Tuesday, November 27, 2007
Also finished grading and reviewing exams. There was a question on the frictional unemployment that results from a decline in the price of oil. More than half the students seemed to conclude that a decline in oil prices was therefore bad. Mr. Bastiat made a call to help explain the make-work bias. Then a pile of kid-taxiing.
Which brings me to the best thing I read tonight. Not that the NBER is going or not going to have its Business Cycle Dating Committee meet, but the history lesson Justin Fox provides.
The Business-Cycle Dating Committee is one of my favorite weird little American institutions. It was set up by Harvard economist Marty Feldstein after he took over as president of the NBER in 1977. Before that, veteran NBER staffer Geoffrey H. Moore (he'd been there since 1939) had more or less singlehandedly determined what was a recession and what was not. Feldstein decided such work was better done by a committee.The NBER explains its procedures here.
...Its members do not follow the short-hand rule that a recession is two consecutive quarters of negative growth in real GDP, a misdefinition that, I learned today (thanks, Barbara!), was probably the dastardly doing of Arthur Okun, chairman of LBJ's Council of Economic Advisers. That's partly because, given the constant revision and re-revision of GDP, you'd have to wait about five years to conclusively declare a recession. But it's also because economic downturns don't necessarily start and end on a quarterly basis.