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Symposium: Housing
"The Economic Implications of Housing Supply," by Edward Glaeser too Joseph Gyourko
In this essay, nosotros review the basic economics of housing render too the surgical operation of US housing markets to ameliorate empathize the distribution of habitation prices, household wealth, too the spatial distribution of people across markets. We employ a cost-based approach to jurist whether a housing marketplace is delivering appropriately priced units. Specifically, nosotros investigate whether marketplace prices (roughly) equal the costs of producing the housing unit. If so, the marketplace is well-functioning inward the feel that it efficiently delivers housing units at their production cost. The gap betwixt cost too production cost tin last understood every bit a regulatory tax. The available evidence suggests, but does non definitively prove, that the implicit revenue enhancement on evolution created yesteryear housing regulations is higher inward many areas than whatever reasonable negative externalities associated amongst novel construction. We hash out ii chief effects of developments inward housing prices: on patterns of household wealth too on the incentives for relocation to high-wage, high-productivity areas. Finally, nosotros plow to policy implications.
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"Homeownership too the American Dream," by Laurie S. Goodman too Christopher Mayer
For decades, it was taken every bit a given that an increased homeownership charge per unit of measurement was a desirable goal. But later the fiscal crises too Great Recession, inward which roughly viii i G 1000 homes were foreclosed on too nigh $7 trillion inward habitation equity was erased, economists too policymakers are re-evaluating the role of homeownership inward the American Dream. Many enquiry whether the American Dream should actually include homeownership or instead focus to a greater extent than on other aspects of upward mobility, too most admit that homeownership is non for everyone. We choose a detailed aspect at US homeownership from 3 unlike perspectives: 1) an international perspective, comparison US homeownership rates amongst those of other nations; 2) a demographic perspective, examining the correlation betwixt changes inward the US homeownership charge per unit of measurement betwixt 1985 too 2015 too factors similar age, race/ethnicity, education, household unit of measurement status, too income; 3) and, a fiscal benefits perspective, using national information since 2002 to calculate the internal charge per unit of measurement of render to homeownership compared to alternative investments. Our overall conclusion: homeownership is a valuable institution. While ii decades of policies inward the 1990s too early on 2000s may induce got set also much organized faith inward the benefits of homeownership, the pendulum seems to induce got swung also far the other way, too many at nowadays may induce got also piddling organized faith inward homeownership every bit component division of the American Dream.
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"Sand Castles earlier the Tide? Affordable Housing inward Expensive Cities," Gabriel Metcalf
This article focuses on cities amongst unprecedented economical success too a seemingly permanent crisis of affordable housing. In the expensive cities, policymakers expend corking amounts of unloose energy trying to convey downwards housing costs amongst subsidies for affordable housing too sometimes amongst rent control. But these efforts are undermined yesteryear planning decisions that brand housing for most people vastly to a greater extent than expensive than it has to last yesteryear restricting the render of novel units fifty-fifty inward the human face upward of growing demand. I get down yesteryear describing electrical flow housing policy inward the expensive tube areas of the United States. I hence present how this combination of policies affecting housing, despite internal contradictions, makes feel from the perspective of the political coalitions that tin shape inward a setting of fragmented local jurisdictions, local command over set down utilisation policies, too homeowner command over local government. Finally, I advise roughly to a greater extent than effective approaches to housing policy. My thought is that the effects of the formal affordable housing policies of expensive cities are quite pocket-size inward their impact when compared to the size of the problem—like sand castles earlier the tide. I volition debate that nosotros tin do more, potentially much more, to create subsidized affordable housing inward high-cost American cities. But to a greater extent than fundamentally, nosotros volition ask to rethink the broader laid of exclusionary set down utilisation policies that are the primary argue that housing inward these cities has locomote hence expensive. We cannot solve the job unless nosotros prepare the housing marketplace itself.
