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- To discount or not to discount?
by Economic Logician in Economic Logic, 2013-12-12 18:09:00 UTC
In Economics, it is standard practice to discount future periods and generations. This is done throughout economics fields, even in the valuation of future benefits from nature, despite objections from biologists. Besides, we would not know how to solve our intertemporal models without discounting, unless one assumes a finite number of generations. But this was not always so. As Pedro Garcia Duarte points out, Cambridge (UK) in the 1930s was lobbying against discounting. Surprisingly, Frank Ramsey (of the Ramsey model) was part of this faction, following his mentor Pigou. Their reasoning is pu [...]
- The effect of foreign sumo wrestlers on the body-mass/human-capital relationship in Japan
by Marc Abrahams in Improbable Research, 2013-12-12 13:31:23 UTC
This economics study suggests that allowing foreigners to work as sumo wrestlers has been detrimental to the quality of native wrestlers’ wrestling:
“ Is body mass human capital in sumo? Outcome of globalization and formation of human capital in Japan ,” Eiji Yamamura , Journal of the Japanese and International Economies , epub November 22, 2013. The author, at Seinan Gakuin University, Fukuoka, Japan, explains:
“Using a data set for all sumo wrestlers in the post-World War II period, this paper investigates how wrestlersÃ¢â¬â¢ body mass index (BMI) is associated with their win rate and abse [...]
- Africaâ€™s Structural Transformation Challenge
by Dani Rodrik in Project Syndicate, 2013-12-12 10:00:00 UTC
PRINCETON â€“ Long viewed as an economic basket case, Sub-Saharan Africa is experiencing its best growth performance since the immediate post-independence years. Natural-resource windfalls have helped, but the good news extends beyond resource-rich countries. Countries such as Ethiopia, Rwanda, and Uganda, among others, have grown at East Asian rates since the mid-1990â€™s. And Africaâ€™s business and political leaders are teeming with optimism about the continentâ€™s future. The question is whether this performance can be sustained. So far, growth has been driven by a comb [...]
- Miden los Indices de Libertad Economica la Libertad Economica?
by Nicolas Cachanosky in Punto de Vista Economico, 2013-12-12 03:01:30 UTC
Michel Ibarra me comparte este link a un post crÃÂtico sobre los Indices de Libertad EconÃÂ³mica. El argumento del post es que los ÃÂndices de libertad econÃÂ³mica, en realidad, no estÃÂ¡n midiendo la libertad econÃÂ³mica. El post tiene algunos comentarios interesantes, pero los argumentos de fondo no me parecen muy convincentes y son una buena oportunidad para discutir algunos puntos.
El argumento del post es que los componentes de los indices de libertad econÃÂ³mica (Heritage Foundation y Fraser Institute) no miden, de hecho, variables de libertad econÃÂ³mica. Dice el autor:
La f [...]
- Meta-analysis of the elasticity of intertemporal substitution
by Economic Logician in Economic Logic, 2013-12-11 14:22:00 UTC
The elasticity of intertemporal substitution is one of the most estimated parameters in Economics. Why is it estimated over and over again? Because some results are positive, some are negative and some are zero. To have a clearer idea of what its true value is, we have to keep estimating it. However, the econometricians also need to get their results published, and the publishing tournament has not only an impact on which results get published but also on which ones the econometricians submit for publication. Tomáš Havránek performs a meta-analysis of estimates of the elasticity of intertempor [...]
- Happiness of economists
by maximorossi in NEP-LTV blog, 2013-12-11 13:55:10 UTC
Feld, Lars P. Necker, Sarah Frey, Bruno S.
This study investigates the determinants of economists’ life satisfaction. The analysis is based on a survey of professional, mostly academic economists from European countries and beyond. We find that certain features of economists’ professional situation influence their well-being. Happiness is increased by having more research time while the lack of a tenured position decreases satisfaction in particular if the contract expires in the near future or cannot be extended. Surprisingly, [...]
- Gender Gaps in Performance Pay: New Evidence from Spain
by maximorossi in NEP-LTV blog, 2013-12-11 13:54:24 UTC
Sara de la Rica Juan J. Dolado Raquel Vegas
This paper analyzes the gender gap in the performanceâ€“pay component of hourly wages received by workers in Spain using detailed information drawn from a large wage survey for 2006. Under the assumption that performance pay is determined in a more competitive fashion than the remaining wage components, there should be less room for gender discrimination. However, this is not what we find. After controlling for observable characteristics, non-random selection into performance [...]
- What do labor market institutions do?
by maximorossi in NEP-LTV blog, 2013-12-11 13:53:15 UTC
Holmlund, Bertil (Uppsala Center for Labor Studies)
The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involving a fruitful interplay between search theory and empirical work. This research has established that UI matters for la [...]
- Gift vouchers, & mispredicting markets
by ? in Stumbling and Mumbling, 2013-12-11 13:51:00 UTC
Tim Harford draws our attention to the limitations of conventional economics. He says that gift vouchers are "awful currencies" and that economists can only scratch their heads at why people prefer to give and receive them rather than cash. Stric [...]
- Mechanism design in attorney fees
by Economic Logician in Economic Logic, 2013-12-10 15:20:00 UTC
When it comes to extracting money from clients, you cannot deny that attorneys have learned their Economics. You cannot say the same about the rest of the legal profession, though. So what makes attorneys so smart? Look at how they evaluate which cases to take. It is not about justice for the plaintiff, it is all about what will give them the highest expected return. And the fee schedule can change dramatically according to circumstances. Take the paper by Winand Emons and Claude Fluet . They observe that defense attorneys use fixed fee contracts while those representing plaintiffs use conting [...]
- "The happiness of economists"
by ? in Environmental Economics, 2013-12-10 14:53:00 UTC
It is the second day of finals week. My happiness will be going up soon, very soon:
There is a new paper by Lars P. Feld, Sarah Necker, and Bruno S. Frey, and here is the abstract:
This study investigates the determinants of economistsâ€™ life satisfaction [...]
