Saturday, March 23, 2013
A sample lecture of professor candidate
Mount Royal University had a series of sample lectures to hire a new economics professor. Some of them were really terrible. Especially the last one. The candidate did not lecture; he presented a research, which would not be really great even as a undergraduate student's. His so-called 'lecture' was about BOC's monetary policy framework based on Mishikin's textbook. He started his lecture by denouncing NGDP targeting. According to him, NGDP targeting is just crazy. I don't mind if a professor has a certain opinion on different policy options as a human being; however, a professor's job in class is not to promote his own ideas but to teach theories and research methods regarding students's learning subjects. A great prof should teach student alternative theories and compare them without prejudice. A normal prof would simply stick with textbook descriptions rather than bringing forward his opinion. This person did not even clearly explain why some economists are critical of inflation targeting. Mishikin's textbook at least introduces those criticisms while also providing counter-criticisms. To this candidate, the inflation targeting just has no problem and is fine. After his teaching demo, I asked his opinion some economists argue inflation targeting may not work at zlb. His response was simply those economists do not understand expectation channel and took an example of Evans's rule. Come on, dude. The Fed does not have an inflation targeting officially. It is wrong to compare the Fed to another central bank with officially inflation target. Evans rule shows the inflation targeting is not enough. The Fed has to show that it will be committed to another target as well to effectively influence expectation. It shows the weakness of inflation targeting not its strength. To him, Mark Carney mentioning NGDPT or Mankiw and Feldstein simulating NGDPT and finding favourable results in the early 1990s already really does not matter. As a student, I want to learn from a prof general ideas about central banking and monetary policy that I will use for my research in the future. However, this person indeed disappointed me.
Negative externalities of Nutrias
The South Korean ecosystem is being distracted by overbred nutria.
http://www.koreatimes.co.kr/www/news/tech/2011/06/113_88098.html
These rodents were imported for the fur industry to South Korea in the 1980s. As South Korea's fur industry became senile, those nutria raised for fur have been released. They can grow as big as 1 meter from head to tail.
In South Korea, now, there is no natural predator to nutrias. First, during the Japanese occupation in the early 20th century, the Japanese colonial government massively hunted large preyers such as grey wolves, black bears, tigers, or leopards. Second, during the Korean War, the U.S. Air Force bombed through the peninsula and it led to even smaller preyers to being extinct. Especially, the Korean inner-land water ecosystems have naturally lacked large predators like grizzlies. Snakes and large birds could be potential predators near lakes or rivers but their populations have decreased recently, too, because of rapid industrialization and subsequent urbanization. Where the tiger is absent, the fox becomes the ruler. In this case, a nutria is the fox.
It is indeed disastrous to the South Korean ecosystem. Since nutrias' main preys are water insects and fish. Outgrown nutria population is leading the natural population of water insects and fish to decrease, which in turn is leading to a even more serious decrease in large birds and snakes populations. They also eat water plants, which are not only diets for fish and other water animals but also oxygen providers to water. A decrease in oxygen in water leads to lower water quality, which is harmful to both humans and other lives. They also attack migratory birds temporarily nesting in Korea during summer or winter, which could cause even greater distraction in environments in East Asia. Recently, they even started attacking the people who came to the water to enjoy leisure.
To reduce their population, municipalities and provinces started incentivizing nutrias hunting by paying citizens per nutria body. I don't think it is too brutal. However, the Korean authorities could have prevented this distraction from happening by levying a large sum of environmental taxes. They might have simply banned fur industry if the tax rate required to prevent the distraction were too high.
Another way that could have prevented the problem is privatization of properties near lakes or rivers owned by government, where nutrias live to the people. Nutrias should lower the values of those properties and the owners would have tried to prevent them from coming in. Then, they would have either force the owners of nutria farms to pay to build screening barriers or the property owners would have built them themselves.
I'm not sure any of those method will work now. However, it is still true these negative externalities could have been averted if Koreans took proper measures suggested above.
http://www.koreatimes.co.kr/www/news/tech/2011/06/113_88098.html
These rodents were imported for the fur industry to South Korea in the 1980s. As South Korea's fur industry became senile, those nutria raised for fur have been released. They can grow as big as 1 meter from head to tail.
In South Korea, now, there is no natural predator to nutrias. First, during the Japanese occupation in the early 20th century, the Japanese colonial government massively hunted large preyers such as grey wolves, black bears, tigers, or leopards. Second, during the Korean War, the U.S. Air Force bombed through the peninsula and it led to even smaller preyers to being extinct. Especially, the Korean inner-land water ecosystems have naturally lacked large predators like grizzlies. Snakes and large birds could be potential predators near lakes or rivers but their populations have decreased recently, too, because of rapid industrialization and subsequent urbanization. Where the tiger is absent, the fox becomes the ruler. In this case, a nutria is the fox.
It is indeed disastrous to the South Korean ecosystem. Since nutrias' main preys are water insects and fish. Outgrown nutria population is leading the natural population of water insects and fish to decrease, which in turn is leading to a even more serious decrease in large birds and snakes populations. They also eat water plants, which are not only diets for fish and other water animals but also oxygen providers to water. A decrease in oxygen in water leads to lower water quality, which is harmful to both humans and other lives. They also attack migratory birds temporarily nesting in Korea during summer or winter, which could cause even greater distraction in environments in East Asia. Recently, they even started attacking the people who came to the water to enjoy leisure.
To reduce their population, municipalities and provinces started incentivizing nutrias hunting by paying citizens per nutria body. I don't think it is too brutal. However, the Korean authorities could have prevented this distraction from happening by levying a large sum of environmental taxes. They might have simply banned fur industry if the tax rate required to prevent the distraction were too high.
Another way that could have prevented the problem is privatization of properties near lakes or rivers owned by government, where nutrias live to the people. Nutrias should lower the values of those properties and the owners would have tried to prevent them from coming in. Then, they would have either force the owners of nutria farms to pay to build screening barriers or the property owners would have built them themselves.
I'm not sure any of those method will work now. However, it is still true these negative externalities could have been averted if Koreans took proper measures suggested above.
Sunday, March 3, 2013
Event and Period
Sumner seems to attempt to debunk textbook macro description on the 1970s and early 1980s.
I agree that stagflations in 1973-1975 and 1979 were not caused by expansionary monetary policy during the previous decade. It simply does not appear true. It was real shocks that disrupted the supply of oil all around the world in 1973 and 1979. After the shock was gone in 1973, the unemployment rate fell.
Plus, if the oil shock had been truly the cause of high price of the 1970s, the inflation rate should have been brought down. However, it stayed high, instead. It had remained over 5% until the late 1982.
Compared to pre-1st-Oil-Crisis period and post-Volcker period, this was indeed the period of Great Inflation.
However, whether the 1970s was a stagflationary period is another question. Textbooks define a recessionary period as a period with actual output below potential output; an inflationary (or expansionary) period as a period with actual output over potential output. It seems the late 1960s and early 1970s fit an inflationary period and the mid and late 1970s fit a recessionary period.
Given that inflation rate stayed high after the first oil shock, is it really wrong to call 1973-1982 a stgflationary period?
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