Tuesday, March 31, 2009
Monday, March 30, 2009
Do you know this about Tenure?
See Econjeff's comments on the article: What I Wish I'd Known About Tenure , where there are plenty of discussion over the topic.
Ease high unemployment rate in China
From All things considered, NPR
In China, the case of a college sophomore who was elected village chief has focused attention on a new policy to encourage educated youths to serve in rural areas.
The policy's aim is to improve local governance and develop the rural economy, while easing high unemployment among college graduates.
Several times during the past century, young Chinese have been at the center of social movements aimed at reforming China's rural society. They often found it more resistant to change than they thought.
More details at:
College Sophomore Takes Helm Of Chinese Village
In China, the case of a college sophomore who was elected village chief has focused attention on a new policy to encourage educated youths to serve in rural areas.
The policy's aim is to improve local governance and develop the rural economy, while easing high unemployment among college graduates.
Several times during the past century, young Chinese have been at the center of social movements aimed at reforming China's rural society. They often found it more resistant to change than they thought.
More details at:
College Sophomore Takes Helm Of Chinese Village
If You're So Smart, Why Aren't You Rich?
See this interesting paper on Econometrica:
If You're So Smart, Why Aren't You Rich?Belief Selection in Complete and Incomplete Markets,
by Lawrence Blume and David Easley
This paper provides an analysis of the asymptotic properties ofPareto optimal consumption allocations in a stochastic general equilibriummodel with heterogeneous consumers. In particular we investigate the marketselection hypothesis, that markets favor traders with more accurate beliefs.We show that in any Pareto optimal allocation whether each consumer van-ishes or survives is determined entirely by discount factors and beliefs. Sinceequilibrium allocations in economies with complete markets are Pareto opti-mal, our results characterize the limit behavior of these economies. We showthat, all else equal, the market selects for consumers who use Bayesian learn-ing with the truth in the support of their prior and selects among Bayesiansaccording to the size of their parameter space. Finally, we show that ineconomies with incomplete markets these conclusions may not hold. Withincomplete markets payo functions can matter for long run survival, andthe market selection hypothesis fails.
If You're So Smart, Why Aren't You Rich?Belief Selection in Complete and Incomplete Markets,
by Lawrence Blume and David Easley
This paper provides an analysis of the asymptotic properties ofPareto optimal consumption allocations in a stochastic general equilibriummodel with heterogeneous consumers. In particular we investigate the marketselection hypothesis, that markets favor traders with more accurate beliefs.We show that in any Pareto optimal allocation whether each consumer van-ishes or survives is determined entirely by discount factors and beliefs. Sinceequilibrium allocations in economies with complete markets are Pareto opti-mal, our results characterize the limit behavior of these economies. We showthat, all else equal, the market selects for consumers who use Bayesian learn-ing with the truth in the support of their prior and selects among Bayesiansaccording to the size of their parameter space. Finally, we show that ineconomies with incomplete markets these conclusions may not hold. Withincomplete markets payo functions can matter for long run survival, andthe market selection hypothesis fails.
Albert Rees in the eyes of Ashenfelter and Pencavel
Ashenfelter (at Princeton) and Pencavel (at Stanford) wrote an overview of Albert Rees' contribution and his role in Chicago economic group. Rees' contribution in Labor economics, market clearing, full employment, retirement of college professors, etc. are briefly reviewed. See the article at: Albert Rees and the "Chicago School of Economics", Princeton.
Sunday, March 29, 2009
Passion from the White House
Obama’s Man on the Budget: Just 40 and Going Like 60 at NYT
To appreciate Peter R. Orszag's way of living.
...
His own health care conversion occurred when a doctor told him several years ago that he was at risk for cardiovascular problems. Mr. Orszag changed his diet. Each day he eats the same egg whites for breakfast and salad topped with chicken for dinner, all from the White House mess.
He also began training for marathons, sometimes startling colleagues by appearing in their offices at day’s end in head-to-toe spandex.
Now he keeps two books on his desk: the teachings of Epictetus, a Greek Stoic philosopher who espoused dispassion and self-discipline, and “The Strenuous Life,” by Theodore Roosevelt, an ode to pushing oneself as hard as possible.
But even Mr. Orszag admits worry about whether he can accomplish anything near what he hopes.
“If you look at the tenure of O.M.B. director in the past, it doesn’t seem to be very long,” he said on his early-morning ride to the White House, a 5 o’clock shadow already creeping over his face.
To appreciate Peter R. Orszag's way of living.
...
His own health care conversion occurred when a doctor told him several years ago that he was at risk for cardiovascular problems. Mr. Orszag changed his diet. Each day he eats the same egg whites for breakfast and salad topped with chicken for dinner, all from the White House mess.
He also began training for marathons, sometimes startling colleagues by appearing in their offices at day’s end in head-to-toe spandex.
Now he keeps two books on his desk: the teachings of Epictetus, a Greek Stoic philosopher who espoused dispassion and self-discipline, and “The Strenuous Life,” by Theodore Roosevelt, an ode to pushing oneself as hard as possible.
But even Mr. Orszag admits worry about whether he can accomplish anything near what he hopes.
“If you look at the tenure of O.M.B. director in the past, it doesn’t seem to be very long,” he said on his early-morning ride to the White House, a 5 o’clock shadow already creeping over his face.
Economic joy with the Young
See the picture posted on Mankiw's blog: The Youngest Member of the Pigou Club
Love economics in all ways it can be loved!
Love economics in all ways it can be loved!
Lost in words
See the CV of MONIKA PIAZZESI, top five young economists in 10 ys or less.
Also, see the whole list of top young economists ranked at IDEAS.
Also, see the whole list of top young economists ranked at IDEAS.
Thursday, March 26, 2009
Feel Better About Yourself
Three Easy Ways to Feel Better About Yourself by Thomas A. Bradley
Cited from greatoffer4u.com
Sometimes, no matter how positive our attitudes are in general, we can all fall victim to feeling trapped inside some negative feelings...especially about ourselves. It's all too easy to feel that we're not "good enough", or that those around us are happier and more successful than we are. At times, this can often lead us to feel and express anger...often directed at no one in particular, or at the first person or thing we come in contact with. Maybe it's just a little thing that sets us off, like someone cutting us off in traffic, or maybe making a joke at our expense...a joke that, in any other circumstance we would probably laugh at as well.
There are probably a thousand different ways to deal with these feelings. For me, there are three ways that work the best and fastest. Three ways that make me feel better about myself and ease the tension I'm feeling. They're not magical...they won't transform you into the world's most popular person...and they're not the be-all-end-all of self contentment. But, they can certainly give you feelings of accomplishment and control over your negative emotions...at least they do for me.
1. When Angered, Think About the Situation
When I find myself getting upset or out of sorts, the first thing I do is stop and see just how the intensity of my feelings at the moment match up to the reason for my feelings. For example, if I find myself agitated by someone asking me a lot of questions while I'm busy, the first thing I do is ask myself - "what if I were in the position of the person asking the questions?" I try to step outside of my feelings at that moment and see how it feels on the other side of the situation. If I find that, in this situation, I really am too busy, I calm myself down, and ask the person needing my attention, if they could wait for a few minutes. The trick, which really isn't a trick at all, is to realize that the situation is so trivial, that anger or agitation is not an appropriate response. In short - try to tailor the emotional response to the given situation.
2. Adding to Your Feelings of Self-Worth and Accomplishment
Believe it or not, this is not a very difficult thing to do. You've probably seen those bumper stickers out there that read "Practice Random Acts of Kindness". Well, to be honest with you...it works. It's relatively simple to do, and it makes you feel good about yourself. But more importantly, while feeling good about yourself...you're actually accomplishing something for someone else at the same time. It doesn't have to be a world changing event. In my case, I make sure that my cover-band performs several benefits a year for causes that I believe in. I still get to enjoy playing, and at the same time I'm contributing to the success of an organization or idea I support.
If you don't have a band...don't worry. The process is still the same. Maybe your neighbor needs help shoveling his driveway, or needs their lawn mowed while they're away on vacation. Maybe the guy on the street REALLY does need that extra quarter or dollar he's asking for. In the scheme of things, what have you got to lose by giving it to him? Your donation to him was an honest one...whether or not he needs it, or is scamming you, is a matter for his conscience and feelings of self-worth. You can't lose.
There are more ways to do this than I can mention, but you get the idea. It doesn't take much to make someone smile, and in the process, you just might find yourself smiling too.
3. Do Something Outside of Your Daily Pattern that Challenges You
Try to find something that you do by habit on a daily basis and change it...even if it's only for a day...or half a day. The idea is to conquer something that you normally give in to. Again...it doesn't have to be a world changing event. As an example, The first thing I like to do when I get up is light a cigarette and down a cup of coffee (I live on both...I used to be A+ blood type...now I'm just 100% Columbian). So, when I need to challenge myself...I skip the coffee and cigarette and grab a bottle of water instead. Believe me, my mind and body are not happy about this...but I tell myself that, "Hell, I can wait the hour and a half it takes me to get to work before I have that first cup of coffee...and it certainly won't do me any harm to hold off on that cigarette until my first break." It's not an impossible goal...I'm not asking myself to quit entirely (although that would be a good thing), I'm just asking myself to exercise a little more control over my life than normal. And when I succeed I feel I've accomplished something...and that the rest of the day has more potential.
Hopefully, you don't smoke, (I'm certainly not advocating that), but I'm sure there are little things in your daily routine that you can set your sights on and overcome...even if only for a little while. Success, not matter how small, is success.
The bottom line is this...there are ways of changing your life and controlling your emotions that can actually make you feel better about yourself without demanding that you reinvent yourself from scratch. It seems all too easy, and too much of a clich? to say that within yourself are the answers to some of your problems. But the truth is...some of the answers really are there. Take a look inside, and see if it isn't true.
Cited from greatoffer4u.com
Sometimes, no matter how positive our attitudes are in general, we can all fall victim to feeling trapped inside some negative feelings...especially about ourselves. It's all too easy to feel that we're not "good enough", or that those around us are happier and more successful than we are. At times, this can often lead us to feel and express anger...often directed at no one in particular, or at the first person or thing we come in contact with. Maybe it's just a little thing that sets us off, like someone cutting us off in traffic, or maybe making a joke at our expense...a joke that, in any other circumstance we would probably laugh at as well.
There are probably a thousand different ways to deal with these feelings. For me, there are three ways that work the best and fastest. Three ways that make me feel better about myself and ease the tension I'm feeling. They're not magical...they won't transform you into the world's most popular person...and they're not the be-all-end-all of self contentment. But, they can certainly give you feelings of accomplishment and control over your negative emotions...at least they do for me.
1. When Angered, Think About the Situation
When I find myself getting upset or out of sorts, the first thing I do is stop and see just how the intensity of my feelings at the moment match up to the reason for my feelings. For example, if I find myself agitated by someone asking me a lot of questions while I'm busy, the first thing I do is ask myself - "what if I were in the position of the person asking the questions?" I try to step outside of my feelings at that moment and see how it feels on the other side of the situation. If I find that, in this situation, I really am too busy, I calm myself down, and ask the person needing my attention, if they could wait for a few minutes. The trick, which really isn't a trick at all, is to realize that the situation is so trivial, that anger or agitation is not an appropriate response. In short - try to tailor the emotional response to the given situation.
