Alan Taylor on financialisation, business cycles, and crises; and a mid-year review

  1. James Heckman tells us why IQ is overrated
  2. Mihir Desai explains the wisdom of finance — Now with transcript!
  3. Mihir Desai explains the Wisdom of Finance
  4. Can we avoid another financial crisis?
  5. Hirschmania, the final chapter
  6. The life and speeches of Sadie Alexander
  7. Kim Rueben on the fiscal impact of immigration
  8. A sit down with Adair Turner
  9. Stephen Kotkin explains how Stalin defined the Soviet system
  10. Richard Florida on geographic inequality
  11. Further reading
  12. Jeremy Adelman on Albert O Hirschman’s “Exit, Voice & Loyalty”
  13. Dan Drezner on the marketplace of ideas
  14. Robert Lustig on the science behind our addictions
  15. The economic impact of immigration
  16. Further reading
  17. Ricardo Hausmann on the tragedy in Venezuela
  18. Does Amazon present an anti-trust problem?
  19. Mary Waters on the integration of immigrants into the US
  20. Lee Buchheit and Mitu Gulati on Venezuela’s debt
  21. Gabriel Zucman on tax evasion and inequality
  22. Michael Pettis on the mechanics of trade and the Chinese economy
  23. Angus Deaton on his Nobel prize-winning career (encore)
  24. Tim Harford on the lessons of new technologies in economic history
  25. Encore episode — Heidi Williams on gene sequencing, patent design, and innovation incentives
  26. Retail hype vs retail facts
  27. Michael Mandel on the case for productivity optimism
  28. Is Ireland an austerity poster child or a “beautiful freak”?
  29. Richard Ocejo on old jobs in new urban economies
  30. A chat with Alice Rivlin on her career in economic policymaking
  31. The life and ideas of Albert O Hirschman (Part 1)
  32. Jason Furman on economic policymaking
  33. Tyler Cowen’s stubborn philosophical attachments
  34. Anne Case on mortality and morbidity in the 21st Century
  35. An all-media Alphachat episode
  36. Robert Cialdini on how persuasion works in business and politics (transcript)
  37. Adaptive markets, and the lessons of an infamous call to sell
  38. How economics has evolved since the crisis
  39. Erica Grieder on the Texas model
  40. An experiment in Kenya
  41. Sebastian Edwards on why economic populism always disappoints
  42. Newly conceivable ideas in economics
  43. The brief history of Airbnb, and what’s next
  44. Steven Johnson on how play shaped the modern world
  45. Michael Mauboussin reflects on thirty years of markets, cognitive biases, luck vs skill, and more
  46. The social media we deserve
  47. Trading Places and those frozen orange juice futures
  48. Language, truth, and Trump
  49. Keynes vs Hayek — who’s winning now?
  50. Miriam Leiva, Cuban dissident, on the death of Fidel Castro
  51. From the Trump to the Tramp
  52. The Trump economy
  53. The psychology and neuroscience of financial decisions
  54. Comparing the candidates’ tax plans, and a GBP view from the US
  55. Tim Harford on the unheralded virtue of messiness
  56. Ryan Avent on the social capital of firms, development economics, and monetary policy
  57. Dan Drezner on forecasting the next-gen political economy
  58. Alphachat bonus episode: Arlie Russell Hochschild’s guide to Trumpland
  59. The problem with drug pricing
  60. The egregiously protectionist dairy racket in… Canada?
  61. Alphachat’s inaugural film review tackles Tron and Tron Legacy
  62. Heidi Williams and the economics of gene sequencing, patent design, and innovation incentives
  63. Gavyn Davies and Tyler Cowen on the productivity puzzle
  64. Alphachat guide: the tradeoffs of city life, and a new era for the business of mixed martial arts
  65. Vox-pop from Camp Alphaville; “Overrated/Underrated” with Tyler Cowen; and the JPM pay bump
  66. Fact-checking Brexit claims with Tim Harford
  67. ETFs see jolt of volume as global markets gyrate
  68. McDonald’s as community center, the two Americas, and the reputation of Wall Street workers
  69. Merging with our longform podcast; responding to listeners; Heather Boushey on the economics of work and life
  70. Maria Konnikova on social-science methods, cognitive biases, and the psychology of cons
  71. Hedge fund problems, performance and personalities
  72. Guy Debelle on the Fed, China, and FX
  73. Private equity’s mark-to-fantasy problem, and the political economy of gangster states
  74. Oil and savings; and tax havens in… South Dakota?
  75. Behavioural economics at work; positional goods
  76. Under-appreciated moments in economic history; mid-career switches; “The Age of Stagnation”
  77. Alternative data mining, earnings season, and Meb Faber on hedge funds
  78. The psychology and study of expertise; and the future for Disney
  79. CEO humiliation; the future of wearables; and the problems at Valeant and Theranos
  80. The Cuban economy, and Caroline Freund on emerging-market billionaires
  81. Why open-plan offices are terrible; new geopolitical risks; and global female labour force participation
  82. Dodgy corporate jet use, NGDP targeting, and the battle over IEX
  83. Super Tuesday, money in politics, and what happened to the “libertarian moment”?
  84. A new hemp SEF; AI investing; Mohamed El-Erian’s new book
  85. The legacy of China’s one-child policy; and the fall of Theranos
  86. Michael Pettis on the Chinese economy, plus the US election and conservative talk radio
  87. Mauboussin on short-termism; millenials staying put; Perella vs Kramer
  88. Cyber-security, Detroit vs Silicon Valley, and markets mayhem
  89. Whether Davos matters, the end of privacy, and the economics of aging
  90. America’s eBay for guns, the gadgets of CES, and predictions for 2016
  91. The FT’s US newsroom wraps up the year, looks ahead
  92. The life of a dissident Cuban economist; a Mexico-US free travel zone; “Hamilton”!
  93. What happens after rates rise, the shrinking middle class and pay equity
  94. The future of BlackBerry, the renminbi, and George Lucas’s gift to Chicago
  95. The US SUV boom, Jamaica’s IMF success and a chat with Reihan Salam
  96. Robots, artificial intelligence and a sluggish shopping season
  97. The power of talk and mythical startup valuations
  98. Jon Stewart to HBO, Soros bails on Gross, tech for the aging, and our longform suggestions
  99. Pharma madness (Valeant, Pfizer-Allergan), and a few Angus Deaton clips
  100. Bernanke’s book, the TV landscape, and the Canadian election
  101. The podcasting biz; AB InBev to buy SABMiller; and the problem with foolproofing the economy
  102. Vox-pop from the #FTPubQuiz, Jack Dorsey’s return to Twitter, and Martin Wolf on secular stagnation
  103. Anne-Marie Slaughter on gender equality, invisible Xi, and Emily Parker on the Internet in Cuba
  104. FT Alphachat Robert Shiller, Martin Wolf, and a tough week for biotech
  105. Alphachat Youtube stars, a terrible Republican debate, and the Fed holds (sorry)
  106. Alphachat The promise (and the risks) of drones
  107. Alphachat Joe Stiglitz on minimum wage, monetary policy, TPP and more
  108. The Chinese economy, and the dodgy Flibanserin (fine, the “female Viagra”)
  109. The problems of indexed investing, “People’s QE”, and old media invests in new
  110. Reader Q&A, bank analyst destiny, Puerto Rican default and the Canadian elections
  111. Nikkei buys the FT, Gillian Tett’s forthcoming new book, and an Alphavillain returns from Greece
  112. The Fifa scandal, a big week for tech, and Gawker
  113. The artisanal economy, Treasury flash crash (still not) explained, campaign Twitter spats
  114. The podcast moment, and some recommendations
  115. Alphachat Diane Coyle, Tyler Cowen, and the econ books of the year
  116. When bank capital sleeps with the fishes
  117. MF Global nostalgia edition
  118. Those fracking robots edition
  119. Michael Pettis edition (well, the second one)
  120. Alphachat Manmohan Singh on collateral chains
  121. Alphachat Noah Smith on the Japanese economy
  122. Abenomics gets the Alphachat podcast treatment
  123. Lee Buchheit edition, featuring Lee Buchheit
  124. That dang negativity edition
  125. Dragons of Ljubljana edition
  126. The cunning plan edition
  127. Snap Cyprus edition
  128. Alphachat returns
  129. Sal Arnuk on high frequency trading
  130. Podcast bleg: Alphachat returns
  131. Introducing Alphachat, the FT Alphaville podcast

