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Just hours after I wrote about this year’s Prize in Economics, here comes the 2006 Nobel Peace Prize winners.
The Prize is awarded jointly to Muhammad Yunus — the founder of Grameen Bank and the inventor of micro-credit — and Grameen Bank win the Nobel Peace Prize!
Excellent choice!
Last year, it was a tribute to physics. This year, it’s economics.
As a blog that pretends to know economics, it’s embarrassing for me to not to blog about Edmund Phelps when he was awarded with the Prize in Economics earlier this week. Almost all blogs that love economics are celebrating his achievement. So, today, I want to celebrate his achievement too.
In modern macroeconomics, students learn that there is a trade off between inflation and unemployment. If inflation goes up, unemployment goes down and vice versa. Those who are familiar with economics will know that this refers to the Phillips curve.
The problem with the Phillips curve is that in macroeconomics, in the long run, nominal factor does not affect real factor. Inflation is a nominal factor and so, in the long run, inflation does not affect the real economy. Despite that, the original Phillips curve says that inflation affects real component of the economy.
Phelps added inter-temporal dimension into the Phillips curve. In essence, his research suggests that current expectation of future inflation affects future Phillips curve. This is the expectation-augmented Phillips curve and with that, he solved the nominal-real problem. In simple terms, the Phillips curve could move around.
The new Phillips curve is dynamic and it shows that there’s no trade off between inflation and unemployment in the long run. The new model also able to explain the stagflations of the 1970s and the low unemployment and inflation rates during the 1990s. The old static Phillips curve can’t explain those two historical events.
I learned that in class and he won the Prize in Economics for it. Last year, the winners contributed to the advancement of game theory. And yup, I learned about that in class too.
p/s – economists for full-cost accounting. Yup, among them are Greenspan and Mankiw. Mankiw call this group of economists as the Pigou Club.
Something has been bugging me for the past few weeks.
In Islam, Iblis is the devil; Satan himself. Iblis was an angel before he disobeyed God. But, angels have no freewill. Therefore, if Iblis was an angel and an angel does not have freewill, how was it possible for Iblis to disobey God in the first place?
I was at a DAP forum yesterday. I came earlier than most people and sat in the third row.
I really don’t want to comment on it but I have a picture that I wanted to share.
Nope. There’s no mistake in the photo. The focus is intentional. This is how I felt after the forum started to drag on and on with odd questions in form of speeches. Somehow, some people have trouble differentiating between questions and statements. I went straight to bed immediately after I reached home.
While I chose photography to express myself, Patrick Teoh chose a more immediate media to express his frustration at the flow of the forum in a very frank manner.
I came to the forum because of two reasons. One was to return all materials a project — that I was in — had borrowed from a friend; second, just curious why on earth we want to set Pak Lah free.
I of course came with a typical libertarian mindset – I want to be free.
So, some Indonesian official has suggested that Malaysia should pay for the oxygen that Indonesia “export” to Malaysia. It’s one of the same nonsensical remarks Indonesia gave last year instead of actually working with others to fight the fire that causes the haze. Well, I want to offer some scientific fact to that Indonesian official.
Mature forest is oxygen neutral. The Indonesian rainforest as well as Malaysia’s consume oxygen through respiration as much as it produces oxygen through photosysthesis. That basically means mature forest produces zero net oxygen.
Only growing forest produces positive net oxygen; in general, Southeast Asia has mature forest.
Given the net zero, if Indonesia exports oxygen, then Indonesia has to import oxygen in order to balance out its “account”. Therefore, if Indonesia wants to internalize the public good (oxygen) and demands Malaysia pays for the oxygen we allegedly get from Indonesian rainforest, the Indonesia must pay for oxygen they get from Malaysian rainforest.
For further reading on zero net oxygen, please read an article at Wikipedia. In particular, Wikipedia cited Wallace S. Broecker of Columbia. Also, for some math, see oxygen cycle at Wikipedia.
So dear sir, you may want to learn a bit of undergraduate biology (frankly, it’s just general knowledge) before making any statement with too much cheekiness.