2. Adding to Your Feelings of Self-Worth and Accomplishment
Believe it or not, this is not a very difficult thing to do. You've probably seen those bumper stickers out there that read "Practice Random Acts of Kindness". Well, to be honest with you...it works. It's relatively simple to do, and it makes you feel good about yourself. But more importantly, while feeling good about yourself...you're actually accomplishing something for someone else at the same time. It doesn't have to be a world changing event. In my case, I make sure that my cover-band performs several benefits a year for causes that I believe in. I still get to enjoy playing, and at the same time I'm contributing to the success of an organization or idea I support.
If you don't have a band...don't worry. The process is still the same. Maybe your neighbor needs help shoveling his driveway, or needs their lawn mowed while they're away on vacation. Maybe the guy on the street REALLY does need that extra quarter or dollar he's asking for. In the scheme of things, what have you got to lose by giving it to him? Your donation to him was an honest one...whether or not he needs it, or is scamming you, is a matter for his conscience and feelings of self-worth. You can't lose.
There are more ways to do this than I can mention, but you get the idea. It doesn't take much to make someone smile, and in the process, you just might find yourself smiling too.
3. Do Something Outside of Your Daily Pattern that Challenges You
Try to find something that you do by habit on a daily basis and change it...even if it's only for a day...or half a day. The idea is to conquer something that you normally give in to. Again...it doesn't have to be a world changing event. As an example, The first thing I like to do when I get up is light a cigarette and down a cup of coffee (I live on both...I used to be A+ blood type...now I'm just 100% Columbian). So, when I need to challenge myself...I skip the coffee and cigarette and grab a bottle of water instead. Believe me, my mind and body are not happy about this...but I tell myself that, "Hell, I can wait the hour and a half it takes me to get to work before I have that first cup of coffee...and it certainly won't do me any harm to hold off on that cigarette until my first break." It's not an impossible goal...I'm not asking myself to quit entirely (although that would be a good thing), I'm just asking myself to exercise a little more control over my life than normal. And when I succeed I feel I've accomplished something...and that the rest of the day has more potential.
Hopefully, you don't smoke, (I'm certainly not advocating that), but I'm sure there are little things in your daily routine that you can set your sights on and overcome...even if only for a little while. Success, not matter how small, is success.
The bottom line is this...there are ways of changing your life and controlling your emotions that can actually make you feel better about yourself without demanding that you reinvent yourself from scratch. It seems all too easy, and too much of a clich? to say that within yourself are the answers to some of your problems. But the truth is...some of the answers really are there. Take a look inside, and see if it isn't true.
Tips for feeling better about yourself
A friend's depression reminds me to find something valuable regarding to this topic. Wish you can feel better about yourself. The following is cited from: The Happiness Project
First came the self-esteem movement. Then came the backlash to the self-esteem movement.
It’s pretty clear that repeating “I’m the greatest” or winning a trophy along with every other participant isn’t a good way to build self-esteem.
At the same time, it’s a rare person who isn’t sometimes – or often – plagued with painful self-doubt.
When you’re feeling lousy about yourself, what can you do to feel better?
Here’s the secret.
To build your self-respect…do something worthy of your respect. To like yourself better…do something that makes you likable. Here are some suggestions:
1. Do a good deed. This is as selfish as it is selfless; you’ll benefit as much as the person you’re helping. When I’m feeling low, thinking about the time I helped some friends get a book contract makes me feel much better than recalling every compliment I’ve ever received. In the same vein…
2. Make small gestures of good citizenship. Bring your old magazines to the gym so other people can read them. Help someone with a stroller. My current favorite: picking up trash that other people have left on the subway.
3. Keep a resolution. Not only will you benefit from exercising or cleaning out your garage, you’ll also get a boost from the mere fact that you made a commitment and stuck to it.
4. Become an expert. There’s great satisfaction in mastery. Pick a subject that interests you, and dig in deep: the American Revolution, the works of Chekhov, wine.
5. Boost your energy. Studies show that when you’re feeling energetic, you’re much more likely to feel good about yourself. For a quick shot of energy, take a brisk ten-minute walk (outside, if possible, where sunlight will also stimulate your brain), listen to some great music, or talk to a friend.
6. Challenge yourself physically. This tip doesn’t work for me, but I know that many people feel great after para-sailing, white-water rafting, bungee-jumping, or rollercoaster-riding.
First came the self-esteem movement. Then came the backlash to the self-esteem movement.
It’s pretty clear that repeating “I’m the greatest” or winning a trophy along with every other participant isn’t a good way to build self-esteem.
At the same time, it’s a rare person who isn’t sometimes – or often – plagued with painful self-doubt.
When you’re feeling lousy about yourself, what can you do to feel better?
Here’s the secret.
To build your self-respect…do something worthy of your respect. To like yourself better…do something that makes you likable. Here are some suggestions:
1. Do a good deed. This is as selfish as it is selfless; you’ll benefit as much as the person you’re helping. When I’m feeling low, thinking about the time I helped some friends get a book contract makes me feel much better than recalling every compliment I’ve ever received. In the same vein…
2. Make small gestures of good citizenship. Bring your old magazines to the gym so other people can read them. Help someone with a stroller. My current favorite: picking up trash that other people have left on the subway.
3. Keep a resolution. Not only will you benefit from exercising or cleaning out your garage, you’ll also get a boost from the mere fact that you made a commitment and stuck to it.
4. Become an expert. There’s great satisfaction in mastery. Pick a subject that interests you, and dig in deep: the American Revolution, the works of Chekhov, wine.
5. Boost your energy. Studies show that when you’re feeling energetic, you’re much more likely to feel good about yourself. For a quick shot of energy, take a brisk ten-minute walk (outside, if possible, where sunlight will also stimulate your brain), listen to some great music, or talk to a friend.
6. Challenge yourself physically. This tip doesn’t work for me, but I know that many people feel great after para-sailing, white-water rafting, bungee-jumping, or rollercoaster-riding.
Tuesday, March 24, 2009
Calls for a model
Do we have a model to investigate the effects of running hours for stores on their profits? See the arguments at baltimoresun:
Some area malls shorten their hours By Andrea K. Walker andrea.walker@baltsun.com
8:45 PM EDT, March 23, 2009
Some area malls shorten their hours By Andrea K. Walker andrea.walker@baltsun.com
8:45 PM EDT, March 23, 2009
Monday, March 23, 2009
who will users blame?
Youtube removed a lot of music videos from its website, which is obviously bad news for music lovers. However, who is to blame?
See that article at NYT:
As Rights Clash on YouTube, Some Music Vanishes By TIM ARANGO
Published: March 22, 2009
See that article at NYT:
As Rights Clash on YouTube, Some Music Vanishes By TIM ARANGO
Published: March 22, 2009
“Is the new bull market starting?”
Some stimulating news from Asia stock market, although analysts remain divided regarding how the market will be.
See the article at NYT:
Asian Stocks Rise on Hopes for Treasury Plan, by By BETTINA WASSENER
Published: March 23, 2009
See the article at NYT:
Asian Stocks Rise on Hopes for Treasury Plan, by By BETTINA WASSENER
Published: March 23, 2009
A nascent sign of recovery
The U.S. economy witnessed its expected performance, as "Wall Street got the news it wanted on the economy's biggest problems — banks and housing — and celebrated by hurtling the Dow Jones industrials up nearly 500 points."
More at NPR news:
Stocks Surge On Bank Plan, Rise In Home Sales by The Associated Press, NPR.org, March 23, 2009
More at NPR news:
Stocks Surge On Bank Plan, Rise In Home Sales by The Associated Press, NPR.org, March 23, 2009
Popularity of Economics (2)
Econjeff also dashes about this topic and gives other reasons that economics is so popular:
Goldilock Chooses a Major
Goldilock Chooses a Major
Sunday, March 22, 2009
Teaching economics during rough times
Mankiw offered an excellent explantion regarding economic teaching of relevant economic crisis prevailing in our daily life.
"In other words, whether you want to help an ailing grandmother or an ailing economy, you need start by mastering some first principles, which do not change in response to current events."
There are indeed principles in economics (and in life too) that do not change over time:
Principles of Economics, Rap Version
See his reply at:
Teaching amidst a Crisis
"In other words, whether you want to help an ailing grandmother or an ailing economy, you need start by mastering some first principles, which do not change in response to current events."
There are indeed principles in economics (and in life too) that do not change over time:
Principles of Economics, Rap Version
See his reply at:
Teaching amidst a Crisis
Saturday, March 21, 2009
Popularity of Economics
As evidenced by the ongoing economic crisis and rise in unemployment rate, economics is far from being understood by our economists or politicians. Yet, economics as a major has been and is, probably will be in the future too, very popular in college. DAVID COLANDER, chair of the economics department at Middlebury College, noticed the 'Just right' feature of economics in college majors.
My personal experience in economics field has documented its popularity. And this has been the case since 1980s, as we have so many economists, especially econometrians, who transferred into economics from other fields of scientific research, like mathematics, physics, chemistry, computer science, statistics and so on. My teaching experience also shows similar pictures. My two years teaching at Wuhan University and one year stay at South-central University of Nationalities in China helped me clarify the point. There are so many students in econ department everywhere and there are students who are dreaming of joining the field since their failure in getting into the major when entering college.
The current cloud in economic uncertainty will, I believe, incent more people to jump into the field to make money. Most of those people would be quantative analysist. The failure of current techniques employed in economics forecasting, especially in financial market, will denifitely encourage the application of more complicated, more elaborate, more realistic economic models as fundamentals to facilitate our understanding in economics, rather than blame the use of econometric approach as the root of evil. Those applied economists, mostly business people who are profit intended, would come to blame if they are keeping on using the simplest models that only take into account of variance-covariance structure of economic variables. The work of econometrians deserve attention now, for sure. And it is this fact that lead to my belief in the expansion of economic research, instead of tearing apart the econometric role in the understanding of the complicated economic world.
See DAVID COLANDER's comentary at:
Economics Is the 'Just Right' Liberal-Arts Major
My personal experience in economics field has documented its popularity. And this has been the case since 1980s, as we have so many economists, especially econometrians, who transferred into economics from other fields of scientific research, like mathematics, physics, chemistry, computer science, statistics and so on. My teaching experience also shows similar pictures. My two years teaching at Wuhan University and one year stay at South-central University of Nationalities in China helped me clarify the point. There are so many students in econ department everywhere and there are students who are dreaming of joining the field since their failure in getting into the major when entering college.
The current cloud in economic uncertainty will, I believe, incent more people to jump into the field to make money. Most of those people would be quantative analysist. The failure of current techniques employed in economics forecasting, especially in financial market, will denifitely encourage the application of more complicated, more elaborate, more realistic economic models as fundamentals to facilitate our understanding in economics, rather than blame the use of econometric approach as the root of evil. Those applied economists, mostly business people who are profit intended, would come to blame if they are keeping on using the simplest models that only take into account of variance-covariance structure of economic variables. The work of econometrians deserve attention now, for sure. And it is this fact that lead to my belief in the expansion of economic research, instead of tearing apart the econometric role in the understanding of the complicated economic world.
