faulker020

So, there's this story going around the econosphere, which says that the economy is being throttled by market power. I've sort of bought into this story . It certainly seems to be getting a lot of attention from top economists. Autor, Dorn, Katz, Patterson and van Reenen have  blamed industrial concentration for the fall in labor's share of income. Now there's a new paper out by De Loecker and Eeckhout blaming monopoly power for much more than that - lower wages, lower labor force participation, slower migration, and slow GDP growth. The paper is getting plenty of attention . That's a big set of allegations. Everyone knows that the U.S. economy has been looking anemic since the turn of the century, and now a growing chorus of papers by well-respected people is claiming that we've found the culprit. Monopoly power could potentially become Public Enemy #1 for economists, the way taxes and unions were in the 70s, and antitrust could become the new silver bullet p...

Via Brad DeLong -- still my favorite blogger after all these years -- I stumbled on this very interesting essay from 2001 , by statistician Leo Breiman. Breiman basically says that statisticians should do less modeling and more machine learning. The essay has several responses from statisticians of a more orthodox persuasion, including the great David Cox (whom every economist should know). Obviously, the world has changed a lot since 2001 -- where random forests were the hot machine learning technique back then, it's now deep learning -- but it seems unlikely that this overall debate has been resolved. And the parallels to the methodology debates in economics are interesting. In empirical economics, the big debate is between two different types of model-makers. Structural modelers want to use models that come from economic theory (constrained optimization of economic agents, production functions, and all that), while reduced-form modelers just want to use simple stuff like linea...

A little while ago, I started to wonder about a historical question: Why did Europe lose the Crusades? The conventional wisdom, at least as I've always understood it, is that Europe was simply weaker and less advanced than the Islamic Middle Eastern powers defending the Holy Land. Movies about the Crusades tend to feature the Islamic armies deploying fearsome weapons - titanic trebuchets, or even gunpowder. This is consistent with the broad historical narrative of a civilizational "reversal of fortunes" - the notion that Islamic civilization was much more highly advanced than Europe in the Middle Ages. Also, there's the obvious fact that the Middle East is pretty far from France, Germany, and England, leading to the obvious suspicion that the Middle East was just too far away for medieval power projection. Anyway, I decided to answer this question by...reading stuff about the Crusades. I read all the Wikipedia pages for the various crusades, and then read a book - Th...

In February, I wrote a Bloomberg View post called " The Myth of the Immigration Crisis " that got a fair bit of attention. In it, I wrote: Illegal immigration to the U.S. ended a decade ago and, according to the Pew Research Center, has been zero or negative since its peak in 2007:  About a million undocumented immigrants left the country in the Great Recession. But even after the end of the recession, illegal immigration didn’t resume. Now, my Twitter buddy Lyman Stone of the USDA has written a post alleging that my post is "bad" and "false" . Well, my mom always told me "Son, don't **** with the USDA," and that advice has served me well for many years. However, given the importance of this issue, I may have to ignore my mother's wise words, and rebut Lyman's post. Which won't be that hard to do, because Lyman, being the perspicacious fellow he is, in fact agrees with me on almost every substantive point. In which Lyman agrees wi...

While I was in Norway to give a talk about macroeconomics , an interdisciplinary group at the University of Oslo also invited me to give a talk about whether economics is a science or not. That's an impossible question, of course, since there's no official definition of what "a science" is. But I did have some thoughts on the matter. Here are the slides from the talk:     These slides don't speak for themselves quite as much as the macro slides did, and the topic is much broader and more vague, so I'll turn it into a full post. This post mostly just explains the slides. What the heck is a "science"? No one knows. Because no one has ever really been able to make one dominant definition of science stick. Some people define it as a method (e.g. Popper), some as a sociological phenomenon (Kuhn, Lakatos), and others don't even see much need for a definition (Feyerabend). And there are plenty of other opinions too. So the argument over whether economic...

I'd like to close the chapter of my life that involves complaining about macroeconomics. I've been out of that world long enough that it's becoming a distant memory. And much more qualified critics are on the job. Furthermore, macroeconomists I talk to - especially young macroeconomists - mostly seem to have heard and internalized all of the critiques. That doesn't mean I want to stop following developments in the macro field, but that my days as a certified "macro-basher" have come to an end. So when the Norwegian Finance Ministry, Norges Bank and Statistics Norway asked me to give a talk about "What Has Happened in Macroeconomics (and what still needs to be done)", I viewed it as an opportunity to sum up. Here are the slides from that talk. Enjoy.