New NBER Working Paper: Getting up to Speed on the Financial Crisis: A One-Weekend-Reader's Guide

Getting up to Speed on the Financial Crisis: A One-Weekend-Reader's Guide

Gary B. Gorton and Andrew Metrick

NBER Working Paper No. 17778

January 2012

ABSTRACT

All economists should be conversant with “what happened?” during the financial crisis of 2007-2009. We select and summarize 16 documents, including academic papers and reports from regulatory and international agencies. This reading list covers the key facts and mechanisms in the build-up of risk, the panics in short-term-debt markets, the policy reactions, and the real effects of the financial crisis.

http://www.nber.org/papers/w17778.pdf

SOPA and Self-Reported Data

This recent article from Bloomberg View discusses the Stop Online Piracy Act (SOPA). It also mentions the Protect Intellectual Property Act (PIPA). The article is written by Joe Karaganis, program director for Media and Democracy at the Social Science Research Council. His team at The American Assembly, a public-policy institute based at Columbia University, commissioned a random phone survey of 2,303 Americans to find out what they think about the plans for the aforementioned legislation.

Karaganis reports: "We learned that most people want to obey the law. But when values conflict, strong majorities rank privacy, free speech, fear of government intrusion, and yes, sharing among family and friends ahead of copyright protection. In other words, our results show an emerging ordering of values online...

Among the respondents, 46 percent said they had, at some point, bought, copied or downloaded unauthorized music or video. This figure reaches 70 percent among people age 18 to 29. But hard-core piracy is rare: Less than 2 percent had acquired most or all of a large collection that way....

There are also a lot of buts. Support drops to 40 percent if the government does the blocking. It falls to 36 percent if legal content is accidentally blocked, and declines to a mere 26 percent if surveillance of Internet use is required. There is general agreement that SOPA/PIPA would do all three."

As Karaganis says, "the results suggest that practices and attitudes are adjusting to a world in which distribution is cheap, copying is easy and sharing is possible -- but the legal means for doing all of this have lagged. Users are also adjusting to a world in which there is vastly more media, not less, competing for limited attention and money." However, anyone who is familiar with self-reported data will know that social desirability bias is a big factor to consider in the interpretation of the results outlined above.

Heckman: Developmental Origins of health

Concise overview in latest edition of Health Economics of the developmental origins of health by James Heckman

Gary King Advanced Quantitative Research Methodology

Gary King becomes one of the number of scholars making high-quality courses taught in the top universities available online. The website for his Advanced Quantitative Research methodology course is available here.

Survey on Organ Donation Attitudes Pre-Test

Our survey on organ donations is in very preliminary mode (link here). Would be grateful if people could have a go and make suggestions for improvements either to me or to Clare, or in the comments. Feel free to input random answers. We wont be using the data. Just pre-testing the survey at this stage. We are examining people's understanding of the current consent mechanisms in Ireland and how it influences behaviour related to organ donation.

Lecturer and Senior Lecturer Positions at Stirling

Stirling Management School (which includes Economics) is hiring again, this time a significant number of lecturer and senior lecturer positions. Some of you may be interested in applying for roles in Economics. I am currently Professor of Economics there and developing a research group at the interface of economics and psychology. Stirling is a good working environment in every sense and Economics is well-connected to the wider SGPE and SIRE structures in Scotland. The link with details is here 

Does Speaking Irish Help You Get Ahead?

A paper in the current edition of the Economic and Social Review by Iarfhlaith Watson and Máire Nic Ghiolla Phádraig from UCD (I wonder if either are Irish speakers themselves) considers whether being able to speak Irish is advantageous. For one thing, those attending Gaelscoileanna tend to do well in the Leaving Cert. Further evidence is presented in a previous ESR paper Borooah et al. (2009). The authors provide a useful summary of what is likely to be the actual prevalence of Irish speaking. Clearly selection is an important issue, and there is a full discussion of this in the paper. They conclude that “the advantage is held by a so-called “middle-class” elite, which is more likely (to claim) to speak Irish, rather than by an Irish-speaking elite."

The Economic and Social Review, Vol. 42, No. 4, Winter, 2011, pp. 437–454

Linguistic Elitism: the Advantage of Speaking Irish Rather than the Irish-speaker Advantage

IARFHLAITH WATSON and MÁIRE NIC GHIOLLA PHÁDRAIG,University College Dublin

Abstract: This paper contributes to the discussion of linguistic elitism in this journal (Borooah et al., 2009). Two main questions are addressed. First, most “census Irish speakers” are not in fact Irish speakers and the majority of Irish speakers proper are not a coherent group. Second, the Irish language is part of the cultural capital which can be acquired by people with an “advantage.” The argument is made that people with an advantage are more likely to speak Irish rather than Irish speakers being more likely to have an advantage.

