Update on Housing Prices

Economic growth continues to lag behind many forecast. The primary reason is likely tied into the housing market. The housing market has continued to fall and now prices from their peak are down over 30%.

A return to normal?

Will we ever return to normal? For the last four years a big debate in economics centered around if the economy would rebound faster following a large recession. Think of a rubber band. The idea was simple, the further we fall the faster our economy will grow during the recovery phrase. This is not happening. Instead the economy is growing the same as our trend. Unless economic growth is faster than trend, we will never see a decline in unemployment.

An Update on Manufacturing

American manufacturing jobs increased last quarter. This is a good sign, but still have a long way to go before we make up the 8+ million that were lost.

Development through Services

Traditionally many developing countries develop through manufacturing. Think about the US during the last 1800s and early 1900 and even China today. The path to economic growth is usually through the promote of manufacturing goods, developing countries have a comparative advantage in low skill manufacturing exports (think outsourcing). After a few decades incomes will start to rise allowing residents to invest in better education, technology, and health care. The process is slow, but with the right government it works, recent examples  include China, Singapore, Korea, Ireland, Taiwan, and Brazil (these are just a few). Of course with the wrong government the low-skilled work force will be exploited and the country will fail to growth.

Here is an article talking about the possibility of skipping manufacturing and go straight into services.

Update on Economic Growth

The economy is growing, just not enough. The slowdown in the GDP growth rate will result in higher unemployment. We need the economy to grow at a 2% rate to maintain the current unemployment rate. A growth rate of 1.8% will cause unemployment to increase. The growth slowdown is largely attributed to a decline in government spending, inflation, and high oil prices. What should we do?

The Case for a Better Measure of Welfare

In class we discussed how we use GDP to measure welfare and in particular focused on what GDP fails to measure. Here is a debate at the Economist talking about whether or not we need a new measure. In class we discussed the use of the UN Human Development Index.

Learning through Osmosis

Are students spending the time (and challenging themselves) to learn course material? This has been a talked about issue. See here.

Why Economics is the Dismal Science

Here's a take by Brad Delong (Berkeley economist).

A Tale of Two Economies

Here is a nice piece on the divide in the US economy.

The increase in structural unemployment is something I've talked a lot about it in the past. The idea is simple, people unemployed today are unable to find work because of a skills mismatch. You can see my past posts here and here.

Unforeseen Consequences of the Housing Bubble

During the housing bubble most money was been used to build homes, commercial offices, and strip malls. The money was not being used to expand our infrastructural in transportation (roads, airports, trains, and bridges) or to create new innovations. The failure to expand our infrastructural does not show up immediately in lower growth, but shows up in a lower potential output five to ten years later. Currently our potential GDP for 2011 is $14.5 trillion (actual GDP is $13.5 trillion). This means we are producing $1 trillion less than we should be. This doesn't account for the potential output being revised lower over the last 5 years. The revisions were done because of a slowdown in productive investments. Ten years ago based on the current rate of innovation and investment potential output was projected to be $15.5 trillion (from the CBO).

Wage Discrimination?

Is there still wage discrimination between between males and females? Maybe. Is it fair?

The Lost Generation

You probably don't want to know who.

High Prices for Driving

One thing you will quickly learn about me is that I am very supportive of high gas prices. Here is an article discussing a driving tax. This post by Greg Mankiw sums up my reasoning for supporting a carbon tax.

For my past posts on a carbon tax see here, here, and here.

Why Study Economics

Economics is an insightful study of how people behave and organizations operate under constraints of resources.  It provides powerful tools to understand and analyze many aspects of our lives and help us to be an informed, perceptive decision-maker.  Decision-making is an integral part of business or governmental organizations.  The economics department at Georgia State University offers a modern curriculum to prepare you for future endeavors and to meet unforeseen challenges successfully.  There are many good reasons to study economics:

 

(1) To be a knowledgeable worker, consumer, investor, and citizen
Economics training helps develop methodical ways of thinking and problem solving which can be used in our lives as effective members of the workforce, responsible and knowledgeable citizens, informed consumers, savers, and investors, and perceptive participants in the global economy.  