- Is There Hope for Small Firms, the Have-Nots in the World of Big Data?
by Christina Donnelly in HBR Blog Network, 2013-12-10 14:00:19 UTC
Hereâ€™s a wishful vision of the future thatâ€™s even more radical than Amazonâ€™s concept of delivery drones or Googleâ€™s robots : One day, small businesses will have access to affordable consumer data.
Donâ€™t yawn. This is a life-and-death issue for small businesses. Anyone who has worked in or around a supplier to a big consumer companyâ€”to a supermarket chain, for exampleâ€”knows the value of information on shoppersâ€™ preferences. If a supplier can use consumer data to shape its offerings and marketing strategies, it has a significantly bett [...]
- SCC: much ado about nothing?
by John Whitehead in Environmental Economics, 2013-12-10 10:58:32 UTC
Does the Social Cost of Carbon Matter?: An Assessment of U.S. Policy Date: 2013-11-27 By: Robert W. Hahn Robert A. Ritz URL: http://d.repec.org/n?u=RePEc:cam:camdae:1346&r=env
We evaluate a recent U.S. initiative to include the social cost of carbon (SCC) in regulatory decisions. To our knowledge, this paper provides the first systematic test of the extent to which applying the SCC has affected national policy. We examine all economically significant federal regulations since 2008, and obtain a surprising result: Putting a value on changes in carbon dioxide emiss [...]
- "The happiness of economists"
by John Whitehead in Environmental Economics, 2013-12-10 09:53:58 UTC
It is the second day of finals week. My happiness will be going up soon, very soon:
There is a new paper by Lars P. Feld, Sarah Necker, and Bruno S. Frey, and here is the abstract:
This study investigates the determinants of economistsâ€™ life satisfaction. The analysis is based on a survey of professional, mostly academic economists from European countries and beyond. We find that certain features of economistsâ€™ professional situation influence their well-being. Happiness is increased by having more research time while the lack of a tenured position decreases satisfaction in par [...]
- ErgÃ¤nzung zu Volker Casparis Bemerkungen zum Mindestlohn
by Ekkehart Schlicht in Funktionale Staatsfinanzen, 2013-12-10 08:47:00 UTC
Lieber Volker Caspari, ich wollte eine ErgÃ¤nzung zu Ihrem Kommentar verfassen. Die ist aber lÃ¤nger geraten als� die Blogger-Software das fÃ¼r Antworten akzeptiert. Deshalb hier meine leider etwas langatmig gewordenen ergÃ¤nzenden Bemerkungen: Wenn die Haushalte ihre GaststÃ¤ttenbesuche einschrÃ¤nken und ihr Bier zu Hause trinken, haben sie weniger Ausgaben fÃ¼r GaststÃ¤ttenbesuche. Das Eingesparte kÃ¶nnen sie entweder sparen oder anderweitig ausgeben. Wenn sie tatsÃ¤chlich mehr sparen wÃ¤re die Situation wohl etwa so, wie Sie es beschreiben und wie sie auch meistens dar [...]
- Collateral requirements and asset prices
by Christian Zimmermann in NEP-DGE blog, 2013-12-10 03:43:45 UTC
By Johannes Brumm, Michael Grill, Felix Kubler and Karl Schmedders
Many assets derive their value not only from future cash flows but also from their ability to serve as collateral. In this paper, we investigate this collateral value and its impact on asset returns in an infinite-horizon general equilibrium model with heterogeneous agents facing collateral constraints for borrowing. We document that borrowing against collateral substantially increases the return volatility of long-lived assets. Moreover, otherwise identical assets with diffe [...]
- UI and Unemployment
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2013-12-09 17:16:00 UTC
I was reading Paul Krugman's NYT column this morning, and ran across the following: Proponents of this story like to cite academic research â€” some of it from Democratic-leaning economists â€” that seemingly confirms the idea that unemployment insurance causes unemployment. Theyâ€™re not equally fond of pointing out that this research is two or more decades old, has not stood the test of time, and is irrelevant in any case given our current economic situation. I'm not sure what research the "proponents of this story" or Krugman are paying attention to, but the mainstream theory [...]
- Why did the panic of 2008 spread abroad?
by Economic Logician in Economic Logic, 2013-12-09 15:31:00 UTC
Why did the Great Recession spread outside the United States? In particular, why did almost all Western industrial countries enter a deep and pronounced recession together? The failure of Lehman Brothers sent ripples throughout international financial markets, plus European banks were heavily involved in the US subprime mortgage market. Yet, financial and goods markets are not perfectly integrated and this should not have lead to such perfectly coordinated business cycles. Philippe Bacchetta and Eric van Wincoop show that you do not need complete market integration to get there, only partial. [...]
- L'eau mouille et le chomage tue
by Alberto Bagnai in Goofynomics, 2013-12-08 13:04:00 UTC
Il y a plusieurs faÃ§on dâ€™Ãªtre un imbÃ©cile. Dâ€™aprÃ¨s Carlo Cipolla, un vaillant historien italien, il y en aurait infinies. Son petit chef dâ€™Å“uvre, Allegro ma non troppo , nous rappelle une simple vÃ©ritÃ©�: lâ€™intelligence est la solution dâ€™un problÃ¨me dâ€™optimisation (obtenir le maximum du rÃ©sultat avec un minimum dâ€™effort). Sous des conditions de rÃ©gularitÃ© assez gÃ©nÃ©rales cette solution est unique (un Ã©conomiste vous parlerait de concavitÃ© â€“ en effet le cr Ã¢ ne est concave â€“ et dâ€ [...]
