(Not) The Leader of the Pack, Again: Wisconsin and Her Neighbors

Political Calculations criticizes me for comparing Wisconsin economic performance against Minnesota, but not other neighbors.

Normally, we’re entertained by Chinn’s analysis, since it frequently involves comparisons of the job growth between Wisconsin and its western neighbor Minnesota since Walker was sworn into office in January 2011, which we find funny because of all the states surrounding Wisconsin, the composition of Wisconsin’s economy is much less similar to Minnesota than it is to any of the states with which the state shares waterfront footage on Lake Michigan, which is something that one might think an economics professor at the University of Wisconsin-Madison would know.

[Update, 3/1] I have calculated a similarity index for MN, IL, MI vs. WI, based on output composition. It’s an unweighted measure of absolute sector differences, (Σ|xWI-xi|)/n . The indices are 0.010, 0.013, 0.007, for MN, IL, MI, respectively. In other words, MI is the most similar to WI, MN next. And, interestingly, MI far outpaces WI, in Figure 1 below.
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Working with Qualitative Variables: Correlation, Causation, and Third Factors

I am fascinated by maps, including maps of the United States which display the geographic variation of institutional features. But qualitative features, such as institutions or laws, cannot be directly subjected quantitative analysis. Fortunately, as I’ve been discussing in my intro econometrics class, one can convert qualitative data into quantitative data by use of dummy variables, i.e., variables that take on a value of 1 or 0 (one could have ordinal values as well, but I’ll skip that aspect today).

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The Congressional Budget Office at 40

The CBO has been providing nonpartisan budgetary and economic analyses for four decades. Whether that continues depends upon the willingness of leaders in Congress believe in the worth of serious analysis (see here for doubts). For now, we look back and (hopefully) forward, at events today. Yesterday, a forum at the Brookings Institution presented some additional views. Director Doug Elmendorf blogs on the anniversary today.

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The Economic Report of the President, 2015

The entire report was released today, covering the “…progress of the recovery and explores the long-term factors that drive middle-class incomes,…the macroeconomic performance of the U.S. economy during 2014, …the opportunities and challenges facing the U.S. labor market, …how American family lives have changed over the last half-century and the implications of these changes for our labor market, …productivity growth with an examination of business tax reform, ..the profound transformation of the U.S. energy sector” and “…the United States in the context of the global economy.”

CEA Chair Jason Furman, CEA Members Maurice Obstfeld, and Betsey Stevenson summarize the report’s findings here.