Research Economist at the Bank of England
My resumption of running continues. February managed to nail January in both distance and pace.
Count: 14 runs (January was 16)
Distance: 100km (January was 94km)
Av. Pace: 5:39/km (January was 5:59/km)
I’ve now managed over 200km in total, which was #5 of my running goals, and which also makes this the best block of running I’ve had in terms of total distance for over 13 years:
All exercise is publicly visible here (on runkeeper.com).
I might as well put this here. Brad DeLong writes:
Put me down as somebody who does not believe that the seasonal factor in the unemployment rate is twice as big today as it was four short years ago, or was half as big four short years ago as it was in the early 1990s…
Not that I am complaining about the BLS, you understand. If I could do better, they would already have done better. Nevertheless this is a source of nervousness…
My first thoughts:
At a first glance, the size of the seasonal adjustment factor looks like it is countercyclical to the business cycle, which immediately raises the question: Why would seasonality-based volatility in unemployment increase during a recession?
Could it just be that seasonal employment is less susceptible to business cycle movements than regular employment, so that during a recession the (relatively constant) seasonal movements look larger relative to the smaller total employment number?
I resumed my stop-start relationship with running on Christmas Day. January has been my best month for running in over 12 years (I’ve lost all records prior to 1998).
Count: 16 runs (previous best was 13 in Feb 1998, Jul 1998 and Aug 2008).
Distance: 94km (previous best was 74km in Feb 1998, followed by 69km in Aug 2008).
Av. Pace: 5:59/km (Feb 1998 was 5:05/km, but we’ll ignore that for now).
I’ve now hit 100km in total, too, which brings up #2 on my running goals.
All exercise is publicly visible here (on runkeeper.com). I’m finding the chatter with a mate and one of my brothers (the other being a lazy git) in Australia to be a real help.
I just got this email from the careers service here at LSE (emphasis mine):
A Conservative MP is looking for support in his role on the Public Accounts Select Committee.
The position is paid £7.85 p/h and will be for approx 15 hours per week.
The successful candidate must have excellent financial understanding in order to examine and analyse accounts.
The candidate should be inquisitive and have an interest in challenging public accounts.
The candidate should also be able to draft their findings into concise briefings and press releases.
To apply please send your CV and covering letter (1 page max) to XXXX by email XXXX@lse.ac.uk ASAP
£7.85 per hour? Are they kidding? They’re sending this to every economics Ph.D. candidate at the London School of Economics? What the f*** are they thinking? (the first person to say “non-monetary incentives” gets a clip ’round the ear)
Update 23 September 2010: Professor Frank Cowell, over on facebook, points us towards:
Gneezy, U. and Rustichini, A. (2000) “Pay Enough or Don’t Pay at All“, Quarterly Journal of Economics, 115, pp. 791-810.
Here’s the abstract:
Economists usually assume that monetary incentives improve performance, and psychologists claim that the opposite may happen. We present and discuss a set of experiments designed to test these contrasting claims. We found that the effect of monetary compensation on performance was not monotonic. In the treatments in which money was offered, a larger amount yielded a higher performance. However, offering money did not always produce an improvement: subjects who were offered monetary incentives performed more poorly than those who were offered no compensation. Several possible interpretations of the results are discussed.
The French Senate has passed the bill after the General Assembly (lower house) did in July. From that HuffPo piece in July:
Officials have taken pains to craft language that does not single out Muslims. While the proposed legislation is colloquially referred to as the “anti-burqa law,” it is officially called “the bill to forbid concealing one’s face in public.”
It refers neither to Islam nor to veils. Officials insist the law against face-covering is not discriminatory because it would apply to everyone, not just Muslims. Yet they cite a host of exceptions, including motorcycle helmets, or masks for health reasons, fencing, skiing or carnivals.
I’d really like to read a literal translation of the bill. I’m curious whether it effectively also bans this sort of thing or this sort of thing. Do French citizens have a right to privacy? Wouldn’t this bill violate such a right?
*sniff*
Then again, Urlai also thinks that I’m over 66 years old.
The Basel III compromise is out. Via Free Exchange, you can read the text here. Or you can just look at the BIS’s handy-dandy little chart:
Let me quote Ryan at Free Exchange:
The minimum common equity requirement has been increased from 2% to 4.5%. Common equilty is what is called “core” Tier 1 capital. Regulators have agreed on an additional 2.5% “conservation buffer”. Most large banks will likely maintain such a buffer, as falling below it will lead to additional regulatory scrutiny. The likely impact, then, is a pretty substantial increase in the common equity reserves banks need to hold.
