Friday, September 09, 2011

Jim Follain has a proposal for empirical macro

He writes:

First, let’s do more research to help reduce the uncertainty regarding the fiscal situation we face and the new, modern and more complex economy in which we live. This step will involve de-emphasizing a number of metrics underlying macroeconomics built around national totals, such as national income, GDP and the aggregate unemployment rate. Instead, we are wise to take a more geographically granular view of our economy that measures regional, state and local economic activity and adapts policies specific to these areas. Focusing upon the national aggregate or the national average masks the extraordinary variation among markets in this country and, indeed, can even make it harder to identify seriously stressful events until it’s too late. This is difficult to do, but c’est la vie.


Anonymous said...

Agreed. Using just the aggregate numbers, it is impossible to put together sensible policy measures. For example, knowing that the unemployment rate for the lowest earners is 3% higher than the national average or that unemployment levels vary hugely by race will allow the policymakers to take more targeted measures to address these structural issues.

Another example: unskilled / skilled unemployment levels

Brijmohan said...

The dilema I'm facing right now is whether to play the sorted game under the sorted rules that are being put in place or not... not about buying a house right now (not here, not now), but doing things like going "all in" with this market... see it for what it is and who cares about reality or not... it's just a game anyhow..

After all, we've got Goldman Sachs reporting record earnings, the autho industry being held together by the US taxpayer, the US deficit to surpass $2T/year this year (easily) and >10% unemployment... That's not to mention armies, marines and sailors spread around the world in countries that despise us or on oceans that are heating up and dying ...

Yes, it sounds like it's time to go all in..

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