See DAVID COLANDER's comentary at:
Economics Is the 'Just Right' Liberal-Arts Major
Tuesday, March 17, 2009
Unemployment rate as high as 11 per cent in Michigan
The reported unemployment rate in Michigan has reached its new stand, as released by NPR. Listen to the interview with Michigan Democratic Governor Jennifer Granholm, who has led the state since 2003 at NPR:
Michigan Gov.: Job Loss 'Our Own Katrina'
Hope that the re-training program would help the unemployed get a job in the emergent industry in the near future.
Michigan Gov.: Job Loss 'Our Own Katrina'
Hope that the re-training program would help the unemployed get a job in the emergent industry in the near future.
Data Envelopment Analysis
The popular approach adopted in economics and management science to evaluate the efficiency of programs/decision making units is much more powerful than you might have thought, especially with the introduction of statistical inference approach to DEA.
See the article below for the statistical aspects of DEA, by Leopold Simar in JPA.
Aspects of statistical analysis in DEA-type frontier models
See the article below for the statistical aspects of DEA, by Leopold Simar in JPA.
Aspects of statistical analysis in DEA-type frontier models
Monday, March 16, 2009
Second thoughts on bootstrap
By Bradly Efron, Statistical Science, 2003, Vol. 18, No. 2, 135–140
Efron (1979) proposes the bootstrap method which has been extensively used in statistics, applied statistics, econometrics and other branches of scientific research. At present, it is a method that is not only known for its capacity of simulating the unknown distribution functions of the statitics of interest. Efron noticed that the popular statitical method, jackknife, is a first order approximation of the proposed bootstrap and also linked the new method with cross validation. Papers in the references of Efron (2003) attached marked the important progress that has been made on bootstrap over time.
See the paper at Statistical Science
Efron (1979) proposes the bootstrap method which has been extensively used in statistics, applied statistics, econometrics and other branches of scientific research. At present, it is a method that is not only known for its capacity of simulating the unknown distribution functions of the statitics of interest. Efron noticed that the popular statitical method, jackknife, is a first order approximation of the proposed bootstrap and also linked the new method with cross validation. Papers in the references of Efron (2003) attached marked the important progress that has been made on bootstrap over time.
See the paper at Statistical Science
Saturday, March 14, 2009
Ranking of Economics Departments
Two economists from Department of Economics, Weber State University, Ogden, UT 84408-3807, USA published a paper on Southern Economic Journal 2008, 74(4), 971–996, that reports the ranking for UCR as 56th for overall economic research, as 33rd for quatitative economics, 16th for urburn economics.
See the report at: Ranking Economics Departments
See the report at: Ranking Economics Departments
Friday, March 13, 2009
Black Friday on 13th?
See the economic loss due to this belief:
"Some 1 in 15 Americans associates the day with ill luck. Apparently enough people call in sick, postpone trips or delay major purchases that the economy loses almost a billion dollars. Henry Ford, for one, declined to do business on Friday the 13th."
More about the article: Who's Afraid Of Friday The 13th? by Paul Hoffman, at NPR
"Some 1 in 15 Americans associates the day with ill luck. Apparently enough people call in sick, postpone trips or delay major purchases that the economy loses almost a billion dollars. Henry Ford, for one, declined to do business on Friday the 13th."
More about the article: Who's Afraid Of Friday The 13th? by Paul Hoffman, at NPR
Wednesday, March 11, 2009
Economists disagree, but who is more confident regarding Obama's policy?
See the below editorial at Washton Times:
EDITORIAL: Too rosy for even a Nobel Prize winner?
...
Harvard economics Professor Greg Mankiw thinks that Mr. Obama's growth forecasts are overly optimistic and that the federal deficit will be a lot larger than Mr. Obama thinks. He was chastised by Princeton's Paul Krugman, a Nobel Prize winner in economics, who on his New York Times blog claims that Mankiw can only make the predictions that he does because of "more than a bit of deliberate obtuseness." He titled his post on Mankiw, "Roots of Evil."
Last Wednesday, Mankiw responded to Krugman's attacks by suggesting: "Well, Paul, if you are so confident in this forecast, would you like to place a wager on it and take advantage of my wickedness?" Krugman has still not responded. It seems even a Nobel Prize winner isn't willing to lay money on Mr. Obama's rosy projections.
EDITORIAL: Too rosy for even a Nobel Prize winner?
...
Harvard economics Professor Greg Mankiw thinks that Mr. Obama's growth forecasts are overly optimistic and that the federal deficit will be a lot larger than Mr. Obama thinks. He was chastised by Princeton's Paul Krugman, a Nobel Prize winner in economics, who on his New York Times blog claims that Mankiw can only make the predictions that he does because of "more than a bit of deliberate obtuseness." He titled his post on Mankiw, "Roots of Evil."
Last Wednesday, Mankiw responded to Krugman's attacks by suggesting: "Well, Paul, if you are so confident in this forecast, would you like to place a wager on it and take advantage of my wickedness?" Krugman has still not responded. It seems even a Nobel Prize winner isn't willing to lay money on Mr. Obama's rosy projections.
Nonparametrics becomes the focus
See the following interesting discussion about nonparametrics in economics at Marginal Revolution:
Why aren't non-parametric statistics more popular in economics?
EconJEFF also responds:
Nonparametrics in economics
Why aren't non-parametric statistics more popular in economics?
EconJEFF also responds:
Nonparametrics in economics
Monday, March 9, 2009
Losing A Job May Help You Find Yourself
Day to day, at NPR, March 9, 2009
Losing a job can mean more than a loss of income. For some people, it means re-thinking who they are. Two Chicago women are trying to overcome the sense of moral failure that can accompany unemployment.
Listen it at: Losing A Job May Help You Find Yourself
See appreciate the women's love for their jobs.
Losing a job can mean more than a loss of income. For some people, it means re-thinking who they are. Two Chicago women are trying to overcome the sense of moral failure that can accompany unemployment.
Listen it at: Losing A Job May Help You Find Yourself
See appreciate the women's love for their jobs.
Mathematical Model and the Mortgage Mess
By DENNIS OVERBYE
Published: March 9, 2009, NYT
See the article at:
Mathematical Model and the Mortgage Mess
Published: March 9, 2009, NYT
See the article at:
Mathematical Model and the Mortgage Mess
They Tried to Outsmart Wall Street
NEW THEORIES After spending 20 years in the study of physics, Emanuel Derman applied his thinking to stock options.
By DENNIS OVERBYE
Published: March 9, 2009 , NYT
...
They are known as “quants” because they do quantitative finance. Seduced by a vision of mathematical elegance underlying some of the messiest of human activities, they apply skills they once hoped to use to untangle string theory or the nervous system to making money.
...
As Dr. Derman put it in his book “My Life as a Quant: Reflections on Physics and Finance,” “In physics there may one day be a Theory of Everything; in finance and the social sciences, you’re lucky if there is a useable theory of anything.”
...
“It’s not like building a bridge. If you’re right more than half the time you’re winning the game.” There are a thousand physicists on Wall Street, she estimated, and many, she said, talk nostalgically about science. “They sold their souls to the devil,” she said, adding, “I haven’t met many quants who said they were in finance because they were in love with finance.”
...
Physicists began to follow the jobs from academia to Wall Street in the late 1970s, when the post-Sputnik boom in science spending had tapered off and the college teaching ranks had been filled with graduates from the 1960s. The result, as Dr. Derman said, was a pipeline with no jobs at the end. Things got even worse after the cold war ended and Congress canceled the Superconducting Supercollider, which would have been the world’s biggest particle accelerator, in 1993.
...
The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock.
The price of a stock option, Dr. Derman explained, can be interpreted as a prediction by the market about how much bounce, or volatility, stock prices will have in the future.
But it gets more complicated than that. For example, markets are not perfectly efficient — prices do not always adjust to right level and people are not perfectly rational. Indeed, Dr. Derman said, the idea of a “right level” is “a bit of a fiction.” As a result, prices do not fluctuate according to Brownian motion. Rather, he said: “Markets tend to drift upward or cascade down. You get slow rises and dramatic falls.”
One consequence of this is something called the “volatility smile,” in which options that benefit from market drops cost more than options that benefit from market rises.
Another consequence is that when you need financial models the most — on days like Black Monday in 1987 when the Dow dropped 20 percent — they might break down. The risks of relying on simple models are heightened by investors’ desire to increase their leverage by playing with borrowed money. In that case one bad bet can doom a hedge fund. Dr. Merton and Dr. Scholes won the Nobel in economic science in 1997 for the stock options model. Only a year later Long Term Capital Management, a highly leveraged hedge fund whose directors included the two Nobelists, collapsed and had to be bailed out to the tune of $3.65 billion by a group of banks.
Afterward, a Merrill Lynch memorandum noted that the financial models “may provide a greater sense of security than warranted; therefore reliance on these models should be limited.”
That was a lesson apparently not learned.
...
Dr. Taleb has waged war against one element of modern economics in particular: the assumption that price fluctuations follow the familiar bell curve that describes, say, IQ scores or heights in a population, with a mean change and increasingly rare chances of larger or smaller ones, according to so-called Gaussian statistics named for the German mathematician Friedrich Gauss.
But many systems in nature, and finance, appear to be better described by the fractal statistics popularized by Benoit Mandelbrot of IBM, which look the same at every scale. An example is the 80-20 rule that 20 percent of the people do 80 percent of the work, or have 80 percent of the money. Within the blessed 20 percent the same rule applies, and so on. As a result the odds of game-changing outliers like Bill Gates’s fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous, Dr. Taleb said.
“I think physicists should go back to the physics department and leave Wall Street alone,” he said.
When Dr. Taleb asked someone to come up and debate him at a meeting of risk managers in Boston not too long ago, all he got was silence. Recalling the moment, Dr. Taleb grumbled, “Nobody will argue with me.”
Dr. Derman, who likes to say it is the models that are simple, not the world, maintains they can be a useful guide to thinking as long as you do not confuse them with real science — an approach Dr. Taleb scorned as “schizophrenic.”
Dr. Derman said, “Nobody ever took these models as playing chess with God.”
Do some people take the models too seriously? “Not the smart people,” he said.
Quants say that they should not be blamed for the actions of traders. They say they have been in the forefront of pointing out the models’ shortcomings.
“I regard quants to be the good guys,” said Eric R. Weinstein, a mathematical physicist who helps run the Natron Group, a hedge fund in Manhattan. “We did try to warn people,” he said. “This is a crisis caused by business decisions. This isn’t the result of pointy-headed guys from fancy schools who didn’t understand volatility or correlation.”
...
Quants, in short, are part of the system. “They get paid, a Faustian bargain everybody makes,” said Satyajit Das, a former trader and financial consultant in Australia, who likes to refer to them as “prisoners of Wall Street.”
“What do we use models for?” Mr. Das asked rhetorically. “Making money,” he answered. “That’s not what science is about.”
The recent debacle has only increased the hunger for scientists on Wall Street, according to Andrew Lo, an M.I.T. professor of financial engineering who organized the workshop there, with a panel of veteran quants.
