FreeMarkets

A unique solution doesn't mean that consumers have the same consumption bundles. It just means that given equilibrium prices, there is a unique allocation that solves the consumers' and firms' problems.

Your production functions are presumably continuous, strictly increasing, strictly quasi-concave, weakly concave, and satisfy no free lunch. That implies your constraint set is compact. Your utility functions are continuous. That implies existence of a solution. Utility being strictly concave implies that the solution is a unique one. See Sundaram or any other optimization book.

I still haven't heard anything. This is pretty frustrating. Gradcafe has had a few admissions over the last two weeks, and one of them is supposedly funded. Has anyone else still not heard?

Hi all, I have a great offer from Georgetown (tuition, insurance, 18.5k stipend). The only school I'm still waiting to hear back from is UW-Madison. On the off-hand chance that I do get in to UW-Madison, it would almost certainly be without funding. Both schools have faculty working in areas I'm interested in (primarily monetary theory and micro theory). Suppose that I do get into UW-Madison unfunded. How should I compare these two offers? Where would you guys recommend going?

Of those 100, do you know how many they plan to accept? Are they all going to be unfunded? Any idea when they'll be finished with decisions? Thanks for the info.

I still haven't heard from UW-Madison. Are any others in the same boat?

I presented facts that suggest otherwise. Please respond to my argument with either evidence supporting your case or with reasons why the Libor-OIS spread is a poor indicator of the health of the financial system. I don't think we can have a reasonable conversation without discussing the facts on the ground, and based on your response it doesn't seem as if you are willing to do that. Please don't take this as a personal attack, because it is not; I just don't think arguing is very effective without presenting actual evidence to support one's claim.

If we had tried unambiguously laissez faire policies in Spring of 2008 and the economy had taken the exact same course it has taken since Spring of 08, people would overwhelmingly agree that laissez faire policies had failed. Why don't we hold policies of government intervention to the same standard? Doing something has obviously failed, why don't we try doing nothing for once? The Libor-OIS spread did not particularly widen after the Lehman bankruptcy. It was only Bernanke and Paulson said that doom and gloom would occur if their proposed bailouts were not passed on September 23rd that the Libor-OIS spread significantly widened. Given this evidence, it's hard to argue that the Lehman collapse was itself the primary source of economic distress in late September rather than government officials spooking the markets. True, private banks funded the bailout, but only after much government prodding. It's really easy to design regulation that would've prevented any crisis, ex post facto. It is extremely difficult, and perhaps impossible, to design regulation that will prevent the next crisis. Historically, a lot of financial crises have occurred as a result of the unintended consequences of well-meaning regulations that were put in place to mitigate future crises. This current crisis is a great example. Even Bernanke has publicly stated that many of the regulations put in place after the S&L crisis (most strongly, the Basel capital requirements) are pro-cyclical and have helped make this downturn more severe. It's one thing to say, let's design regulation that will prevent future financial crises and a completely different thing to actually do it. I'm not arguing that all financial regulations necessarily lower efficiency, but it's often the case that the supposed cure is worse than the disease.

Why do we think that financial institutions leveraged themselves to the hilt? No doubt some of that was a result of the government's decision to bail out the credit holders of Long Term Capital Management 11 years ago. The government set the precedent that they would bail out too big to fail firms and created a massive moral hazard. Not surprisingly, some of the biggest credit holders of LTCM were companies like AIG, Lehman Brothers, and Bear Stearns, the very companies that were the most leveraged in this current crisis. A big source of financial distress in this current crisis has been the result of what is called counterparty risk, a risk that is created from credit default swaps. The very first credit default swap was created in 1997 by a bright up and coming executive at JP Morgan. What was the purpose of the CDS? It allowed JP Morgan to have exposure to risky assets that capital requirement regulations prevented them from having on their balance sheets. In a lot of ways, the CDS market, was created because of misguided regulation that was a response to the Savings and Loans crisis in the late '80s. It boggles my mind that when an industry in which the federal government implicitly backed half of all outstanding assets (the housing industry) and an industry that is the single most regulated industry in history (the finance industry) both fail, it is seen as a failure of capitalism and not of government regulation.

Does anybody know where recent graduates at either program have been placed?

Hi all, I hate to start another school X vs school Y thread, but I was wondering what you guys thought about the relative merits of both programs. I have full funding at Georgetown. The funding situation at GMU is uncertain.

Did you email the economics department secretary or somebody in the Dean's office? I also have not received the official offer.

UVA should have final decisions within 7-10 days. There are about 150 applicants the school still has to decide on.

I have just been selected for membership into Omicron Delta Epsilon, the International Honor Society in Economics. I have a few applications outstanding. Do you guys recommend contacting anybody at the schools I have yet to hear from and inform them of this?

I'm late for a flight, but I'll be back later. I have enjoyed this conversation very much so far. To everyone I've been arguing with, I'm glad we've been able to avoid ad hominem attacks, and I respect you all for that.