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Comment on Videos: More Than You Ever Wanted To Know About Elasticity… by Michael L.

Posted: Thu, 11 Mar 2010 06:32:12 +0000

BTW have you thought of doing macroeconomic videos? Maybe even some intermediate stuff of both aka indifference curves/ consumer choice.

Also, what about some calculus thrown in? I find it really helps to explain marginal costs/benefits since it’s essentially a derivative of total costs and benefits.
Comment on Videos: More Than You Ever Wanted To Know About Elasticity… by Michael L.

Posted: Thu, 11 Mar 2010 06:27:01 +0000

Or as Yoram says “blah blah blah.”
Comment on Homer Economicus? by econgirl

Posted: Thu, 11 Mar 2010 03:24:27 +0000

@ steve: I am hard-pressed to come up with an explanation of how I am missing some sort of cost that makes it prohibitively unattractive to reach into a drawer for a candy as opposed to get it from a jar on a desk. Differences in salience seems to be a more likely explanation.

@ Justin: no positive externalities, just three-eyed fish.

@ Scott: but I DID mention organ donation on Valentine’s Day, so there. =P

@ Tim: Thanks. It should be fixed now so y’all can see the paper.
Comment on Homer Economicus? by Tim Schilling

Posted: Wed, 10 Mar 2010 22:15:30 +0000

Econgirl,
There seems to be problem with the link in the second paragraph.

Loving the post, btw.
Comment on Videos: More Than You Ever Wanted To Know About Elasticity… by econgirl

Posted: Wed, 10 Mar 2010 22:04:10 +0000

=P

I am convinced that that was my subconscious trying to pretend that there is no such thing as macroeconomics.
Comment on Videos: More Than You Ever Wanted To Know About Elasticity… by Michael L.

Posted: Wed, 10 Mar 2010 21:30:47 +0000

Wow so’s it’s used extensively in microeconomics twice?! That’s crazy and crazy!
Comment on Apparently This Is What Economics Does To People… by What is comparative advantage? | Weakonomi¢s

Posted: Wed, 10 Mar 2010 18:13:36 +0000

[...] more about comparative advantage and its implications/applications on the world stage, check out the hottest economist on the planet and her two-part video on the subject. [...]
Comment on Homer Economicus? by Scott Ritchie

Posted: Wed, 10 Mar 2010 05:30:37 +0000

Yet another post about nudges, defaults, and opt-out systems where you fail to mention organ donation
Comment on Homer Economicus? by Justin Ross

Posted: Wed, 10 Mar 2010 01:38:56 +0000

I have just gone ahead and perched a laptop by my tv, so I can write as things appear. BTW, if you see something that is an example of a positive production externality, send it my way!
Comment on What The Fed Does, Now With Pictures… by steve

Posted: Tue, 09 Mar 2010 23:27:50 +0000

print money is semantic. but what is going to happen in a cashless society when money actually is “thin air” transferred on a plastic card?

the criticism should be that the Fed “creates money” where there is no value, watering down the value of everybody else’s money.

whether by printing or thin air its all semantics; its about giving something new a value by stealing that value from everything else.

the reply to the criticism is that it is all in the goal of stability. so long as they also reduce the money supply on occasion, it would be only borrowing the value from existing money, rather than stealing, because it is paid back when the money supply is reduced.
Comment on Homer Economicus? by steve

Posted: Tue, 09 Mar 2010 23:19:28 +0000

do you think this is because people get their estimate of transport cost wrong? alternatively maybe there is some information transaction cost missing; that walking accross the store involves considering all the alternatives, whereas people may consider also minimising this transaction cost and just purchasing what is close to the counter.

my expectation would be that consumers are still rational, it is us economists who have missed some extra cost, benefit, or risk factor in our analysis.
Comment on Homer Economicus? by econgirl