The problem is not that there are too many physicists on Wall Street, he said, but that there are not enough. A graduate, he told the young recruits, can make $75,000 to $250,000 a year as a quant but can also be fired if things go sour. He said an investment banker had told him that Wall Street was not looking for Ph.D.’s, but what he called “P.S.D.s — poor, smart and a deep desire to get rich.”
He ended his presentation with a joke that has been told around M.I.T. for a long time, but seemed newly relevant; “What do you call a nerd in 10 years? Boss.”
By DENNIS OVERBYE
Published: March 9, 2009 , NYT
...
They are known as “quants” because they do quantitative finance. Seduced by a vision of mathematical elegance underlying some of the messiest of human activities, they apply skills they once hoped to use to untangle string theory or the nervous system to making money.
...
As Dr. Derman put it in his book “My Life as a Quant: Reflections on Physics and Finance,” “In physics there may one day be a Theory of Everything; in finance and the social sciences, you’re lucky if there is a useable theory of anything.”
...
“It’s not like building a bridge. If you’re right more than half the time you’re winning the game.” There are a thousand physicists on Wall Street, she estimated, and many, she said, talk nostalgically about science. “They sold their souls to the devil,” she said, adding, “I haven’t met many quants who said they were in finance because they were in love with finance.”
...
Physicists began to follow the jobs from academia to Wall Street in the late 1970s, when the post-Sputnik boom in science spending had tapered off and the college teaching ranks had been filled with graduates from the 1960s. The result, as Dr. Derman said, was a pipeline with no jobs at the end. Things got even worse after the cold war ended and Congress canceled the Superconducting Supercollider, which would have been the world’s biggest particle accelerator, in 1993.
...
The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock.
The price of a stock option, Dr. Derman explained, can be interpreted as a prediction by the market about how much bounce, or volatility, stock prices will have in the future.
But it gets more complicated than that. For example, markets are not perfectly efficient — prices do not always adjust to right level and people are not perfectly rational. Indeed, Dr. Derman said, the idea of a “right level” is “a bit of a fiction.” As a result, prices do not fluctuate according to Brownian motion. Rather, he said: “Markets tend to drift upward or cascade down. You get slow rises and dramatic falls.”
One consequence of this is something called the “volatility smile,” in which options that benefit from market drops cost more than options that benefit from market rises.
Another consequence is that when you need financial models the most — on days like Black Monday in 1987 when the Dow dropped 20 percent — they might break down. The risks of relying on simple models are heightened by investors’ desire to increase their leverage by playing with borrowed money. In that case one bad bet can doom a hedge fund. Dr. Merton and Dr. Scholes won the Nobel in economic science in 1997 for the stock options model. Only a year later Long Term Capital Management, a highly leveraged hedge fund whose directors included the two Nobelists, collapsed and had to be bailed out to the tune of $3.65 billion by a group of banks.
Afterward, a Merrill Lynch memorandum noted that the financial models “may provide a greater sense of security than warranted; therefore reliance on these models should be limited.”
That was a lesson apparently not learned.
...
Dr. Taleb has waged war against one element of modern economics in particular: the assumption that price fluctuations follow the familiar bell curve that describes, say, IQ scores or heights in a population, with a mean change and increasingly rare chances of larger or smaller ones, according to so-called Gaussian statistics named for the German mathematician Friedrich Gauss.
But many systems in nature, and finance, appear to be better described by the fractal statistics popularized by Benoit Mandelbrot of IBM, which look the same at every scale. An example is the 80-20 rule that 20 percent of the people do 80 percent of the work, or have 80 percent of the money. Within the blessed 20 percent the same rule applies, and so on. As a result the odds of game-changing outliers like Bill Gates’s fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous, Dr. Taleb said.
“I think physicists should go back to the physics department and leave Wall Street alone,” he said.
When Dr. Taleb asked someone to come up and debate him at a meeting of risk managers in Boston not too long ago, all he got was silence. Recalling the moment, Dr. Taleb grumbled, “Nobody will argue with me.”
Dr. Derman, who likes to say it is the models that are simple, not the world, maintains they can be a useful guide to thinking as long as you do not confuse them with real science — an approach Dr. Taleb scorned as “schizophrenic.”
Dr. Derman said, “Nobody ever took these models as playing chess with God.”
Do some people take the models too seriously? “Not the smart people,” he said.
Quants say that they should not be blamed for the actions of traders. They say they have been in the forefront of pointing out the models’ shortcomings.
“I regard quants to be the good guys,” said Eric R. Weinstein, a mathematical physicist who helps run the Natron Group, a hedge fund in Manhattan. “We did try to warn people,” he said. “This is a crisis caused by business decisions. This isn’t the result of pointy-headed guys from fancy schools who didn’t understand volatility or correlation.”
...
Quants, in short, are part of the system. “They get paid, a Faustian bargain everybody makes,” said Satyajit Das, a former trader and financial consultant in Australia, who likes to refer to them as “prisoners of Wall Street.”
“What do we use models for?” Mr. Das asked rhetorically. “Making money,” he answered. “That’s not what science is about.”
The recent debacle has only increased the hunger for scientists on Wall Street, according to Andrew Lo, an M.I.T. professor of financial engineering who organized the workshop there, with a panel of veteran quants.
The problem is not that there are too many physicists on Wall Street, he said, but that there are not enough. A graduate, he told the young recruits, can make $75,000 to $250,000 a year as a quant but can also be fired if things go sour. He said an investment banker had told him that Wall Street was not looking for Ph.D.’s, but what he called “P.S.D.s — poor, smart and a deep desire to get rich.”
He ended his presentation with a joke that has been told around M.I.T. for a long time, but seemed newly relevant; “What do you call a nerd in 10 years? Boss.”
Reviving the Dream
By BOB HERBERT
Published: March 9, 2009 ,NYT
Working families were in deep trouble long before this megarecession hit. But too many of the public officials who should have been looking out for the middle class and the poor were part of the reckless and shockingly shortsighted alliance of conservatives and corporate leaders that rigged the economy in favor of the rich and ultimately brought it down completely.
...
The American dream was alive and well and seemingly unassailable. But somehow, following the oil shocks, the hyperinflation and other traumas of the 1970s, Americans allowed the right-wingers to get a toehold — and they began the serious work of smothering the dream.
...
The right-wingers were crafty: You smother the dream by crippling the programs that support it, by starving the government of money to pay for them, by funneling the government’s revenues to the rich through tax cuts and other benefits, by looting the government the way gangsters loot legitimate businesses and then pleading poverty when it comes time to fund the services required by the people.
The anti-tax fanatic Grover Norquist summed the matter up nicely when he famously said, “Our goal is to shrink the government to the size where you can drown it in a bathtub.” Only they didn’t shrink the government, they enlarged it and turned its bounty over to the rich.
Now, with the economy in free fall and likely to get worse, Americans — despite their suffering — have an opportunity to reshape the society, and then to move it in a fairer, smarter and ultimately more productive direction. That is the only way to revive the dream, but it will take a long time and require great courage and sacrifice.
The right-wingers do not want that to happen, which is why they are rooting so hard for President Obama’s initiatives to fail. They like the direction that the country took over the past 30 years. They’d love to do it all again.
Published: March 9, 2009 ,NYT
Working families were in deep trouble long before this megarecession hit. But too many of the public officials who should have been looking out for the middle class and the poor were part of the reckless and shockingly shortsighted alliance of conservatives and corporate leaders that rigged the economy in favor of the rich and ultimately brought it down completely.
...
The American dream was alive and well and seemingly unassailable. But somehow, following the oil shocks, the hyperinflation and other traumas of the 1970s, Americans allowed the right-wingers to get a toehold — and they began the serious work of smothering the dream.
...
The right-wingers were crafty: You smother the dream by crippling the programs that support it, by starving the government of money to pay for them, by funneling the government’s revenues to the rich through tax cuts and other benefits, by looting the government the way gangsters loot legitimate businesses and then pleading poverty when it comes time to fund the services required by the people.
The anti-tax fanatic Grover Norquist summed the matter up nicely when he famously said, “Our goal is to shrink the government to the size where you can drown it in a bathtub.” Only they didn’t shrink the government, they enlarged it and turned its bounty over to the rich.
Now, with the economy in free fall and likely to get worse, Americans — despite their suffering — have an opportunity to reshape the society, and then to move it in a fairer, smarter and ultimately more productive direction. That is the only way to revive the dream, but it will take a long time and require great courage and sacrifice.
The right-wingers do not want that to happen, which is why they are rooting so hard for President Obama’s initiatives to fail. They like the direction that the country took over the past 30 years. They’d love to do it all again.
A Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad
By PETER S. GOODMAN
Published: March 8, 2009, NYT
As the world is seized with anxiety in the face of a spreading financial crisis, the one place having a considerably easier time attracting money is, perversely enough, the same place that started much of the trouble: the United States.
...
“Virtually all of the low-income countries are in very serious trouble,” said Eswar Prasad, a former official at the International Monetary Fund and a senior fellow at the Brookings Institution, the liberal-leaning research organization in Washington.
He went on: “This is the third wave of the financial crisis. Low-income countries are getting hit very hard. The flow of private capital to the emerging market has dried up.”
...
“Depreciation isn’t enough now to offset the global contraction,” said Mr. Setser, noting that export powers like Japan, Korea, Taiwan and Brazil have had rapid declines in sales in recent months. “Everybody’s looking vulnerable. All commodity exporters are potentially subject to currency crises.”
...
“It’s a huge safe haven effect,” said William R. Cline, a senior fellow at the Peterson Institute for International Economics in Washington. “The basic assumption that people are making is that the U.S. government will never default on its debt.”
...
“The fact that we can still borrow at lower interest rates is saving us from much more severe adjustments,” Mr. Rogoff said. “We’re really still staring down an abyss.”
Published: March 8, 2009, NYT
As the world is seized with anxiety in the face of a spreading financial crisis, the one place having a considerably easier time attracting money is, perversely enough, the same place that started much of the trouble: the United States.
...
“Virtually all of the low-income countries are in very serious trouble,” said Eswar Prasad, a former official at the International Monetary Fund and a senior fellow at the Brookings Institution, the liberal-leaning research organization in Washington.
He went on: “This is the third wave of the financial crisis. Low-income countries are getting hit very hard. The flow of private capital to the emerging market has dried up.”
...
“Depreciation isn’t enough now to offset the global contraction,” said Mr. Setser, noting that export powers like Japan, Korea, Taiwan and Brazil have had rapid declines in sales in recent months. “Everybody’s looking vulnerable. All commodity exporters are potentially subject to currency crises.”
...
“It’s a huge safe haven effect,” said William R. Cline, a senior fellow at the Peterson Institute for International Economics in Washington. “The basic assumption that people are making is that the U.S. government will never default on its debt.”
...
“The fact that we can still borrow at lower interest rates is saving us from much more severe adjustments,” Mr. Rogoff said. “We’re really still staring down an abyss.”
Lessons from the Great Depression for Economic Recovery in 2009
By Christina D. Romer
Council of Economic Advisers
To be presented at the Brookings Institution,Washington, D.C.,
March 9, 2009
In the last few months, I have found myself uttering the words “worst since the Great Depression” far too often: the worst twelve month job loss since the Great Depression; the worst financial crisis since the Great Depression; the worst rise in home foreclosures since the Great Depression. In my previous life, as an economic historian at Berkeley, one of the things I studied was the Great Depression. I thought it would be useful to reflect on that episode and what lessons it holds for policymakers today. In particular, what can we learn from the 1930s that will help us to end the worst recession since the Great Depression?