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Symposium: Friedman's Natural Rate Hypothesis later 50 Years
"Friedman's Presidential Address inward the Evolution of Macroeconomic Thought," by N. Gregory Mankiw too Ricardo Reis
Milton Friedman's presidential address, "The Role of Monetary Policy," which was delivered 50 years agone inward Dec 1967 too published inward the March 1968 number of the American Economic Review, is odd inward the outsized role it has played. What explains the huge influence of this work, exactly 17 pages inward length? One cistron is that Friedman addresses an of import topic. Another is that it is written inward simple, clear prose, making it an ideal improver to the reading lists of many courses. But what distinguishes Friedman's address is that it invites readers to reorient their thinking inward a fundamental way. It was an invitation that, later hearing the arguments, many readers chose to accept. Indeed, it is no exaggeration to thought Friedman's 1967 AEA presidential address every bit mark a turning quest inward the history of macroeconomic research. Our destination hither is to assess this contribution, amongst the do goodness of a half-century of hindsight. We hash out where macroeconomics was earlier the address, what insights Friedman offered, where researchers too primal bankers stand upward today on these issues, too (most speculatively) where nosotros may last heading inward the future.
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"Should We Reject the Natural Rate Hypothesis?" yesteryear Olivier Blanchard
Fifty years ago, Milton Friedman articulated the natural charge per unit of measurement hypothesis. It was composed of ii sub-hypotheses: First, the natural charge per unit of measurement of unemployment is independent of monetary policy. Second, in that location is no long-run trade-off betwixt the departure of unemployment from the natural charge per unit of measurement too inflation. Both propositions induce got been challenged. The newspaper reviews the arguments too the macro too micro evidence against each. It concludes that, inward each case, the evidence is suggestive, but non conclusive. Policymakers should locomote on the natural charge per unit of measurement hypothesis every bit their nil hypothesis, but locomote on an opened upward hear too set roughly weight on the alternatives.
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"Short-Run too Long-Run Effects of Milton Friedman's Presidential Address," by Robert E. Hall too Thomas J. Sargent
The centerpiece of Milton Friedman's (1968) presidential address to the American Economic Association, delivered inward Washington, DC, on Dec 29, 1967, was the striking proffer that monetary policy has no longer-run effects on the existent economy. Friedman focused on ii existent measures, the unemployment charge per unit of measurement too the existent involvement rate, but the message was broader—in the longer run, monetary policy controls only the cost level. We telephone yell upward this the monetary-policy invariance hypothesis. By 1968, macroeconomics had adopted the basic Phillips bend every bit the favored model of correlations betwixt inflation too unemployment, too Friedman used the Phillips bend inward the exposition of the invariance hypothesis. Friedman's presidential address was ordinarily interpreted every bit a recommendation to add together a previously omitted variable, the charge per unit of measurement of inflation anticipated yesteryear the public, to the right-hand side of what hence became an augmented Phillips curve. We believe that Friedman's chief message, the invariance hypothesis nigh long-term outcomes, has prevailed over the final half-century based on the wide sweep of evidence from many economies over many years. Subsequent inquiry has non been sort to the Phillips curve, but nosotros volition debate that Friedman's exposition of the invariance hypothesis inward terms of a 1960s-style Phillips bend is incidental to his chief message.
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Articles
"Exchange-Traded Funds 101 for Economists," yesteryear Martin Lettau too Ananth Madhavan
Exchange-traded funds (ETFs) stand upward for i of the most of import fiscal innovations inward decades. An ETF is an investment vehicle, amongst a specific architecture that typically seeks to rail the performance of a specific index. The start US-listed ETF, the SPDR, was launched yesteryear State Street inward Jan 1993 too seeks to rail the S&P 500 index. It is nevertheless today the largest ETF yesteryear far, amongst assets of $178 billion. Following the introduction of the SPDR, novel ETFs were launched tracking wide domestic too international indices, too to a greater extent than specialized sector, region, or province indexes. In recent years, ETFs induce got grown substantially inward assets, diversity, too marketplace significance, including substantial increases inward assets inward bond ETFs too so-called "smart beta" funds that rail sure enough investment strategies oft used yesteryear actively traded mutual funds too hedge funds. In this paper, nosotros get down yesteryear describing the construction too organization of exchange-traded funds, contrasting them amongst mutual funds, which are closed relatives of exchange-traded funds, describing the differences inward how ETFs operate too their potential advantages inward terms of liquidity, lower expenses, revenue enhancement efficiency, too transparency. We hence plow to concerns over whether the rising inward ETFs may heighten unexpected risks for investors or greater instability inward fiscal markets. While concerns over fiscal fragility are worth serious consideration, roughly of the mutual concerns are overstated, too for others, a number of rules too practices are already inward seat that offering a substantial margin of safety.
