BLOG MASH-UP OF THE WEEK

Everyday the blogosphere offers an enormous amount of in-depth analysis on any imaginable topic. The world of macroeconomics and economic forecasting is no exception. To keep themselves updated on the latest information, our in-house team of economists scan the world wide web and gather what they consider the most interesting, appealing, informative or just curious blog posts from experts in the field of global economics. Here’s the list of the Top 4 posts from this week. Check it out!

  1. Econbrowser – Menzie Chinn : ‘Guest Contribution: “Commodity-Price Comovement and Global Economic Activity”

    In this post, Menzie Chinn talks about a paper called “Commodity-Price Comovement and Global Economy Activity” written by Ron Alquist and Olivier Coibion. According to the authors, there are two main factors that drive commodity prices: direct forces that alter the supply or demand for commodities for a fixed level of global economic activity and indirect forces that affect commodity prices through the changes that they induce in the level of global economic activity. They apply these two insights on a data set of forty-energy commodities to explain price fluctuations. They find that most of the variation in prices is related to the second indirect factor.  – Dirina Mancellari

  2. House of Debt – Atif Mian & Amir Sufi: ‘Measuring Wealth Inequality’

    The issue of income inequality has risen as a popular topic of debate in many economics and policy circles recently, with many emphasizing the stark rise in income inequality in the U.S. in the past few decades. In their newly launched blog, University of Chicago professors Atif Mian and Amir Sufi take a look at another type of inequality: wealth inequality. The authors argue that “wealth is as important as income for thinking about overall well-being.” They contend that wealth may be better at predicting who can make certain types of investments, like financing a child’s college education, and that higher concentrations of wealth imply that fewer individuals control the decisions made by firms in the economy. Mian and Sufi then point out some of the preliminary research being done in this area, which suggests that there is a “rising amount of inequality driven by the very top of the wealth distribution.” In this case, the top of the distribution is not the wealthiest 1.0%, but the wealthiest 0.1%.  Carl Kelly 

  3. The Reformed Broker – Joshua Brown : ‘The Best and Worst Thing About Investing’

    Based on a presentation from Towers Watson on equity investing, Joshua Brown shows that return on investments has a lot of randomness. Firstly, past performance does not help to maintain excess returns in the mid-long run. Secondly, skilled managers have a higher probability to outperform the market, but they still have a sizeable probability to fail. Finally, while successful managers attract more investors, according to some reports, managing a large volume of assets imply lower returns. That said, Joshua Brown notes that, like Ithaca, the important thing here is what you have learned during the process. – Ricard Torné  

  4. Can Twitter Predict the Economy Better Than Wall Street Economists? – Josh Zumbrun: ‘Can Twitter Predict the Economy Better Than Wall Street Economists?

    In this blogpost, Josh Zumbrun gives and interesting example of how big data and social media can be used to estimate economic indicators. The author compares unemployment figures that were estimated based on a Wall Street Journal survey with estimates obtained by using data from Twitter and employing a methodology developed by the University of Michigan. Even though results estimated based on the survey came in closer to the real unemploment figures, the method based on twitter data also came in quite close: while the Wall Stree Journal underestimated the real figure by 1.8%, the alternative method overestimated actual data by 4.9%. – Teresa Kersting

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