To read the whole presentation at:
Lessons from the Great Depression for Economic Recovery in 2009
Council of Economic Advisers
To be presented at the Brookings Institution,Washington, D.C.,
March 9, 2009
In the last few months, I have found myself uttering the words “worst since the Great Depression” far too often: the worst twelve month job loss since the Great Depression; the worst financial crisis since the Great Depression; the worst rise in home foreclosures since the Great Depression. In my previous life, as an economic historian at Berkeley, one of the things I studied was the Great Depression. I thought it would be useful to reflect on that episode and what lessons it holds for policymakers today. In particular, what can we learn from the 1930s that will help us to end the worst recession since the Great Depression?
To read the whole presentation at:
Lessons from the Great Depression for Economic Recovery in 2009
Sunday, March 8, 2009
Half-Space
In mathematics, half space is defined as the part of the space that was seperated by a hyperplane. For a simple example, in the two-dimensional Euclidean space, x-y space, the half space is the portion on either side of a straight line, say, 2x+y=3. The concept of closed half space has been used to garrantee the existence of the solution to some optimization problems. It also finds its application in economics to show the existence of general equilibrium and to construct the equilibrium price vector in a competivie Walrus economy.
In China, however, a word with similar meaning has been used to emphasize the importance of WOMEN in our mundane world, that is, BANBIANTIAN. It is used to say that "women is the half space." And we have to, and actually are proud to, admit this fact that without women's being there, the world is not the one that we could ever imagine.
First, I'd like to take this special day to show my respect to all those women who are and will be mothers. They are the most great people in the world. I deeply respect their selfishless love for their children, their helpful assitance to their husband to make family a wonderful place for the young and the old, their wise and kind cultivation of their children into knowledgable, responsible and integral citizens.
Also, I'd like to show my deep respect for those women who are working day and night to make their work an art, to bring the fruitful meaning to our lives, to expand the world that we have known and contribute to the improvement of the society towards equality, justice, love and boundfulness. I'd like to show my deep respect for those women who are doing their own best to achieve the dreams of life and bring us inexhaustible spiritual encouragement all the time, for those women who are dovoting their life into philanthropy works and help to save those who are in trouble and make a difference for the individual life. Specially, I'd like wish all the women teachers and nurses a happy womens day, without whose being, the young will not be nurtured and the sick will not be taken care of.
I deeply respect for those women who are devoting thier lives into scientific research, where it is rather a lonely journey for them. Yet, they have lead us to a better position in understanding the facts behind our daily or scientific observations. The tremendous amount of time that they spend on and the amount of feeling that they have diverted from familty to scientific research deserves special notice of our society.
In the world of econometric research, I deeply respect all those women econometricians who are making the researches more fruitiful and interesting. I'd like to show my special respect for those women econometricians I know, Xiaohong Chen, Yoosoon Chang, Serena Ng, and Gloria Gozalaz-Rivera, and also for others that I did not have a chance to know their work.
Wish all women (girls) a happy holiday!
In China, however, a word with similar meaning has been used to emphasize the importance of WOMEN in our mundane world, that is, BANBIANTIAN. It is used to say that "women is the half space." And we have to, and actually are proud to, admit this fact that without women's being there, the world is not the one that we could ever imagine.
First, I'd like to take this special day to show my respect to all those women who are and will be mothers. They are the most great people in the world. I deeply respect their selfishless love for their children, their helpful assitance to their husband to make family a wonderful place for the young and the old, their wise and kind cultivation of their children into knowledgable, responsible and integral citizens.
Also, I'd like to show my deep respect for those women who are working day and night to make their work an art, to bring the fruitful meaning to our lives, to expand the world that we have known and contribute to the improvement of the society towards equality, justice, love and boundfulness. I'd like to show my deep respect for those women who are doing their own best to achieve the dreams of life and bring us inexhaustible spiritual encouragement all the time, for those women who are dovoting their life into philanthropy works and help to save those who are in trouble and make a difference for the individual life. Specially, I'd like wish all the women teachers and nurses a happy womens day, without whose being, the young will not be nurtured and the sick will not be taken care of.
I deeply respect for those women who are devoting thier lives into scientific research, where it is rather a lonely journey for them. Yet, they have lead us to a better position in understanding the facts behind our daily or scientific observations. The tremendous amount of time that they spend on and the amount of feeling that they have diverted from familty to scientific research deserves special notice of our society.
In the world of econometric research, I deeply respect all those women econometricians who are making the researches more fruitiful and interesting. I'd like to show my special respect for those women econometricians I know, Xiaohong Chen, Yoosoon Chang, Serena Ng, and Gloria Gozalaz-Rivera, and also for others that I did not have a chance to know their work.
Wish all women (girls) a happy holiday!
Saturday, March 7, 2009
Soaking the Rich?
New York Times, Sunday, March 8, 2009; Page A15
See Soaking the Rich? for different opinions of economists, former officials and others on Obama's proposal at NYT.
An ariticle by E.J. McMahon, a senior fellow for tax and budgetary studies at the Manhattan Institute for Policy Research is available as Why “Soaking the Rich” Is Poor Policy, May 19, 2003
Also, see Soaking the Rich Won’t Work, Mar 7, 2009, by Paul Martin in Economics, Government Evil, Socialism
Thomas: Soaking the rich ends up hurting the middle class , By Cal Thomas
See Soaking the Rich? for different opinions of economists, former officials and others on Obama's proposal at NYT.
An ariticle by E.J. McMahon, a senior fellow for tax and budgetary studies at the Manhattan Institute for Policy Research is available as Why “Soaking the Rich” Is Poor Policy, May 19, 2003
Also, see Soaking the Rich Won’t Work, Mar 7, 2009, by Paul Martin in Economics, Government Evil, Socialism
Thomas: Soaking the rich ends up hurting the middle class , By Cal Thomas
Blogger Responds to Economic Crisis?
The ariticle "Out of Work? Read a Recession Blog. Or, Better Yet, Write One" in NYT make fun out of the blog writers who have been making their words known to the broad audience via internet. As commented in the ariticle, the blogsphere has documented this economic crisis and the bloggers' background varies from economists, old ladies to people who lose jobs. Mankiw at Harvard responds to the ariticle by joking that it is because his blog was termed as "heavy on theory" that his sitemeter did not show any jump in numbers of visitors. See Mankiw's blog at
A Shout Out, But No One Hears
A Shout Out, But No One Hears
Amazing people at Berkeley---MICHAEL JANSSON
Michael Jansson
Associate Professor of Economics
Fields: Econometrics
Research interests: Nonstationary time series analysis;
Short Biography and Research Interests
Michael Jansson joined Berkeley as a research economist in 2000, the same year he received his PhD at University of Aarhus in Denmark. He became an assistant professor in 2001. He is a member of the Econometric Society, the Danish Econometric Society, and the Institute of Mathematical Studies. Professor Jansson received the Econometric Theory Multa Scripsit Award in 2005. He was a Fulbright scholar at the Danish Research Academy and was a 1996 recipient of the Danish Central Bank?s ?Erik Hoffmeyers Rejselegat? award.
Visit his homepage at: MICHAEL JANSSON
Associate Professor of Economics
Fields: Econometrics
Research interests: Nonstationary time series analysis;
Short Biography and Research Interests
Michael Jansson joined Berkeley as a research economist in 2000, the same year he received his PhD at University of Aarhus in Denmark. He became an assistant professor in 2001. He is a member of the Econometric Society, the Danish Econometric Society, and the Institute of Mathematical Studies. Professor Jansson received the Econometric Theory Multa Scripsit Award in 2005. He was a Fulbright scholar at the Danish Research Academy and was a 1996 recipient of the Danish Central Bank?s ?Erik Hoffmeyers Rejselegat? award.
Visit his homepage at: MICHAEL JANSSON
Friday, March 6, 2009
What Rain Man is
Rain Man, cited from
http://en.wikipedia.org/wiki/Rain_Man
A tale of two brothers
Rain Man is a 1988 dramatic film written by Barry Morrow and Ronald Bass and directed by Barry Levinson. It tells the story of an abrasive, selfish yuppie, Charlie Babbitt, who discovers that his father has left all of his multimillion-dollar estate to his brother, Raymond, an autistic savant, of whose existence he was unaware.
The movie stars Tom Cruise as Charlie Babbit, Dustin Hoffman as Raymond Babbit, and Valeria Golino as Charlie's girlfriend, Susanna. Morrow created the character of Raymond after meeting Kim Peek, a real-life savant; his characterization was based on both Peek and Bill Sackter, a good friend of Morrow who was the subject of Bill, an earlier film that Morrow wrote.
The film won four Oscars at the 61st Academy Awards (1988), including Best Picture, Best Original Screenplay, Best Director, and Best Actor in a leading role for Hoffman. Its crew received an additional four nominations.
PLOT
Charlie Babbitt (Cruise), a Los Angeles car dealer in his mid-twenties, is in the middle of importing four grey market Lamborghinis. The deal is being threatened by the EPA, and if Charlie cannot meet its requirements he will lose a significant amount of money. After some quick subterfuge with an employee, Charlie leaves for a weekend trip to Palm Springs with his girlfriend, Susanna.
Charlie's trip is cancelled by news that his estranged father, Sanford Babbitt, has died. Charlie travels to Cincinnati, Ohio, to settle the estate, where he learns an undisclosed trustee is inheriting $3 million on behalf of an unnamed beneficiary, while he is to receive a classic Buick Roadmaster convertible and several prize rose bushes. Eventually he learns the money is being directed to a mental institution, and he discovers that it is the home of his autistic brother, Raymond (Hoffman).
Raymond is an autistic savant, with superb recall but little understanding of subject matter. He is frightened by change and adheres to strict routines (for example, his continual repetition of the "Who's on First?" sketch). Except when he is in distress, he shows little emotional expression and avoids eye contact.
Numbed by learning that he has a brother and determined to get what he believes is his fair share of the Babbitt estate, Charlie takes Raymond on what becomes a cross-country trip back to Los Angeles to meet with his attorneys. He intends to start a custody battle in order to get Raymond's doctor, Dr. Bruner (Molen), to settle out of court for half of Sanford Babbitt's estate so that they can maintain custody of Raymond.
During the course of the journey, Charlie learns about Raymond's condition, which he initially believes is curable — resulting in frustration with his brother. He also learns about how his brother came to be separated from his family, as a result of an accident when he was left alone with Charlie when Charlie was a baby. Sometimes shallow and exploitative, as when he learns that Raymond has an excellent memory and takes him to Las Vegas to win money at blackjack counting cards, Charlie nonetheless finds himself becoming protective over Raymond.
Charlie finally meets with his attorney to try to get his share of his inheritance, but then considers taking custody of Raymond. However, Raymond is unable to decide exactly what he wants. Eventually, the attorney presses Raymond for a decisive answer, upsetting him and leading Charlie to tell the attorney to back off.
