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2013-05-23

• Women's emancipation: more education and more divorces
  by Economic Logician in Economic Logic, 2013-05-23 14:41:00 UTC

  Divorce rates are at an all-time high, and many blame a lack of morals. That is not a good explanation. There is always an economic argument in the background of societal change, and it is no different here. There is more divorce because the incentives are right for that. And if the incidence of divorce has changed, it must be because it now makes more sense for people to divorce, not because sentiments have changed. Fatih Guvenen and Michelle Rendall argue that the cost of divorce used to be very high for the women. They have a natural bond to their children and want the best for them. But th [...]

• Konsumtion som indikation på skatteflykt
  by Jesper Roine in Ekonomistas, 2013-05-23 03:50:39 UTC

  I ett tidigare inlägg noterades att en del av bevisningen i ett antal stora korruptionsfall som kartlagts av Financial Action Task Force bestod av uppgifter om konsumtion som var svår att få ihop med de anklagade politikernas inkomster. Zambias tidigare president Frederick Titus Chiluba hade betalat en enskild skräddare mer än fem gånger hans sammanlagda officiella lön under hela hans tid som president. I ett annat fall noteras att en politiker “[in] a single two-day period [.] made payments of USD 80 000 to Gucci and USD 51 000 to Dolce & Gabbana, and [had] a Paris-based shopping spr [...]

• Can the Mortensen-Pissarides Model Match the Housing Market Facts?
  by Christian Zimmermann in NEP-DGE blog, 2013-05-23 00:59:53 UTC

  By Gaetano Lisi http://d.repec.org/n?u=RePEc:eec:wpaper:1312&r=dge In the housing markets three basic facts have been repeatedly reported by empirical studies: the existence of price dispersion, the positive correlation between housing price and time-on-the-market, and between housing price and trading volume. Since housing markets are characterised by a decentralised framework of exchange with important search and matching frictions, this paper examines whether the baseline search and matching model can account for these three basic facts. We find that the standard matching framework allows t [...]

2013-05-22

• Hedonic Pricing
  by Clive Jones in Business Forecasting, 2013-05-22 22:23:38 UTC

  Quartz predicts Toyota probably will use the weaker yen to add better components or accessories — rather than cut prices, although… .. those improvements might actually push down government measures of consumer vehicle prices… because the US government’s price watchers reflect quality as lower prices, thanks to something called  “hedonic pricing.”   Hedonic analysis also is mentioned in an interview with Zillow CEO Spencer Rascoff , Knowledge@Wharton : One of the things that I found most interesting on Zillow was the Zestimate… How do you figure out what the house is worth? How [...]

• Complicated Southern European recessions
  by Economic Logician in Economic Logic, 2013-05-22 14:51:00 UTC

  On both sides of the Atlantic, the last recession was unconventional. This has meant that the mainstream business cycle models needed to be rethought to make good sense of what is happening. By that I mean, they need to be augmented or altered, not thrown out completely, as some have claimed. In doing so, one needs to identify new channels for the transmission of shocks, and possibly new shocks as well. And because this is unconventional, it is sometimes difficult to wrap one's head around some of those models. One good example of that is the paper by Zhen Huo and Jos�-V�ctor R�os-Rull that tr [...]

• Planes and trains can deliver the growth the IMF wants
  by W David McCausland, Senior Lecturer in Economics at University of Aberdeen in The Conversation, 2013-05-22 14:28:32 UTC

  The International Monetary Fund’s annual report on the UK economy calls for the Chancellor to boost economic growth through investing in infrastructure . While the IMF is right to make this point, we must ensure we do not once again become bogged down in the simplified debate around “austerity vs stimulus” that has dominated policy discussion in recent years. Economic growth will only return through what is known as “investment spending” on planes, trains and other projects with a strong “multiplier” effect. Spending, multiplied Here’s how the argument works. If the governme [...]

• Superstars' baleful effects
  by chris dillow in Stumbling and Mumbling, 2013-05-22 13:11:26 UTC

  Do we over-rate the importance of individual talents to organizational performance? I ask because of this finding by Sander Hoogendoorn: Team performance exhibits an inverse u-shaped relationship with ability dispersion. This comes from a study of MBA students' collaborations on business projects. But it is consistent with a finding from baseball , that teams with middling levels of ability dispersion do better than those with low or high dispersion. It's easy to hypothesise why this might be so. Where's there's middling levels of ability dispersion, less able team members can learn from the [...]

