One of the exciting implications for economists of the digitization of everything is the ability to study economic relations and behavior at a level of detail far beyond anything that could have been attempted a decade ago. I’ve earlier called attention here to new measures of inflation obtained from millions of prices posted on the web, new insights into pricing behavior coming from scanner data on individual store transactions, and understanding of consumer behavior based on debit and credit transactions of 25 million Americans. Here I discuss another new study based on smart-phone apps.
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Author Archives: James_Hamilton
Q3 GDP
The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 2.9% annual rate in the second quarter. That’s below the historical average U.S. growth rate of 3.1% per year. Even so, this was the best report in the last two years.
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U.S. elections
The most valuable resource for tracking the U.S. elections is Nate Silver’s 538.
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OPEC production cut
The Wall Street Journal reported on Thursday:
OPEC said its members agreed that they need to cut crude output to reduce the world’s supply glut, a shift for the 14-member group that was enough to send oil prices higher, even though reaching a deal remains far from certain.
Members of the Organization of the Petroleum Exporting Countries said they reached an understanding after a six-hour gathering in the Algerian capital, but deferred until November the fraught task of finalizing a plan to make those cuts. OPEC officials said a committee would be formed to determine how much each country would have to cut and then report to the group at its next meeting on Nov. 30 in Vienna.
Why didn’t the recent oil price decline help the U.S. economy more?
Christiane Baumeister and Lutz Kilian presented an interesting paper at the Brookings Institution last week that takes a detailed look at the effects on the U.S. economy of the dramatic oil price decline of 2014-2015.
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Links for 2016-09-11
Quick links to a few items I found interesting.
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Supply cuts lift oil prices
The price of crude oil has had some sharp swings over the last month. But the trend since January has clearly been up.
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Fed tightening cycles
Last December the Fed began what it thought at the time was a new cycle of tightening. Fed Chair Janet Yellen’s statements last week suggest the Fed still sees this plan as underway. A comparison with historical tightening cycles sheds some light on why so far the Fed hasn’t followed through.
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Too systemic to fail
Bryan Kelly at the University of Chicago, Hanno Lustig at Stanford and Stijn van Nieuwerburgh at NYU had an interesting paper in the June issue of American Economic Review that used option prices to measure the magnitude of the implicit U.S. government guarantee of the financial sector during 2007-2009.
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Why you should never use the Hodrick-Prescott filter
A common problem in economics is that most of the variables we study have trends. Even the simplest statistics like the mean and variance aren’t meaningful descriptions of such variables. One popular approach is to remove the trend using the Hodrick-Prescott filter. I’ve just finished a new research paper highlighting the problems with this approach and suggesting what I believe is a better alternative.
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