The Economic and Social Review, Vol. 40, No. 4, Winter, 2009, pp. 435–460

Language and Occupational Status: Linguistic Elitism in the Irish Labour Market

VANI K. BOROOAH, University of Ulster
DONAL A. DINEEN, University of Limerick
NICOLA LYNCH, University of Limerick

Abstract: This paper, using data from the 2006 Irish Census, provides evidence of the structural advantage of Irish speaking, relative to non-speaking workers in Ireland’s labour market with advantage and disadvantage being defined in terms of occupational outcomes. To the best of our knowledge there has been no systematic investigation of any advantage enjoyed by Irish speakers in Ireland and allegations of the comfortable middle class ambience of the Gaelscoileanna have remained at the level of anecdote. Since linguistic elitism is a feature of many societies and since Irish enjoys the constitutional status of the national and first official language of Ireland, such an investigation was, arguably, overdue. This is then compared to the structural advantage of Irish speaking workers in Northern Ireland and of Welsh speaking workers in Wales. Our conclusion is that after controlling for as many relevant factors as the data permitted, a considerable part of the difference between Irish speakers and non-speakers in Ireland, in their proportionate presence in the upper reaches of occupational class, was due to structural advantage. The major contribution of this paper is to lift the debate about the economic position of Irish speakers in Ireland above the level of hearsay: dúirt bean liom go ndúirt bean léi.

ISNE 9 at UCC: Call for Papers

The ninth annual meeting of the Irish Society of New Economists (ISNE) will be held at University College Cork (UCC) on Thursday 23rd and Friday 24th of August, 2012.

There will be plenary sessions by two leading economists: Professor Geoffrey Hodgson (University of Hertfordshire), Editor-in-Chief of the Journal of Institutional Economics; and Professor Bernard Fingleton (University of Cambridge), Editor-in-Chief of the Journal of Spatial Economic Analysis.

The organisers of ISNE 2012 (David Butler, Robbie Butler and Justin Doran) have announced a call for papers. The deadline for abstract submission is Friday, 1st of June 2012. Applicants will receive notification by Friday, 22nd June 2012.
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Addendum: The deadline for submitting papers to the annual conference of the Irish Economics Association is tomorrow. Details are available here.

Memo on Stata Resources

This post is an old memo on Stata reources that I thought some readers might find useful. To get a nice introduction on YouTube, there is a set of Stata Videos that I discovered last year. These are on Intermediate Social Statistics, and are very well made. The producer is the Department of Sociology at the University of Minnesota.

The first three videos are on introducing Stata; the subsequent five look at linear regression, discrete choice, count models, quantile regression and panel models (all through Stata). Some videos are in two parts (A and B). It's also worth noting that the titles follow the format of "Stata Video #1" and so on. So after watching the first video, one should look for "Stata Video #2" on the right hand side column.

In addition, I particularly recommend the UCLA tutorials, and you could even leave it at that. But if interested, the Bank of England/LSE guide is a good document for reference purposes. Ian Watson's guide is good for reading about getting Stata output into Word docs, but more specialist. As is Roy Wada's guide to "outreg2" (and other things). There is also a useful list of resources provided by the Marginal Revolution blog.

Behavioural Economics Events

As part of the development of a research team around behavioural economics and well-being in Stirling, there will be a day-long conference on April 20th (further details to follow) and a launch-type workshop in September. I am very interested to hear people's thoughts either here, or as is more usual, by email on best format for continuing the regular November session we have held since 2008. These four events have been really interesting and engaging and I would not like them to stop. Default option is simply to run it again as normal in Dublin on last Friday in November and extend it by inviting more people from outside Ireland to present. Funding will, of course, be an issue but hopefully we can work something out on that side. Anyway, thoughts welcome.

External Funding Possibilities to work on Economics and Psychology in Stirling Group

Below are some external funding opportunities that people thinking of working with our emerging research group in Stirling might consider. Clearly, some of the below deadlines are too soon for this year but most of these are recurring calls. Potential PhD students, academic colleagues in other universities, potential postdocs and so on may find below useful. Specific PhD studentships for the group will be announced soon, and we will launch a website in September 2012.