Alphachat is available on Acast, iTunes and Stitcher.

Notes for this week’s episode, for which I was joined as co-host by Matt Klein of Alphaville, are below:

Credit and crises
[1:56]

Alan Taylor is an economic historian at the University of California – Davis. In a recent paper with collaborators Oscar Jorda and Moritz Schularick, the authors summarise their decades-long work on financialisation, which we discussed with Alan.

From the paper:

Our previous research uncovered a key stylized fact of modern macroeconomic history: the “financial hockey stick.” The ratio of aggregate private credit to income in advanced economies has surged to unprecedented levels over the second half of the 20th century.

The goal of this paper is to show that with this “great leveraging” key business cycle moments have become increasingly correlated with financial variables. Our long-run data show that business cycles in high-debt economies may not be especially volatile, but are more negatively skewed. Higher debt goes hand in hand with worse tail events.

A great deal of modern macroeconomic thought has relied on the small sample of US post-WW2 experience to formulate, calibrate, and test models of the business cycle, to calculate the welfare costs of fluctuations, and to analyze the benefits of stabilization policies. Yet the historical macroeconomic cross country experience is richer.

An important contribution of this paper is to introduce a new comprehensive macro-financial historical database covering 17 advanced economies over the last 150 years. This considerable data collection effort that has occupied the better part of a decade, and involved a small army of research assistants.

See more of Alan’s work here, here, and here.

Mid-year review
[18:57]

Matt and I are joined by Emiliya to discuss some of the events of the year’s first half. Matt has been struck by the Fed’s realisation that it would not be able to raise rates at the pace it expected at the end of last year. Emiliya has been troubled by the rise of populist sentiment throughout the developed world, and we talk about the role that income inequality has (and hasn’t) played. Relatedly, I’ve been dispirited by how the same populist sentiment has manifested in such loud and ugly attitudes towards immigrants and refugees.

Longform recommendations

Alan Taylor – Between Debt and the Devil and The End of Alchemy
Matt Klein – “The gun control we deserve”
Emiliya Mychasuk – Interpol Confidential
Cardiff Garcia – Marketplace Weekend podcast

