Markus' Academy

MarkusAcademy

Princeton University's Markus Brunnermeier hosts conversations with leading academics and policymakers on the global economy, global politics, and artificial intelligence.

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110 episodes
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Episodes110

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July 8 · 1 hr 16 min
Climate Compacts to Combat Free Riding | Markus' Academy | Ep. 50
Follow the link for the full summary: https://markusacademy.substack.com/p/climate-compacts-to-combat-free-riding Link to sign up for the webinar series: https://markusacademy.substack.com/ On January 28, 2021, William Nordhaus joined Markus’ Academy for a lecture on climate compacts to combat free riding in international climate agreements. Nordhaus is a Professor of Economics at Yale University and one of the 2018 recipients of the Nobel Prize in Economics. Download the slides here. Highlights: There has been little progress in slowing emissions. Climate innovation is plagued by a double externality. Currently, the federal budget for military versus green energy R&D is 60 billion vs 2 billion dollars. A high price on CO2 emissions is a key to sharp emissions reductions. The carbon price landscape in 2019 varied across regions and sectors. International climate policy is at a dead end because of the global free rider problem, where the costs and benefits are very disperse. An effective international agreement requires incentives, such as a climate compact or club. In summary, there has been little progress in slowing warming, low-carbon technologies are plagued by double externalities, there should be a central goal of high and harmonized carbon prices, and effective international policies require climate compact structure with carrot and sticks.
July 8 · 1 hr 7 min
Macroeconomics, Carbon Pricing, and Climate Policy | Markus' Academy | Ep. 49
Follow the link for the full summary: https://markusacademy.substack.com/p/macroeconomics-carbon-pricing-and Link to sign up for the webinar series: https://markusacademy.substack.com/ On January 21, 2021, James Stock joined Markus’ Academy for a talk on macroeconomics, carbon pricing, and climate policy. Stock is a Professor of Political Economy at the Harvard Kennedy School. Download the slides here. Highlights: Climate change policies are rapidly changing. For example, on its first day, the Biden Administration rejoined the Paris climate accord, stopped the Keystone XL pipeline, reinstituted the Social Cost of Carbon (SCC), and embarked on a review of the Trump climate rollbacks. Current projections for aggregate CO2 emissions under existing policies show a decrease before ticking back up while missing the Paris target. There exist many challenges for an energy transition. To displace all natural gas and coal with solar and wind, we would need to build hundreds of wind and solar farms every year over the next 15 years. In addition, there are concerns over carbon tax bills regarding jobs and economy, regressivity, the impact on coal mining and similar sectors, and that such taxes would not produce necessary emission reductions. Regarding the macroeconomic effects of a carbon tax, standard calculations of the effects of carbon taxes on GDP are done using computable general equilibrium models, which indicate a small decrease in GDP per capita, along with some job displacement effects. Projections by the US Energy Information Administration and others have shown that a modest carbon tax would help us hit the Obama-era Paris targets by 2025. Alternative policies to economy-wide carbon tax include: a carbon tax on power sector only, clean electricity standard (CES) — where a certain percentage of electricity has to be from clean (renewable and nuclear) sources — and extending investment and production tax credits. All those require legislation. Regulatory options include regulating emissions under the Clean Air Act and ending the federal coal program. Stronger state policies, such as strengthening state RPS’s, are also an option, but have very small national impact. A carbon tax (or a proportional CES) is a key element of effective and efficient climate policy, but it isn’t enough on its own.
