Hurricanes Increase GDP

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In a prior post I took a deeper look at what the large epidemic, the Zika virus, will cost the world. Similar to Zika, category 3 storm, Hurricane Matthew, is a type natural “disaster” that will have an unstoppable effect on the economy. There are at least 200,000 homes along the coast from Florida to North Carolina at risk of damage from the storm surge alone. Due the potential to affect such a broad geographic area, some sources are claiming that Matthew could be one of the costliest hurricanes in U.S. history estimated to cost just Florida as much as Continue reading Hurricanes Increase GDP→

And the 2016 Nobel Prize in Economics goes to…

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While most of us were sleeping this morning the Royal Swedish Academy of Sciences announced that Oliver Hart and Bengt Holmstrom were awarded the 2016 Nobel Prize in Economic Sciences “for their contributions to contract theory.” Hart, an English-born economics professor at Harvard, and Holmstrom, a Finnish-born economics and management professor at MIT, received the award for improving the design of contracts. Hart and Holmstrom are two giants in contract theory. Though the first formal treatment of contract theory was given by Kenneth Arrow in the 60’s, the pairs’ work, which began in the 1970’s, helped establish contract theory as Continue reading And the 2016 Nobel Prize in Economics goes to…→

Fascinating Idea to Keep Coal Market Burning

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In the past couple of years, we have seen the energy market completely turn around. We’ve seen the demand for natural gas increase while reliance on coal has continued to decrease. Add that to increased use of renewable energy in the form of wind, solar etc. and it spells big time trouble for the coal industry. President Obama has continued to push away the use of coal and tried to focus on slowing down Global Warming in the form of renewable energy and agreements across the world. Coal companies are being forced  to shut down because of how much Carbon they contribute to the atmosphere and Continue reading Fascinating Idea to Keep Coal Market Burning→

Could Private Universities Face an Adverse Selection Problem?

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George Akerlof’s ultra-famous paper “The Market for Lemons: Quality Uncertainty and the Market Mechanism” introduced adverse selection as a consequence of information asymmetry. Akerlof noticed that in markets where sellers have more information than buyers, the average value of the good tends to go down, even for those of high quality, which causes sellers of high quality goods to exit the market eventually leading to a market collapse. Buyers are weary that unscrupulous sellers may be looking to rip them off so they avoid buying higher quality goods, “peaches,” and instead only buy ones of lower quality “lemons.” Since they Continue reading Could Private Universities Face an Adverse Selection Problem?→

Let Janet Yellen Tell You How It Really Is

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Janet Yellen is the first woman to hold the position as Chair of the Federal Reserve and is making waves; not only having increased the key interest rate for the first time since 2006, but in her logical, simplistic & informative explanations of the US economy as well. In May of 2015 the Chairwoman addressed the Providence Chamber of Commerce with a predicted outlook for the US economy. She started off talking about how since the recession in 2008, the economy has made significant gains and is regaining its strength, however there was still work to be done regarding the Continue reading Let Janet Yellen Tell You How It Really Is→

Relationship between Oil Prices and Inflation

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Economists in the past 20 years have examined the relationship between oil prices and inflation. The common finding has been one of “limited” or “modest” correlation between these two variables. Michele Cavallo wrote on this topic in the FRBSF Economic Letter and made the observation that in the “1970s and early 1980s, rising oil prices were accompanied by double-digit overall inflation in the U.S. and in several other developed economies.” There were studies conducted using data from 1960-2000 and the results were ambiguous as they showed a strong relationship between oil prices and inflation only before 1981. But since 2000 Continue reading Relationship between Oil Prices and Inflation→

Minor League Baseball Players are being Neglected

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When hundreds of people in a “business” are making below the federal poverty line, then you would think that business would be doing quite poorly. Think again. Major League Baseball (MLB), which has heard the narrative that it is dying due to lack of interest from the younger demographic and the idea that is somewhat of a boring sport, is doing quite well at the moment. According to the Washington Post (WP) article linked first, “baseball has in recent years parlayed renewed popularity into record earnings, leveraging apparel and media demands into $9.5 billion in revenue last year; its 30 franchises averaged $23 Continue reading Minor League Baseball Players are being Neglected→

The State of the Venezuelan Economy (Part 2)

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Two weeks ago, I discussed the state of the Venezuelan economy. Today, I’d like to provide some information about how it got there, and what it might lead to in the future. When Hugo Chavez took power in 1999, he brought in his own ideology that is known as Chavismo. Chavismo is essentially left-wing populism that, like other with other Socialist regimes, is very hostile to private business. Hugo Chavez was president for 14 years, and during that time he implemented a huge number of regulations, taking control of big businesses and centralizing decisions to the government. Small private businesses Continue reading The State of the Venezuelan Economy (Part 2)→

There’s Another Candidate?

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In light of the debate last night between America’s two dominant parties, I wanted to talk about the man who didn’t get to make it to the stage. Yes that’s right, there is still someone out there fighting. The man is Gary Johnson, the Libertarian Party’s presidential candidate. The two-term Republican governor of New Mexico, a state that usually votes democratic, claims that most Americans are in fact libertarians but just don’t know it yet. In his interview with Stephen Dubner, Johnson tells listeners his biggest problem, “Right now, 65 percent of Americans don’t even know that I exist”. But Continue reading There’s Another Candidate?→