[PEN-L:2336] Re: 1998 Bad Writing Contest winners

[Brad De Long <delong@xxxxxxxxxxxxxxxxx>]

>In a message dated 99-01-19 12:19:47 EST, you write:
>
><< It's really too bad that when they do these Bad Writing Contests,
> mathematical writing is not included in the hopper.
>  >>
>
> So, here's my proposal -- let's hold our own
>contest.  Anyone who is interested should submit contestants along with
>references for writing samples of the contestants.  I will volunteer to
>compile a list after a few weeks and put it to a vote.  I suggest that for a
>start, people look in their AEA journals for contestants to submit.
>
>maggie coleman mscoleman@xxxxxxx

Here's one, a paragraph from the _Journal of Political Economy_ in 1990,
with the Greek letters spelled out (and with subscripts moved into
parentheses):

"Equation (12) shows that, in the absence of fundamental risk, a sequence
of economies in which mu approaches zero also has E((Delta){R(n)-R(i)})
approach minus infinity. By contrast, equation (28) shows that, with
fundamental risk present, E((Delta){R(n)-R(i)}) approaches r* as mu
approaches zero. There is an intuitive explanation for the substantially
different dynamics of the system for sigma-squared-epsilon = 0 and
sigma-squared-epsilon > 0. If sigma-squared-epsilon is greater than zero,
then noise traders' and sophisticated investors' demands remain bounded as
mu approaches zero. For a sufficiently small noise trader market share,
therefore, sophisticated investors must have positive holdings of the risky
asset--the very small number of noise traders cannot hold it all--and so
the risky asset must offer an expected return higher than the safe rate in
equilibrium. If sigma-squared epsilon = 0, then noise traders' and
sophisticated investors' demands become unbounded as m approaches zero and
the unsafe asset loses its risk. Noise traders' positions then lose them
arbitrarily large amounts each period."

:-)


Brad Delong


-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
"Now 'in the long run' this [way of summarizing the quantity theory of
money] is probably true.... But this
long run is a misleading guide to current affairs. **In the long run** we
are all dead.  Economists set themselves too easy, too useless a task if in
tempestuous seasons they can only tell us that when the storm is long past
the ocean is flat again."

--J.M. Keynes
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
J. Bradford De Long; Professor of Economics, U.C. Berkeley;
Co-Editor, Journal of Economic Perspectives.
Dept. of Economics, U.C. Berkeley, #3880
Berkeley, CA 94720-3880
(510) 643-4027; (925) 283-2709 phones
(510) 642-6615; (925) 283-3897 faxes
http://econ161.berkeley.edu/
<delong@xxxxxxxxxxxxxxxxx>