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Markets in everything, Xmas editionDecember 16 2008

Company offers to wrap your Christmas purchases just as badly as you could do it yourself

So says Kat, my source on this story.  It's called "Crapwrap":

Firebox.com is paying 20 of its male forklift truck drivers and warehouse assistants to wrap presents as quickly as possible, using ugly brown duct tape and very little care.

And the $9 service, cheekily called CrapWrap, has attracted more than 500 customers since it launched last week.

This way she'll think you did it. 

...Parcels can even be dispatched in brown paper with a shoddily-tied pink ribbon.

Kevin Smith, 29, is proud to be the worst wrapper at the company's London warehouse.

He said: "I am rubbish. We're not given any instructions. I'm just asked to make a hash of it using lots of brown tape and making sure there are rips and untidy folds.

"It's nice to get away from the normal work: cleaning, packing and moving stuff around. Wrapping is a good distraction."

What is the best kind of fiscal policy shock?December 16 2008

Hot off the presses from the NBER, from Andrew Mountford and Harald Uhlig, the evidence is mounting:

We propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions. Specifically, we use sign restrictions to identify a government revenue shock as well as a government spending shock, while controlling for a generic business cycle shock and a monetary policy shock. We explicitly allow for the possibility of announcement effects, i.e., that a current fiscal policy shock changes fiscal policy variables in the future, but not at present. We construct the impulse responses to three linear combinations of these fiscal shocks, corresponding to the three scenarios of deficit-spending, deficit-financed tax cuts and a balanced budget spending expansion. We apply the method to US quarterly data from 1955-2000. We find that deficit-financed tax cuts work best among these three scenarios to improve GDP, with a maximal present value multiplier of five dollars of total additional GDP per each dollar of the total cut in government revenue five years after the shock.

The emphasis is mine.  I'm not saying you have to believe this paper in all its details (I don't), but over the next year you will continue to hear talk about the wonders of government spending as fiscal policy.  The science isn't there.  Here are

Infrastructure: Roads and The Smart GridDecember 9 2008

The first thing people think about when someone says "infrastructure" is roads and bridges.  That's unfortunate because we already spend over $100 billion a year on transportation infrastructure and the truth is we don't need that much more.  Peter Orzag, President-Elect Obama's choice for OMB estimated - when Director of the CBO - that an additional $20 billion in spending, mostly to maintain current transportation infrastructure, would achieve 83% of the net benefits to he had from more transportation infrastructure spending.  Moreover, in many cases, congestion pricing would be both greener and more efficient than greater spending.  A better program would be to follow Germany and several innovative state programs to get congestion pricing using GPS technology up and running, especially for trucks.

Even more valuable than transportation infrastructure would be grater investment in  electricity infrastructure, a smart grid.  Consider that in 2003 a massive, widespread, power outage threw 50 million people in the Northeastern states and Ontario, Canada out of power - disrupting lives and the economy.  Why did this h

Obama's fiscal stimulus: some detailsDecember 7 2008

I was surprised to read the first plank of Obama's proposed stimulus:

First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.

Maybe that is deliberately unglamorous but I was expecting a more dramatic first punch.  Here, by the way, are some simple arguments for energy-efficient buildings.  My Google search doesn't yield much useful, however, in the way of critical analysis.  (Any leads, readers?)  And surely ten years from now our government still will have the highest energy bills in the world, unless the goal is to grow so slowly that the Chinese government will pass us.

Oddly the two goals of the plan -- saving dollars and creating jobs -- often stand in tension.  Let's say we could heat all those buildings for a dollar: how many jobs would that create?  Is the goal to "spend less" or to "spend more"? The mere fact th

Why do so many more women study abroad?December 4 2008

The ratio is about 2-1.  And it's not just because women are concentrated in the "study abroad intensive" humanities:

The National Science Foundation reports that men earn 80 percent of bachelor’s degrees in engineering. But women’s participation in a study abroad consortium for engineers, the Global Engineering Education Exchange, typically ranges from 30 to nearly 40 percent (39.3 percent this academic year) — far outstripping their 20 percent representation in the field.

Here is what the experts think:

Among the many conventional wisdom-type explanations pervading in the study abroad field: differing maturity and risk-taking levels among 18- to 21-year-old men and women; a sense that females, concerned about safety, are more inclined to attend a college-sanctioned study abroad program than travel on their own; and, again, varying study abroad participation rates in male versus female-dominated fields.

I favor a more Hansonian explanation, such as this:

“The three main factors I found were motherhood, age and safety,” said McKinney, associate director of the Center for Global Education at Butler University. “Essentially, my informants shared with