What he said. Anyway …
The asterisk on the countercyclical buffer has this note against it: “Common equity or other fully loss absorbing capital”. Here’s some more detail, from the press release itself:
A countercyclical buffer within a range of 0% – 2.5% of common equity or other fully loss absorbing capital will be implemented according to national circumstances. The purpose of the countercyclical buffer is to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth. For any given country, this buffer will only be in effect when there is excess credit growth that is resulting in a system wide build up of risk. The countercyclical buffer, when in effect, would be introduced as an extension of the conservation buffer range.
In other words, the countercyclical buffer is expressly designed to allow for different rates of credit expansion across different countries. This is excellent news for the Euro area, because (as I mentioned previously) it explicitly allows — heck, even encourages! — individual member countries to re-assert some control over monetary policy. Remember that the level of credit in an economy is not just affected by demand for the stuff (which is itself influenced largely through interest rates), but also through the supply of the stuff, which falls under the umbrella of macro-prudential regulation (since, it is assumed, banks will generally supply all the credit they can subject to the restrictions of capital adequacy regulations). The former may remain the remit of the ECB, but the latter can be economy-specific.
This is arguably desirable because, since the Euro-area economies are not perfectly synchronised, we have for many years seen monetary policy be overly tight for low-inflation countries like Germany and overly lax for high-inflation countries like Spain.
To some extent, one might view Germany’s reluctance to accept tighter capital requirements as evidence that they have been tacitly using this logic all along: that is, they were already compensating for the (to them) overly-high interest rate with relatively lenient policies on the supply side. To a German’s mind, it may therefore appear that with these higher minimum ratios, a neutral position for the German economy will require lower interest rates on average than previously prevailed.
The risk, from the Germans’ point of view, is that in a Eurozone world with higher capital ratios but lower interest rates, countries like Spain may be tempted to avoid making use of the countercyclical buffer and so may still end up with faster-than-ideal credit expansion. How to convince the central banks and/or regulatory authorities in Mediterranean countries to be financially conservative, even when their governments aren’t, is clearly the next challenge.
It’s the new academic year. I’m once again teaching (not lecturing!), this time in EC400, the pre-sessional September maths course for incoming post-graduate students, and EC413, the M.Sc. macro course.
I’m also a new (Teaching) Fellow in the school, which means that a) I’m now a formal academic advisor (my advisees are yet to be determined); and b) I’m technically part of the academic staff at LSE (even though I’m only part-way through my Ph.D.). That last point gets me access to the Senior Common Room (where the profs have lunch) and into USS, the pension scheme for academics at most UK universities.
Here’s what’s amazing about USS: It’s a final salary scheme! I’m honestly amazed that there are any defined-benefit schemes still open to new members. Well, there you go. I’m in one now.
Here is a quick, dirty and poorly-written explanation why I (probably) oppose the RMT’s strike action at London Underground:
The Tube, like most public services, is a monopoly. As such, Transport for London (TfL) has pricing power and the ability to extract economic rents from consumers. To whom would those rents flow? There are three possible groups: Capital owners (bonds), Capital owners (equity) and Labour (the suppliers of the stuff, not the political party).
The owners of capital in the form of bonds have no ability to insist on being paid economic rents because they cannot credibly threaten to walk away. There are plenty of other (institutional) investors that are perfectly happy to step in and receive the low interest rates paid by TfL because TfL has the backing (implicit or otherwise) of the UK government and investors value that security.
The sole owner of capital in the form of equity is the UK government. They have no desire to extract economic rents. Indeed, they have an incentive to keep economic rents to a minimum because their existence is, on net, welfare-destroying for Britain as a whole.
That leaves the suppliers of labour. If no TfL worker was unionised, then individual employees would be unlikely to be able to insist on receiving economic rent (i.e. a wage in excess of the value of their marginal product). By being unionised, however, the employees have collective bargaining power and are therefore able to insist on economic rents. They can do this because they can credibly threaten to stop the tube from working. The current strikes are a demonstration of the credibility of any future threat.
There are two further issues to consider, however. First: what if without the union, workers would be unfairly exploited — paid less than the value of their marginal product? If this were the case, the increased bargaining power of unionisation would be justified as it would offset the exploitation. This is not a problem, however, because the owner of the Tube — the UK government — is not a a profit maximiser. It is a (zero-profit seeking) service maximiser. They have literally no incentive to pay less than the employees are genuinely worth.
Second: what if, when paid the value of their marginal product, TfL employees end up with incomes that are less than the cost of living? Once again, this fails as an argument for unionisation of TfL workers. It is the job of the government to guarantee a living wage to all workers across the country, regardless of their job. If TfL employees are concerned about this, they should be canvassing for an increase in the national minimum wage, not insisting on a higher wage just for themselves.
Therefore, to a first approximation, there is no justification for the unionisation of (and hence, no justification for the strike action by) London Underground employees.