2013-05-21

• Risk management four centuries ago
  by Economic Logician in Economic Logic, 2013-05-21 13:52:00 UTC

  I tend to think that financial management, and especially risk management, are modern creations that came about after the introduction of analytic accounting, information technology, and the rise of new financial instruments. In other words, you look one century back at firms and individual, they would have laughable financial setups by todays standards. How about some data? Ann Carlos, Erin Fletcher and Larry Neal look at the financial marketplace four centuries ago in London. They look at firms that were discussed in the financial press at that time and reverse-engineer their ownership struc [...]

• Wonkbook: Could the scandals help immigration reform?
  by Ezra Klein, Evan Soltas in Ezra Klein's Wonkblog, 2013-05-21 12:45:29 UTC

  Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here . Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog . Our thoughts and prayers are with the people of Moore, Oklahoma. The latest Washington Post/ABC News poll confirms the findings of the Gallup and CNN polls before it: President Obama's approval ratings are curiously unchanged by the ongoing furors over the IRS, DOJ, and Benghazi. His approval rating is holding at 51 percent, even as 55 percent think his administ [...]

• The Economic Nature of the Resource Curse: Evidence
  by Daron Acemoglu and James Robinson in Why Nations Fail, 2013-05-21 12:02:00 UTC

  So oil has been a curse for Cameroon. Is it true more generally that natural resource wealth, or perhaps more specifically oil wealth, has a negative effect on economic growth? If it does, via what mechanisms? Before we start thinking about mechanisms let’s focus on the cross-national evidence. In fact, the more careful evidence does not suggest that there is such an unconditional effect. Early work by Jeffrey Sachs and his collaborators suggested that this was the case. And it is true that the discovery and exploitation of oil in the Cameroon coincided with a massive economic decline and det [...]

2013-05-20

• On Whose Research is the Case for Austerity Mistakenly Based?
  by jfrankel in Jeff Frankels Weblog, 2013-05-20 20:32:55 UTC

  Several of my colleagues on the Harvard faculty have recently been casualties in the cross-fire between fiscal austerians and stimulators.   Economists Carmen Reinhart and Ken Rogoff have received an unbelievable amount of press attention, ever since they were discovered by three researchers at the University of Massachusetts to have made a spreadsheet error in the first of two papers that examined the statistical relationship between debt and growth.   They quickly conceded their mistake . Then historian Niall Ferguson, also of Harvard, received much flack when — asked to comment on Keyne [...]

• The Flawed Origins of Expansionary Austerity
  by Jeffrey Frankel in Project Syndicate, 2013-05-20 15:20:13 UTC

  CAMBRIDGE – Several of my Harvard University colleagues have recently been casualties in the crossfire between fiscal “austerians” and fiscal stimulators. The economists Carmen Reinhart and Kenneth Rogoff have received an astounding amount of press attention since it was discovered that they made a spreadsheet error in a 2010 paper that examined the statistical relationship between debt and growth. They quickly conceded their error. Soon after, the historian Niall Ferguson – also at Harvard – received much flack when, asked to comment on Keynes’ famous phrase, “In the long run we [...]

• 238 � Ranking environmental projects 4: Environmental condition and values
  by David Pannell in Pannell Discussions, 2013-05-20 15:00:59 UTC

  Episode 4 in this series on principles to follow when ranking environmental projects. This one discusses how to think about environmental conditions and the resulting environmental values.� In the previous post I said that the benefit from an environmental project is the difference between the environmental values with the project and without the project. This time I will break that down a bit. The point of this post is that there are two parts to that change in environmental values: a change in the physical condition of the environment, and a resulting change in the values generated by the en [...]

• Reducing child labor with micro-insurance
  by Economic Logician in Economic Logic, 2013-05-20 14:27:00 UTC

  Micro-insurance is insurance for the poorest against what sometimes seem trivial risks to us. Yet, for the poorest of this world small shocks can be devastating. It is also believed that such shocks are often the reason why parents have to send their children to work even though they know it is bad for their future. It is thus natural to study whether the introduction of micro-insurance reduces the incidence of child labor. Andreas Landmann and Markus Fr�lich benefit from a randomized experiment in rural Pakistan, where a micro-credit enterprise is also offering micro-insurance to members that [...]

