Categories
Research Program

Secular Labor Reallocation and Business Cycles

This is the title of a new Journal of Political Economy article by Gabriel Chodorow-Reich and Johannes Wieland which advances the current debate on business cycles, labour reallocation, and possible job losses. Here is the abstract:

We revisit an old question: does industry labor reallocation affect the business cycle? Our empirical methodology exploits variation in a local labor market’s exposure to industry reallocation on the basis of the area’s initial industry composition and national industry employment trends for identification. Applied to confidential employment data over 1980–2014, we find sharp evidence of reallocation contributing to higher local area unemployment if it occurs during a national recession but little difference in outcomes during an expansion. A multiarea, multisector search-and-matching model with imperfect mobility across industries and downward nominal wage rigidity can reproduce these cross-sectional patterns.

Categories
Research Program

Economic Crash Books

Some context for this week’s coronavirus panic and financial market correction:

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History by Diana B. Henriques (New York: Henry Holt and Company, 2017). What happened on Monday, October 19, 1987, and what led to it.

A Demon of Our Own Design: Markets, Hedge Funds and the Perils of Financial Innovation (Hoboken, NJ: John Wiley & Sons, 2008). A leading quantitative portfolio manager notes two causes of the 2008-09 Great Recession or Global Financial Crisis: the use of leverage, and the rapid growth in complex financial assets (such as mortgage debt securities and collateralised debt obligations).

Manias, Panics and Crashes: A History of Financial Crises (Seventh edition) by Robert Z. Aliber and Charles P. Kindleberger (New York: Palgrave Macmillan, 2017). An influential history of why manias, panics and economic crashes occur.

Market Madness: A Century of Oil Panics, Crises, and Crashes by Blake C. Clayton (Oxford: Oxford University Press, 2015). A behavioural economics view of why oil panices, crises, and crashes occur – building on Robert J. Shiller’s pioneering framework.

The Asylum: Inside The Rise and Ruin of the Global Oil Market by Leah McGrath Goodman (New York: HarperCollins, 2011). How traders and speculators deal with the global oil market and risk-reward decision-making.

Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos by James Rickards (New York: Penguin, 2019). One of the best well-argued bear cases for a financial crisis or recession in the near future.

World Event Trading: How to Analyze and Profit from Today’s Headlines by Andrew Busch (Hoboken, NJ: John Wiley & Sons, 2009). How event arbitrage traders trade economic crises, pandemics, geopolitical conflict, and other forms of volatility events: they look for tradable catalysts.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the Financial Order of Decaying Growth and Economic Crisis by Tim Lee, Jamie Lee, and Kevin Coldiron (New York: McGraw-Hill, 2019). How volatility suppression strategies can create the market conditions for volatility events.

Narrative Economics: How Stories Go Viral & Drive Major Economic Events by Robert J. Shiller (Princeton, NJ: Princeton University Press, 2019). A behavioural economics perspective on the role of narratives in creating and shaping volatility events.

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo (Princeton, NJ: Princeton University Press, 2019). An influential quantitative finance researcher and quantitative hedge fund consultant outlines his Adaptive Markets Hypothesis – and how it differs from the Efficient Markets Hypothesis.

During my 2002-04 Masters studies in strategic foresight at Swinburne University, I also wrote a postmortem on the 2000 Dotcom Crash.

Categories
Research Program

Journal of White Collar and Corporate Crime

SAGE Publications has recently launched the Journal of White Collar and Corporate Crime:

The Journal of White Collar and Corporate Crime is an international and a multidisciplinary, peer-reviewed academic journal featuring high quality contributions from a community of global scholars and researchers. The journal is aimed at uncovering the interrelations of theoretical and empirical investigation of the crimes of powerfully organized people and institutions while advancing the knowledge of white collar and corporate crime as well as the practices of social intervention and policy change.

The journal’s first issue features a range of interesting articles including an inaugural editors’ statement that suggests the benefits of linking criminology and political economy, and an article by the Australian National University’s Professor John Braithwaite on the crimes of the powerful.