1. 12th January 2012: Marie Curie ITN: Initial Training Networks (ITN) offer early-stage researchers the opportunity to improve their research skills, join established research teams and enhance their career prospects.Usually, at least three participants join together to propose a coherent programme for an ITN. The participants can be universities, research centres or companies (large or small). Any research field in the humanities or science may qualify for ITN funding – provided that there is an element of mobility across national borders.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-ITN

2. 7th February: ESRC Knowledge Exchange Opportunities
This scheme provides researchers with an opportunity to engage with organisations in the private, public and civil society sector(s) on a social science issue. The Knowledge Exchange Opportunities Scheme now covers activities at all stages of the research process; from setting up networks to help inform the first stages of research; to the development of activities designed to apply previous research to policy and practice issues (previously covered by the ESRC Follow on Fund Scheme). Please note this is a collaborative scheme and, as such, all applications must include at least 25% co-funding from partner(s) in the user community (depending on the sector involved). For further details, including how to apply, please visit:

http://www.esrc.ac.uk/funding-and-guidance/collaboration/knowledge-exchange/opportunities/index.aspx

3. 14th February 2012: RSE/Scottish Government Personal Research Fellowships.

These postdoctoral Research Fellowships aim to provide outstanding researchers, who should have the potential to become leaders in their chosen field, with the opportunity to build an independent research career. Applicants will have completed between 2 and 6 years of relevant postdoc academic research and can currently reside anywhere in the world working in any of the physical, computational, engineering, biological, medical, natural and social disciplines (although the research project proposed must align to one or more of the Scottish Government’s National Outcomes - see

http://www.scotland.gov.uk/About/scotPerforms/outcome).

Applicants must show that they have an outstanding capacity for innovative research with a strong publication record relevant to their proposed field of study. The fellowships are tenable for up to 5 years in a Scottish institution (ideally from 1st Oct 2012) and will include an opportunity for the fellow to work anywhere abroad for up to a year during the fellowship to help establish research collaborations. Funds will cover up to 4.5 years of fellow salary costs, associated overheads, and up to £6K per year research support costs. The host institution must commit to covering the final 6 months of the fellows salary. Further information about the scheme along with the application form can be found at

http://www.royalsoced.org.uk/995_FormsandGuidance.html

4. 21st March 2012: Leverhulme Research Project Grant.

The aim of these awards is to provide financial support for innovative and original research projects of high quality and potential, the choice of theme and the design of the research lying entirely with the applicant (the Principal Investigator). The grants provide support for the salaries of research staff engaged on the project, plus associated costs directly related to the research proposed.

Proposals are favoured which:

* reflect the personal vision of the applicant;
* demonstrate compelling competence in the research design;
* surmount traditional disciplinary academic boundaries;
* involve a degree of challenge and evidence of the applicant’s ability to assess risk.

Value and Duration

The great majority of awards involve a spend of up to £250,000 over a duration of two to three years. If compelling evidence is provided, awards may be made for sums between £250,000 and £500,000 for research over a period of up to five years. The assessment procedures for these large grants are especially stringent, and can involve site visits and discussions with applicants.

Topics

Applications for research on any topic within the entire array of academic disciplines are eligible for support. However, an exception is made for areas of research supported by specialist funding agencies and, in particular, for medicine. In such cases, applicants should consider an application to these alternative funding bodies as being more appropriate. Specific attention is paid to the reasons given by applicants in justifying their choice of the Trust as the most appropriate agency for the support of their project.

http://www.leverhulme.ac.uk/funding/RPG/RPG.cfm

5. April 2012: Secondary Data Analysis (ESRC)

http://www.esrc.ac.uk/news-and-events/news/delivering-priorities-funding/secondary-data-analysis.aspx

The UK has a unique and internationally renowned collection of datasets which will form the foundation of the Initiative (see file attached). This data infrastructure provides a huge opportunity to address some of the most pressing challenges facing society today and into the future. For example, our portfolio of longitudinal studies has already revealed how fundamental and complex causal relationships influence individual life trajectories in a whole variety of ways. They have supported research across a wide terrain, including areas such as obesity, educational attainment, crime, social mobility and welfare and emotional wellbeing. These studies have also provided a strong evidence base to support a battery of government anti-poverty strategies, health campaigns, schooling policies, social welfare reform and other interventions.

The Secondary Data Analysis Initiative will build upon and extend the impact of longitudinal studies and a wide variety of other data resources. Given the richness of data available across the UK’s social and economic data infrastructure, the Initiative will not be thematically driven and proposals are welcome in any area which can generate policy and practitioner impact. Nevertheless there are significant opportunities for proposals to address key issues in our strategic priorities - http://www.esrc.ac.uk/strategic-priorities

Priorities:
· Economic Performance and Sustainable Growth
· Influencing Behaviour and Informing Interventions
· A Vibrant and Fair Society

The Initiative will also aim to penetrate a range of disciplines which move well beyond traditional users of these data, in, for example economics, and some areas of sociology and geography. The expectation is that use will deepen in these disciplines but also will also extend to researchers from wider backgrounds.