• The potential of the super QALY to reconcile the key contentions in health economics
  by Chris Sampson in The Academic Health Economists' Blog, 2013-05-20 06:54:41 UTC

  Economics is largely about trade-offs and compromise. Academics study the former but don’t often engage in the latter. In health economics, as in other fields, a key trade-off is between equity and efficiency.  We’ve been studying this for   a. very .long .time . Despite this, a s Culyer   has identified , equity is hardly considered in current health technology assessments. We all agree it should be, but just can’t seem to figure it out. Indeed, i t  has been argued  that incorporating equity concerns into cost-effectiveness analyses could still be a long time coming. But let’s be a bit [...]

2013-05-19

• Economic Prospects for the Long Run
  by Guest Author in The Big Picture, 2013-05-19 10:00:47 UTC

  Economic Prospects for the Long Run Chairman Ben S. Bernanke At Bard College at Simon’s Rock, Great Barrington, Massachusetts May 18, 2013   • 29 KB PDF Let me start by congratulating the graduates and their parents. The word “graduate” comes from the Latin word for “step.” Graduation from college is only one step on a journey, but it is an important one and well worth celebrating.I think everyone here appreciates what a special privilege each of you has enjoyed in attending a unique institution like Simon’s Rock. It is, to my knowledge, the only “early college” in the United States; many of [...]

• �The Institutional Causes of China�s Great Famine, 1959-1961,� X. Meng, N. Qian & P. Yared (2011)
  by afinetheorem in A Fine Theorem, 2013-05-19 04:43:59 UTC

  Nancy Qian, along with a big group of coauthors, has done a great amount of interesting empirical work in recent years on the economics of modern China; among other things, she has shown that local elections actually do cause policy changes in line with local preferences and that the state remains surprisingly powerful in the Chinese economy. In this paper with Xin Meng and Pierre Yared, she considers what is likely the worst famine in the history of mankind, China�s famous famine following the Great Leap Forward. After a agricultural production shock in 1959, a series of misguided policy ex [...]

2013-05-18

• Hall and Sargent: Fiscal Prioritization: Lessons from Three Wars
  by Mark Thoma in Economist's View, 2013-05-18 17:49:18 UTC

  George Hall and Thomas Sargent advise Republicans who support the idea of debt prioritization to "ponder the actions" of Hamilton, Madison, and Grant: Fiscal prioritisation: Lessons from three wars, by George Hall, Thomas J. Sargent,�Vox EU : With the temporary suspension on the US Treasury’s statutory debt limit set to expire in late May, Republicans in the US House of Representatives have advanced the idea of debt prioritization. This proposal, put forward in the Full Faith and Credit Act (HR 807), would "require that the government prioritize all obligations on the debt h [...]

• Bernanke: Economic Prospects for the Long Run
  by Mark Thoma in Economist's View, 2013-05-18 10:14:38 UTC

  Chairman Ben S. Bernanke is an optimist when it comes to our long-run economic prospects (i.e. he does not endorse the notion that productivity is slowing). I'm with him. (This is a graduation speech Bernanke gave at Bard College at Simon's Rock, Great Barrington, Massachusetts): Economic Prospects for the Long Run : Let me start by congratulating the graduates and their parents. The word "graduate" comes from the Latin word for "step." Graduation from college is only one step on a journey, but it is an important one and well worth celebrating. I think everyone here appreciates [...]

• Structural transformation and stylised business cycle facts
  by Ajay Shah in Ajay Shah's blog, 2013-05-18 06:13:00 UTC

  The first step in the economics of business cycles is to establish `stylised facts' about the characteristics of business cycle fluctuations. Once these are know, alternative models can be judged on the extent they are able to predict these stylised facts. This is routine in mainstream macroeconomics, which is largely about the United States economy. When we think about India, however, there is the question of structural transformation of the economy. �There was an old Indian macroeconomics which worried about different things. In recent decades, the economy has changed in fundamental ways: [...]

