Fuller and Phillips to share one, Engle and Sims to get them on their own, and Nelson and Plosser to maybe not get one at all.

Thursday, October 02, 2003

Of course, other people can predict Nobel prize winners and here are the predictions from Thomson publishing (one of the big three textbook publishers). I wouldn't really disagree with any of these, although I think that if Robert Barro get the prize, that it will be jointly awarded with Tom Sargent.
The Nobel Prize in Economic Science for 2003 will be awarded this Wednesday October 8th. Here is a list of hopefuls that was put together over ten years ago. Most of the people on this list have yet to win a Nobel Prize. My money is either on Jagdish Bhagwati or Arnold Harberger. Bhagwati is the foremost academic proponent of free trade, and Nobel prize committees like to send messages to the greater public. Giving the hard time that the global economy is having moving forward on free trade, I think they may choose him. For sentimentality, they might choose Harberger, who is quite old, and not well (Nobel prizes cannot be awarded posthumously). He is known for the concept of "Harberger triangles"; the graphical device for showing how changes in policies can cause producers and consumers to lose surplus. The best known example of this is the deadweight loss that everyone learns about in their first month of principles of microeconomics.

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