Monday, April 30, 2007

What's hot in economics

From a scan of the leading journals I make the following observations
  1. political economics is becoming mainstream following Acemoglu and Persson
  2. theoretical econometrics is becoming a niche
  3. nonlinear models are becoming more popular
  4. game theory pretends to answer everyday questions, as does experimental economics, following Levitt
Have you made similar or additional observations recently?

Sunday, April 29, 2007

Wurst in London

Kurz & Lang is a London takeaway which serves German bratwurst and other quick delicacies.

1 St. John Street, Smithfield, London EC1M 4AA, between Farringdon and Barbican

Germans third biggest foreign group in UK

The 2001 Census shows that the Germans are the third biggest group of residents born abroad, after India and Pakistan. The BBC says, however, "Many are them are almost certainly not German but the children of British forces personnel, born while stationed in Germany itself."

US American are in fifth place. German foreigners have seen the six biggest growth. Most Germans live in the South East, while Richmond is the borough which attracts many of them.

Saturday, April 28, 2007

Last German polymath dead

The physicist and philosopher Carl Friedrich von Weizsäcker has died at the age of 94. He was an early mentee of Heisenberg. After WWII he fought vehemently agains the use of the atomic bomb. In 1979 he declined to become president of Germany. He is the brother of Friedrich von Weizsäcker.

Greek minister resigns

AP reports
Greece's employment minister resigned Saturday after weeks of criticism that followed the discovery that a state pension fund had overpaid €4.8 million (US$6.4 million) for state bonds.
According to the Greek news this means that millions of state pension payments are in jeopardy. This surely will worsen state finances in the future and Greece again will fail the Maatricht criteria. The big question is how this could stay uncovered for so long.

Friday, April 27, 2007

Schumpeter revival

Schumpeter was one of the most influential economists of the 20th century. McCraw has published a new biography. Although Schumpeter, who was born in Austria and then moved to the US, didn't leave a coherent theory, he is most associated with inovation and entrepreneurship today. In the words of the Economist:

Schumpeter's two greatest insights were that innovation is the driving force not only of capitalism but also of economic progress in general, and that entrepreneurs are the agents of innovation. Entrepreneurs are possessed by “the dream and the will to found a private kingdom”. But they are confronted with all sorts of obstacles. Innovation is hard to produce and harder to sustain: all successful businessmen stand on ground that is “crumbling beneath their feet”. And of course it produces losers as well as winners.

Poll bias in the UK

I have found a useful data set which lists UK polls over the past two years. It also lists the commissioning newspapers or channels and the pollsters. Many pollsters work with the same newspapers and that’s why I concentrate on former. I estimate the normalised lead of Tories over Labour by controlling for a time trend (exceldate in the table) and a switch in the lead in December 2005. By normalisation I control for other parties, which means I divide by the sum of votes for Tories, Labour and LibDems.

I find that BPIX over-estimates the lead by 3 percentage points, ICM and YouGov over-estimate by 2 percentage points (see table). The R2 is surprisingly good with 74%, keeping in mind that we don’t control for political events. This can also be read in the way that all the other pollsters (eg Populus) under-estimate the lead.

Blacker on the Apprentice

Terence Blacker comments on The Apprentice in the Independent. Although he is right in saying that the bullying and aggressiveness is a bit outdated, he oversees two facts. One, most viewers do not take the show seriously, and the candidates are not role models for today's businessmen, if they were they wouldn't need to be on the show. Two, a lot of business is about selling, maybe that's not the case at the Independent, but look at the results when corporations revise their profits.

Thursday, April 26, 2007

First woman to win Clark Medal

36 year old Susan Athey of Harvard University is the first woman to win the Clark medal for economists below 40. Her most cited paper is Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information Econometrica, Vol. 69, No. 4 (Jul., 2001). This paper analyzes a class of games of incomplete information where each agent has private information about her own type, and the types are drawn from an atomless joint probability distribution

Wednesday, April 25, 2007

Econometrics journals impacts

The Free University of Amsterdam reveals the impact factors of the top 50 (shown below only top 10) econometrics journals. Econometrica only makes it into seventh place, which probably we can blame on the bias in game theory.