- How much new revenue would be generated by an increase in federal corporate taxes?
by Stephen Gordon in Worthwhile Canadian Initiative, 2013-12-07 21:55:09 UTC
I've decided to revisitÂ this post from last year. The background context is the Conservative government's 'starve the beast' agenda - documented by me here and here , by Livio here and by Paul Wells in his excellent new book . The Conservatives have made two significant tax cuts during their time in office. The GST rate was reduced from 7% to 5%, and the corporate income tax (CIT) rate continued the downward trend begun during the ChrÃ©tien-Martin years: the statutory rate went from from 21% (22.1% with the surtax) in 2006 to 15% (no surtax) now.Â So far, the only tax cut anyone seems [...]
- Yes, McDonald's Can Do Better
by ? in The American Prospect, 2013-12-06 16:42:00 UTC
When I was 18, I spent a year and change flipping burgers in one of those restaurants where customers eat from a tray balanced across their car windows. It was one of the three jobs I held at the time, affording a simple budget and enough left over to sav [...]
- How do immigrants assimilate in job search?
by Economic Logician in Economic Logic, 2013-12-06 16:09:00 UTC
How immigrants integrate into the native population has been a concern in many countries for a long time. Typically, this has been done by looking at how they marry, they educate themselves, how much they earn, and how they conduct criminal activities. Their labor market behavior, particularly how they search for a job, is less studied. Audra Bowlus, Masashi Miyairi and Chris Robinson fill that gap by applying a search model to Canadian data. Two crucial parameters in those models are the job arrival and job destruction rates, which the authors allow to differ between natives and immigrants. I [...]
- The happiness of economists
by Tyler Cowen in Marginal Revolution, 2013-12-06 14:19:31 UTC
There is a new paper by Lars P. Feld, Sarah Necker, and Bruno S. Frey, and here is the abstract:
This study investigates the determinants of economists’ life satisfaction. The analysis is based on a survey of professional, mostly academic economists from European countries and beyond. We find that certain features of economists’ professional situation influence their well-being. Happiness is increased by having more research time while the lack of a tenured position decreases satisfaction in particular if the contract expires in the near future or cannot be extended. Surprisingly, publication [...]
- Desempleo: EspaÃ±a necesita un Plan de Emergencia
by JosÃ© Francisco Bellod Redondo in jfbellod, 2013-12-06 09:42:00 UTC
� Las estadÃsticas no mienten: la tasa de cobertura de los desempleados estÃ¡ en mÃnimos histÃ³ricos (47Â´9%) y continÃºa cayendo. La prestaciÃ³n media por desempleo era de 1.019 â‚¬ en 2019, hoy es de 873 â‚¬... y cayendo. Descontada la inflaciÃ³n, la prestaciÃ³n media equivale a 719 â‚¬ del aÃ±o 2005. Â¿Brotes verdes?... sÃ... los que vamos a rebuscar en los solares para tener algo que llevarnos a la boca... [ Y si quieres aprender mÃ¡s sobre las falacias de la TeorÃa EconÃ³mica oficialista, te proponemos el artÃculo " La FunciÃ³n de P [...]
- Self-Defeating Human Rights Policies (9): Child Labor Legislation
by Filip Spagnoli in P.A.P.-Blog, 2013-12-05 17:32:41 UTC
According to a famous model by Kaushik Basu , if governments ban child labor but fail to enforce those bans -ÃÂ governments in countries where child labor is prevalent often have weak law enforcement in general -ÃÂ then they create the wrong incentives for employers and for the families of child laborers. Employers react by continuing the practice of child labor because they can often get away with it, but at the same time they lower the wages of child workers because they except to get caught at some point and be fined. They anticipate and compensate these fines by lowering wages. (Childre [...]
- Fresh air is better for learning
by Economic Logician in Economic Logic, 2013-12-05 16:20:00 UTC
How do you get children to learn better at school? You can change the curriculum, the teachers, class size, or the administrators. You can provide incentives to the teachers, children or their parents (unfortunately, you cannot change the parents). You can bus children to other schools. You can add more equipment to the classroom. All this may be effective to some extend, and in some cases not. That is a major part of what the Economics of Education field is about, and there is obviously still a lot to do, given how the latest PISA results show dramatic differences across countries. Tess Staff [...]
- Ignore the armchair economists, Osborne's plan is sensible
by Michael Ben-Gad, Professor of Economics at City University London in The Conversation, 2013-12-05 15:59:46 UTC
George Osborne long ago realised that policy programmes designed to avert crises do not win elections. What he has offered instead in his Autumn Statement is once again a simple trade-off of public austerity today in exchange for unimaginable private prosperity tomorrow.
As a politician, the chancellor may be prone to overstating the expected benefits of his policies. But it is important to remember that there is a strong economic case for the governmentâ€™s broader strategy of deficit reduction through spending cuts.
It is particularly worth recalling this now, as the Autumn Statement [...]
- So, who was lightning the bulb in Latin America?
by berodsat in NEP-HIS blog, 2013-12-05 14:34:52 UTC
Foreign Electricity Companies in Argentina and Brazil: The Case of American and Foreign Power (1926 Ã¢â¬â 1965)
[Original title: Companhias estrangeiras de eletricidade na Argentina e no Brasil: o caso da American & Foreign Power (1926-1965]
By Alexandre Macchione Saes ( firstname.lastname@example.org ), Universidade de SÃÂ£o Paulo Ã¢â¬â FEA/USP and Norma S. Lanciotti ( email@example.com ), Universidad Nacional de Rosario – CONICET
The article analyses the evolution, strategies and position of American & Foreign Power s [...]