Eventually, Raymond is allowed to go back home to Cincinnati. Charlie, who has gained a new brother and mellowed considerably, tells him he'll visit.
http://en.wikipedia.org/wiki/Rain_Man
A tale of two brothers
Rain Man is a 1988 dramatic film written by Barry Morrow and Ronald Bass and directed by Barry Levinson. It tells the story of an abrasive, selfish yuppie, Charlie Babbitt, who discovers that his father has left all of his multimillion-dollar estate to his brother, Raymond, an autistic savant, of whose existence he was unaware.
The movie stars Tom Cruise as Charlie Babbit, Dustin Hoffman as Raymond Babbit, and Valeria Golino as Charlie's girlfriend, Susanna. Morrow created the character of Raymond after meeting Kim Peek, a real-life savant; his characterization was based on both Peek and Bill Sackter, a good friend of Morrow who was the subject of Bill, an earlier film that Morrow wrote.
The film won four Oscars at the 61st Academy Awards (1988), including Best Picture, Best Original Screenplay, Best Director, and Best Actor in a leading role for Hoffman. Its crew received an additional four nominations.
PLOT
Charlie Babbitt (Cruise), a Los Angeles car dealer in his mid-twenties, is in the middle of importing four grey market Lamborghinis. The deal is being threatened by the EPA, and if Charlie cannot meet its requirements he will lose a significant amount of money. After some quick subterfuge with an employee, Charlie leaves for a weekend trip to Palm Springs with his girlfriend, Susanna.
Charlie's trip is cancelled by news that his estranged father, Sanford Babbitt, has died. Charlie travels to Cincinnati, Ohio, to settle the estate, where he learns an undisclosed trustee is inheriting $3 million on behalf of an unnamed beneficiary, while he is to receive a classic Buick Roadmaster convertible and several prize rose bushes. Eventually he learns the money is being directed to a mental institution, and he discovers that it is the home of his autistic brother, Raymond (Hoffman).
Raymond is an autistic savant, with superb recall but little understanding of subject matter. He is frightened by change and adheres to strict routines (for example, his continual repetition of the "Who's on First?" sketch). Except when he is in distress, he shows little emotional expression and avoids eye contact.
Numbed by learning that he has a brother and determined to get what he believes is his fair share of the Babbitt estate, Charlie takes Raymond on what becomes a cross-country trip back to Los Angeles to meet with his attorneys. He intends to start a custody battle in order to get Raymond's doctor, Dr. Bruner (Molen), to settle out of court for half of Sanford Babbitt's estate so that they can maintain custody of Raymond.
During the course of the journey, Charlie learns about Raymond's condition, which he initially believes is curable — resulting in frustration with his brother. He also learns about how his brother came to be separated from his family, as a result of an accident when he was left alone with Charlie when Charlie was a baby. Sometimes shallow and exploitative, as when he learns that Raymond has an excellent memory and takes him to Las Vegas to win money at blackjack counting cards, Charlie nonetheless finds himself becoming protective over Raymond.
Charlie finally meets with his attorney to try to get his share of his inheritance, but then considers taking custody of Raymond. However, Raymond is unable to decide exactly what he wants. Eventually, the attorney presses Raymond for a decisive answer, upsetting him and leading Charlie to tell the attorney to back off.
Eventually, Raymond is allowed to go back home to Cincinnati. Charlie, who has gained a new brother and mellowed considerably, tells him he'll visit.
Serial Correlation and Serial Dependence
Serial Correlation and Serial Dependence
Yongmiao Hong, 2006, WISE Working Paper
ABSTRACT
Serial correlation and serial dependence has been central to time series econometrics. Theexistence of serial correlation complicates statistical inference of econometric models, and in timeseries analysis, inference of serial correlation, or more generally, serial dependence, is crucial tomodel and capture the dynamics of time series processes. In this entry, we …rst discuss theimpact of serial correlation on statistical inference of a linear regression model. In Section 2,we introduce various tests for serial correlation, for both estimated residuals and observed rawdata, and discuss their relationship. Section 3 discusses serial dependence in nonlinear time seriescontexts, and related measures and tests for serial dependence.
This paper provides an excellent overview of the tests proposed for the testing of serial correlation and independence. See the paper at:
Serial Correlation and Serial Dependence
Yongmiao Hong, 2006, WISE Working Paper
ABSTRACT
Serial correlation and serial dependence has been central to time series econometrics. Theexistence of serial correlation complicates statistical inference of econometric models, and in timeseries analysis, inference of serial correlation, or more generally, serial dependence, is crucial tomodel and capture the dynamics of time series processes. In this entry, we …rst discuss theimpact of serial correlation on statistical inference of a linear regression model. In Section 2,we introduce various tests for serial correlation, for both estimated residuals and observed rawdata, and discuss their relationship. Section 3 discusses serial dependence in nonlinear time seriescontexts, and related measures and tests for serial dependence.
This paper provides an excellent overview of the tests proposed for the testing of serial correlation and independence. See the paper at:
Serial Correlation and Serial Dependence
Overview of Statistical Estimation Theory
By Roni Rosenfeld
January 16, 1997
A simple but good enough introdution of statistical estimation theory, available at PKU CS410
January 16, 1997
A simple but good enough introdution of statistical estimation theory, available at PKU CS410
Specification testing
Journal of EconometricsVolume 143, Issue 1,
March 2008, Pages 1-4 Specification testing
Miguel A. Delgado,
Department of Economics Universidad Carlos III de Madrid Getafe, Spain
A model is said to be statistically adequate, or correctly specified, when its underlying assumptions are supported by the observed data. The concept of statistical adequacy was first put forward by Fisher and by Koopmans (1937) referred to as Fisher's axiom of correct specification. Once a model is selected for performing statistical inferences, the next natural step is to test if the specification of the putative model is correct. If the model is misspecified, the resulting statistical inferences are usually invalid.
Specification testing, or goodness-of-fit testing, is a classical research topic in statistics since the early thirties. The pioneering work of Kolmogorov (1933), Smirnov (1936), Cramรฉr (1928) and von Mises, 1931 R. von Mises, Wahrscheinlichkeitsrechnung, Deuticke, Vienna (1931).von Mises (1931) for testing simple hypotheses on distribution functions were extended in the late fifties by Kac et al. (1955) and Gikhman (1953) to test composite hypothesis, where parameters are estimated. The formalization of these results was provided in the seventies by Durbin (1973) and (Neuhaus, 1973) and (Neuhaus, 1977). Test statistics are suitable functionals of the standard empirical process resulting in omnibus tests, i.e. tests designed to detect general alternatives of nonparametric nature. The limiting null distribution of test statistics with estimated parameters is case dependent, but tests can be implemented with the assistance of a parametric bootstrap. Khmaladze (1981) proposed to use the martingale part of the empirical process with estimated parameters for constructing asymptotically distribution free tests. See D’Agostino and Stephens (1986) for an overview of classical specification tests.
As argued by Durbin and Knott (1972), see also Eubank and LaRicca (1992), classical omnibus specification tests are highly unlikely to detect many alternatives in practice. Recently, Janssen (2000) has shown that any of these tests has a preference for a finite dimensional space of alternatives. Apart from this set, the power function is almost flat on balls of alternatives. Furthermore, there exists no test which pays equal attention to an infinite number of orthogonal alternatives. As a compromise between omnibus and directional tests, smooth tests, introduced by Neyman (1937), are based on the Lagrange-Multiplier testing principle. They assume a flexible parametric model under the alternative hypothesis, usually belonging to the exponential family. If the number of parameters in the model under the alternative hypothesis increases with the sample size at a suitable rate, the smooth tests become omnibus. They are related to tests that compare the estimated parametric model under the null and a nonparametric fit using smoothers, as proposed by Rosenblatt (1975). See Rayner and Best (1989) and Hart (1997) for overviews of Neyman's smooth tests and tests using nonparametric smoothing.
The alternative testing methodologies were conceived to test the specification of distribution functions, but they have been extended to test the specification of other type of models. Specification testing of regression curves have been proposed by Hรคrdle and Mammen (1993) using smoothers and by Stute (1997) using a type of CUSUM process. Many others have studied the properties of both procedures. The same alternative strategies have been applied for goodness-of-fit testing of survival curves, conditional variances, conditional distributions, spectral distributions and general conditional functionals.
There have also been important developments in the econometrics literature. Haavelmo (1944) discusses in his famous Econometrica monograph the crucial importance of a correct specification for performing valid inferences. Among the many recent contributions, it is worth mentioning Zheng (1996) on regression curves using smoothers, Fan and Li (1996) on semi-parametric models using smoothers, Andrews (1997) on conditional distributions using multi-parameter empirical processes, and Horowitz and Spokoiny (2001) on optimal smoothing based testing.
This Annals volume is edited on the occasion of an ‘Explanatory Workshop of the European Science Fundation’ on Specification Testing held at Santander (Spain) in December 2005. The workshop was interdisciplinary, aimed to bring together researchers working in specification testing and those with different applied interests, e.g. economics, finance, physics, medicine and engineering. Twenty-five invited participants from 13 countries presented articles in the conference. Among them, 17 have submitted their work and twelve articles have been accepted after the usual referee process in the Journal of Econometrics.
The papers in this volume provide an upto date perspective on the state of the art in specification testing. The majority of articles deals with omnibus specification testing under the two leading methodologies: empirical processes and nonparametric smoothing.
March 2008, Pages 1-4 Specification testing
Miguel A. Delgado,
Department of Economics Universidad Carlos III de Madrid Getafe, Spain
A model is said to be statistically adequate, or correctly specified, when its underlying assumptions are supported by the observed data. The concept of statistical adequacy was first put forward by Fisher and by Koopmans (1937) referred to as Fisher's axiom of correct specification. Once a model is selected for performing statistical inferences, the next natural step is to test if the specification of the putative model is correct. If the model is misspecified, the resulting statistical inferences are usually invalid.
Specification testing, or goodness-of-fit testing, is a classical research topic in statistics since the early thirties. The pioneering work of Kolmogorov (1933), Smirnov (1936), Cramรฉr (1928) and von Mises, 1931 R. von Mises, Wahrscheinlichkeitsrechnung, Deuticke, Vienna (1931).von Mises (1931) for testing simple hypotheses on distribution functions were extended in the late fifties by Kac et al. (1955) and Gikhman (1953) to test composite hypothesis, where parameters are estimated. The formalization of these results was provided in the seventies by Durbin (1973) and (Neuhaus, 1973) and (Neuhaus, 1977). Test statistics are suitable functionals of the standard empirical process resulting in omnibus tests, i.e. tests designed to detect general alternatives of nonparametric nature. The limiting null distribution of test statistics with estimated parameters is case dependent, but tests can be implemented with the assistance of a parametric bootstrap. Khmaladze (1981) proposed to use the martingale part of the empirical process with estimated parameters for constructing asymptotically distribution free tests. See D’Agostino and Stephens (1986) for an overview of classical specification tests.
