October 16, 2017
The personal savings rate in this graph does not behave as our life cycle model would have us expect. What else could be going on? One possibility is that we have more complex motives for saving that operate over different time horizons. In other words, the life cycle model is incomplete. Another is that this reflects an aggregation issue, even though individual households do try to smooth consumption. A combination of the two is to note that some people are cash flow constrained. That is, they have no assets and little or no access to credit. If their income falls and they want to keep their house or especially their car, they have to cut consumption a lot to make loan payments. That is, payments (savings!) remain high (the numerator), while income falls (the denominator), so the ratio, the savings rate, rises.
Can you think of additional savings motives? Do you save and then dissave money each month? Do you keep a positive balance in your checking account? Are your grandparents saving money?
Now what is true of households is not necessarily the case for other actors in our economy. State and local government turned into big dis-savers in 2010. What's going on here? Why the rebound – or is it merely a return to normal, and not offsetting behavior?
October 11, 2017
Among the "headline" inflation numbers, experienced observers look not at the overall monthly, seasonally-adjusted CPI but at the CPI less food and energy. You all know what's happened to energy, but you also know that it's temporary, until the effects of Harvey wear off. Food has such effects when a droughts or floods will hit a major crop area one year but not the next. So look at the graphs – not a formal statistical test, but a start! – and look for co-movements of these three indices. Don't see any? Maybe that's why the focus on "core" inflation.
October 11, 2017
This graph shows (i) the nominal interest rate, here on 3-month Treasury bills (which are bonds), (ii) the corresponding 3-month rate of inflation for the economy as a whole, in the form of the quarterly GDP deflator [which is thus much broader than the CPI measure of inflation, as befits an economy-wide interest rate], and (iii) the difference of the two, the "real" interest rate. Note that you can drag the bar at the bottom to narrow the time frame. What has happened these past 10 years?
This is the WordPress site for Prof Smitka's two sections of Econ 102, Macroeconomic Principles. The tabs give you the syllabus, schedule, and blogs for each of the two sections. I will continue to tweak the site to make sure posts and discussion are front and center.
If you've not looked at this site before, blogs are divided for the two section tabs – see the CGL Blog or Huntley Blog – for posts. Ones I write appear in both places, student posts appear only in the tab specific to their class.
Remember that you need to comment on the title of a post to make a comment. It works better if you're logged in, but I periodically check the site and can approve comments made while you're not logged in. Any classmate logged in should also be able to do that. However, your comment won't appear until a classmate or I does that.
The Professor's Blog, Autos & Economics
The Professor's Posts:
- Gender Employment (10/16/2017)
So far this term we have talked a lot about the employment factors and the process behind being unemployed. This graph above shows the respective employment to gender population rate in the United States over the last 65 years. There is a clear divide in the 50s' that gradually closes over time, not necessarily in one given year. World War II was during this time period causing male employment rate to drop, and female employment rate to rise. What are some of the economic factors and social factors that contribute to this closing? Do these social changes add to/are behind Levinson's ideology for "An Extraordinary Time?"
Looking towards the future, will the gap ever completely shut (in our lifetime/how long)? What does this mean for our economy and social climate going forward? Economically, what do we need to do to close this gap?
-Kyle Perel and Andrew Blair
- Cobalt prices (8/27/2017)
WordPress added various functions over the summer, and I'm testing the ability to embed graphs here. Why cobalt prices? Cobalt is a critical part of electric vehicle batteries, as cathodes rely upon nickel-chrome oxide crystals of various compositions (eg, along with manganese). It is a potential game-stopper, because enough is used that chrome content affects the overall price of a car. There are other chemistries ... in the lab. However, the path from lab to cost-effective volume production is at a minimum 20 years, and then adding capacity to meet the potential size of the market can (in the automotive case) take an additional two decades.
Now this isn't macroeconomics, but it is certainly a good exemplar of the challenges of turning exciting technologies into commercial realities. That IS of macroeconomic significance. Indeed, in the US context productivity is potentially the single most important contributor to economic growth over the 40-plus years your working life.
This however is a statement that needs both a theoretical foundation – what underlies growth? – and am empirical foundation – what are the numbers in the US context, and can we usefully project them for the next 4 decades? Making predictions is challenging, the moreso if they are about the distant future. Be skeptical about claims that pin that down to a precise number; be thoughtful about whether we can put likely bounds on what will happen, e.g., can we achieve 3% growth?
If I understand correctly, both these graphs should update automatically – come back in a month to see whether they still reflects Aug 26th data, which for cobalt happened to be the then historic peak of $60,750 per (metric) ton.
- Textbook options (8/10/2017)
I just sat through a webinar by Macmillan, here is a list of textbook options. The bookstore already has used copies at $150+ without any of the online add-ons. Look around, but buying one or another ebook and/or printable looseleaf version looks to be the least costly route. If so, there's no need to rush to buy the text in advance of the start of classes.
Macmillan Krugman & Wells Macro takes you to the textbook page and HERE jumps you to the Macmillan student bookstore page. They try to upsell, with various packages as per below. These packages do however appear to add value, unlike the add-ons I examined a few years back.
- just the Looseleaf which gives you an eBook version that you can print, at 5¢ a page that's cheaper than buying the physical book, esp as the first few chapters are a review of Micro
- the LaunchPad option includes an eBook. LaunchPad looks quite useful, consider adding it
- the slightly more expensive FlipIt + Launchpad + Looseleaf Sheets adds videos and other pre-class material that is well done. not a costly upgrade
- Sapling is a fairly sophisticated homework/quiz function. I think you can purchase after-the-fact, again, I'll update once I've checked with the bookstore as I don't want to mandate something after you've bought other components.
Amazon appears to be more expensive than any of the above options, and what they sell in general will not include access codes to LaunchPad / FlipIt / Sapling. However you may be able to find a used 3rd edition. I've not been able to find a Table of Contents online to confirm, but typically changes are modest (updated graphs, examples but no wholesale changes to content and order or presentation). If you find a ToC, email it to me and I'll confirm whether the old edition is adequate.
- Econ Snapshot (7/30/2017)
Econ Snapshot provides exactly that.