  1. James Heckman tells us why IQ is overrated
  2. Mihir Desai explains the wisdom of finance — Now with transcript!
  3. Mihir Desai explains the Wisdom of Finance
  4. Can we avoid another financial crisis?
  5. Hirschmania, the final chapter
  6. The life and speeches of Sadie Alexander
  7. Kim Rueben on the fiscal impact of immigration
  8. A sit down with Adair Turner
  9. Stephen Kotkin explains how Stalin defined the Soviet system
  10. Richard Florida on geographic inequality
  11. Further reading
  12. Jeremy Adelman on Albert O Hirschman’s “Exit, Voice & Loyalty”
  13. Dan Drezner on the marketplace of ideas
  14. Robert Lustig on the science behind our addictions
  15. The economic impact of immigration
  16. Further reading
  17. Ricardo Hausmann on the tragedy in Venezuela
  18. Does Amazon present an anti-trust problem?
  19. Mary Waters on the integration of immigrants into the US
  20. Lee Buchheit and Mitu Gulati on Venezuela’s debt
  21. Gabriel Zucman on tax evasion and inequality
  22. Michael Pettis on the mechanics of trade and the Chinese economy
  23. Angus Deaton on his Nobel prize-winning career (encore)
  24. Tim Harford on the lessons of new technologies in economic history
  25. Encore episode — Heidi Williams on gene sequencing, patent design, and innovation incentives
  26. Retail hype vs retail facts
  27. Michael Mandel on the case for productivity optimism
  28. Is Ireland an austerity poster child or a “beautiful freak”?
  29. Richard Ocejo on old jobs in new urban economies
  30. A chat with Alice Rivlin on her career in economic policymaking
  31. The life and ideas of Albert O Hirschman (Part 1)
  32. Jason Furman on economic policymaking
  33. Tyler Cowen’s stubborn philosophical attachments
  34. Anne Case on mortality and morbidity in the 21st Century
  35. An all-media Alphachat episode
  36. Robert Cialdini on how persuasion works in business and politics (transcript)
  37. Adaptive markets, and the lessons of an infamous call to sell
  38. How economics has evolved since the crisis
  39. Erica Grieder on the Texas model
  40. An experiment in Kenya
  41. Sebastian Edwards on why economic populism always disappoints
  42. Newly conceivable ideas in economics
  43. The brief history of Airbnb, and what’s next
  44. Steven Johnson on how play shaped the modern world
  45. Michael Mauboussin reflects on thirty years of markets, cognitive biases, luck vs skill, and more
  46. The social media we deserve
  47. Trading Places and those frozen orange juice futures
  48. Language, truth, and Trump
  49. Keynes vs Hayek — who’s winning now?
  50. Miriam Leiva, Cuban dissident, on the death of Fidel Castro
  51. From the Trump to the Tramp
  52. The Trump economy
  53. The psychology and neuroscience of financial decisions
  54. Comparing the candidates’ tax plans, and a GBP view from the US
  55. Tim Harford on the unheralded virtue of messiness
  56. Ryan Avent on the social capital of firms, development economics, and monetary policy
  57. Dan Drezner on forecasting the next-gen political economy
  58. Alphachat bonus episode: Arlie Russell Hochschild’s guide to Trumpland
  59. The problem with drug pricing
  60. The egregiously protectionist dairy racket in… Canada?
  61. Alphachat’s inaugural film review tackles Tron and Tron Legacy
  62. Heidi Williams and the economics of gene sequencing, patent design, and innovation incentives
  63. Gavyn Davies and Tyler Cowen on the productivity puzzle
  64. Alphachat guide: the tradeoffs of city life, and a new era for the business of mixed martial arts
  65. Vox-pop from Camp Alphaville; “Overrated/Underrated” with Tyler Cowen; and the JPM pay bump
  66. Fact-checking Brexit claims with Tim Harford
  67. ETFs see jolt of volume as global markets gyrate
  68. McDonald’s as community center, the two Americas, and the reputation of Wall Street workers
  69. Merging with our longform podcast; responding to listeners; Heather Boushey on the economics of work and life
  70. Maria Konnikova on social-science methods, cognitive biases, and the psychology of cons
  71. Hedge fund problems, performance and personalities
  72. Guy Debelle on the Fed, China, and FX
