It's relative prices and wages that matter!

Dilbert gets it (I think).

Bernanke named new Fed chair

President Bush named Ben Bernanke as the new chair of the Fed. There are many comments on Bernanke here.

What's the deal with inflation?

David Altig at Macroblog has a nice discussion of the intricacies of inflation. What's important, labor markets or expectations?

Are publics going private?

Well, the public money is certainty not going to the public universities. Is it a temporary phenomenon? Is it permanent? What are the implications? Sam Dillon of the NY Times reports on these questions.

Black gold in Kentucky, at least at these prices

In response to our post on oil and the macroeconomy, reader Henry Neltner writes:

Did you know there are over 12,000 oil wells in the state of Kentucky alone? Old oil wells that were not profitable when oil was around 15 bucks a barrel are now being tapped as the price
makes it affordable to pull oil from the ground. Drillers are using water as a means to bring it up..... Wells that are producing about 30 to 50 barrels a day are being pumped in the southern part of the state. These wells were abandoned back in the 80's but now are producing big bucks for small investors.

Everybody loves Mikey, or do they?

Michael Munger explains how markets work and how parents embarass teenagers.

If ain't broke, don't fix it

Apparently, Samsung thought that prices were broke, because they fixed them. Unfortunately for Samsung, if you fix prices and get caught, it can be very expensive! (Hat tip: Nicole Kozdron)

More on the Laureates

The marginal revolution has a nice discussion of Schelling's and of Auman's work.

Oil and the macroeconomy

Jim Hamilton discusses how the recent increases in the price of oil may interact with other macro-shocks such as Katrina.

My own interpretation is that energy disruptions only start to matter a great deal for the economy when utilization rates of other factors of production besides energy are observed to adjust. For example, in deciding to cancel flights, the airline is not just using less energy but also likely laying off workers. A typical pattern in the above episodes was that consumers suddenly became very apprehensive following the supply disruptions, postponing big ticket purchases such as automobiles. As automobile sales declined and workers were laid off in autos and the industries that sell to the auto makers, further cutbacks in spending by those affected led the economy into recession.
So where do we stand right now? In response to the rapid run-up in gasoline prices in August and the devastation from Katrina, the University of Michigan's index of consumer sentiment fell from 96.5 in July to 76.9 in September. Consumption spending fell 0.5% in August, with sales of many SUV's down 50% in September compared with the year earlier. And today Delphi, the largest U.S. auto parts supplier, filed for bankruptcy.

An economist gives real world advice

Alex Tabarrok gives advice on wage policy to a New Orleans hospital. Note the somewhat sociological rationale for downward nominal wage rigidity.

Is Homo Economicus good or bad?

Arnold Kling looks at the implications of maximizing status (as opposed to, say, wealth) and doesn't like what he sees.