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Economist’s View: Historical Patterns, Okun’s Law, and the Great Recession

by on July 10, 2011

Historical Patterns, Okun’s Law, and the Great Recession

Arin Dube shows that estimates of Okun’s law are inconsistent with the assertion that most of the unemployment problem is structural rather than cyclical:

Historical Patterns, Okun’s Law, and the Great Recession, by Arin Dube: After reading Paul Krugman’s post today, I decided to follow up by actually estimating out-of-sample unemployment rate change forecasts during the Great Recession based on a pre-2007 Okun’s law relationship (i.e., a regression of change in the unemployment rate on percentage change in real GDP).

This anchors the previous post.

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6 Comments
  1. The family of humanity as well as much of life as we know it are now here inhabitants of a finite planet with a frangible environment that is failing fast. What really matters is being inadvertently ruined on our watch by the human population, but is not being openly discussed. My ‘blood boils’ in the truth that we have possessed knowledge of so much about ourselves as human beings with feet of clay and acknowledged so little about what has been known for so long about our distinctly human creatureliness, based upon extensive empirical research and unchallenged scientific evidence. Elective mutism and silent consent in the face of the reckless degradation, relentless dissipation and willful sell-off of what everyone knows to be sacred looks to me like the worst of all precipitants of the colossal ecological wreckage that appears in the offing.

    Inside and outside the community of top rank scientists, as well as among first class professionals in demography and economics who claim appropriate expertise in issues concerning human overpopulation, one issue is not being discussed by anyone. A worldwide conspiracy of silence continues to prevail about the population dynamics of the human species. The last of the last taboos is the open discussion of extant scientific research of human population dynamics. The implications of this astounding denial of what could somehow be real are potentially profound for the future of life on Earth, I suppose.

    Within the human community a tiny minority of self-proclaimed masters of the universe hold the ‘destiny’ of all in their hands. This elite group is operating behind the scenes these days and “growing” the global economy to such a colossal scale that it could soon become patently unsustainable on a planet with the size, composition and ecology of Earth because our planetary home is not, definitely not “too big to fail.”

    • In 1948 Aldo Leopold wrote: “our bigger-and-better society is now like a hypochondriac, so obsessed with its own economic health as to have lost the capacity to remain healthy. The whole world is so greedy for more bathtubs that it has… lost the stability necessary to build them, or even to turn off the tap. Nothing could be more salutary at this stage than a little healthy contempt for a plethora of material blessings. Perhaps such a shift of values can be achieved by reappraising things unnatural, tame, and confined in terms of things natural, wild, and free.”

      In our time greed is extolled as a virtue. Many too many are invited by the few to do ‘good’ things. Seven billion are told the global political economy was saved today, but not told at what expense: mortgaging the children’s future. Nor were they told at what price: the Earth as a fit place for human habitation? To say that greedmongering is “unhealthy” seems tame to me. There must be stronger words deployed to describe such obscene per capita hyper-consumption and patently unsustainable individual hoarding; such conscious dissipation of Earth’s finite resources and willful degradation of its frangible ecology. Perhaps we can find other words that more adequately describe how the planet we inhabit is being ravaged on our watch. And if we can find the words, who will speak out loudly, clearly and often? A worldwide conspiracy of silence is in effect. Self-proclaimed masters of the universe have already bought and paid off ‘the brightest and best’. The greediest among us are selling off the Earth to the “lowest bidders.” Greed rules the world, I suppose.

  2. With thanks to Andy R…….

    A New Look at Population Bombs and Bulges

    http://dotearth.blogs.nytimes.com/2011/08/02/a-fresh-look-at-population-bombs-and-bulges/

    dotearth.blogs.nytimes.com
    A fresh look at humanity’s cresting growth spurt and its implications, for good or ill.