- SOSTENIBILIDAD DEL ENDEUDAMIENTO AUTONÃ“MICO
by JosÃ© Francisco Bellod Redondo in jfbellod, 2013-12-05 10:29:00 UTC
La Revista AUDITORÃA PÃšBLICA, acaba de publicar su ediciÃ³n nÂº 61, en el que se incluye el artÃculo "Sostenibilidad del Endeudamiento AutonÃ³mico". En este trabajo aplicamos un sencillo indicador no estocÃ¡stico de sostenibilidad de la deuda pÃºblica, aplicÃ¡ndolo al caso de las Comunidades AutÃ³nomas para el periodo 1999 â€“ 2012. Dicho indicador compara la evoluciÃ³n del dÃ©ficit primario realmente ejecutado con el que se requerirÃa para estabilizar en nivel de endeudamiento. A pesar de su sencillez nos permite identificar en quÃ© momento incurriÃ³ cad [...]
- Structural problems in academic science
by ? in Gravity's Rainbow, 2013-12-05 01:18:00 UTC
Paula Stephan, an economist at Georgia State University, argues that many of the research community’s problems flow from two big features of how we do research. First, we staff our labs with low-wage, temporary workersÃ¢â¬âgraduate students and postdocto [...]
- In Europe, All Regulation Is Antitrust Regulation
by David Zaring in The Conglomerate, 2013-12-04 16:19:11 UTC
The multibillion dollar fine imposed by the EU for rigging the LIBOR and other rates was doled out not because the rate rigging was deemed a form of market fraud, but because it was collusive, anti-competitive conduct . Â Indeed, the EU doesn't have a regulator who can police that kind of fraud. Â Instead it has antitrust, the seminal European worry, and a font of regulation that has quite literally been used to further the European project (dethroning national champions, removing internal trade barriers, defending important European companies, like Airbus, against foreign competitors, you [...]
- Firms polarize, too
by Economic Logician in Economic Logic, 2013-12-04 15:49:00 UTC
While the last decade will be remembered for the financial crisis, another marked new trend that is emerging in all industrialized economies is that of polarization. Not of the political kind, although this is also quite new and annoying, but rather in terms of a widening in the distribution of wages, with a gaping hole in the middle. Call it the disappearance of the middle class, globalization finally hitting the middle class, or the increasing weight of the top earners, there is not that much debate about the origin of this change in wages. It is skill-biased technological change, namely the [...]
- Carta a una amiga extranjera
by Leopoldo Fergusson in Foco Económico, 2013-12-03 21:00:26 UTC
ÃÂ¿QuÃÂ© tan comÃÂºn es el comportamiento social en LatinoamÃÂ©rica? ÃÂ¿QuÃÂ© tanto confiamos y cooperamos con los demÃÂ¡s los individuos de la regiÃÂ³n?ÃÂ Este trabajo ÃÂ de CÃÂ¡rdenas, Chong, y Ãâopo, concluye que, en promedio, la propensiÃÂ³n a confiar y cooperar entre latinoamericanos es (ÃÂ¿sorprendentemente?) similar a la encontrada en otras regiones del mundo. TambiÃÂ©n revela, entre las 6 ciudades estudiadas (BogotÃÂ¡, Buenos Aires, Caracas, Lima, Montevideo, y San JosÃÂ©), que los bogotanos no salimos nada bien parados en cooperaciÃÂ³n y confianza.
Hoy me salgo d [...]
- Does State Charity Crowd-Out Private Philanthropy?
by andrewdsmith in The Past Speaks, 2013-12-03 19:39:53 UTC
The profits from this charity shop in Wales go to support an air ambulance service that brings patients to public-sector hospitals. It shows that the dividing line between public, private, and third sectors is blurry.
AS: Many on the right of the political spectrum believe that state support for the poor tends to crowd-out private charity. They reason that if the wealthy see the state helping the poor, they will conclude that there is no need to dig into their own pockets and contribute to the “third sector” (e.g., non-profits) . Personally, I’ve never been convinced by this speculative argu [...]
- The social cost of carbon in one equation
by Economic Logician in Economic Logic, 2013-12-03 15:45:00 UTC
Climate economics is a hugely complex undertaking, especially if you want to get some quantitative answers. Indeed, one has to embed economic and climate models into each other, and the later are not simple particularly once you want to incorporate the impact of some additional pollutants that bring the model outside of historical records. This complexity makes is largely impossible for most of us to attempt at looking at, say, at the effect of our favorite policy intervention. This need not be so, write Inge van den Bijgaart, Reyer Gerlagh, Luuk Korsten and Matti Liski . Indeed, they find th [...]
- Recent Trends in Inequality and Poverty in Developing Countries
by maximorossi in NEP-LTV blog, 2013-12-03 13:12:38 UTC
Facundo Alvaredo (EMod/OMI-Oxford University, Paris School of Economics and CONICET.)
Leonardo Gasparini (CEDLAS, UNLP.)
This chapter reviews the empirical evidence on the levels and trends in income/consumption inequality and poverty in developing countries. It includes a discussion of data sources and measurement issues, evidence on the levels of inequality and poverty across countries and regions, an assessment of trends in these variables since the early 1980s, and a general discussion of their determinants. There has [...]
- The Ins and Outs of Top Income Mobility
by maximorossi in NEP-LTV blog, 2013-12-03 13:11:38 UTC
Aaberge, Rolf (Statistics Norway)
Atkinson, Anthony B. (Nuffield College, Oxford)
Modalsli, Jorgen Heibo (Statistics Norway)
This paper is concerned with the question of whether top income earners are permanently there or only temporarily receive the highest incomes. How much mobility is there at the top of the income distribution, and how has mobility changed over time? The paper makes both a methodological and an empirical contribution to answering these questions. The first part of the paper introduces a family of top inc [...]
- South Africa: A country of migrants
by Johan Fourie in Johan Fourie's Blog, 2013-12-03 08:18:43 UTC
The arrival of Indian indentured labourers in South Africa (www.ulwazi.org)
Continuous waves of people have flocked to this land. Inhabited for thousands of years by hunter-gatherer peoples, the first group of technologically advanced migrants arrived from across the Limpopo in what we today call the Bantu migration. Starting around 3000 BC around the modern-day border of Nigeria and Cameroon, a sedentary people with advanced technology – agriculture and bronze-working – began to move east and south, amalgamating with or simply displacing the hunter-gatherer peoples they found on their way sou [...]