Biostatistics (2) and Marketing Science (4) are surprising entries and show that economists are losing the supremacy over econometrics. In eighth place we have another marketing journal. Ninth and tenth place are occupied by financial journals.

Biostatistics was only set up in 2000. Its editor is Scott Zeger of John Hopkins University. The journal has many articles on duration models, and Bayesian econometrics.

Rank in 2005 Acronym

  1. -------- QJE
  2. -------- Biostatistics
  3. -------- JEL
  4. -------- MarkSc
  5. -------- JHE
  6. -------- JEP
  7. -------- Econometrica
  8. -------- JMR
  9. -------- JEG NEW
  10. -------- JF

Inflation forecast

CPI inflation has surged above the 3 percent mark in March, for the first time since the Bank’s independence.

I have fitted several models (in SAS) and chosen the one with the lowest Bayesian Information Criterion which is the integrated MA(1) with one seasonal lag and no intercept. The 12-step ahead forecast shows a decrease in inflation. The forecast for April is 3.0. However, the uncertainty (confidence bands) is huge.

new Earth - 581c

Scientists have found a new Earth-like star. CNN reports about possible life there

You could have a birthday party every 13 days because that's how fast this new planet circles its sun-like star. But watch the cake -- you'd weigh a whole lot more than you do on Earth.

However, it would take us 20 light years to get there.

Tuesday, April 24, 2007

World Snooker Championship

Ronny O'Sullivan is favourite to win the WSC in Sheffield. Last year's runner-up Peter Ebdon is third in the bets with odds of 10/1. Shaun Murphy who was beaten by Ebdon last year is this year's runner-up according to the bookies. Last year's winner Graeme Dott and surprise semi-finalist Marco Fu already dropped out in the first round.

Monday, April 23, 2007

Putin on Yeltsin

The FT reports
Vladimir Putin, Russian president, on Monday night hailed Boris Yeltsin as the father of a democratic Russia. “A man has died thanks to whom a whole new era began. A new democratic Russia was born: a free state open to the world, and a state in which power really does belong to the people,” Mr Putin said.
Well, what can he say. But why does he praise the democracy he is trying to defeat by his state capitalism? Why does he praise the freedom he does try to limit with his nationalist revolution?

Sunday, April 22, 2007

Leo Strauss - Father of Neo-Conservatism

The German-American philosopher Leo Strauss (1899-1973) is for many the father of Neo-Conservatism.

He was born in Hessen, Germany. He received his PhD in Hamburg under Ernst Cassirer. In 1937 he emigrated to the US, where twelve years later he gained the position of professor in Chicago. Here he taught and influenced many of today Neocon thinkers, among them Paul Wolfowitz.

Strauss was against relativism which he saw embodied in the philosophy of Martin Heidegger. He saw himself as a follower of Plato.

Liberal relativism has its roots in the natural right tradition of tolerance or in the notion that everyone has a natural right to the pursuit of happiness as he understands happiness; but in itself it is a seminary of intolerance.
And this is really how one should understand his conservatism, as a reaction to modern 20th century philosophy.

Saturday, April 21, 2007

I am No 2 in Yahoo Answers UK on Economics

Internet fair in London

From 1 till 3 May Earls Courts hosts the Internet World, a fair for everything around the WWW.
See here. Keynotes include Google, Channel 4, AOL, BBC, John Lewis, Bebo, Sainsbury's, Yahoo! Europe, IKEA, and many more.

Friday, April 20, 2007

gender taxation

Alberto Alesina of Harvard University and Andrea Ichino of the University of Bologna argue in the FT that optimal taxation requires men to be taxed more than women, the paper can be found here.

They show that since women have higher elasticities of labour supply, they should be taxed less. They also argue that such an approach could be cost-neutral, in the sense that men could be taxed more. This policy would achieve that more women seek work.