  3. We can readily see what ‘the brightest and best’ as well as “the smartest guys in the room” are doing on our watch. These self-proclaimed masters of the universe are assuring their ‘inalienable rights’ to reprehensibly internalize profits while externalizing costs; rapaciously overconsume and hoard finite natural resources; relentlessly overproduce unnecessary stuff that pollute the environment; and recklessly condone the overpopulation of our planetary home, let us hope human beings with feet of clay are wise enough to recall the words of “The Prince” and to respond ably to human-induced global ecological challenges as we observe what is being done to the “design space” we call Earth, because future human well being and environmental health are being put at risk here and now. For the sake of children everywhere, another path to the future, one that is sustainable, must be taken while there is still time.

    “The Romans did in these instances what all prudent princes ought to do, who have to regard not only present troubles, but also future ones, for which they must prepare with every energy, because, when foreseen, it is easy to remedy them; but if you wait until they approach, the medicine is no longer in time because the malady has become incurable; for it happens in this, as the physicians say it happens in hectic fever, that in the beginning of the malady it is easy to cure but difficult to detect, but in the course of time, not having been either detected or treated in the beginning, it becomes easy to detect but difficult to cure. Thus it happens in affairs of state, for when the evils that arise have been foreseen (which it is only given to a wise man to see), they can be quickly redressed, but when, through not having been foreseen, they have been permitted to grow in a way that every one can see them, there is no longer a remedy.”
    —Niccolo Machiavelli, The Prince, Chapter Three

  4. We face a culture of silence with regard to the growth of the human population on Earth. As a consequence, a colossal, human-induced tragedy is being precipitated in our time. But this is not the whole problem being utterly avoided. Even among top-rank scientists with appropriate expertise, extant scientific research of human population dynamics and overpopulation is being willfully ignored. Attractive preternatural thought and specious ideologically-driven theory by non-scientists, namely demographers and economists, about the nature of the human population have been widely shared and consensually validated in the mainstream media during my lifetime. This unscientific thought and theory is not only misleading but also directly contradicted by scientific evidence toward which first-class scientists have “turned a blind eye” for way too long. That is to say we have two challenges to confront and ovecome. The first is the culture of silence. The second is the deliberate collusion within a sub-culture of experts who have determined not to acknowledge, examine and report on vital scientific research. Some scientists have referred to “the first challenge” as revealing the facts of “the last taboo”. What I am asking scientists to do is address “the last of the last taboos” by reviewing and reporting findings of unchallenged scientific research of human population dynamics from two outstanding scientists, Hopfenberg and Pimentel(2001), Hopfenberg(2003, 2009). At least to me, it appears the denial of the population issue by people everywhere and the denial of scientific research of human population dynamics/overpopulation by scientists with adequate expertise have resulted in a betrayal of humanity and science itself. This failure of intellectual honesty and moral courage among so many so-called experts with responsibilities to assume and duties to perform is as unfortunate as it is unprecedented. A good enough future for children everywhere appears to be at risk on our watch and we are bearing witness now and here, I suppose, to the way silence ‘kills’ the world.

  5. Everything within me makes one thing crystal clear: among the species of Earth only human beings with feet of clay possess the capability to honestly, consciously, courageously and deliberately behave in ways that run counter to their strongest drives. Evidence for this statement has been occurring ubiquitously since of the first days of Homo sapiens on Earth, I suppose. As we know, our species has exploded to seven billion in the ‘blink of an eye’. Is it not inconceivable that at least some small percentage of human beings have always been acting and continue to act in ways that provide evidence of the subjugation of the most powerful of their instincts to their even more formidable capacity to think, judge and will. I would go so far as to guess that not one day in human history has passed without a human being overcoming what is instinctual.

    Our instincts to survive individually and to propagate the human species globally are the most potent instincts. But in our time these instincts, that have served humankind so well from our earliest days on Earth, appear to reached a point in space-time when they are pernicious and dangerous to future human well being, life as we know it, and the planet as a fit place for the children to inhabit. Among the species in our planetary home, perhaps human beings are the first species ever to be in the position of precipitating a massive extinction event. So gifted, well-endowed and unique a species as Homo sapiens, one that appears to be potentiating some sort of unimaginable global ecological wreckage, can surely begin making necessary changes in behavior for the sake of the future human well being.

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