Edward Conard

Top Ten New York Times Bestselling Author

  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, April 8, 2021

AI Summary. House prices across rich countries have risen, climbing an average 5% in real terms across 25 tracked countries, with US prices up 11% year over year, Britain 8% and Germany 9%. Less densely populated but commutable areas in both Britain and the US saw faster price gains than more populous regions.

Economist Staff The Economist
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According to @TheEconomist, US home prices rose by 11% in the year to January, with less densely populated areas experiencing significant growth.

Are house prices rising fastest in less densely populated areas?

Core argument: US house prices rose 11% in the year to January, the fastest increase in 15 years, while Britain saw an 8% rise and Germany 9%.

House prices in the rich world have surged, with less densely populated areas experiencing significant growth. In the US, house prices rose by 11% in the year to January, marking the fastest increase in 15 years. Similarly, Britain saw an 8% rise, and Germany 9%. Across 25 countries tracked, real house prices increased by an average of 5% over the latest 12-month period, with Japan as the sole exception. Prices per square foot in London are 40% higher than in surrounding counties, yet house prices in less densely populated but commutable areas of Britain have risen faster than in more populous regions. This trend is mirrored in the US, where areas with lower population density but access to urban centers are seeing more rapid price increases, highlighting a shift in housing demand dynamics.

Takeaways by Macro Roundup® AI

  1. US house prices rose 11% in the year to January, the fastest increase in 15 years, while Britain saw an 8% rise and Germany 9%.
  2. Across 25 countries tracked, real house prices increased by an average of 5% over the latest 12-month period, with Japan the sole exception.
  3. House prices in less densely populated but commutable areas of Britain have risen faster than in more populous regions, a pattern mirrored in the US, even as prices per square foot in London run 40% above surrounding counties.

Across western advanced economies housing in booming, with the winner seemingly being places with lower population density that still have access to urban centers,“…American house prices rose by 11% in the year to January, the fastest pace for 15 years. Those in Britain increased by 8% last year, and in Germany by 9%. The pattern is seen in much of the rich world (see chart 1). Across the 25 countries tracked by The Economist, real house prices have risen by an average of 5% in the latest 12-month period. Only in Japan have they fallen….. Prices per square foot in London, for instance, are 40% higher than in surrounding counties. House prices in less densely-populated, but still commutable, areas of Britain have risen faster over the past year than more populous ones. A similar pattern is also evident in America (see chart 2)….”

Japan as an exception makes sense to me given the demographics.

Economist Staff, "House prices in the rich world are booming,"The Economist, April 3, 2021, https://www.economist.com/finance-and-economics/2021/04/03/house-prices-in-the-rich-world-are-booming

Monday, April 12, 2021

AI Summary. Small banks' Paycheck Protection Program loan originations exceeded their share of total lending while large banks lagged historical norms, and average loan sizes fell as bank assets passed $100bn. The authors argue this pattern is inconsistent with weak loan demand, pointing instead to differences in risk management practices.

Paul H. Kupiec American Enterprise Institute
Date Posted:
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PPP lending reveals small banks exceed historical share while $250bn+ banks reduce average loan size. Operational differences explain some variation, risk management likely drives large bank restraint.

Why did the largest banks lend less under the small-business loan program?

Core argument: Small banks' Paycheck Protection Program loan originations exceeded their share of total lending, while large banks' PPP activity lagged behind their historical lending norms.

Small bankppP loan originations significantly exceeded their share of total lending, while large banks lagged behind historical norms. Statistical analysis suggests that differences in bank operational characteristics account for much of the variation inppP loan activity, yet large unexplained differences persist. Notably, averageppP loan sizes decrease as bank asset size surpasses $100bn, with significant reductions for banks over $250bn. This pattern contradicts a loan demand explanation, indicating that systematic differences in risk management practices may have influenced the reducedppP lending by larger banks. However, without precise measures ofppP loan demand, the exact cause remains uncertain.

Takeaways by Macro Roundup® AI

  1. Small banks' Paycheck Protection Program loan originations exceeded their share of total lending, while large banks' PPP activity lagged behind their historical lending norms.
  2. Average PPP loan sizes decline as bank asset size passes $100bn, with larger reductions for banks above $250bn, a pattern that runs counter to a loan demand explanation for reduced large-bank PPP lending.
  3. Statistical analysis suggests differences in bank operational characteristics account for much of the variation in PPP lending, though large unexplained differences persist and, absent precise measures of PPP loan demand, the cause remains uncertain.

AEI’s Kupiec looks at theppP loans by bank size, “….Small bankppP loan originations far outpaced their overall share of total lending whilelarge bank originations lagged historical norms. Statistical analysis attributes a large share of the variation inppP loan activity to differences in bank operational characteristics, but large differences remain. The unexplained differences could owe to systematic differences in risk management practices or bankppP loan demand. Analysis of data on bank-specific averageppP loan size produces results that are inconsistent with a loan demand explanation. Absent good measures ofppP loan demand, the source of the observed differences in bankppP loan activity cannot be definitively identified using bank regulatory data alone…Surprisingly, analysis of regulatory data on bank averageppP loan size produces the opposite pattern—averageppP loan sizes appear to shrink monotonically as bank asset size increases beyond a $100 billion threshold. The analysis shows very large and highly statistically significant reductions in averageppP loan size for banks larger than $250 billion in assets. While these results seem inconsistent with a loan demand explanation, lacking good measures of bank specificppP loan demand, it is not possible to completely discount the possibility thatppP lending difference owe in part to systematic differences inppP loan demand…”

Paul H. Kupiec, "Did prudent risk management practices or weak customer demand reduce Paycheck Protection Program lending by the largest banks?," American Enterprise Institute, December 15, 2020, https://www.aei.org/research-products/working-paper/did-prudent-risk-management-practices-or-weak-customer-demand-reduce-paycheck-protection-program-lending-by-the-largest-banks/

Good table of equity taken out of banking system (Through 2018) in terms of fines - $166.9B from large US banks (BAML, JPM, Citi, Wells, MS, GS)