As argued by Durbin and Knott (1972), see also Eubank and LaRicca (1992), classical omnibus specification tests are highly unlikely to detect many alternatives in practice. Recently, Janssen (2000) has shown that any of these tests has a preference for a finite dimensional space of alternatives. Apart from this set, the power function is almost flat on balls of alternatives. Furthermore, there exists no test which pays equal attention to an infinite number of orthogonal alternatives. As a compromise between omnibus and directional tests, smooth tests, introduced by Neyman (1937), are based on the Lagrange-Multiplier testing principle. They assume a flexible parametric model under the alternative hypothesis, usually belonging to the exponential family. If the number of parameters in the model under the alternative hypothesis increases with the sample size at a suitable rate, the smooth tests become omnibus. They are related to tests that compare the estimated parametric model under the null and a nonparametric fit using smoothers, as proposed by Rosenblatt (1975). See Rayner and Best (1989) and Hart (1997) for overviews of Neyman's smooth tests and tests using nonparametric smoothing.
The alternative testing methodologies were conceived to test the specification of distribution functions, but they have been extended to test the specification of other type of models. Specification testing of regression curves have been proposed by Hรคrdle and Mammen (1993) using smoothers and by Stute (1997) using a type of CUSUM process. Many others have studied the properties of both procedures. The same alternative strategies have been applied for goodness-of-fit testing of survival curves, conditional variances, conditional distributions, spectral distributions and general conditional functionals.
There have also been important developments in the econometrics literature. Haavelmo (1944) discusses in his famous Econometrica monograph the crucial importance of a correct specification for performing valid inferences. Among the many recent contributions, it is worth mentioning Zheng (1996) on regression curves using smoothers, Fan and Li (1996) on semi-parametric models using smoothers, Andrews (1997) on conditional distributions using multi-parameter empirical processes, and Horowitz and Spokoiny (2001) on optimal smoothing based testing.
This Annals volume is edited on the occasion of an ‘Explanatory Workshop of the European Science Fundation’ on Specification Testing held at Santander (Spain) in December 2005. The workshop was interdisciplinary, aimed to bring together researchers working in specification testing and those with different applied interests, e.g. economics, finance, physics, medicine and engineering. Twenty-five invited participants from 13 countries presented articles in the conference. Among them, 17 have submitted their work and twelve articles have been accepted after the usual referee process in the Journal of Econometrics.
The papers in this volume provide an upto date perspective on the state of the art in specification testing. The majority of articles deals with omnibus specification testing under the two leading methodologies: empirical processes and nonparametric smoothing.
Wednesday, March 4, 2009
A letter to mum
A friend's birthday today reminds me to say something about the love of mum. I find the following article that is more than appropriate to cite.
A letter to mum
ๅญๆดๆถฆ ๅ่กจไบ 2006-5-16 11:58:31
Mum:
I write this letter to tell you how much I love you. This writing to you is very nostalgic. This morning sun shown brightly, I woke up, and my first thought was you. Sometimes at night I dream of you and I can almost feel the warmth of your hug.
Today it is 4 years since I have been abroad. I have tried my best to live my life the way you wanted me to. I just hope I have made all the right decisions and you would have been proud of me.
I cherish each moment we have, although sometimes I don't seem to. I wish I could go and see you everyday, and attend to your needs. But life is such that we don't always get to do the things that we want
Mum, you've taught me many things. You may not have a good family background, but you're the one who is successful in your own career. Some of my principles in life are yours; I like to quote you to my friends. And because of your attitude and outlook, I am what I am today. Thank you Mum, for all the sacrifices you made in nurturing me into what I am today. I can never repay you enough.
Mum, I miss you so much. I love you more than anything. My memories of you, and the feel of you deep within my soul that is ever constant. And, no one will be able to take you or me away from each other ‘s heart.
I pray for your good health everyday and sleep peacefully
Your son. MQR
A letter to mum
ๅญๆดๆถฆ ๅ่กจไบ 2006-5-16 11:58:31
Mum:
I write this letter to tell you how much I love you. This writing to you is very nostalgic. This morning sun shown brightly, I woke up, and my first thought was you. Sometimes at night I dream of you and I can almost feel the warmth of your hug.
Today it is 4 years since I have been abroad. I have tried my best to live my life the way you wanted me to. I just hope I have made all the right decisions and you would have been proud of me.
I cherish each moment we have, although sometimes I don't seem to. I wish I could go and see you everyday, and attend to your needs. But life is such that we don't always get to do the things that we want
Mum, you've taught me many things. You may not have a good family background, but you're the one who is successful in your own career. Some of my principles in life are yours; I like to quote you to my friends. And because of your attitude and outlook, I am what I am today. Thank you Mum, for all the sacrifices you made in nurturing me into what I am today. I can never repay you enough.
Mum, I miss you so much. I love you more than anything. My memories of you, and the feel of you deep within my soul that is ever constant. And, no one will be able to take you or me away from each other ‘s heart.
I pray for your good health everyday and sleep peacefully
Your son. MQR
Weak Exogeneity
Engle, R.F., D.F. Hendry and J.-F. Richard, (1983), Exogeneity, Econometrica,51, 277-304.
Engle et al bring up the attention of econometrician to the important concept of weak exogeneity in 1983. They clarify concepts related to weak and strong exogeneity, isolate the essential requirements for a variable to be exogeneous, and illustrate their relationship to predeterminedness, strict exgoneneity and Granger causality to facilitate econometric modelling. They introduce the concept of variation free for parameters of interest, which helps to simplify the estimation of econometric models sharing the property of weak exogeneity.
Professor D.S.G. POLLOCK's (at University of Leicester, UK) topics in Econometrics also covered this topic: Weak Exogeneity. Professor Pollock illustrates the main idea of Engle et al (1983) and attempts to convey the simple idea of weak exogeneity in the context of bivariate distribution. A so-called cobweb model describing the agriculture market is also investigated to demonstrate the concept of weak exogeneity in the framework of structural model.
It might be closely related to our current research and it provides evidence for our supervision modelling approach, in the case that some of the parameters/underlying factors in the model are not variation free. Thanks for my co-author for putting me on this journey.
Engle et al bring up the attention of econometrician to the important concept of weak exogeneity in 1983. They clarify concepts related to weak and strong exogeneity, isolate the essential requirements for a variable to be exogeneous, and illustrate their relationship to predeterminedness, strict exgoneneity and Granger causality to facilitate econometric modelling. They introduce the concept of variation free for parameters of interest, which helps to simplify the estimation of econometric models sharing the property of weak exogeneity.
Professor D.S.G. POLLOCK's (at University of Leicester, UK) topics in Econometrics also covered this topic: Weak Exogeneity. Professor Pollock illustrates the main idea of Engle et al (1983) and attempts to convey the simple idea of weak exogeneity in the context of bivariate distribution. A so-called cobweb model describing the agriculture market is also investigated to demonstrate the concept of weak exogeneity in the framework of structural model.
It might be closely related to our current research and it provides evidence for our supervision modelling approach, in the case that some of the parameters/underlying factors in the model are not variation free. Thanks for my co-author for putting me on this journey.
Are regression models useful?
Freedman, David, "Statistical Models and Shoe Leather," Sociological Methodology, 21, 1991, 291-313.
Freedman posed this and other interesting questions regarding the frequently used regression technique in 1991, although regression model has been extensively used since Yule (1899). Yet the weakness of regression model being used to make causal inference is just pointed out and Freedman raise the concern to evaluate the results of various applications.
Freedman doubt the capability of regression model in making causal inference and even its role in controlling confounding variables. There has been illustrations with the use of regression models, with the development of two stage least square, latent variable approach, specification testing and so on, yet Freedman question their validity of assumption of the models since there is effort carried towards this direction.
Some examples of abuse of regression techneque have been given in the article and then he directed the reader to some appropriate application of the regression models, including one of his work in 1987.
In the end, Freedman argued that it is time to ask questions like, are models usful, is it possible to differentiate sucessful from unsucessul use of models, and how to test and evaluate the models?
This paper caught my eyes when I was surfing Professor Ken Chay's (at Berkerley) website for his applied econometric course.
Freedman posed this and other interesting questions regarding the frequently used regression technique in 1991, although regression model has been extensively used since Yule (1899). Yet the weakness of regression model being used to make causal inference is just pointed out and Freedman raise the concern to evaluate the results of various applications.
Freedman doubt the capability of regression model in making causal inference and even its role in controlling confounding variables. There has been illustrations with the use of regression models, with the development of two stage least square, latent variable approach, specification testing and so on, yet Freedman question their validity of assumption of the models since there is effort carried towards this direction.
Some examples of abuse of regression techneque have been given in the article and then he directed the reader to some appropriate application of the regression models, including one of his work in 1987.
In the end, Freedman argued that it is time to ask questions like, are models usful, is it possible to differentiate sucessful from unsucessul use of models, and how to test and evaluate the models?
This paper caught my eyes when I was surfing Professor Ken Chay's (at Berkerley) website for his applied econometric course.
Monday, March 2, 2009
Broken in two
Sung by Doug Paisley.
I heard this long sometime ago and it took me a while to find it out. It was broadcasted by NPR, in the programme titled "song of the day". I like the lyrics a lot.
Broken in two,
This is what you wanted,
You can not keep your love to yourself,
Now you say,
Your heart is haunted,
How will you give it to somebody else?
I heard the urgence to share. And when your heart is somewhere else, how can you focus on your pursuit?
Listen the song at:
Broken In Two
I heard this long sometime ago and it took me a while to find it out. It was broadcasted by NPR, in the programme titled "song of the day". I like the lyrics a lot.
Broken in two,
This is what you wanted,
You can not keep your love to yourself,
Now you say,
Your heart is haunted,
How will you give it to somebody else?
I heard the urgence to share. And when your heart is somewhere else, how can you focus on your pursuit?
Listen the song at:
Broken In Two
From Limbless to Limitless
I got to know Nick at a gathering at a friend in last November. The time I saw videos about him, I was so deeply moved by his strength, his confidence, his belief and his magic life that one might not even dare to wonder. I feel grateful for the girl named ROSE who introduce Nick into my life, the limitless power of life and belief.
See Nick's videos and more attached at:
http://www.youtube.com/watch?v=UQ2jOQNcIBk
http://www.youtube.com/watch?v=3sHyzatcBq8&feature=related
When you feel that there is no hope in your life or when you feel it is hard, it is misery or whatever depression, like the U.S. economy, it is highly the time that you should listen to Nick's perspective of life.
I like the following sentences a lot:
There is the bible and I wanna get to the bible. If I do not get to the bible, the bible does not come to me. Now if I wanna get to it, I have to go to the bible. But how? You take one step at a time, one step at a time and one step at a time.
When you fall down, you get up!
Isn't that right? Don't let yourself down!
Here is the lyrics of the beautiful song in the video:
Here in the love of Christ I stand
In Christ alone my hope is found
He is my light my strength my song
This Cornerstone this solid Ground
Firm through the fiercest drought and storm
What heights of love what depths of peace
When fears are stilled when strivings cease
My Comforter my all in all
Here in the love of Christ I stand.
In Christ alone who took on flesh
Fullness of God on helpless babe
This gift of love and righteousness
Scorned by the ones He came to save
Till on that cross that Jesus died
The wrath of God was satisfied
For every sin on Him was laid
Here in the death of Christ I live.
See the whole version in .ppt at:
Here in the love of Christ I stand
See Nick's videos and more attached at:
http://www.youtube.com/watch?v=UQ2jOQNcIBk
http://www.youtube.com/watch?v=3sHyzatcBq8&feature=related
When you feel that there is no hope in your life or when you feel it is hard, it is misery or whatever depression, like the U.S. economy, it is highly the time that you should listen to Nick's perspective of life.