The Tories would argue that this would lead to family breakdown, as women don't need men anymore. However, we always should be cautious with fiscal effects on family formation.

The proposal is also questionable from a discrimination point of view. Why should women take home more pay than men, for the same amount of work?

One could argue that many women already receive tax breaks (child benefits etc) and in-kind transfers, such as childcare.

Thursday, April 19, 2007

Siemens chairman von Pierer to go

The FAZ reports that the chairman of Siemens Heinrich von Pierer is too leave, caused by the recent corruption affair. The likely successor is Gerhard Cromme. Between 1992 and 2005 Siemens is said to have paid €420mn in bribes.

Darling, Miliband or Balls for Chancellor

Who will be the Chancellor of the Exchequer in the first Brown cabinet?

Many tip current Trade and Industry Secretary Darling. Although he doesn't have the economic credentials of the two Eds (Miliband and Balls), he would suit Gordon as a good follower, who would be easier to handle than Gordon himself. But can he afford too many Scots in the cabinet?

The two Eds are working or have worked for Brown directly. They both have studied economics, which probably overqualifies them for that office.

What do you think?

Wednesday, April 18, 2007

Reframing the Embodied Consumer as Cyborg

Giesler and Venkatesh have published a paper called Reframing the Embodied Consumer as Cyborg. A Posthumanist Epistemology of Consumption.

They develop

three posthumanist systems on the rise and of interest in the marketplace matrix: (1) cyborg consumers (2) brand systems and (3) protest systems.

Tuesday, April 17, 2007

US election update

According to the bookmakers Giuliani has overtaken Obama in second place behind H Clinton in the presidential race. Al Gore and Mark Warner are still a hot bet despite the fact that they didn't declare their candidacy.

Sunday, April 15, 2007

Disco Sarko

Sarkozy, French presidential candidate, shows his dance movements on this website. The site seems to be run by enthusiastic Sarkozy fans.

Saturday, April 14, 2007

Hyndman on exponential smoothing

Exponential smoothing is one of the basic forecasting methods. Rob Hyndman has published a new book on this method. A sample chapter can be see on his website.

25 years of forecasting

In 1982, the International Institute of Forecasters set up the Journal of Forecasting, followed in 1985 by the International Journal of Forecasting. The primary aim of their foundation, laid out in the first issues, was to take a “multi-disciplinary perspective”; all types of forecasting methods were of interest. Last year the IJF was celebrating a quarter century of forecasting with this special issue, which can be accessed for free.

Herein, Allen and Morzuch ask some important questions

In the next 25 years, what new avenues will open up? With ever greater computational capacity, more complex models with larger data sets seem the way to the future. Will they require the automatic model selection methods that have recently been introduced? Preliminary evidence suggests that these methods can do well. The quality of aggregate data is no better than it was. Will greater use of more disaggregated data be sufficient to provide better forecasts?

Friday, April 13, 2007

Marketing research

The American Marketing Association publishes various journals, the Journal of Marketing Research among them. This website lists current and forthcoming articles. Some articles can actually be seen fro free.

Steenburgh (Harvard) discusses the decomposition of elasticity. He presents
a clear and accurate method that simultaneously attributes the growth in own- good demand to changes in: (1) consumers’ decisions, (2) competitive demand, and (3) competitive market share.The author accomplishes this by settling some confusion about what the decision- and share-based decompositions mean, by discussing how each of the decompositions relate to the others, and by discussing the research questions that each of the decompositions can answer.

Thursday, April 12, 2007

Vonnegut is gone

Kurt Vonnegut, the great American satirical novelist, died on Wednesday at the age of 84 as a result of head injuries sustained in a fall at his home in New York last week. Kurt Vonnegut was born to German-American parents on November 11, 1922, in Indianapolis, Indiana.

He was known for a sharp sense of humor and an equally sharp awareness of the depth of human tragedy.

I tell you, we are here on Earth to fart around, and don't let anybody tell you different.