July 8 · 59 min
A Conversation with the Federal Reserve Chair | Markus' Academy | Ep. 48
Follow the link for the full summary: https://markusacademy.substack.com/p/a-conversation-with-the-federal-reserve Link to sign up for the webinar series: https://markusacademy.substack.com/ On January 14, 2021, Federal Reserve Chair Jerome Powell joined Markus' Academy for a conversation. Powell and Brunnermeier discussed the following: The new flexible average inflation targeting framework The possibility of an “inflation whipsaw" The importance of central bank independence to avoid fiscal dominance and of macroprudential regulation to avoid financial dominance The difference between the COVID crisis and Great Recession Various crisis response measures the Federal Reserve employed during the COVID crisis Highlights: Flexible inflation targeting was successful, but needed to be adapted to the new normal of policy rates near the lower bound. Regarding the inflation goal, the Fed reaffirmed its understanding of price stability as achieving 2 percent annual inflation over time. Regarding the maximum employment goal, the Fed added new language saying that maximum employment is a broad and inclusive goal, which reflects the Fed’s appreciation of the benefits of a strong labor market for many in low- and moderate-income communities and the overall economy. Surveys show that market participants do not expect the Fed to raise rates until inflation has reached 2 percent and until the labor market is very strong. As the pandemic recedes, the Fed sees the potential for increased spending as people return to their normal lives. A key difference between macro-prudential regulation in the US and many other countries is that the Fed relies on strong through-the-cycle tools rather than time varying-tools. The COVID shock and the GFC shock were fundamentally different. Treasury market functioning is central to the entire financial system, and bestows a vast good to the public. The Fed and Treasury worked together closely to set up several emergency lending facilities. Central bank independence is an institutional arrangement that has served the public well. Public debt level is at record high and is growing substantially faster than the economy. Now is not the time to talk about exit from the path of asset purchases. The Fed is committed to studying benefits, potential costs, and unresolved questions around a CBDC. It is an extraordinary time to be doing economic research. On a positive note, we should be optimistic about the economy for the next couple of years.
July 8 · 1 hr 9 min
Less Lower for Longer; More Higher and Sooner | Markus' Academy | Ep. 47
Follow the link for the full summary: https://markusacademy.substack.com/p/less-lower-for-longer-more-higher Link to sign up for the webinar series: https://markusacademy.substack.com/ On January 7, 2021, Charles Goodhart, CBE, joined Markus’ Academy for a lecture on "Less lower for longer; more higher and sooner." Goodhart is a Professor at the London School of Economics. Download the slides here. Highlights: Looking at the last three centuries, interest rates were steady up to 1950, after which they increased drastically up to 1980. From the 1980s to the present inflation rates and expectations went to historically low levels, due to globalization and demographic changes. Shift of production from high-wage to low-wage has improved world equality but increased within-country inequality. The increase in the number of elderly people has led to sharp rises in expectations for deficits and debt, even before the pandemic.
July 8 · 51 min
COVID-19 Economic Lessons | Markus' Academy | Ep. 46
Follow the link for the full summary: https://markusacademy.substack.com/p/covid-19-economic-lessons Link to sign up for the webinar series: https://markusacademy.substack.com/ On December 16, 2020, Markus Brunnermeier joined Markus’ Academy for a summary lecture on economic lessons from COVID-19 on resiliency. Markus is the host of Markus’ Academy, a Professor of Economics at Princeton, and Director of the Princeton Bendheim Center for Finance Download the slides here. Timestamps: 0:00 Introduction0:59 Webinar speakers 2020 ... and beyond 8:17 Social contract 10:45 Temporary or permanent shift? 12:41 Overview: Resilient Society 18:10 Testing/Vaccine production 20:49 Innovation boost: trend accelerator or QWERTY jump 22:37 Scarring 24:41 Financial Markets Whipsaw 26:23 Global Financial Crisis - averted in March 2020 31:35 Tail/Trap Risk: Inflation whipsaw 33:45 Inequality of Resilience 35:37 Global Resilience
July 6 · 1 hr 6 min
International Economic Challenges for the President-Elect | Markus' Academy | Ep. 45
Follow the link for the full summary: https://markusacademy.substack.com/p/international-economic-challenges Explore the webinar series: https://markusacademy.substack.com/archive On December 9, 2020, Adam Posen joined Markus' Academy to discuss international economic challenges for the President-elect: trade, China, the dollar, and pandemic recovery. Posen is the President of the Peterson Institute of International Economics. Download the slides here.* ● Presidents rarely tackle international economic issues early on, but many of Biden's most urgent problems are inescapably international in nature, including vaccine distribution, climate change, and conflict with China. Political constraints — including a divided electorate, bipartisan fear of China, and a loss of U.S. reputational soft power — will affect this work. ● Globalization is about more than goods and has in some ways been eroding over the past 15 years. Posen argues that by overweighting trade in goods, economists develop a false sense of increasing globalization, when in fact it is a multi-layered web of ideas, human capital, and norms that is increasing in some ways and decreasing in others. ● The effect of the Trump administration's trade policies were exactly what economics textbooks would predict: tariffs were paid by consumers, the trade deficit increased, sanctions diverted trade from the U.S., reshoring didn't happen, and immigration restrictions did not create "good jobs." ● International cooperation is possible but requires common effort — simultaneous contributions to shared goals and common abstention from specific behaviors. On China, Posen recommends directly addressing both issues of cooperation and confrontation, rather than ignoring either.
