Tuesday, December 21, 2010

Tuesday, December 14, 2010

Monday, December 13, 2010

Gelman on statistical significance:
The short story is that if you screen for statistical significance when estimating small effects, you will necessarily overestimate the magnitudes of effects, sometimes by a huge amount...

And corrections for multiple comparisons will not solve the problem: such adjustments merely shift the threshold without resolving the problem of overestimation of small effects.

Friday, December 10, 2010

Michael Mandel makes an interesting case for a VAT:
But in today’s global economy, any attempt to ‘fix’ the U.S. income tax system is fundamentally doomed. Financial and product markets are so deeply globally integrated that multinationals and wealthy individuals can easily recognize their income in lower-tax countries, if they choose.

One simple statistic: In 2009 40% of U.S. imports and exports was ‘related-party trade’ –”trade by U.S. companies with their subsidiaries abroad as well as trade by U.S. subsidiaries of foreign companies with their parent companies.” That means companies are effectively trading with themselves, so they can choose which side of the transaction books the profits.

Saturday, December 04, 2010

You can't read enough Scott Sumner:
There are actually two Republican parties in America. One wants to do real deregulation, to actually reduce the role of the government in the economy. The other Republican party (which I fear is the more powerful one) wants to do “deregulation,” to remove all constraints on business, banking, the medical industrial complex, energy, for-profit colleges, etc, so that they can systematically loot the taxpayers by taking advantage of the enormous moral hazard that has seeped into almost all aspects of our modern regulated economy.

The Dems are more likely to want to try to tame the beast, but then keep passing laws that make the economy even more riddled with moral hazard. Not much of a choice these days.

Thursday, December 02, 2010

The Irish will not accept this:
The Irish “program” solves exactly nothing – it simply kicks the can down the road. A public debt that will now top out at around 130 per cent of GDP has not been reduced by a single cent. The interest payments that the Irish sovereign will have to make have not been reduced by a single cent, given the rate of 5.8% on the international loan. After a couple of years, not just interest but also principal is supposed to begin to be repaid. Ireland will be transferring nearly 10 per cent of its national income as reparations to the bondholders, year after painful year.
A likely prediction:
It is not technocratic economists who will win the day and pull us out of our cul-de-sac, but angry Irishmen and Spaniards who challenge, on moral terms, the right of German bankers to impose vast deadweight costs on current activity because they lent greedily into what might easily have been recognized as a property and credit bubble.
Tangentially, I've often wondered what would have happened if McCain or Obama had opposed TARP in fall 2008. (I'm not saying TARP was the worse US bail-out, just an example. TARP hasn't lost nearly as much money as people expected. The GSE bailouts will surely cost US taxpayers far more.)