• Pledgability and Liquidity: A New Monetarist Model of Financial and Macroeconomic Activity
  by Christian Zimmermann in NEP-DGE blog, 2013-05-18 01:18:47 UTC

  By Venky Venkateswaran and Randall Wright http://d.repec.org/n?u=RePEc:nbr:nberwo:19009&r=dge When limited commitment hinders unsecured credit, assets help by serving as collateral. We study models where assets differ in pledgability – the extent to which they can be used to secure loans – and hence liquidity. Although many previous analyses of imperfect credit focus on producers, we emphasize consumers. Household debt limits are determined by the cost households incur when assets are seized in the event of default. The framework, which nests standard growth and asset-pricing theory, is ca [...]

2013-05-16

• Is There a Curse of Resources? The Case of the Cameroon
  by Daron Acemoglu and James Robinson in Why Nations Fail, 2013-05-16 20:45:20 UTC

  Are natural resources really a curse? Before discussing cross-country regressions analysis let’s begin with a case study that appears to illustrate exactly what people have in mind when they talk about the resource curse. In their recent edited volume “ Plundered Nations? Successes and Failures in Natural Resource Extraction ” Paul Collier and Anthony Venables have a very interesting chapter by Bernard Gauthier and Albert Zeufack called “ Governance and Oil Revenues in Cameroon ”. There is no better place to start to study the resource curse. Oil was discovered in Cameroon in 1977. At the time [...]

• Les méga-évenements sportifs sont-ils réellement rentables ?
  by trenault@economiematin.fr (Captain Economics) in Economie Matin, 2013-05-16 09:37:58 UTC

  Jeux Olympiques, Coupe du Monde, Super Bowl, All Star Games ... Lorsqu'un pays ou une ville se voit attribuer la réception d'un méga-événement sportif, les organisateurs s'imaginent déjà les nombreuses retombées économiques positives et se frottent les mains. Arrivée massive de touristes, recettes de billetterie, boom pour l'hôtellerie et les restaurants, effet multiplicateur, hausse de l'emploi par la construction d'infrastructures ... il est vrai que le tableau des retombées positives, celui que les organisateurs et promoteurs peignent avec talent, semble plutôt ensoleillé avec [...]

• Lorsque les hedge funds prêtent à des entreprises ... pour ensuite parier à la baisse via de l'information privée !
  by contact@captaineconomics.fr (Le Captain') in Captain Economics, 2013-05-16 07:11:11 UTC

  Il était une fois, dans un monde fort fort pas lointain, des fonds ayant comme objectif d'assurer la meilleure rentabilité possible pour leurs clients fortunés en investissant dans toutes les classes d'actifs financiers : les fameux hedge funds. Ces fonds opaques peuvent, entre autres, prêter de l'argent à des entreprises et investir, à la hausse comme à la baisse, sur le marché action. Vous allez me dire que cela ressemble finalement beaucoup à une banque classique qui aurait une activité de prêt et une activité de trading en compte propre ! Oui, mais tandis que les activités de [...]

2013-05-15

• The tax payer as a tax enforcer
  by Economic Logician in Economic Logic, 2013-05-15 14:25:00 UTC

  I am fine with paying my fair share of taxes as long as the others do, too. I do not like it when people hide their income and thus have me pay the taxes for them. The ones gaming the system are the rich (especially where filing taxes is very complex) and the independents, who can skimp on both income and sales tax. And this is why I always insist for a receipt or an otherwise documented transaction. Marcelo Arbex and Enlinson Mattos consider my behavior like that of an auditor looking out for tax evasion. Except that I would need to be rewarded in some way for my requesting receipts, as I gue [...]

• An�lisis del mercado de �rganos
  by Adri�n Ravier in Punto de Vista Economico, 2013-05-15 11:19:44 UTC

  Una alumna me ha escrito consultando mi opini�n sobre un tema tan delicado como introducir incentivos monetarios en el mercado de ri�ones e h�gados. Quiero compartir un art�culo corto de Albert Esplugas , otro m�s extenso de Alejandro A. Calabria y una presentaci�n de PowerPoint del Profesor Julio El�as que surge como s�ntesis de su aporte al libro Progresos de Microeconom�a (de la AAEP) que permitan abrir la discusi�n. La s�ntesis del art�culo de A. Calabria dice lo siguiente: Desde su expansi�n a fines de la d�cada del ?60 hasta la actualidad la cantidad de trasplantes realizados ha aumenta [...]