I like the following sentences a lot:
There is the bible and I wanna get to the bible. If I do not get to the bible, the bible does not come to me. Now if I wanna get to it, I have to go to the bible. But how? You take one step at a time, one step at a time and one step at a time.
When you fall down, you get up!
Isn't that right? Don't let yourself down!
Here is the lyrics of the beautiful song in the video:
Here in the love of Christ I stand
In Christ alone my hope is found
He is my light my strength my song
This Cornerstone this solid Ground
Firm through the fiercest drought and storm
What heights of love what depths of peace
When fears are stilled when strivings cease
My Comforter my all in all
Here in the love of Christ I stand.
In Christ alone who took on flesh
Fullness of God on helpless babe
This gift of love and righteousness
Scorned by the ones He came to save
Till on that cross that Jesus died
The wrath of God was satisfied
For every sin on Him was laid
Here in the death of Christ I live.
See the whole version in .ppt at:
Here in the love of Christ I stand
Sunday, March 1, 2009
Efficient Local Polynomial Estimation of Nonparametric Simultaneous Equations Models
joint with Ullah A., November 2008
Abstract: This paper defines a new procedure to consistently estimate nonparametric simultaneousequations models that have been explored by Newy et al (1999) and Su and Ullah (2008). The proposed estimation procedure takes into account the additive structure thus achieves efficiencycompared to Su and Ullah (2008), thus further improved the estimator of Newy et al (1999).Our new estimator achieves the oracle e¢ ciency of the oracle estimator defined in this paper,which is infeasible since it is based on knowledge of all components of the model except for theone of interest. Simulation results show that our new estimator outperforms that of Su andUllah (2008) in terms of Mean Squared Error.
This is my third paper, which is my course work for professor Ullah's Nonparametric lectures. I presented the paper on Jan 16, 2009 in the Econometric Colloquia. It was exciting to present my work on the colloquia with many people asking questions. Actually I was sick then, due to the trip back China from Dec 06, 2008 to Jan 08, 2009. I tried my best and it is a satisfactory one, I think, though not the best. After all, it is my first formal presentation.
I feel deeply thankful for Professor Ullah for both his time and directions through the preparation of the work and many helpful comments. Also, I appreciate Professor Su L. at SMU for his kindness to share with me his code.
See the paper at: Tu and Ullah (2008)
http://www.economics.ucr.edu/seminars/winter09/econometrics/index.html
Abstract: This paper defines a new procedure to consistently estimate nonparametric simultaneousequations models that have been explored by Newy et al (1999) and Su and Ullah (2008). The proposed estimation procedure takes into account the additive structure thus achieves efficiencycompared to Su and Ullah (2008), thus further improved the estimator of Newy et al (1999).Our new estimator achieves the oracle e¢ ciency of the oracle estimator defined in this paper,which is infeasible since it is based on knowledge of all components of the model except for theone of interest. Simulation results show that our new estimator outperforms that of Su andUllah (2008) in terms of Mean Squared Error.
This is my third paper, which is my course work for professor Ullah's Nonparametric lectures. I presented the paper on Jan 16, 2009 in the Econometric Colloquia. It was exciting to present my work on the colloquia with many people asking questions. Actually I was sick then, due to the trip back China from Dec 06, 2008 to Jan 08, 2009. I tried my best and it is a satisfactory one, I think, though not the best. After all, it is my first formal presentation.
I feel deeply thankful for Professor Ullah for both his time and directions through the preparation of the work and many helpful comments. Also, I appreciate Professor Su L. at SMU for his kindness to share with me his code.
See the paper at: Tu and Ullah (2008)
http://www.economics.ucr.edu/seminars/winter09/econometrics/index.html
Shopper City
joint with Arnott R. , Auguest 2008.
Abstract: The bulk of the literature on retail location looks at the topic from theperspective of either the retail firm or the individual shopper. Another branch of theliterature examines the spatial distribution of retail activities within a city or region,drawing on either central place theory or the Lowry model, neither of which incorporateseither markets or agglomeration economies. This paper looks at retail location from theperspective of a general equilibrium model of location and land use, with agglomerationeconomies in retailing. In particular, drawing on the Fujita-Ogawa (1982) model of nonmonocentriccities, it develops a model of retail location, assuming that retail firmsbehave competitively, subject to spatial agglomeration economies. Locations aredistinguished according to the effective variety of retail goods they offer. Shoppers arewilling to pay more for goods at locations with greater effective variety, and in theirchoice of where to shop trade off retail price, product variety, and accessibility to home.Retail prices and land rents at different locations adjust to achieve spatial equilibrium.
This is my second paper, but it comes out first and it is forthcoming in a book in honor of Curtis Eaton for his many contribution in economic theory, especially for his work in spatial competition theory. I feel grateful for Professor Arnott, without whose help I could not make it.
See the paper at: Arnott and Tu (2008)
http://www.economics.ucr.edu/papers/papers08/index.html
Abstract: The bulk of the literature on retail location looks at the topic from theperspective of either the retail firm or the individual shopper. Another branch of theliterature examines the spatial distribution of retail activities within a city or region,drawing on either central place theory or the Lowry model, neither of which incorporateseither markets or agglomeration economies. This paper looks at retail location from theperspective of a general equilibrium model of location and land use, with agglomerationeconomies in retailing. In particular, drawing on the Fujita-Ogawa (1982) model of nonmonocentriccities, it develops a model of retail location, assuming that retail firmsbehave competitively, subject to spatial agglomeration economies. Locations aredistinguished according to the effective variety of retail goods they offer. Shoppers arewilling to pay more for goods at locations with greater effective variety, and in theirchoice of where to shop trade off retail price, product variety, and accessibility to home.Retail prices and land rents at different locations adjust to achieve spatial equilibrium.
This is my second paper, but it comes out first and it is forthcoming in a book in honor of Curtis Eaton for his many contribution in economic theory, especially for his work in spatial competition theory. I feel grateful for Professor Arnott, without whose help I could not make it.
See the paper at: Arnott and Tu (2008)
http://www.economics.ucr.edu/papers/papers08/index.html
How to be a great conference participant?
The ariticle by Art Carton caught my eyes when I was surfing ECONJEFF's bolg at: http://econjeff.blogspot.com/2009/02/how-to-be-great-conference-participant.html
It has a lot of good points regarding how to present a paper in 20 mins at a conference. What strikes me most is the part of style and attitude, which would be definitely helpful for those of presenters who are not confident and feel bad after presentations.
But, anyway, it is still good to be a very good speaker, not following Art's suggestion at all, regarding the presentation style and attitude. It will take time to practice, for sure.
See the paper at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1332144
It has a lot of good points regarding how to present a paper in 20 mins at a conference. What strikes me most is the part of style and attitude, which would be definitely helpful for those of presenters who are not confident and feel bad after presentations.
But, anyway, it is still good to be a very good speaker, not following Art's suggestion at all, regarding the presentation style and attitude. It will take time to practice, for sure.
See the paper at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1332144
The spirit of perfection
It has been over one year since I started the current research. It is an interesting project, besides that it is my first one. Looking back the times that I have gone through, progress has been made all along the way.
Knowing the ABC of Econometrics, I was very confident and felt urged to get into some area to build up my research experience, in the fall 2007. It was by chance that I got into the area of principal component analysis and later combining information via principal components. These methods are designed to filter information for the purpose of forecasting with the presence of large bulck of information. Our line of research is to argue that principal component analysis alone is inadequate to estimate the true unknown factors accurately to make the optimum forecast. That is why we are considering combining forecast after filtering information. And it has been a puzzle to researchers that the simplest forecast combination with equal weights turns out to be the optimum factor. Our research will shed light on this puzzle and move the economic and financial forecasting towards a brand new era. We have been and still are excited for this conjecture.
Indeed, our application results agree with our intuition and confirms that we should employ the information contained in the variable of interest to form better predicitons. All along the way up to now, we have been troubled by how to build up the theorectical results. For me, it is like on and off, since I have the course work and also some other research topics to work on. My co-author has similar situations with a lot of academic involvement. And recently, we started to understand the problem in a deeper and rather novel perspective, with the finding of the contraction mapping for the supervision parameter.
Out of all, what I have been impressed most since the start of the project is the persuit of perfection of my co-author. And I can feel the love that he devoted into the research. It is still clear to me the times when I was in depression due to the unsatisfactory results I had, the time when I feel frustrated because of the skindeep draft paper I wrote, the time when I feel tired because of the pressure to meet deadlines, the time when I have to leave the research for a while for other responsibilities of my course work, the time when I wanna go back China to visit my familiy. My co-author has always been supportive and encouraging me to do my personal best. Besides, his seemly never exhausting passion in the topic strikes right on me. I remember the time that he has been sitting up till 4'o clock in the morning to modify matlab code, that he was writing ideas relating that of weak exogeneity, that he is still working while he is sick. He is working much more than I am, and he is dedicated to the research much more than I am. He has taken the research as more than part of his life. His spirit moved me deeply. And I should work harder to be competive in my field.
I start to understand that in the process of scientific research, we are alone yet never lonely, with the spirit of perfection.
Knowing the ABC of Econometrics, I was very confident and felt urged to get into some area to build up my research experience, in the fall 2007. It was by chance that I got into the area of principal component analysis and later combining information via principal components. These methods are designed to filter information for the purpose of forecasting with the presence of large bulck of information. Our line of research is to argue that principal component analysis alone is inadequate to estimate the true unknown factors accurately to make the optimum forecast. That is why we are considering combining forecast after filtering information. And it has been a puzzle to researchers that the simplest forecast combination with equal weights turns out to be the optimum factor. Our research will shed light on this puzzle and move the economic and financial forecasting towards a brand new era. We have been and still are excited for this conjecture.
Indeed, our application results agree with our intuition and confirms that we should employ the information contained in the variable of interest to form better predicitons. All along the way up to now, we have been troubled by how to build up the theorectical results. For me, it is like on and off, since I have the course work and also some other research topics to work on. My co-author has similar situations with a lot of academic involvement. And recently, we started to understand the problem in a deeper and rather novel perspective, with the finding of the contraction mapping for the supervision parameter.
Out of all, what I have been impressed most since the start of the project is the persuit of perfection of my co-author. And I can feel the love that he devoted into the research. It is still clear to me the times when I was in depression due to the unsatisfactory results I had, the time when I feel frustrated because of the skindeep draft paper I wrote, the time when I feel tired because of the pressure to meet deadlines, the time when I have to leave the research for a while for other responsibilities of my course work, the time when I wanna go back China to visit my familiy. My co-author has always been supportive and encouraging me to do my personal best. Besides, his seemly never exhausting passion in the topic strikes right on me. I remember the time that he has been sitting up till 4'o clock in the morning to modify matlab code, that he was writing ideas relating that of weak exogeneity, that he is still working while he is sick. He is working much more than I am, and he is dedicated to the research much more than I am. He has taken the research as more than part of his life. His spirit moved me deeply. And I should work harder to be competive in my field.
I start to understand that in the process of scientific research, we are alone yet never lonely, with the spirit of perfection.
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