New Resource for Teachers

I want to draw your attention to a new link on my link list.  It's Ed Dolan Economics Blog. I just found out about it yesterday. But I've visited a few times.  The author provides free powerpoint slides to accompany his posts. I hope this proves useful for you.

Luxury Goods

A short piece from a recent edition of The New York Times, is titled "Is Environmentalism a Luxury Good?"  The piece points to a paper out of the National Bureau of Economic Research that seems to indicate that when times are tough, many of us put issues like the environment behind things like paying the bills.

This really shouldn't be surprising. People make choices on how to use scarce resources. Their immediate short-term wants tend to take time preference over longer-term wants. I've often told students that issues like the environment, arts and culture, and social justice have a better chance of being addressed when the economy is humming along than when we are afraid for our livelihood. Thus to connect to my other post…the sooner the economy gets back on track, the more likely we’ll start worrying about things other than the economy.

I'd welcome your thoughts.

Business Cycle Measurement

When we teach macro, we spend time on business cycles. One of the issues that comes up is the definition of the various components, and who gets to "make the call" on the turning points. Hopefully you're successful in dismissing the "two consecutive quarters of negative GDP growth" rule of thumb.

But the Federal Reserve Bank of St. Louis has just published an informative article on business cycle measurement in its Economic Synopsis publication. It examines a couple of alternative measures that are interesting. Truthfully, both of the measures discussed seem to indicate that things turned around in late 2008. And this topic may only be of esoteric interest. Nevertheless, it can help students understand that calling the turn is not as simples as "two consecutive quarters...".

Explaining Tax Cuts

A few days ago, Bryan Caplan at the Library of Economics and Liberty offered a logical explanation for providing cash to consumers as a method of fiscal stimulus.

The standard argument is you can't depend on consumers to spend it. (That's also often a reason that "government" can do it better.) But Bryan's analysis is worth looking at. Even if you think stimulating demand has problems (so does he); his idea of a cushion or comfort zone that needs to be rebuilt before effective demand kicks in is an interesting one.

More on Fiscal Policy

John Taylor has a good post on a recent study by Alan Blinder and Mark Zandi on the effectiveness of fiscal and financial intervention. Dr. Taylor found some faults with the paper. And other reputable blogs have joined the discussion.(HT to Russ Roberts at Cafe Hayek).

There was also a TV debate between Dr. Taylor and Dr. Zandi on PBS.


The debate was informative and showed some areas of agreement as well as disagreement - as most debates are likely to do. Here’s the link if you can’t get the video above.

All of the reading and watching are worthwhile for that unit on fiscal policy. After all, one of the questions you're likely to hear is "does/did it work?"

The Globalization of an American Export

In my opinion, one of the best definitions of globalization is found in the first paragraph of this page of the Globalization 101 web site.

When I was teaching a course on Globalization for the Powell Center for Economic Literacy, I would start off the course with that paragraph. I would ask the students about the various parts of the paragraph and what they thought was meant by each part, or if they could give me an example.

The Wall Street Journal had an excellent example of how globalization drives cultural and economic decision-making recently. The story is about how movies are pitched, written and produced in the U.S. as a result of the global marketplace. The short explanation is that proposals for Hollywood films need to be translatable (and I'm not talking about language) to foreign audiences. To truly understand what I mean, check out the graphics that are part of the article.

And please share your thoughts.

Belated Birthday Recognition

Yesterday, July 31, was the anniversary of the birth of economist Milton Friedman. He won the 1976 Nobel Prize for Economics for his work on monetary theory among other things. He was also the author of the book Free to Choose and the TV series by the same name.

When I first started teaching economics, it was among the first supplemental resources I used that seemed to engage the students and generate a lot of discussion. The students actually looked forward to their sessions with "Uncle Milton", as they referred to him. I got to know more about him (secondhand) when I worked at the Fed with an economist who had him as his graduate advisor at the University of Chicago.

If you want to know more about him, check here and here. Regardless, I thank you "Uncle Milton."