- A comparison of numerical methods for the solution of continuous-time DSGE models
by Christian Zimmermann in NEP-DGE blog, 2013-12-03 03:38:34 UTC
By Juan Carlos Parra-Alvarez
This paper evaluates the accuracy of a set of techniques that approximate the solution of continuous-time DSGE models. Using the neoclassical growth model I compare linear-quadratic, perturbation and projection methods. All techniques are applied to the HJB equation and the optimality conditions that define the general equilibrium of the economy. Two cases are studied depending on whether a closed form solution is available. I also analyze how different degrees of non-linearities affect the approximated solution [...]
- Rochester Teens Arrested For Obstructing The Sidewalk While Waiting For School Bus
by ? in Think Progress, 2013-12-02 22:56:38 UTC
CREDIT: WHEC screenshot
Three teen boys waiting for a school bus in Rochester, N.Y., were arrested Wednesday , after police claimed they obstructed pedestrian traffic by standing on the sidewalk.
The 16 and 17-year-old boys were charged with disorderly conduct, a catch-all that is often used to criminalize conduct of the homeless , or to punish those who are perceived as simply uncooperative , including school children .
A police report obtained by WROC in Rochester said the students were obstructing “pedestrian traffic while standing on a public sidewalk…preventing free passage of citizens [...]
- Basic income objections
by Julie Novak in Catallaxy Files, 2013-12-02 22:02:26 UTC
Since the Swiss referendum proposal for the state to provide every adult with a flat, universal monthly payment of up to CHF 2,500 (roughly a little over $A 3,000)ÃÂ became a reality, the ‘basic income’ concept, and varieties thereof, has received growing interest amongst academics, in the media and within policy circles.
For those interested, some notable news and opinion pieces discussing the idea can be found here , here , and here .
Much of the recent discussion about basic income has been driven by socialists of varied hues. In various ways, they describe how a basic income, paid by gene [...]
- The true life-time profile of wages
by Economic Logician in Economic Logic, 2013-12-02 15:30:00 UTC
If you look at just about any paper that considers the life-time profile of wages, you invariably find the same picture: a hump-share with wages increasing until age 50 to 55, and then a steady decrease. This decrease is every time justified with older people getting less productive and thus getting lower wages. But I have yet to see anecdotal evidence of that. Everybody I know has constantly increasing labor income. So what is wrong? Mar�a Casanova has it figured out. You need to make the distinction between several types of people: those who continue working throughout until age 65, those wh [...]
- 259 â€“ Increasing environmental benefits
by David Pannell in Pannell Discussions, 2013-12-02 15:00:50 UTC
It is obvious that the budgets of our public environmental programs are small relative to the cost of fixing all of our environmental problems. If we want to achieve greater environmental benefits from our public investments, what, in broad terms, are the options?
I remember seeing a graph last year – I think it was from the Australian Bureau of Statistics – showing the level of concern felt by the Australian community about environmental issues. It looked to have peaked a few years ago, and was pretty flat, or slightly declining. In that context, the prospects for a big increase in environmen [...]
- Mike Sproul responds (guest post)
by Kurt Schuler in Free Banking, 2013-12-02 01:53:05 UTC
(Mike Sproul's response to points I raised in a comment on his first guest post.)
In reply to Kurtâ€™s commentary on the backing theory/real bills view, let me start with a reasonable working statement of the real bills doctrine:
Money should be issued in exchange for
(2) real bills
(3) of adequate value.
Â Rule 3 is by far the most important. No bank should (or would) issue $100 to someone who offered securities worth only $90 in exchange. A bank that fails to follow rule 3 will soon become insolvent, while a bank that follows rule 3 will get a dollarâ€™s worth o [...]
- Does QE cause deflation?
by Noah Smith in Noahpinion, 2013-12-02 01:11:00 UTC
Oh my gosh. I am really excited. For years, I've been waiting for a chance to disagree with Brad DeLong about something econ-related, and the day has finally come!! It's enough to make me break my blogging hiatus a few days early. Remember back in 2011 when Narayana Kocherlakota theorized that low interest rates cause de flation? Well, on Wednesday, Steve Williamson made a similar claim , writing that in a liquidity trap, QE will cause long-term deflation. Williamson based his post on this paper .In� a testy response , Nick Rowe called Williamson's post "horribly wrong," lamenting: "What the h [...]
- Teachable Moment
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2013-12-02 00:19:00 UTC
Students are often confused, and we can't always figure out why. The teachable moment comes when students actually articulate their confusion, and then you can work on trying to help them. Nick Rowe, Brad DeLong, and Paul Krugman are all confused - each in his own way - about my last blog post. Let's start with Krugman, as he's by far the most articulate of the lot - you can actually understand what he's complaining about. The basic ideas in my post come from two papers, my recent AER article, and this recent working paper. So, I'm not just writing something in a blog that I thought up in the [...]
- Tax-Hike Scare Goes Up in Thin Air
by acmerecords in Firedoglake, 2013-12-01 20:30:34 UTC
Honor Among Thieves. Just the difference of a suit of clothes.
An academic study released by an economist from the University of Massachusetts found that one of the scare tactics used by both federal and state lawmakers for not raising taxes and instead cutting back funding of public works and social services is based on a falsity.
A review of recent research performed by economist Jeffrey Thompson found that there is no evidence to support the often-employed claim that the wealthy will flee states that raise taxes to pay for public services. The study actually found that the most wealthy t [...]
