Wednesday, March 28, 2012

Microfounding the IS Curve

In the midst of thinking about presenting the IS Curve to undergraduates, I came across this helpful blog post by Mark Thoma from 10/2011 that discusses David Romer's approach in Advanced Macro 4th ed.  Spending today falls (rises) because the representative consumer (via the Euler condition) substitutes toward (away from) future spending when the interest rate rises (falls).

Maybe I'll present that intuition at some point, but I think undergraduates probably better comprehend the interest rate as the price of borrowing; when borrowing's price rises, borrowing and spending on investment and other durable goods falls.

Tuesday, March 13, 2012

Celebrity marriage predictor

Fun from the Times in the form of witty schadenfreude and likely dooming factors in celebrities' marriages. Hooray, divorce.

Wednesday, March 7, 2012

Convincing others of mental health trauma

An article in the Times about ailing youngsters in Le Roy, NY includes a citation to an article in Spine on fibromyalgia (1996, behind a pay firewall) whose title is, "If You Have to Prove You Are Ill, You Can't Get Well." It reminded me of an insight someone shared with me once about PTSD disability benefits, for which veterans have to periodically attest they still suffer from PTSD. The argument is that is likely to be iatrogenic, continuing mental health trauma because the patient has to convince a third party he or she had it.

Monday, March 5, 2012

"Growth" and regulations

I wasn't expecting to find a lesson in the economics of regulation in this Times article on craft brewing in Colorado, but that ultimately was the focus. Colorado still has restrictions on the books prohibiting large sellers from stocking beer above 3.2% ABV. As any good craft beer connoisseur knows, there are precious few brews south of 5% currently on the market, let alone 3.2%.  As a result, consumers looking for more alcoholic brews are forced to patronize smaller liquor stores, which are more willing to stock local beers that tend to vary more than national brands in availability and quality. Hence the "welcoming atmosphere" for craft brews promised in the title of the article.

Everybody wins, right? Local breweries see increased demand, presumably shifted from out-of-state competitors. Having grown up in a 3.2-beer-state myself, maybe I'm more likely to state that I'd rather have the choice as a consumer to purchase products wherever I'd like, either to skip the extra trip to the liquor store if I choose to drink stronger "Bud,"or to choose to make the trip and purchase a microbrew.