Wednesday, April 11, 2007

People I admire

Here are three people I admire. I admire John Coltrane for being the greatest jax saxophonist of all times. He revolutionised saxophone playing while showing amazing simplicity.

Secondly I admire the philosopher Martin Heidegger, who created a new language of being. I always see him as a poet rather than a philosopher. Although he was not resistant against the Nazis, he remains one of the most important philosophers of the 20th century.

Thirdly, I cannot decide between the Swiss author Friedrich Dürenmatt or the Austrian dramatist Thomas Bernhard. The former created a unique narrative which goes back to ancient mythology, the latter has again created his own language, with endless musically composed sentences.

Who is behind Private Equity?

News about private equity firms and their buyouts increasingly make it onto the cover of the FT. But who is behind these groups?

Kohlberg, Kravis and Roberts is one of the largest groups. They currently try to acquire the pharmacist Boots. KRR was founded in 1976 by Henry R. Kravis and cousins Jerome Kohlberg, Jr., George R. Roberts, all of whom had previously worked together at Bear Stearns. KKR has been the largest and most active participant in the buyout market since the mid-1970s. Since its inception, KKR has completed more than 150 transactions with an aggregate enterprise value of over $279 billion. They invented leveraged buyout which occurs when a financial sponsor gains control of a majority of a target company's equity through the use of borrowed money or debt.

Another firm is TPG Capital, L.P. (formerly Texas Pacific Group) which was founded by David Bonderman, James Coulter and William S. Price in 1992.

Upcoming deals can be seen on

Economist's Walk in London

The website of the 2005 Econometric Society World Congress at UCL describes five walks for economists through London. For instance

The [third] walk starts at the Hunterian Museum (entrance free, closed Mondays) inside the Royal College of Surgeons on the south side of Lincoln’s Inn Fields (1). Here can be seen the preserved left hemisphere of Charles Babbage’s brain (in Gallery 4 on the lower floor). Babbage, best known for his role in the history of computing, also wrote innovatively on the economics of production.

Tuesday, April 10, 2007

Angela Merkel

I have a confession to make, I am a big fan of Angela Merkel. This is for various reasons: She is from East Germany, she is also from the region in which my grandparents live, Mecklenburg-Vorpommern, she is a scientist, and she talks (conservative) sense.

People often make fun of her for being clumsy or not having enough willpower to see things through, but she uses power in a much more subtle way.

She started her career under Helmut Kohl in the early 1990s.

She currently heads the grand coalition of conservatives (CDU) and social democrats (SPD). A SPD friend of mine said that she stays mainly calm on inner political issues, while presenting herself to political leaders. This has lead to her recognition by many male world leaders.

She is presiding over a small economic boom which is mainly based in the economic reforms of the former government. But it also seems that people have more confidence in themselves and their country under Merkel. A poll shows that she is the most highly rated politician of all (in the graph ahead of the foreign and finance minister), not always the case for a chancellor or prime minister.

British captives - poll

Two of the Royal Navy crew members held in Iran have sold stories to the press, but further media deals have been stopped pending a government review. Please vote in this poll.

Was it right that some soldiers sold their story to the press?
Yes, they have that right
No, we should keep this confidential
No, this is just a propaganda war
It doesn't matter anyway free polls
By the way this is the 100th post in my blog.

Monday, April 09, 2007

the Remainder

Tom McCarthy's book the Remainder is an exciting read. The unnamed narrator has experienced a mysterious accident for which he receives £8.5 million compensation. Then, haunted by a complex sense memory of a particular building, he spends the money having the building reconstructed and its occupants' behaviour re-enacted by hired performers.

McCarthy is also general secretary of the Necronautical Society. They declare

We, the First Committee of the International Necronautical Society, declare the following:-

1.That death is a type of space, which we intend to map, enter, colonise and, eventually, inhabit.