(2) To acquire a set of important skills for career-building
A key element for getting a job and succeeding in a career is your set of desirable skills.  Economics training offers individuals a terrific set of marketable skills.  They include written communication and presentation skills, quantitative communication skills, and analytical problem-solving skills.  Learning to communicate your ideas in writing and presentation to a broad range of audiences is a key component of our economic curriculum.  Economics majors are also trained to understand numerical data and recognize their importance, use a variety of data analysis and computing tools, and communicate quantitative information to others.   Moreover, there is no better major to acquire analytical problem-solving skills than economics.  Economic principles can be applied to identify the core elements of many problems confronting business and government and to formulate effective decisions to tackle those problems.  

(3) To seek employment that interests you
Finding employment that interests you can be crucial for a successful and fulfilling career.  Studying economics is exciting and fun, and it opens a wide variety of career opportunities for individuals.  Economics graduates have gone on to rewarding professional careers in industry, trade, banking and finance, law, consulting, government, research, and education.  The career flexibility is coupled with the fact that economists often receive high salaries.  

(4) To gain a solid foundation for other advanced fields of study
Because of vigorous and comprehensive training, economics majors are sought by not only employers but also graduate schools.  Graduate study in law, business, politics, or public policy commonly demands logical thinking abilities and strong investigative and quantitative skills.  Indeed, economics is one of the most highly respected academic disciplines.

(5) FLEXIBLE
With the major changes that have taken place in the world of work, the rapid changes in technology and globalization, it is not uncommon for individuals to make several career changes during their lives. Today's hot specialized degree has often become tomorrow's target for downsizing. Companies that were relatively unchallenged in the domestic market have suffered as a result of global competition. As a result, experts in career development recommend that one seriously consider a flexible degree such as economics.

(6) REWARDING
Majors in economics receive average starting salaries that are in the upper range of salary offers made to majors with other business degrees and significantly above most majors in other areas of the liberal arts.

(7) CHALLENGING
Economics is a discipline in which you learn a unique way of thinking. This unique way of thinking is a primary reason that economics is also a flexible degree. Economic concepts have been applied to a number of different areas that would, at first, seem totally unrelated to economics. However, the concepts of economics are critical to finding solutions to problems in a wide variety of areas.

(8) RICH IN SKILLS

(a) Analytical/Critical Thinking Skills - There is no better major for learning analytical problem solving than economics. You have learned how to take a problem, and break it down into its separate elements (ceteris paribus). You have learned that economics has a core set of tools that can be applied in a wide variety of settings (the same tools apply to both consumer and firm behavior, for example). All of business is problem solving, and this is the expertise you have learned from the
logical constructs in economics.

(b) Quantitative Skills (Mathematical and Statistical Technics) - This means the ability to understand numbers and their importance, and the ability to communicate quantitative information to others. All the graphs in economics represent quantitative concepts, and as an economics major you will certainly have no fear of graphs. Further, many classes use explicit numerical problem solving. You also have the opportunity to explicitly learn a wide range of statistical and computing tools, in Statistics, and Econometrics. You have the opportunity to explicitly learn a broad range of mathematical tools in Mathematical Economics, Game Theory, Experimental Economics and a wide variety of other courses.

 

(c) Comminication Skills (Written and Oral) - This means communicating with a variety of audiences in a variety of formats. In economics, you will learn to communicate your ideas in writing- through essay exams, papers, and homework. In addition, the small class sizes in the upper level classes allows you the opportunity to speak in class. All of these tools improve your interpersonal communication skills. Some classes also present the opportunity to work with other students explicitly.

Summer Course

Hi All,

This is your course blog. As I discussed in class, for full credit I expect 3-5 quality posts per week. I do not like seeing posts made during class time or in very short time frames. Posts completed with 1-2 minutes apart will not be counted. Please feel free to email me with any questions. When posting make sure your user name is identifiable.