Worthwhile Canadian Initiative

Notation: a beginner's guide

My colleague Lynda Khalaf's favourite saying is: Notation, notation, notation. Bad notation makes a paper difficult to follow. Papers that are hard to read and understand get rejected, or receive lower grades.

Things students do that aren't annoying

Female Science Professor's blog recently featured a discussion of annoying things students do, like asking "Did I miss anything important" or "Is that going to be on the test" (the two questions FSP's readers voted the most annoying.) The purpose of the FSP posts is, in part, to generate good practical advice for students, and they do. For example, when in doubt, start an email to a professor with "Dear Professor X..."  When sending a file to a professor, use a title like "MyName_resume.doc" rather than "resume.doc".

Modern LM curves are vertical

Modern teaching of modern macroeconomics and modern monetary theory should reflect modern monetary policy -- what modern central banks actually do nowadays. That means the modern LM curve is vertical.

Why "culture" is a lousy explanation

In China, there are 6 boys born for every 5 girls; the result of an age old preference for sons combined with widespread use of sex selection technology.

It's tempting to ascribe son preference to culture and leave it at that. However, for an economist, "culture" is a lousy explanation. It has no only trivial predictive value. Will the preference for sons persist over time, or will it gradually fade away? Cultural explanations cannot say: culture simply is what it is. 

Teaching Mundell Fleming

The Mundell Fleming model is usually taught in second year macroeconomics. It's the open economy version of the ISLM model.

This post is me disagreeing with Simon Wren-Lewis about teaching open economy macro (in textbooks and in the classroom). It is not a disagreement about open economy macroeconomics.

Simon says that the textbook Mundell Fleming model, in some circumstances (like a temporary increase in government spending), violates Uncovered Interest Parity.

I say that the textbook Mundell Fleming model always preserves Uncovered Interest Parity, but in some circumstances (like a temporary increase in government spending), violates model-consistent ("rational") expectations.

Big disagreement? Not really. But I think my way of looking at it is more intuitive.

Draft notes for teaching Intro Money

I always suffer self-doubt when I teach the Money part of Intro Economics. Perhaps I'm over-thinking it, and it would be better for my students if I told myself to shut up, and just give them some simple clear story. But how to get it simple and clear, yet not horribly wrong or incomplete?

I'm writing these notes mostly for myself. (To try to organise my thoughts, because I don't actually use notes when I teach.) But I might as well do it in public. Read at your own risk. Because I haven't got it right yet.

Copy/paste/re-write; student essays as collages

This is not about economics. Maybe it's about teaching. Maybe it's about the internet. I only have anecdata, and it is compromised by sample selection bias. I don't have any theory, and I don't have a proposed policy.

A suggestion for complicating the simple aggregate production function (bleg)

I wrote this post. Then I realised it was wrong. I really wish my math were better. So I'm turning it into a sort of bleg. I should have written the technology in implicit form as F(C,I,K,L)=0 rather than H(C,I)=F(K,L). Because the way I wrote it makes Pk depend only on I/C, when it should also depend on K/L as well. I can't think of any plausible underlying story that would make H(C,I)=F(K,L) legitimate and reasonably general. But F(C,I,K,L)=0 is ugly and unintuitive and unteachable, even though it works fine theoretically, and is just a little bit more complicated.

Maybe someone has some ideas?

Here's what I originally wrote:

The depressing job of grading exams

I have a very good job, and I'm well paid to do it. The only part of my job I don't like is grading exams. I have just finished grading 30 exams for my graduate course and 300 exams for my first year course.

Technology, preferences, and wages; kinks and curves, Moseley and Krugman.

Look at the red curve PF1 and the blue curve PF2 in this picture. Ignore everything else:

That's the picture Paul Krugman drew, showing how a capital-biased change in technology would shift the production function.

Four MC curves and two PPFs

Just another "Teaching" post. Because it's needed. (Though I have never taught micro beyond first year.)

Marginal Cost means the change in Total Cost per extra unit of output. MC=dTC/dQ. (Not to be confused with Average Cost, which is the level of Total Cost divided by the level of output. AC=TC/Q.)

Do MC curves slope up? (Is MC an increasing function of Q?) If so, why? If not, so what?

These questions matter because: profit-maximising firms set Q where Marginal Revenue=MC; for perfectly competitive firms Price is the same as Marginal Revenue, so they set Q where P=MC and the MC curve is the Supply curve; for imperfectly competitive firms MR=[1-(1/E)]P where E is Elasticity of Demand, so they set Price as a markup over Marginal Cost according to the formula P={1/[1-(1/E)]}MC, and the MC curve plus markup is a "pseudo supply curve".