- Is QE lowering the rate of inflation?
by David Andolfatto in MacroMania, 2013-12-01 18:54:00 UTC
The answer may be "yes," according to a new paper by Steve Williamson. In examining the effects of a QE experiment in his model economy, he reports the following (p. 16): Some of the effects here are unconventional. While the decline in nominal�bond yields looks like the "monetary easing" associated with an open market�purchase, the reduction in real bond yields that comes with this is permanent,�and the inÃ¡ation rate declines permanently. Conventionally-studied channels�for monetary easing typically work through temporary declines in real interest�rates and increases in the inflation rate. [...]
- ProduttivitÃ , salari, crisi, logaritmi, marziani, onestÃ .
by Alberto Bagnai in Goofynomics, 2013-11-30 22:21:00 UTC
A Pescara vi avevo fatto vedere due grafici, uno tratto da Rick Wolff (2010), "In capitalist crisis rediscovering Marx", Socialism and democracy , 24 , 130-146 (se non avete accesso a una biblioteca universitaria online, il testo potete trovarlo sul sito di Wolff ma senza il grafico), e uno tratto da Carmen Reinhart e Belen Sbrancia (2011) "The liquidation of government debt", BIS Working Papers, 363 . L'accostamento di questi due grafici mi sembrava abbastanza istruttivo, per capire la fase storica che stiamo vivendo. Ve li ripropongo nell'ordine: Quale messaggio convogliavano queste due imma [...]
- On Cows and Central Tenets of Capitalism!
by paragwaknis in Musings of the Sorts, 2013-11-30 18:48:31 UTC
Santosh Anagol ÃÂ has been doingÃÂ interesting research ÃÂ on several phenomena concerning the Indian economy. In a recentÃÂ paper , he and his coauthors estimate that returns to owning a cow in India are negative and hence the continued existence of cows violates the central tenets of capitalism.
Daron Acemoglu and James Robinson discuss these findings in their extremely interesting blogÃÂ here. ÃÂ They argue that social embeddedness could help us understand why cows are still a part of a typical Indian farmer’s portfolio. I think that their arguments certainly makes sense, however, [...]
- There is nothing â€œunconventionalâ€ about money base control
by Lars Christensen in The Market Monetarist, 2013-11-30 09:06:27 UTC
Central bankers around the world talk about monetary policy as being Ã¢â¬ÅunconventionalÃ¢â¬Â when they undertake Ã¢â¬Åquantitative easingÃ¢â¬Â to expand the money base. This term frustrates me a great deal as there is nothing unconventional about the fact that the central bank is changing the money base.
In fact controlling the money base is exactly what central banks are doing when they undertake Ã¢â¬ÅnormalÃ¢â¬Â monetary policy. Central bankers might talk about monetary policy in terms of changing interest rates, but what central banks are doing – when they are undertaking what [...]
- The dual process account of reasoning: historical roots, problems and perspectives
by Alessandro Cerboni in Knowledge Team, 2013-11-29 20:35:38 UTC
See on Scoop.it – Bounded Rationality and Beyond Abstract
Despite the great effort that has been dedicated to the attempt to redefine expected utility theory on the grounds of new assumptions, modifying or moderating some axioms, none of the alternative theories propounded so far had a statistical confirmation over the full domain of applicability. Moreover, the discrepancy between prescriptions and behaviors is not limited to expected utility theory. In two other fundamental fields, probability and logic, substantial evidence shows that human activities deviate from the prescriptions of the t [...]
- Rent control and home ownership
by Economic Logician in Economic Logic, 2013-11-29 15:48:00 UTC
A new and recent trend in the United States has been the decline in the homeownership rate. While I have mentioned before that homeownership (the "American Dream") is not necessarily a good thing, both privately and socially, it is heavily favored by government policies. And while obviously the recent housing debacle has reduced homeownership, the trend started before that. To understand why the trend is down, it may be of interest to understand how it went up. Daniel Fetter looks at the period where the nationwide homeownership rate went up the fastest, World War II. Paradoxically, this was a [...]
- Measuring progress
by Johan Fourie in Johan Fourie's Blog, 2013-11-29 08:32:26 UTC
GDP is perhaps the most popular and influential measure in Economics. Everyone from presidents to plebs use it to show that ‘the economy’ is ‘doing well’, ‘recovering’, ‘accelerating’, and what we economists consult to identify a country’s ‘growth’, ‘development’, ‘progress’. It’s universally accepted (at least by economists) that higher economic growth is good for a country, and for an obvious reason: those countries that have experienced high growth rates have managed to achieve goals that are universally accepted as good: reducing poverty, and increasing the living standards of people. In [...]
- The role of marginal non-participants in the labor force
by Economic Logician in Economic Logic, 2013-11-28 15:20:00 UTC
While the unemployment situation in the US is gradually getting better, the numbers on the labor force participation continue to decline. This worries a lot of people because this can be a sign that some of the unemployed are getting discouraged and drop out entirely out of the labor force. But it may also simply be the continuation of a trend for a few decades already of a steady decline in the labor participation rate, in which case this would be much less worrisome. Regis Barnichon and Andrew Figura add to this discussion that we should not only think about three categories (employed, unemp [...]
- The smartphone patent wars: nothing really surprisingâ€¦
by Paul Belleflamme in IPdigIT, 2013-11-28 13:42:21 UTC
(This is an updated and slightly modified version of this post , published on April 25, 2012.)
In April 2012, Lucy Koh, a US District Court Judge, tried to force a truce on one of the fiercest fronts of what is now commonly known as the Ã¢â¬ÅSmartphone Patent WarsÃ¢â¬Â. She ordered Tim Cook and Choi Gee-Sung, the CEOs of Apple and Samsung, to meet and work out their bitter and prolonged patent disputes. The two firms had indeed spent long months suing and countersuing each other, all over the world, for alleged patent infringements (thisÃÂ infographic ÃÂ nicely summarizes the main [...]