July 6 · 1 hr 10 min
Working from Home: Will it Persist? | Markus' Academy | Ep. 44
Follow the link for the full summary:https://markusacademy.substack.com/p/working-from-home-will-it-persist Explore the webinar series:https://markusacademy.substack.com/archive On December 3, 2020, Nick Bloom joined Markus' Academy to discuss labor market trends around working from home before, during, and after the COVID-19 pandemic. Bloom is a Professor of Economics at Stanford University. Download the slides here.* ● In March, work-from-home (WFH) status of full-time employees surged to 42% of Americans from pre-pandemic levels of 2%. By November, it was still high at 34%, leaving commercial buildings semi-deserted, with office security card swipes dropping to 10% of their pre-pandemic numbers. ● COVID-19 increased the share of days U.S. workers WFH significantly, but with great variation by education level. Before the pandemic, 5% of paid working days were WFH days; by May that jumped to over 60%. The share of WFH days ranges from around 10.5% for those with less than a high school degree to 53% for those with a graduate degree. ● The average employee wants to WFH about two days a week, and surveyed firms are planning to offer employees who can WFH about two days a week. A pre-COVID stigma against WFH has diminished, and the "forced experimentation" caused by COVID-19 has reversed the priors of many firms — on average, WFH has turned out better than they expected. ● Investments in WFH infrastructure add up to about 1.2% of GDP. The average American spent $600 setting up their home office and 13 hours learning Zoom and other necessary tools, with firms also spending substantially on the transition.
July 6 · 1 hr 5 min
When, If Ever, Should We Worry About the Debt? | Markus Academy | Ep. 43
Follow the link for the full summary:https://markusacademy.substack.com/p/when-if-ever-should-we-worry-about Explore the webinar series:https://markusacademy.substack.com/archive On November 19, 2020, Jason Furman joined Markus' Academy to discuss U.S. debt and a framework for fiscal policy moving forward. Furman is a Professor of Economics at Harvard Kennedy School, Senior Fellow at PIIE, and Former Chair of the Council of Economic Advisers. Download the slides here.* ● Even before the pandemic, economic policy in 2018-2019 was extraordinarily stimulative and should change how we think about the macroeconomy. A chronic excess in risk-free savings relative to investment has required lower rates for markets to clear, indicating how differently the economy is acting today relative to decades past. ● Traditional arguments for worrying about the debt are less relevant now, and debt should not be a constraint on the short-term response to the depressed economy. Furman is not concerned about investment crowding out, intergenerational fairness, the ability to borrow in emergencies, or interest on debt crowding out other spending, given that real rates are currently negative. ● Still, the question of how to size stimulus relief remains outstanding. Even if the U.S. can borrow an unlimited amount, it is still redirecting scarce resources and should apply a cost-benefit test to different policies — it just doesn't need to add an extra "cost" for debt. ● Debt to GDP is a misleading metric for assessing fiscal sustainability, and policymakers should instead look at real net interest as a share of GDP. Furman's tentative framework works toward a goal where real interest does not exceed 1% of GDP in the coming decade, and argues that anything the U.S. does in the fiscal space needs to be optimal, understandable, and achievable.
