Christina Romer on the Stimulus (or, Macroeconomics in Action)

A speech by Christina Romer (chair of the Council of Economic Advisors and until recently an economic historian at Berkeley) in defense of the stimulus package is making the rounds in the econblog world. I highly recommend it – it’s an excellent (if brief) description of why she thinks the stimulus will work and what’s wrong with the critiques of her estimates of the multipliers on taxes and spending (that is, how much stimulus per dollar of government spending we will get).

A couple notes/thoughts: Her research involved a significant amount of qualitative analysis of government documents and the congressional record. How refreshing, from an economist! Second, Romer (like many economists) uses the financial sector/real economy distinction, arguing that aiding recovery in the real economy will help the financial sector out. I still wonder when that distinction starts and when it takes on its current vocabulary?

Last, here’s Romer’s defense of “non-traditional” stimulus spending:

Second, there’s a tendency in some circles to criticize specific spending proposals, like funding for preventative care or Pell Grants for college, that involve spending that looks very different from our traditional view of stimulus projects where brawny men build things out of steel. But, those types of spending provide just as much stimulus as road-building and school-weatherizing. Spending on preventative care leads to the increased employment of nurses and clinic staff. Pell Grants lead to job creation in education, and by relaxing the budget constraint for households, lead to jobs in industries that produce consumer goods.

I love the writing, and the ease of justifying massive new government spending on education and health care. As Rahm says, we can’t let a crisis go to waste. Hooray for the Obama administration! Let’s just hope we get a single-payer system by the end of this (though that seems unlikely still).

Oh, and I’m sure you all caught Obama’s education rhetoric in his big speech last week, right? Did you notice the bit about it being unAmerican not to attend college?

But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It’s not just quitting on yourself, it’s quitting on your country — and this country needs and values the talents of every American.

I’m calling this the “full employment for professors” act.

Where Callon and I Disagree: The History of the Economy

“The economy obviously existed before economics became a formal academic discipline, but this does not mean that we went from a state of non-reflexivity to one of intense reflexivity, monopolized by a small number of academic researchers.” – Callon (2005), “Why Virtualism Paves the Way to Political Impotence: A Reply to Daniel Millers Critique of the Laws of the Markets.” in the Economic Sociology newsletter.

I have thus far found no evidence of any object called “the economy” before perhaps 1930, nor have Emmison (1983) or Mitchell (1998). Perhaps Callon simply meant that people produced, distributed, exchanged and consumed goods before the rise of formal economics. If so, then we have no disagreement. But, while I am no longer continually surprised at how casually sociologists throw around the terms “economy” and “market” as if these were simple, ahistorical constructs, I am a bit more surprised at such language from Callon himself. So, in case you are out there, why do you keep talking about “the economy” and what do you mean by it, M. Callon?

Edit: This post came off as snarkier than I intended it. That’s what happens when you post things on the internet half-asleep, I suppose. My last question is a serious one, trying to be a little silly, but not snarky. I really don’t understand why Callon shifts between the language of markets (a term he spends a fair bit of time defining and discussing) and the language of economy/economies (which, as far as I can tell, he does not). What is the difference for Callon between “markets” and “the economy”? I don’t know. Maybe it is somewhat nitpicky, but given how important the term “economy” is in contemporary discourse, and his carefulness with the term market, I expected a bit more than “obviously existed…”

In Defense of Callon’s Performativity of Economics

This past Thursday I was faced with the delightful task of trying to defend the “performativity of economics” literature from two of the best informed skeptics I have ever encountered. I can’t quite remember how the conversation shifted to the topic, but I soon found myself trying to re-justify the entire program from the ground up in order to defend my take on it, as well as the work I would like to do using the concept. So, here is a brief gesture in that direction.

Econometrics

Just finished my econometrics exam. Remembering the formulae for estimators of the asymptotic variance of heteroskedastic models is not particularly pleasant, and we were not allowed a formula sheet. Thankfully, we have only one more exam left (the final), and that will be the last exam I have to take in a required course to get my PhD (I might end up taking more if I sit in on or take as electives more stats or macroeconomics). Coming out of the test, I kept thinking of this definition of econometrics:

“Econometrics is the art of putting hats on Greek letters.”*

I am not a particularly good haberdasher, but I think at least some of my hats fit. We’ll find out after break.

Oh wow, it’s break. That’s nice. Now I have time to work on my research! Also, it’s extremely nice to be feeling not sick anymore. Just in time too..

* Alternate, long version: “Econometrics is the subtle science and exact art of putting hats on Greek letters.”

I Am The Very Model of a Modern Sociologist

So, Friday night was the annual Sociology Cabaret here at Michigan. I think a lot of departments have events like this – an evening of scenes put on by the graduate students, often the first-years as a sort of hazing ritual. Apparently, Michigan’s started 10 years ago, which makes me wonder how recent a phenomenon this is. Anyway, I had the honor of MCing the event (i.e. stalling while we rearranged the stage or loaded up a video) and starring in one bit. I thought I’d post the lyrics to my bit below, in the hopes they continue to amuse. We filmed the event, so hopefully I’ll have video at some point (if the sound quality is ok).

“I am the very model of a Modern Sociologist”

Cabaret Eve Economic History Update

Things have been pretty hectic for me this week, as the Sociology Department Annual Cabaret (organized by the first year cohort) is tomorrow night, and we are in full gear making props, rehearsing sketches, doing our statistics problem sets, etc. But Brad DeLong has forced me out of hiding for a moment to link to his excellently written and insightful essay on monetarism and the death thereof. Here’s a snippet from the middle (of a not very long piece) about why Friedman’s plan to just “keep the money supply growing smoothly” is not as easy as it sounds:

No central banker controls all these vast and varied sluices of the money supply – at least not in economic reality. When banks and businesses and households get scared and cautious and feel poor, they take steps to shrink the economic reality that is the “money supply.” Businesses extend less trade credit. Credit card companies cut off cards and reduce ceilings. Banks call in loans and then take no steps to replace the deposits extinguished by the loan pay-downs. Without a single bureaucrat making a single decision to slow down a single printing press, the money supply shrinks—disastrously in episodes like the Great Depression. Thus in emergencies, to say that all the central bank has to do is to keep the money supply growing smoothly is very like saying that all the captain of the Titanic has to do is to keep the deck of the ship level.

Hmm. Now I need to add “measures of the money supply” to my list of economic indicators to learn the history of…

Blogroll for Accounts

So, question for my devoted but small readership:
Are there any excellent (economic) sociology blogs I’m not reading? Assume that any relevant blog is either listed on my blogroll or not currently being read. What’s fabulous out there? Are any of the contexts blogs consistently worth following – I was reading pubcrim for awhile, but that’s it. I’m working on compiling an updated list of the best and brightest of Soc Blogging with an econ soc focus for the next issue of the Economic Sociology section newsletter Accounts and want to make sure I don’t miss anything.