• L'impact des méga-événements sportifs sur l'économie d'un pays : positif ou négatif ?
  by contact@captaineconomics.fr (Le Captain') in Captain Economics, 2013-05-15 07:18:34 UTC

  Jeux Olympiques, Coupe du Monde, Super Bowl, All Star Games ... Lorsqu'un pays ou une ville se voit attribuer la réception d'un méga-événement sportif, les organisateurs s'imaginent déjà les nombreuses retombées économiques positives et se frottent les mains. Arrivée massive de touristes, recettes de billetterie, boom pour l'hôtellerie et les restaurants, effet multiplicateur, hausse de l'emploi par la construction d'infrastructures ... il est vrai que le tableau des retombées positives, celui que les organisateurs et promoteurs peignent avec talent, semble plutôt ensoleillé avec [...]

2013-05-14

• Health and Retirement
  by UDADISI in UDADISI, 2013-05-14 22:48:00 UTC

  Source .� [...]

• Sports, Gender Equality, and Development
  by Terra Lawson-Remer in Development Channel, 2013-05-14 18:37:14 UTC

  As my colleague Isobel Coleman wrote last week, Saudi Arabia has just leaped a small hurdle towards gender equality: announcing last week that it will allow female athletics in private schools. Until now girls have been prohibited from playing sports as a part of formal education. The move comes on the heels of last year�s decision to allow two Saudi women to compete in the Olympics for the first time in the country�s history. While allowing a few girls to play sports may seem inconsequential, it is a small step that may have ripple effects for gender equality in the country. And while a valu [...]

• Development that Works: 4 views on evaluation challenges
  by Guest blogger in Eval Central, 2013-05-14 16:39:55 UTC

  By Guest blogger originally posted at Development that Works By Paloma Acevedo* Conducting an impact evaluation (IE) is a complex exercise full of challenges – if you don’t agree, you probably have not worked on one yet! Some publications, such as ”Learning About Experiments That Never Happened ” or blogs about common mistakes in evaluations , talk about some of these challenges. In the workshop “Surveys and Impact Evaluation of Public Policies” recently held in Chile, the session called “Learning from Experience” devoted some time to talk about these difficulties. We asked an I [...]

• 4 visiones sobre retos en evaluaci�n
  by Guest blogger in Hacia el desarrollo efectivo, 2013-05-14 16:36:05 UTC

  �Por Paloma Acevedo * Llevar a cabo una evaluaci�n de impacto es un ejercicio complejo cargado de desaf�os (si no est�s de acuerdo, apuesto a que a�n no has participado en una). Algunas publicaciones como �sta sobre experimentos que nunca suceden o �sta sobre metidas de pata en evaluaciones hablan sobre algunos de estos retos. En la sesi�n de �Aprendiendo de la Experiencia� del Taller de Encuestas y Evaluaci�n de Impacto de Pol�ticas P�blicas �dedicamos un espacio a reflexionar sobre este tema y preguntamos a una jefa de proyectos del BID, un gestor del gobierno, un experto en calidad de dato [...]

• Reduced form welfare
  by Economic Logician in Economic Logic, 2013-05-14 14:13:00 UTC

  It is not uncommon to find theory papers that assume quadratic utility or loss functions. They are the most tractable functions that allow to find an optimum, yet there is no reason to believe they have anything to do with reality. If you are designing an optimal policy where trade-offs are important, the results hinges quite a bit on the functional forms you choose. Jasper Lukkezen and Coen Teulings look at optimal fiscal policy and go a step further. They attach a VAR (vector autoregression) to a quadratic welfare function. Not only do they assume an analytically tractable but very likely un [...]

• Flexibilidad laboral micro y macroecon�mica
  by Samuel Bentolila in Nada Es Gratis, 2013-05-14 05:55:35 UTC

  En octubre de 2012 el Fondo Monetario Internacional sorprendi� a propios y extra�os al reconocer �que en 2010 cometi� errores significativos en sus previsiones de crecimiento del PIB para 2010 y 2011, por haber infraestimado el impacto de la reducci�n del d�ficit p�blico, es decir, el llamado multiplicador fiscal (ver� un trabajo de Olivier Blanchard y Daniel Leigh o el excelente resumen de Javier Andr�s y Rafael Dom�nech en NeG ). En marzo pasado el FMI tambi�n repas� sus recomendaciones sobre pol�ticas laborales a los pa�ses europeos desde el inicio de la Gran Recesi�n, en un trabajo de Blan [...]