July 6 · 1 hr 4 min
Pandemics and the Future of Globalization | Markus Academy | Ep. 42
Follow the link for the full summary:https://markusacademy.substack.com/p/pandemics-and-the-future-of-globalization Explore the webinar series:https://markusacademy.substack.com/archive On November 12, 2020, Stephen Redding joined Markus' Academy for a talk on recent work studying the relationship between pandemics and globalization. The research is joint work with Harvard's Pol Antras and Princeton's Esteban Rossi-Hansberg. Redding is a Professor of Economics at Princeton University. Download the slides here.* ● As it did during the Black Death in the 14th century, business travel and people travelling for trade played a role in the spread of COVID-19. A key question motivating Redding's research is how trade and disease dynamics affect pandemics. ● In an open economy, whether a pandemic occurs depends on the country with the worse disease environment. Even limited interaction with a country with an unhealthy disease environment is enough to eventually bring both countries into a pandemic. ● But more globalization can also prevent pandemics or lessen their severity. When barriers to interaction are reduced, people choose to interact with those in countries with better disease environments — which can, surprisingly, even reduce infection rates in the healthier country despite an increase in total interactions. ● Not considering the effects of the pandemic, globalization may slow as we emerge from a period of "hyper-globalization" between the mid-1980s and early 2000s. Redding says that while there's no conclusive evidence of significant de-globalization in recent years, growth in globalization is likely to slow with or without the effects of COVID-19.
July 6 · 58 min
COVID-19 School Dashboard: Reopen Evidence
Follow the link for the full summary:https://markusacademy.substack.com/p/covid-19-school-dashboard-reopen Explore the webinar series:https://markusacademy.substack.com/archive On November 5, 2020, Emily Oster joined Markus' Academy for a talk on her COVID-19 school dashboard and evidence around reopening schools. Oster is a Professor of Economics at Brown University. Download the slides here. ● Remote learning is not as effective as in-person learning, particularly for lower-income students. Earlier work showed that student performance on Zearn, an online math program, declined by larger amounts among lower-income children at the start of the pandemic. Oster argues that if we can get kids back to school, we should. ● The biggest risk of opening elementary schools is virus spread from adult-to-adult. While children can still get and spread COVID-19, health risks to children are lower than other groups, and some recent research suggests living with children doesn't increase the likelihood of getting COVID-19. ● Because no national or state-level data collection system was built over the summer, Oster worked with schools and districts to collect this information and post it anonymously to her COVID-19 School Response Dashboard. New data is posted every two weeks and covers about 3 million students, including 1.6 million attending school in-person. ● Data from the dashboard suggests case rates at schools are not alarming and schools are not driving infections. Oster hypothesizes that low transmission in schools may be due to the structured environment, as outbreaks tend to be driven by unstructured social activities. She argues that if local areas restrict in-person schooling, those restrictions should apply consistently to other activities as well.
June 27 · 1 hr 22 min
The Natural Behavior of Unemployment with Robert Hall | Markus' Academy | Ep. 40
Follow the link for the full summary: https://markusacademy.substack.com/p/the-natural-behavior-of-unemployment Link to sign up for the webinar series: https://markusacademy.substack.com/ On October 29, 2020, Robert Hall joined Markus’ Academy for a talk on the natural behavior of unemployment. Hall is a Professor of Economics at Stanford University. Download the slides here.
June 27 · 1 hr 13 min
The Seasonality of Covid-19 | Markus' Academy | Ep. 39
Follow the link for the full summary: https://markusacademy.substack.com/p/the-seasonality-of-covid-19 Link to sign up for the webinar series: https://markusacademy.substack.com/ On October 22, 2020, Bengt Holmstrom joined Markus’ Academy for a lecture on the seasonality of COVID-19. Holmstrom is a Professor of Economics at MIT and one of the 2016 recipients of the Nobel Prize in Economics. Download the slides here.