Posted: Tue, 09 Mar 2010 23:07:47 +0000

The findings of behavioral economists are even more interesting since in a lot of cases the transport costs and such that you refer to aren’t enough to “rationally” sway a lot of decisions, but they do anyway. Psychology is a funny thing…
Comment on Homer Economicus? by steve

Posted: Tue, 09 Mar 2010 22:37:45 +0000

I’m loving the simpsons econ. well done.

one example can teach so much.

it is an additional transport cost. but given this transport cost, the seller, Apu, will position products accordingly to maximise his revenue. products with inelastic demand will be further away, (probably fruit) and products with elastic demand (such as impulse buys of candy) will be positioned close to the counter; re economic geography. i.e. in this case, Apu takes a hit in revenue to help homer maximise well-being.

there would also be some interesting analysis on how to price these goods including the transport cost. the inelastic demand goods would be lower priced when further away but by a portion less than that required for elastic goods; re micro/supply and demand.

love it.
Comment on What The Fed Does, Now With Pictures… by Luke

Posted: Tue, 09 Mar 2010 15:12:15 +0000

If you want to help clarify the money creation role of the Fed, it might be worth describing the money supply effects of reserve requirements. Assuming a 10% reserve requirement, when the Fed buys one $1K T-bill, this effectively increases the real money supply by up to $90K (assuming banks aren’t hoarding reserves). The Treasury manages the supply of paper-money, to be sure, but their money-creation role is negligible when compared with the mechanics of the reserve requirements and the power to issue debt. Isn’t it semantic to claim that the Fed doesn’t “print money?”

Just my two cents, but I think it warrants a post. I’m also pretty sure I did my math wrong re: the money creation limit, and I know for a fact I am missing assumptions inherent in my analysis.
Comment on What The Fed Does, Now With Pictures… by Tim Schilling

Posted: Tue, 09 Mar 2010 10:44:46 +0000

Dave M.,

‘The criticism of the Fed is not that it “prints money.” It’s that it “creates money out of thin air.”’

You may be right about critics of the Fed. But after working at the Fed for 16 years, and observing many, many tour groups, I can tell you most people, even after their visit, believe the Fed prints the money. This is after repeated statements to the contrary, and after telling them that currency and coins are manufactured by branches of the Treasury (Bureau of Engraving and Printing and Bureau of the Mint respectively).

I agree with econgirl. Don’t think the Fed prints money.
Comment on What The Fed Does, Now With Pictures… by john jacob jingleheimer schmidt

Posted: Tue, 09 Mar 2010 04:22:38 +0000

“When the supply of money goes up, interest rates go down and vice versa.”

This assumes you refer to the demand for money, aka liquidity preference via Keynes, not the demand for loanable funds.

In that story, you have to assume that the liquidity effect will be greater than the income, price level, and expected inflation effects.

Does history offer any proof of the liquidity preference theory?

Well, plot the rate of growth in M2 and the interest rate on three-month T-Bills to see how the story actually plays out.
Comment on What The Fed Does, Now With Pictures… by Dave M.

Posted: Mon, 08 Mar 2010 23:18:11 +0000

The criticism of the Fed is not that it “prints money.” It’s that it “creates money out of thin air.” However, some folk have found the analogy of turning on the printing press useful in helping explain the concept to others.
Comment on What The Fed Does, Now With Pictures… by Stephan

Posted: Mon, 08 Mar 2010 21:42:21 +0000

Good post! Can you please explain to folks next time, that the US government can’t go broke because of debt given the fact it’s issuer of the US$ currency non-convertible.
Comment on What The Fed Does, Now With Pictures… by Get A Free Apple Ipad Without Breaking A Sweat | iPads, iPods, iPhones

Posted: Mon, 08 Mar 2010 21:32:16 +0000

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Comment on What The Fed Does, Now With Pictures… by econgirl

Posted: Mon, 08 Mar 2010 21:23:50 +0000

In my world, I think both of those things are true…which is why I’m trying to exploit economies of scale here.