- SEA/SDAE: Consequences of Central Banking, Intended and Unintended
by Nicolas Cachanosky in Punto de Vista Economico, 2013-11-28 03:01:38 UTC
El pasado fin de semana fue la conferencia anual de la Southern Economic Association (SEA). Entre las sesiones se encuentran las presentaciones organizadas por la Society for the Development of Austrian Economics (SDAE) asÃÂ como la cena y reuniÃÂ³n anual de esta organizaciÃÂ³n.
Siendo ya una agradable costumbre, compartÃÂ uno de los paneles del SDAE con Thomas L. Hogan (Troy University), William J. Luther (Kenyon College), Alexander W. Salter (George Mason University) y Robert F. Mulligan (Western Carolina University). A continuaciÃÂ³n un resumen del panel y novedades del SDAE.
- Liquidity Premia and the Monetary Policy Trap
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2013-11-27 21:52:00 UTC
There is a wide class of monetary models that boil down to something like the following. We'll confine attention to a deterministic world - extending this to a stochastic environment isn't a big deal. Given intertemporal optimization, the price of a nominal bond, q(t), in dollars, is determined from the first-order condition (1) q(t) = B[u'(c(t+1))/u'(c(t))][p(t)/p(t+1)], where B is the discount factor, u(.) is the utility function, c(t) is consumption in period t, and p(t) is the price level. Similarly, for money to be held, (2) 1 + L(t) = B[u'(c(t+1))/u'(c(t))][p(t)/p(t+1)], where L(t) is th [...]
- The equity-efficiency trade-off and simplifying assumptions
by Matt Nolan in The Invisible Hand in Economics, 2013-11-27 19:00:14 UTC
Given my admission that I am now going to talk more about inequality , it is important for me to show a bit more analytical respect to the concept of the ‘equity-efficiency trade-off’. ÃÂ This is a term that is often used in economics, and that we often use here, but which on the blog I have only explicitly dug into once before – back in 2008 .
The reason I often prefer not digging myself into the equity-efficiency trade-off concept too much is that I fear I won’t dig myself out, and if I do I doubt much would come from it. ÃÂ It is an overarching concept that exists in economics, one that w [...]
- Policy and academic macro
by Economic Logician in Economic Logic, 2013-11-27 14:43:00 UTC
Academics are in their ivory tower and have little real world or policy impact. That is the view that is often conveyed by those who do not know what those academics are up to. It is also a common justification by policymakers for ignoring any advice coming from academia. I have lamented many times that politicians routinely disregard advice from scientists (including economists), particularly by focusing law-making on the means instead of on the goals. That said, I recently mentioned work that argued that Keynesian policies will always appeal more to policymakers than Hayekian ones, because i [...]
- How We're Unintentionally Defunding the National Institutes of Health
by ? in Pacific Standard. Smart Journalism. Real Solutions., 2013-11-27 14:00:00 UTC
In June of 1998, the U.S. Congress, with bipartisan support, committed itself to double the National Institutes of Health (NIH) budget over the next five years, arguing that "biomedical research has been shown to be effective in saving lives and reduc [...]
- Shared prosperity and the mitigation of poverty : in practice and in precept
by maximorossi in NEP-LTV blog, 2013-11-27 12:57:39 UTC
The World Bank Group recently adopted two overarching goals — the end of extreme, chronic poverty in the world by 2030 and the promotion of shared prosperity in every society. The paper examines the normative properties of these goals, their strengths and weaknesses, and their implications for actual policymaking, especially in the presence of globalization. This is closely related to the age-old debate on growth versus direct welfare interventions as instruments for countering poverty. The paper analyzes pas [...]
- Altruism in Networks
by maximorossi in NEP-LTV blog, 2013-11-27 12:56:46 UTC
Renaud BourlÃÂ¨s (AMSE – Aix-Marseille School of Economics – Aix-Marseille Univ. – Centre national de la recherche scientifique (CNRS) – Ãâ°cole des Hautes Ãâ°tudes en Sciences Sociales [EHESS] – Ecole Centrale Marseille (ECM))
Yann BramoullÃÂ© (AMSE – Aix-Marseille School of Economics – Aix-Marseille Univ. – Centre national de la recherche scientifique (CNRS) – Ãâ°cole des Hautes Ãâ°tudes en Sciences Sociales [EHESS] – Ecole Centrale Marseille (ECM))
We provide the first theoretical analysis of altruism i [...]
- Mental Illness and Unhappiness
by maximorossi in NEP-LTV blog, 2013-11-27 12:47:13 UTC
This paper is a contribution to the second World Happiness Report. It makes five main points. 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if mental health is included with a six-year lag. It explains more of the variance of life-satisfaction in the population of a country than physical health does, and much more than unemployment and income do. Income explains 1% of the variance of life-s [...]
- The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing
by maximorossi in NEP-LTV blog, 2013-11-27 12:45:31 UTC
Hart, Robert A
Roberts, J Elizabeth
Based on detailed payroll data of blue collar male and female labor in Britain’s engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build [...]
- A History Lesson for Scotland
by Carola Binder in Noahpinion, 2013-11-27 04:05:00 UTC
In Guan's recent post on this blog, " Scotland, sterling and the debt ," he notes that Scotland will hold a referendum on independence from the United Kingdom in September 2014. The Scottish Government suggests that an independent Scotland should be in a currency union with the UK. Guan writes: "There are probably some sound arguments for that: it could take years to join the euro, and much of Scotlandâ€™s trade is with rest-of-UK, and vice versa. � On the other hand, events of recent years have kind of cooled the enthusiasm for currency unions in Europe. Itâ€™s not at all clear that [...]
- How will China's carbon markets work in a non-market economy?
by Alex Lo, Lecturer, Griffith School of Environment at Griffith University in The Conversation, 2013-11-26 19:07:43 UTC
While Australiaâ€™s emission trading scheme (ETS) has an uncertain future , China is determined to go ahead with its trading schemes . This week it will launch the pilots of its Beijing and Shanghai schemes. But the operating environment for these schemes will be vastly different to that in Australia or the European Union.