June 27 · 1 hr 12 min
How To Worry About Government Debt | Markus' Academy | Ep. 38
Follow the link for the full summary: https://markusacademy.substack.com/p/how-to-worry-about-government-debt Link to sign up for the webinar series: https://markusacademy.substack.com/ On October 15, 2020, Christopher Sims joined Markus’ Academy for a lecture on “how to worry about government debt.” Sims is a Professor of Economics at Princeton University and one of the 2011 recipients of the Nobel Prize. Download the slides here.
June 27 · 1 hr 14 min
Which Capitalism? | Markus' Academy | Ep. 37
Follow the link for the full summary: https://markusacademy.substack.com/p/which-capitalism Link to sign up for the webinar series: https://markusacademy.substack.com/ On October 8, 2020, Luigi Zingales joined Markus’ Academy for a conversation on “Which Capitalism?” Zingales is a Professor of Finance at the University of Chicago Booth School of Business. Download the slides here.
June 27 · 1 hr 19 min
The Economic Geography of Climate Change | Markus' Academy | Ep. 36
Follow the link for the full summary: https://markusacademy.substack.com/p/the-economic-geography-of-climate Link to sign up for the webinar series: https://markusacademy.substack.com/ On October 1, 2020, Esteban Rossi-Hansberg joined Markus’ Academy for a lecture on the economic geography of climate change. Rossi-Hansberg is a Professor of Economics at Princeton University. He presented joint work with Princeton Economics Ph.D. student José-Luis Cruz. Download the slides here. Timestamps: 0:00 Introduction 1:08 Markus' intro on Climate Change 2:42 Role of Risk/Uncertainty 6:02 Migration as Adaptation Strategy? 6:48 Migration? 9:24 2 Types of Innovations - diabolic loop 10:51 Poll Results 13:08 An Economic Assessment Model 18:24 Model Characteristics 24:37 Local Temperature Down-scaling 27:37 Damage Functions 35:46 Fossil and Clean Energy Costs 38:02 Baseline Scenario: CO2 Emissions and Global Temperature 42:03 Baseline Scenario: Amenities and Productivities 47:47 Baseline Scenario: Uncertainty about Damage Function 49:16 Adaptation: Migration 51:49 Adaptation Innovation 58:57 Carbon Taxes: Dynamic Effects
June 20 · 1 hr 6 min
Public and Private Spheres and the Authentic Self | Markus' Academy | Ep. 35
Follow the link for the full summary: https://markusacademy.substack.com/p/public-and-private-spheres-and-the Link to sign up for the webinar series: https://markusacademy.substack.com/ On September 24, 2020, Jean Tirole joined Markus’ Academy for a lecture on public and private spheres and the authentic self. Tirole is honorary chairman of the Foundation JJ Laffont at the Toulouse School of Economics (TSE), the scientific director of TSE-Partnership, and a 2014 recipient of the Nobel Prize in Economics. Download the slides here. Timestamps: (1:22) Markus' intro on privacy (5:31) The shift from private to public sphere (6:56) "Tech elite" can measure our inner feelings (12:11) Introduction (14:42) Considerable Lab and Field evidence (19:32) Outline (21:18) Consensual behavior (36:21) Divisive behavior (53:17) Competition for attention (55:08) Conclusion
June 20 · 59 min
A Q&A on Digital Innovation, Privacy, and Cybersecurity | Markus' Academy | Ep. 34
Follow the link for the full summary: https://markusacademy.substack.com/p/a-q-and-a-on-digital-innovation-privacy Link to sign up for the webinar series: https://markusacademy.substack.com/ On July 27, 2020, Eric Schmidt, Princeton Class of ‘76, joined Markus' Academy for a Q&A on digital innovation, privacy, and cybersecurity. Eric Schmidt is the former chairman and CEO of Google and co-founder of Schmidt Futures. Download the slides here. Timestamps: Markus Brunnermeier introduction: 0:00Technology and society: 0:59Privacy - “free to think”: 9:51Free to speak, fake news: 13:26Algorithms and AI: 25:57Cyber Security: 31:10Innovation: 35:16Money/ payment system: 47:44Regulation/Taxation: 52:12Concluding remarks: 57:54
