Financial Economics

Archive for Financial Economics

Ac-cent-tchu-ate the Positive: The Fed’s Obscure Rule Change

Today at Mises I walk through my understanding of the Fed’s January 6 accounting rule change. My take is that the Fed’s description sounded like no big deal, because they implicitly focused on the treatment of earnings. What they didn’t mention was that their rule change shielded them from losses. One thing: Some analysts have […]

Calling Sumner’s Bluff on Stock Prices and Inflation Expectations

Yesterday I put up a lengthy post arguing that Scott Sumner and Paul Krugman were inexplicably claiming vindication from data that, if anything, I would have thought they would prefer to sweep under the rug. Specifically, since 2008 the stock market’s movements have been much more strongly correlated with the spread between nominal and TIPS […]

Murphy Lecture on (Rothbardian) Bank Mechanics

For the Mises Academy, we have incorporated “pre-recorded” lectures* to make the experience that much cooler for the paying students. (I.e. if you miss the weekly “live” lecture, you can watch this HQ version to get caught up.) Below is a sample, where I walk through the balance sheet basics of banking, from a Rothbardian […]

Potpourri

* You know how it wasn’t the Fed that caused the housing bubble, but those Chinese savers? Well Paul Krugman tells us it’s the same story with rising food prices–not the Fed’s fault, but those Chinese eaters. * Lew Rockwell has a really nice historical and psychological analysis of right-wing warhawks. (I.e. he offers plausible […]

Scott Sumner: Fool or Genius?

In a recent post, “Does Finance Deserve Its Earnings?” Scott Sumner writes: Many economists (even some relatively free market economists) have begun to question the high returns flowing to the financial industry in recent years. It’s not that people don’t understand that finance is important, or that it plays a critical role in our economy, […]

Doctor’s Orders

You know how when you were a purist, you couldn’t understand why Hollywood would ruin a perfectly great movie, by cranking out ever more variants of the same thing? Yet when you get older, you realize that as long as you can pull in more marginal revenue from yet another sequel, it makes sense.

How Much Faith Should We Put in Keynesian Models?

This is the first of a two-part series in which I join Jim Manzi’s search for justification for Keynesian models. For what it’s worth, one of the copy editors at Mises told me, “This one made me laugh a lot.”

Scott Sumner Assumes a Can Opener

It’s possible that I have blogged about this before, but in any event one of the things that bothers me about Scott Sumner’s proposal to have the Fed target nominal GDP (NGDP) is that he often argues almost from definitions, rather than the economics. This is analogous to a Keynesian justifying stimulus spending by pointing […]