Recently, I thought about submitting a paper to Journal of Monetary Economics. Upon reading its submission guideline, I learned that they charge a submission fee of USD 350, which I found quite expensive.

Nevertheless, I proceeded with the submission, but when it came to the point of paying the submission fee, I found that Elsevier charges 350 in GBP, which is much more expensive than in USD. See the image below.

I want to believe that this is just a glitch and not a scam. Because it seems that it will take a while until this issue is fixed, I submitted my paper to a different journal.

As I am preparing for my first teaching assignments at Emory, I started from creating a syllabus template. My department provided a Word template, which was not exactly to my taste, so I wrote a template in \(\LaTeX\) here. The version titled syllabus_template.tex follows the basic structure of the Emory economics template, and the version titled syllabus_template_toda.tex adds some of my information that I use across all my courses. A few comments:

The compensation at University of California has just published the figures for 2023. I have updated the data set for my paper and run regressions. In case readers are interested in predicting their salaries, the prediction equation in 2023 is \[\log y = 12.12 -0.0100T + 0.0052N_\textrm{pub} + 0.0204N_\textrm{top5} + 0.2485D_\textrm{assoc} + 0.5048D_\text{full}, \] where \(y\) is the 9-month salary, \(T\) is the number of years elapsed since obtaining Ph.D., \(N_\textrm{pub}\) is the cumulative number of peer-reviewed research articles, \(N_\textrm{top5}\) is the cumulative number of top 5 publications, and \(D_\textrm{assoc}, D_\textrm{full}\) are dummy variables for associate and full professors.

Three years ago, I wrote a blog post in which I mentioned that I stopped (strictly speaking, significantly reduced) contributing in 403(b) and 457(b) retirement savings plans because I could no longer afford it.

Jianjun Miao of Boston University and Pengfei Wang of Peking University published a paper titled “Asset Bubbles and Credit Constraints” at American Economic Review in 2018. In their abstract, they state that they “provide a theory of rational stock price bubbles”. For those who are not familiar with the economic theory of bubbles, “rational bubble” means that the asset price (denoted by \(P\)) exceeds its fundamental value (denoted by \(V\)) defined by the present value of dividends, so \(P>V\), in a model in which agents are rational.

Most papers in the rational bubble literature assume that the asset pays no dividends, because there are known difficulties with positive dividends. (I can talk about this more but it is technical, so I refer the reader to my JME review article with Tomohiro Hirano, especially Section 3.4.) Miao and Wang’s paper is ambitious because they claim to attach a rational bubble to a dividend-paying asset. For instance, in their literature review, they state

Some studies (e.g., Scheinkman and Weiss 1986; Kocherlakota 1992, 2008; Santos and Woodford 1997; Hellwig and Lorenzoni 2009) have found that infinite-horizon models of endowment economies with borrowing constraints can generate rational bubbles. Unlike this literature, our paper analyzes a production economy with stock price bubbles attached to productive firms.

Here the cited papers are all rational bubble models. Subsequent papers by the authors also advertise Miao and Wang (2018) as a rational bubble model. For example, Footnote 4 of Dong, Miao, and Wang (2020) states

Introducing dividends or rents will complicate our analysis without changing our key insights. See Miao and Wang (2018) and Miao, Wang, and Xu (2015) for models of rational bubbles attached to assets with dividends or rents.

In a recent working paper by Tomohiro and I titled “Rational Bubbles: A Clarification”, we mathematically proved the nonexistence of rational bubbles in the model of Miao and Wang (2018). In other words, \(P=V\) in their model.

It seems that there is a widespread misunderstanding in the literature. According to our systematic literature search detailed in the paper, there are 74 papers that are mainly about the theory of bubbles and cite Miao and Wang (2018) as a paper on bubbles. Among those 74 papers, 68 cite Miao and Wang (2018) as a rational bubble model specifically. As proved in our paper, the model of Miao and Wang (2018) is not a rational bubble model. It is an asset pricing model with multiple equilibria, where the high- or low-stock price equilibrium is selected based on agents’ self-fulfilling expectations. In both equilibria, the stock price reflects fundamentals. I hope that our paper will help to reach a better and mutual understanding about bubbles, and that the science of bubbles will prosper forever, without ever imploding.