June 20 · 1 hr 19 min
COVID-19: A View from Outside The Industrialized World | Markus' Academy | Ep. 33
Follow the link for the full summary: https://markusacademy.substack.com/p/covid-19-a-view-from-outside-the Link to sign up for the webinar series: https://markusacademy.substack.com/ On July 24, 2020, Raghuram Rajan joined Markus' Academy. Rajan is Professor of Finance at Chicago Booth, a former Governor of the Reserve Bank of India, and a former Chief Economist of the IMF. Download the slides here. Timelines: Markus Brunnermeier introduction: 0:00Beginning of Rajan presentation: 8:35The economic playbook: 9:23Containment: 12:31Differences between India and Italy: 16:22Why didn't lockdowns work in India: 22:53Problems are exacerbated by mismanagement: 26:34Why shorter lockdown?: 29:07Consequences: 35:53Has the virus spread EM’s economic damage: 38:07What about relief?: 40:56Central banks have stepped up: 42:49With central bank support: 47:54Why so little relief, is it a mistake?: 49:42An alternative approach: 52:27Modest relief: 54:23Repair: 56:24Tepid recovery without further action: 59:07What next for EM’s: 1:01:52Why is India not doing better: 1:05:15What is next for India:1:09:27Q&A: 1:11:18
June 20 · 1 hr 15 min
Climate Policy: Moving Beyond Ostriches and Pollyannas | Markus' Academy | Ep. 32
Follow the link for the full summary: https://markusacademy.substack.com/p/climate-policy-moving-beyond-ostriches Link to sign up for the webinar series: https://markusacademy.substack.com/ On Friday, July 17, 2020, Richard Zeckhauser joined Markus' Academy for Finance to discuss recent research on prudent climate policy. Zeckhauser is a Professor of Political Economy at the Harvard Kennedy School. Download the slides here. Timestamps: Markus Brunnermeier introduction: 0:00Beginning of Zeckhauser presentation: 16:10Prudent climate policy: 22:28Three prongs for climate policy: 23:30Next ten years are last the chance policy: 24:34Basic argument: 26:38Prospects for reversing these trends: 28:02Likely dates of reaching 2° celsius warming: 30:00Likelihood of climate catastrophe is extremely high: 31:15Resources required by policy prong: 32:34Outline of analysis: 33:33Moral hazard concerns: 35:57Approaches to substitute instruments: 39:15Awful Action Alert: 41:38Deleterious Deterrence: 43:42Types of climate policy observers: 49:32Infeasibility and political economy of targets: 51:09Concluding remarks: 54:32Q&A: 55:36
June 20 · 1 hr 19 min
Brazil’s Perfect Storm | Markus' Academy | Ep. 31
Follow the link for the full summary: https://markusacademy.substack.com/p/brazils-perfect-storm Link to sign up for the webinar series: https://markusacademy.substack.com/ On July 13, 2020, Arminio Fraga joined Markus' Academy for a discussion of Brazil’s economy leading up to COVID-19. Fraga is a member of the Group of Thirty and the former president of the Central Bank of Brazil. Download the slides here. Timestamps: Markus Brunnermeier introduction: 0:00Beginning of Fraga presentation: 13:50Divergence since 1980: 16:05What went wrong: 18:05Progress since the 90’s: 19:4190’s progress did not last: 22:06Government spending, tax breaks, and debt: 23:35Bolsa Empresário: 24:54Investment and GDP growth: 26:16Brazil just before Covid-19: 28:03Inequality: 28:38Education: 31:06Ease of doing business: 35:53Governance: 37:56 Global competitive index and social mobility: 38:26Government spending: 39:40Perfect storm: 45:57Major risks: 48:20Hope and resistance: 1:00:06Q&A 1:03:02