So in asking whether MC curves slope up we are asking whether supply curves (or pseudo supply curves) slope up.

Elasticity, slope, scale, and collusion

Every year I teach "elasticity". And every year the students ask "Why not talk about "slope" instead?". They are familiar with "slope", but "elasticity" is a new concept. Why do we teach a new concept, if an old familiar concept would do just as well?

[For non-economists: the slope of a demand curve is the change in price divided by the change in quantity demanded; the elasticity of a demand curve is the percentage change in quantity demanded divided by the percentage change in price. Elasticity = (1/slope)x(Price/Quantity demanded).]

My normal answer is that elasticity is unit-free, while slope has the units dollars.years/tonnes squared (if price is measured in dollars per tonne and quantity in tonnes per year). So you can compare the elasticities of demand for wheat and electricity, but you can't compare the slopes, because you can't compare tonnes with kilowatts-hours.

But I think there's a better answer. "Elasticity" helps us distinguish the individual experiment from the market experiment. "Slope" doesn't. Things that look flat on one scale don't look flat on another scale (e.g. Earth).

Advice for new Teaching Assistants

This is based on a short talk I have given several times to new TAs (mostly new graduate students) at Carleton. It's very basic. I think it should work for most subjects, not just economics. (Though maybe not as well for science and engineering where TAs run labs?). I think it should work for most Canadian universities too, and maybe outside Canada.

I have no special expertise in this area. But I do have a lot of experience, because I have taught a lot of big courses with a lot of TAs. You will probably be working for someone like me, so you need to know what I expect.

The dubious value of doctors' notes

Students get sick around exam time. Cold, damp weather, combined with lack of sleep, poor diet, and stress, is a recipe for illness. I'm sure that the students who woke up last week and thought, "I don't feel well enough to write a midterm exam today" truly didn't feel very well.

But what degree of unwellness is sufficient excuse for not writing an exam? Feeling tired after only having five hours sleep? Allergies acting up? A cold? Stomach pain? Influenza? Mononucleosis? Pregnancy? A concusion? Shoulder injury? Broken wrist?

How to manipulate student grades

There are times when a professor wishes to raise or lower his or her students' grades.

Perhaps a directive has come down from on high: "Instructors need to focus on increasing student success rates." "The average grade in this class is above the departmental norm - grades must come down."

Or a professor might wish to maximize teaching evaluations while maintaining a reputation for rigor and standards using the tried-and-true easy midterm/killer final technique.

Incorporating behavioural economics into intermediate micro

Behavioural economics is fun. It starts off with anecdotes, experiments, and simple generalizations about people's behaviour. People are averse to losses, they go with the default option, and are overconfident. Behavioural economists give fun quizzes.

Intermediate microeconomics, on the other hand, is hard. It begins with abstract concepts such as indifference curves and production functions. These are conceptually difficult ideas, and their relevance to the real world is not obvious.

Incorporating behavioural economics into the intermediate micro curriculum is, therefore, highly dangerous. Anyone exposed to behavioural economics may be tempted to reject mainstream economics entirely, and go off and major in psychology.

Is "Y=C+I" a PPF?

I'm thinking about the best way to teach the investment demand curve in the "classical" (flexible price and wage) macroeconomic model. I don't like the way it's normally done. This post is an experiment, where I'm trying to come up with a better way. I'm not sure if I have succeeded yet, so if you read on you may be a slightly dissatisfied guinea pig.

Office hours: an accidental experiment

Every year I conscientiously hold office hours, and every year only a few students take advantage of them. The TAs' offices are just as empty. Some students even pay for private tutoring, instead of taking advantage of the free services provided by the university. 

This week, however, I carried out an accidental experiment.

Two (probably) unstable macroeconomic equilibria

Some people argue about whether the macroeconomy is inherently stable or unstable. I don't think that's a very useful question. Because.....it depends. And one of the things it depends on is monetary policy. And that is a useful discussion to have, because we can actually do something about monetary policy.

Don't adopt a monetary policy that would make an equilibrium unstable. Because if you miss that equilibrium by even the tiniest amount (which you almost certainly will) the economy will move further and further away from equilibrium.

I thank Steve Keen for (inadvertently) reminding me to do something that George Selgin had wanted economists like me to do. It's not often any of us get the chance to write a post that will make both Steve and George happy at the same time. (Well, Steve should be happy, because I'm talking about unstable equilibria, but you never can tell.)

There's nothing new here. Just the old stuff, but perhaps told in a slightly different way.

Three different ways expectations can matter. And the ZLB.

Nothing new here. Think of this as a teaching post. Partly for the people of the concrete steppes, but for others too. I'm just going to talk about different ways that expectations can affect what happens. The main distinction is between multiple equilibria and unique equilibrium.