Chandler Lutz

Separation of Stocks and State

Nice Article! I have to say though you used quite a small data set. When econometricians analyze these things they always use as much data as possible which usually goes back to the 1920s. If you do so (and there have been various studies on these things) you would find that with a dem in office you would find the stock market increased about 11 percent while with a republican it. The difference largely accounts for Hoover's Great Depression and the large expansion during the roosevelt years.

Overall if you want to find a candidate that will foster economic growth then you must look at what drives economic growth...the consensus on this is capital investment and productivity growth. Then you must look at each candidates' policies to determine which will more likely drive productivity growth and capital investment in the long term. The answer is not always clear and obviously different people will arrive at different conclusions.

For me personally I believe that Obama Is by far the best choice...Undoubtedly 50 percent of the people will agree with me and the other 50 will disagree with me...I guess that's what happens when you have heterogeneous agents...

Is the Great Moderation in Danger?

Nice article an comments. The argument about the financial regulation is interesting but I have never seen any evidence that a drop in financial regulation has smoothed out the business cycle. I guess arguing about the topic is pointless since the central banks must now regulate/monitor the investment banks after the bear sterns "bailout" (The fed created a moral hazard situation where after the bear sterns bailout all investment banks will believe they have access to the discount window in one form or another; hence those firms must be regulated).

Also, One thing that the author did not mention was the growth of international trade. Since the 1970s international trade has grown exponentially. I do believe that the global economy is still very much tied to the American, but look at the way many American companies have performed internationally while growth has been sluggish or negative in their home markets. Coke, Pepsi, Phillip Morris, car manufacturers, medical companies, computer companies have all seen large overseas growth. Larger markets, larger scale, larger work forces and foreign direct investment should all be included in the talk of moderation. After all, one reason inflation stayed so low over the last 20 or so years was America's ability to outsource low skill work to foreign countries. This also freed up their workforce more highly skilled jobs.

Overall, I doubt anyone could pin moderation on any one thing. In all likelihood it's probably a combination of many factors