2. That there is no beauty without death, its immanence. We shall sing death's beauty - that is, beauty.

Friday, April 06, 2007

Jacques plays jazzy Bach

Another great interpreter of Bach is Frenchman Jacques Loussier and his trio. The 72 year old gives Bach a totally new touch by transforming his pieces into jazz. Listening to him for years I often imagine how Loussier would play it whenever I hear a Bach piece. Over the years Loussier has also adapted Satie, Debuusy and Vivaldi, but his Bach interpretations still stand out.

His approach has been criticised by purists, but they cannot deny the eloquence and style with which he does it.

Happy easter

I wish all the readers of this blog a happy Easter and hope you spend good time with your family and loved ones.

Tuesday, April 03, 2007

Peter Rossi and marketing

Peter Rossi is professor of marketing and statistics at Chicago. The 51 year old graduated from Chicago in 1984. He has published a vast amount of articles on econometric techniques applying marketing data. He is a proponent of Bayesian statistics. His students include Belgian Eric Ghysels and Greg Allenby. Interestingly one of his first articles was on the relationship between mood and menstruation cycle.

His articles include
  • With G. Allenby and J. Kim, "Product Attributes and Models of Multiple Discreteness," Journal of Econometrics (forthcoming, 2006).
  • With R. McCulloch and Z. Gilula, "A Direct Approach to Data Fusion, Journal of Marketing Research (2006).
  • With G. Allenby and R. McCulloch, Bayesian Statistics and Marketing , in John Wiley Statistics and Probability Series (2005).
  • With P. Manchanda and P. Chintagunta, "Response Modeling with Non-Random Marketing Mix Variables," Journal of Marketing Research (2004).
  • With J. Chevalier and A. Kashyap, "Why Don't Prices Rise During Periods of Peak Demand," American Economic Review (2003).

FMCG share performance

Comparing four major food and beverage companies - Coca-Cola, Pepsico, Cadbury Schweppes, and Unilever - over the past year, reveals a slump in last summer. Coca-Cola and Pepsico have lower values than a year ago. Unilever has grown in line with the Dow Jones, except from a late surge. Cadbury Schweppes has underperformed until the rumour of its split up, which gives it a more than 20% increase per annum.

Sunday, April 01, 2007

Web 2.0 and advertising

Web 2.0 - the user-friendly, interactive new generatuon of web content - is driving the growth in web advertising. Jason makes some simple projections and names five reasons for recent growth in web advertising:

a) there are more advertisers online today.
b) it's getting easier to spend money online
c) Google Adsense/Adwords (a huge part of part B above)
d) Yahoo, MSN, AOL, and Google reaching scale, which in turn allows major advertisers to reach comparable audience sizes to TV
e) audiences shifting from TV, radio, and magazines to the Internet.
A recent article in the FT stated that web advertising has overtaken advert revenue in newspapers and is chasing TV revenue.

French polls

It's only three weeks untill the first round in the French elections. A poll by TNS-Sofres released by Unilog reveals 30 per cent of respondents would support Sarkozy and his Union for a Popular Movement (UMP). The Socialists' Royale is second with 27% of the votes. The two top contenders have gained votes of the past weeks. One in eight people support the right-wing Le Pen.

Bach and Martins

Some years ago I watched a program on German-French channel arte about the pianist Brazilian Joao Carlos Martins. Born in 1940 he was an early starter and received stardom for his Bach interpretations.

But at the height of his successes, in 1969, João Carlos Martins was knocked down during a soccer match, and hurt his arm to the point of a painful neuralgia, so that he had to stop playing piano. But in a surprising change of direction, he went into banking, managed a champion prizefighter, started a construction company, and became a multimillionaire in devalued Brazilian currency. An even more surprising development followed when, in 1981, he was appointed to the post of the Brazilian state secretary of culture; in this capacity, he exhibited an extraordinary knack for urban recovery in the direction of futuristic Americanization.

He was struck again later:

Following a recording session in Sofia in 1995, he was beaten senseless by two Bulgarian thugs. He received injuries to his skull and brain, causing the loss of use of his right arm.

Despite these setbacks he is one of the best known Bach interpreters, after Glenn Gould. Check Amazon for some of his CDs.