  73. Private equity’s mark-to-fantasy problem, and the political economy of gangster states
  74. Oil and savings; and tax havens in… South Dakota?
  75. Behavioural economics at work; positional goods
  76. Under-appreciated moments in economic history; mid-career switches; “The Age of Stagnation”
  77. Alternative data mining, earnings season, and Meb Faber on hedge funds
  78. The psychology and study of expertise; and the future for Disney
  79. CEO humiliation; the future of wearables; and the problems at Valeant and Theranos
  80. The Cuban economy, and Caroline Freund on emerging-market billionaires
  81. Why open-plan offices are terrible; new geopolitical risks; and global female labour force participation
  82. Dodgy corporate jet use, NGDP targeting, and the battle over IEX
  83. Super Tuesday, money in politics, and what happened to the “libertarian moment”?
  84. A new hemp SEF; AI investing; Mohamed El-Erian’s new book
  85. The legacy of China’s one-child policy; and the fall of Theranos
  86. Michael Pettis on the Chinese economy, plus the US election and conservative talk radio
  87. Mauboussin on short-termism; millenials staying put; Perella vs Kramer
  88. Cyber-security, Detroit vs Silicon Valley, and markets mayhem
  89. Whether Davos matters, the end of privacy, and the economics of aging
  90. America’s eBay for guns, the gadgets of CES, and predictions for 2016
  91. The FT’s US newsroom wraps up the year, looks ahead
  92. The life of a dissident Cuban economist; a Mexico-US free travel zone; “Hamilton”!
  93. What happens after rates rise, the shrinking middle class and pay equity
  94. The future of BlackBerry, the renminbi, and George Lucas’s gift to Chicago
  95. The US SUV boom, Jamaica’s IMF success and a chat with Reihan Salam
  96. Robots, artificial intelligence and a sluggish shopping season
  97. The power of talk and mythical startup valuations
  98. Jon Stewart to HBO, Soros bails on Gross, tech for the aging, and our longform suggestions
  99. Pharma madness (Valeant, Pfizer-Allergan), and a few Angus Deaton clips
  100. Bernanke’s book, the TV landscape, and the Canadian election
  101. The podcasting biz; AB InBev to buy SABMiller; and the problem with foolproofing the economy
  102. Vox-pop from the #FTPubQuiz, Jack Dorsey’s return to Twitter, and Martin Wolf on secular stagnation
  103. Anne-Marie Slaughter on gender equality, invisible Xi, and Emily Parker on the Internet in Cuba
  104. FT Alphachat Robert Shiller, Martin Wolf, and a tough week for biotech
  105. Alphachat Youtube stars, a terrible Republican debate, and the Fed holds (sorry)
  106. Alphachat The promise (and the risks) of drones
  107. Alphachat Joe Stiglitz on minimum wage, monetary policy, TPP and more
  108. The Chinese economy, and the dodgy Flibanserin (fine, the “female Viagra”)
  109. The problems of indexed investing, “People’s QE”, and old media invests in new
  110. Reader Q&A, bank analyst destiny, Puerto Rican default and the Canadian elections
  111. Nikkei buys the FT, Gillian Tett’s forthcoming new book, and an Alphavillain returns from Greece
  112. The Fifa scandal, a big week for tech, and Gawker
  113. The artisanal economy, Treasury flash crash (still not) explained, campaign Twitter spats
  114. The podcast moment, and some recommendations
  115. Alphachat Diane Coyle, Tyler Cowen, and the econ books of the year
  116. When bank capital sleeps with the fishes
  117. MF Global nostalgia edition
  118. Those fracking robots edition
  119. Michael Pettis edition (well, the second one)
  120. Alphachat Manmohan Singh on collateral chains
  121. Alphachat Noah Smith on the Japanese economy
  122. Abenomics gets the Alphachat podcast treatment
  123. Lee Buchheit edition, featuring Lee Buchheit
  124. That dang negativity edition
  125. Dragons of Ljubljana edition
  126. The cunning plan edition
  127. Snap Cyprus edition
  128. Alphachat returns
  129. Sal Arnuk on high frequency trading
  130. Podcast bleg: Alphachat returns
  131. Introducing Alphachat, the FT Alphaville podcast
Copyright The Financial Times Limited 2018. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Read next:

Read next:

FT Alpha Tweets