From 2013 China has introduced seven pilot trading schemes in key cities and provinces, including Beijing, Shanghai and Guangdong. These schemes vary in scale, rules, and coverage : some cover over 50% of local greenhouse emissions; some are more lenient to the use of [...]
- Pioneers of the static interest rate
by Economic Logician in Economic Logic, 2013-11-26 15:14:00 UTC
When an author describes his work in the abstract or the introduction, it is common to highlight what is "new," "novel," "unique," an "improvement," or "better." But you do not write that your paper is "pioneering" or "seminal," as this can only be established by others in hindsight. That does not stop Sarbajit Chaudhuri and Manash Ranjan Gupta , who start their abstract with "This paper makes a pioneering attempt to provide a theory of determination of interest rate in the informal credit market in a less developed economy in terms of a three-sector static deterministic general equilibrium mo [...]
- Stagnation: in the mind?
by chris dillow in Stumbling and Mumbling, 2013-11-26 14:43:47 UTC
Is "secular stagnation" a state of the world or a state of our minds? I ask for two different - indeed, contradictory - reasons.
The first is inspired by papers (pdf) by Ulrike Malmenider and Stefan Nagel and by Henrik Cronqvist and colleagues. They both show that our attitudes to the economy - as measured by how we invest our money - are shaped by experiences in our impressionable years. People who experience recessions in their formative years tend to be more risk-averse than those who enjoyed better times. They invest less in equities and less in growth stocks than more favoured generations [...]
- The effect of abolishing university fees in Ireland
by kevin denny in Kevin Denny: Economics more-or-less, 2013-11-26 10:33:31 UTC
This morning’s Irish Times headlines the “league tables ” they have just produced showing how private schools send a disproportionate number of students to university and especially to the more prestigious high-point courses.ÃÂ So far, so familiar. Given our “free” university system, how can this be? The answer of course is that there is a very significant socio-economic gradient when it comes to Leaving Certificate attainment: the kids of better-off parents do significantly better in the Leaving.
The key to our system of third level education (especially universities) is that places are rat [...]
- Connecting the Academic and Policy Worlds: Interview with James Bullard
by David Andolfatto in MacroMania, 2013-11-25 21:40:00 UTC
An interview by Economic Dynamics with James Bullard, president of the Federal Reserve Bank of St. Louis ( source ). EconomicDynamics Interviews James Bullard on policy and the academic world James Bullard is President and CEO of the Federal Reserve Bank of St. Louis. His research focuses on learning in macroeconomics. Bullard's RePEc/IDEAS entry . EconomicDynamics: You have talked about how you want to connect the academic world with the policy world. The research world is already working on some of these questions. Do you have any comments on that? James Bullard: I have been dissatisfied [...]
- NZ inequality statistics: Some of the research
by Matt Nolan in The Invisible Hand in Economics, 2013-11-25 19:00:32 UTC
Donal over at Economics New Zealand posted up some OECD figures that indicate that the Gini coefficient over the OECD was the same in 2010 as it was in the mid-1990s, and that it is actually lower in New Zealand.
As I have noted earlier, I am going to start writing about inequality ÃÂ on the blog. ÃÂ So I have been spending a little bit of time reading about it!
Given this, I’ve realised we can take this analysis a step further. ÃÂ Bryan Perry from MSD discussed the Gini coefficient, and other indicators, in his introduction for the inequality conference in July. ÃÂ I wasn’t there – but I [...]
- Paid maternity leaves are regressive
by Economic Logician in Economic Logic, 2013-11-25 15:10:00 UTC
Quite a few countries guarantee paid leaves for new mothers that not only allow them to get back the same job they left, but also gives them the financial wiggle-room to well take care of their new offspring. This time at home without worries is good both for the mother and the child, although one can suspect that this time off work can have adverse implication on human capital and the future career path for the mother. Paid maternity leaves are also often promoted as a way to conduct social policy across all social strata, as they apply to everyone. Not so fast, say Gordon Dahl, Katrin L�ken, [...]
- Capital Tax Competition and Dynamic Optimal Taxation
by Christian Zimmermann in NEP-DGE blog, 2013-11-24 15:57:40 UTC
By Till Gross
I analyze international tax competition in a framework of dynamic optimal taxation for strategically competing governments. The global capital stock is determined endogenously as in a neo-classical growth model. With perfect commitment and a complete tax system (where all factors of production can be taxed), governments set their capital taxes so that the net return is equal to the social marginal product of capital. Capital accumulation thus follows the modified golden rule. This is independent of relative country size, capital [...]
- Polling accuracy: a Q&A with Kai Arzheimer and Jocelyn Evans
by ? in OUPblog, 2013-11-24 11:30:00 UTC
By R. Michael Alvarez
Polling data is ubiquitous in today’s world, but it is is often difficult to easily understand the accuracy of polls. In a recent paper published in Political Analysis, Kai Arzheimer and Jocelyn Evans developed a new methodol [...]
- Bernanke: Communication and Monetary Policy
by Guest Author in Credit Writedowns, 2013-11-23 13:05:56 UTC
EditorÃ¢â¬â¢s Note: Below is the full text of a Speech by Federal Reserve Chairman Ben Bernanke on communication and monetary policy that includes his view on the FedÃ¢â¬â¢s large scale asset purchase program. His ideas give greater clarity to how the Fed thinks about its forward guidance policy now used as a principal focus of monetary policy transmission. While BernankeÃ¢â¬â¢s ideas on forward guidance are consistent with even a more limited Fed as conceived of by Philadelphia Fed President Charles Plosser, BernankeÃ¢â¬â¢s ideas on asset purchases are in direct contradiction to Ploss [...]