6. 19th April 2012. Marie Curie Industry-Academia Partnerships and Pathways.

This action seeks to open and foster dynamic pathways between public research organisations and private commercial enterprises, in particular SMEs, including traditional manufacturing industries, based on longer term co-operation programmes with a high potential for increasing knowledge-sharing and mutual understanding of the different cultural settings and skill requirements of both sectors. Participants under this action are on the one hand, one or more universities/research centres and on the other, one or more enterprises, in particular SMEs, that propose a project based on a joint cooperation programme. Within this scheme, the industrial partners must be organisations operating on a commercial basis, i.e. companies gaining the majority of their revenue through competitive means with exposure to commercial markets, and will include incubators, start-ups and spin-offs, venture capital companies, etc. The different participants should be from at least two different Member or Associated countries, of which at least one must be from a Member State. The participants recruit and/or host eligible researchers and contribute directly to the implementation of longer-term cooperation programmes established between them in line with the objectives of this action.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-IAPP

7. 30th April 2012: Leverhulme Research Leadership Awards

The Research Leadership Award scheme provides funds to build a research group under the direction of the grant holder, who must be at least 2 years into their first university post (but not sufficiently long in post for the trajectory of their research contribution to have become established). Awards will be for a sum of between £800,000 and £1 million over a period of up to 5 years and funds can be used to employ a research group of research assistants and research students (but cannot be used to cover applicant salary or overheads). Applications for research in any subject area within the Trust’s normal remit will be eligible for support. See http://www.leverhulme.ac.uk/funding/RLA/RLA.cfm) for more details of the scheme.

8. September 2012: Marie Curie Career Integration Grant
Marie Curie Career Integration Grants are intended to improve considerably the prospects for the permanent integration of researchers who are offered a stable research post in Europe after a mobility period in a country different from the country where the researcher has been active during the past years (i.e. the researcher has to be mobile but can come from anywhere in the world – moving within Europe or coming from outside Europe). The duration of these grants is up to 4 years.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-CIG

9. International Outgoing Fellowships for Career Development

The specific objectives of the Marie Curie International Outgoing Fellowships for CareerDevelopment can be described as follows:

"This action aims to reinforce the international dimension of the career of European researchers by giving them the opportunity to be trained and acquire new knowledge in a high-level organisation active in research, established in an Other Third Country. Subsequently, these researchers will return with the acquired knowledge and experience to an organisation in a Member State or Associated country" (2011 "People" Work Programme)

Experienced researchers applying to this action need to identify and develop a research training project that will provide the means to advance significantly in their career. A fundamental concept underlying this action is that of advanced training and life-long learning. In essence, the fellowship should enable the experienced researcher to progress in the development of his/her career and should not represent a temporary solution. The fellowship is expected to be part of a structured, long-term professional development plan that is coherent with past achievements and clearly defines the future aims of the researcher.

http://ec.europa.eu/research/fp7/understanding/marie-curieinbrief/europe-world_en.html

10. Intra-European Fellowships for career development (IEF)
This action provides financial support for advanced training and trans-national mobility, for a period of 12 to 24 months (full-time equivalent), for individual projects presented by experienced researchers active in Member States or associated countries in liaison with a host organisation from another Member State or associated country. Overall, projects are expected to add significantly to the career development of the best and most promising researchers active in Europe, in order to enhance and maximise their contribution to the knowledge-based economy and society. http://ec.europa.eu/research/fp7/understanding/marie-curieinbrief/research-development_en.html

11. Economic and Social Research Council studentships for Scotland
(MSc+PhD or PhD only)

The SGPE is one of the research training pathways that forms part of the ESRC Scottish Doctoral Training Centre. ESRC 1+3 (MSc+PhD) and +3 (PhD only) studentships in Economics are available at the 8 SGPE universities: Aberdeen, Dundee, Edinburgh, Glasgow, Heriot-Watt, Stirling, Strathclyde and St. Andrews. They are intended solely for students either starting a PhD or intending to start a PhD following their MSc. Students wishing to apply for an SGPE "1+3" or a "+3" award must submit a written and credible research proposal for their PhD. Further information on eligibility and details can be found on the DTC and the ESRC Websites.