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"Frictions or Mental Gaps: What's Behind the Information We (Don't) Use too When Do We Care?" by Benjamin Handel too Joshua Schwartzstein
Consumers endure pregnant losses from non acting on available information. These losses stalk from frictions such every bit search costs, switching costs, too rational inattention, every bit good every bit what nosotros telephone yell upward mental gaps resulting from incorrect priors/worldviews, or relevant features of a job non existence top of mind. Most inquiry studying such losses does non empirically distinguish betwixt these mechanisms. Instead, nosotros present that most highly cited papers inward this surface area presume i machinery underlies consumer choices too assume away other potential explanations, or collapse many mechanisms together. We hash out the empirical difficulties that arise inward distinguishing betwixt unlike mechanisms, too roughly promising approaches for making progress inward doing so. We also assess when it is to a greater extent than or less of import for researchers to distinguish betwixt these mechanisms. Approaches that seek to seat truthful value from demand, without specifying mechanisms behind this wedge, are most useful when researchers are interested inward evaluating resources allotment policies that strongly steer consumers towards ameliorate options amongst regulation, traditional policy instruments, too defaults. On the other hand, agreement the precise mechanisms underlying consumer losses is essential to predicting the impact of machinery policies aimed primarily at reducing specific frictions or mental gaps without otherwise steering consumers. We brand the instance that papers engaging amongst these questions empirically should last clear nigh whether their analyses distinguish betwixt mechanisms behind poorly informed choices, too what that implies for the questions they tin answer. We introduce examples from several empirical contexts to highlight these distinctions.
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"Do Economists Swing for the Fences later Tenure?" yesteryear Jonathan Brogaard, Joseph Engelberg too Edward Van Wesep
Using a sample of all academics who transcend through top 50 economics too finance departments from 1996 through 2014, nosotros written report whether the granting of tenure leads faculty to pursue riskier ideas. We utilisation the extreme tails of ex-post citations every bit our stair out of take away chances too honor that both the number of publications too the part consisting of "home runs" peak at tenure too autumn steadily for a decade thereafter. Similar patterns agree for faculty at elite (top 10) institutions too for faculty who choose differing fourth dimension to tenure. We honor the reverse blueprint amidst poorly cited publications: their numbers rising post-tenure.
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"Retrospectives: Cost-Push too Demand-Pull Inflation: Milton Friedman too the "Cruel Dilemma," by Johannes A. Schwarzer
This newspaper addresses ii conflicting views inward the 1950s too 1960s nigh the inflation-unemployment tradeoff every bit given yesteryear the Phillips curve. Many economists at this fourth dimension emphasized the number of a seemingly unavoidable inflationary pressure level at or fifty-fifty below total employment. In contrast, Milton Friedman was convinced that total work too cost stability are non conflicting policy objectives. This dividing describe betwixt the ii camps ultimately rested on fundamentally unlike views nigh the inflationary process: For economists of the 1950s too 1960s cost-push forces are responsible for the apparent conflict betwixt cost stability too total employment. On the other hand, Friedman, who regarded inflation to last an solely monetary phenomenon, rejected the notion of ongoing inflationary cost-push pressures at total employment. Besides his emphasis on the total adjustment of inflation expectations, this rejection of cost-push theories of inflation, which implied a decoupling of the ii previously perceived incompatible policy objectives, was the other of import chemical constituent inward Friedman's assault on the Phillips bend tradeoff inward his 1967 presidential address to the American Economic Association.
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"Recommendations for Further Reading," yesteryear Timothy Taylor
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"Using JEP Articles every bit Course Readings? Tell Us About It!"
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