Applicants interested in PhD study only (+3) should have applied to and have received an offer from their preferred SGPE university by the 3rd of May, 2011.

Applicants interested in MSc+PhD study (1+3) should have applied to and have received an offer from SGPE MSc Programme taught at the the University of Edinburgh by the 3rd of May, 2011. 1+3 applicants should NOT apply for a PhD (in addition to the MSc) at their preferred Unviversity at this stage, but they MUST contact the relevant PhD Coordinator (see instructions below.)

Applicants who wish to be considered for an ESRC award must first register their interest. To do this they need to send two emails; one to the SGPE PhD Director, Liam Delaney at Liam.Delaney@stir.ac.uk (cc'ing sgpe.admissions@ed.ac.uk) and the other to the PhD coordinator at the department at the at which they are interested in pursuing their PhD (see below). These emails must be sent by Friday the 8th of April 2011. The coordinators are the relevant Dapartments are:

Aberdeen: Ioannis Theodossiou
Dundee: Hassan Molana
Edinburgh: Ed Hopkins
Glasgow: Kostas Angelopoulos
Heriot-Watt: David Cobham
St. Andrews: Paola Manzini
Stirling: Ian Lange
Strathclyde: Julia Darby

Applicants who register their interest will receive detailed instructions by email on how to apply.

In brief, these instructions will ask students to (1) identify a research topic, the SGPE University where they intend to pursue their PhD, and a specific supervisor within the SGPE, (2) provide details of their relevant degree and degree courses and (3) write a short research proposal, and (4) provide a letter of support from the relevant University department where PhD study is planned. The deadline for receipt of full applications is 4pm, 3 May 2011.

Successful applicants will hear back by Friday the 20th of May.

Using Internet Search Data

Martin Ryan posted recently (here and here) on the potential predictive power of Twitter and the Internet. Liberty Street Economics, a blog on the Federal Reserve Bank of New York's website has a new post looking at the predictive power of Internet search data.

They look at two potential uses of the data: "now-casting", which aims to provide information on current conditions which bypasses the normal lag periods of official economic and financial data, and more traditional forecasting.

For now-casting, they use Google search data to anticipate a weekly index of mortgage refinancing. They find that "the search index increases the R² by about 10 percentage points and is highly statistically significant, which suggests that the search data have information not captured by the model’s other variables". Real-time information on a weekly index may not be particularly useful, however the appendix cites what may be more interesting research:

"Askitas and Zimmermann (2009) show strong correlations between search data and German unemployment. D’Amuri (2009) of the Bank of Italy finds that an Internet-search-based measure is superior to other leading indicators in predicting Italian unemployment. D’Amuri and Marcucci (2009) find that augmenting models of the U.S. unemployment rate with an Internet job-search indicator outperforms traditional forecasting methods and the Survey of Professional Forecasters. Suhoy (2009) of the Bank of Israel finds search data to be a good predictor of labor market conditions in that country."

They find search data less useful when attempting to forecast: "using Internet search data to predict financial market movements is a more fraught exercise. We could not forecast gold prices, European sovereign spreads, interbank rates, and equity market implied volatility with models using search data". However they have better results in markets that may contain less open information, such as renminbi (the Chinese currency) forecasting. This seems an interesting area, however countries which have restricted economic and/or financial information are also more likely to place restrictions on Internet access and usage.

The post and the appendix contain many more references.

On a side note, the post also helps with language skills: 人民, or rénmín, is people's and 币, or bì, is currency. 人民币 = people's currency, or renminbi. Pronunciation is left to the reader.

Intergenerational Persistence in Income and Social Class

Lindsey presented at the UCD departmental seminar in October. This new IZA working paper is on a similar topic.

IZA DP No. 6202

Jo Blanden, Paul Gregg, Lindsey Macmillan:

Intergenerational Persistence in Income and Social Class: The Impact of Within-Group Inequality

Abstract:
Family income is found to be more closely related to sons' earnings for a cohort born in 1970 compared to one born in 1958. This result is in stark contrast to the finding on the basis of social class; intergenerational mobility for this outcome is found to be unchanged. Our aim here is to explore the reason for this divergence. We derive a formal framework which relates mobility in measured family income/earnings to mobility in social class. Building on this framework we then test a number of alternative hypotheses to explain the difference between the trends, finding evidence of an increase in the intergenerational persistence of the permanent component of income that is unrelated to social class. We reject the hypothesis that the observed decline in income mobility is a consequence of the poor measurement of permanent family income in the 1958 cohort.

http://ftp.iza.org/dp6202.pdf