• big data and economic research
  by Ren� B�heim in Econ Tidbits, 2013-05-14 05:38:00 UTC

  Liran Einav and Jonathan D. Levin highlight how "big data" could change economic research. Being a regular data cruncher myself, this is a welcome contribution as (applied micro-)economists have been skilled in the use of large data for quite some time. Some highlights: "Government administrative data are almost certainly under-utilized, both by government agencies and, because of limited and restricted access , by researchers" [my emphasis!]--hear, hear! "Many government agencies are increasingly smart about using data analytics to improve their operations and services. However, most agencies [...]

• Links for 05-14-2013
  by Mark Thoma in Economist's View, 2013-05-14 00:03:00 UTC

  Labor Force Participation and the Unemployment Threshold - macroblog Capital Controls, Currency Wars, and Cooperation - Liberty Street Keynes and Keynesianism - Economix Time travel in Euroland - Antonio Fatas This Is No Time to Cut Food Stamps - NYT Crowding Out Watch, Heritage Edition - Econbrowser Working Conditions in Bangladesh - EconoSpeak Inflation Continues to Make Itself Scarce - WSJ The Partial Faith and Dubious Credit Act - Alan Blinder Misunderstanding the Neyman-Pearson Hypothesis - Brad DeLong Can FTAs support ‘Factory Asia’? - Vox EU Utopophobophilia - Crooked Timber [...]

2013-05-13

• Does Social Judgment Diminish Rule Breaking?
  by UDADISI in UDADISI, 2013-05-13 15:54:00 UTC

  We conducted an experiment simulating three rule-breaking situations, theft, bribery and embezzlement, where we varied the extent to which the actions of the potential rule-breaker are visible to others and are subject to social judgment in the form of informal approval and disapproval messages. We involved a US student sample characterized by cultural heterogeneity due to the immigration of their ancestors to the US from a multitude of countries characterized by different levels of rule of law, as measured by the World Bank’s Rule of Law index. We found significant differences in the res [...]

• From My Notebook no. 11
  by Gavin Kennedy in Adam Smith's Lost Legacy, 2013-05-13 15:51:00 UTC

  � “BEYOND THOMAS MUN: THE ECONOMIC IDEAS OF EDWARD COKE, FRANCIS BACON, AND LIONEL CRANFIELD by� Carlos Eduardo Suprinyak HERE http :// d. repec .org /n ?u =RePEc :cdp :texdis :td473&r =his 1: … In 1603, the decision reached by King’s Bench on the famous case of Darcy� v. Allen (alternatively known as The Case of Monopolies ) finally offered a legal benchmark for dealing with restrictive grants of privilege issued under the sovereign prerogative (Foster 2004, p. 303). The court ruled that all royal grants which were found to be monopolistic in their nature should be declared In 1603 [...]

• 237 � Ranking environmental projects 3: With vs without
  by David Pannell in Pannell Discussions, 2013-05-13 15:00:17 UTC

  Episode 3 in this series on principles to follow when ranking environmental projects. This one discusses the �with versus without� principle for estimating the project benefits.� Through the series, we will cover a number of points about the estimation of benefits from an environmental project. Initially, to keep things simple, I�ll talk about the case where there is a single type of benefit being generated by an environmental project (e.g. a threatened species is being made safer). In later posts I�ll talk about cases with multiple types of benefits from the same project. This first point is [...]

• Immediate rewards prompt dishonest behavior
  by Economic Logician in Economic Logic, 2013-05-13 14:46:00 UTC

  How can one entice people to behave more honestly? An economy where people trust each other works much better, and deals come by more easily. But if no one trusts each other, one has to post collateral for every transaction and contracts need to specify everything. One could also find ways to elicit more honest behavior from people, for example by transacting in a specific context. Bradley Ruffle and Yossef Tobol find that providing rewards later prompts more honest behavior. This conclusion comes from a neat experiment that must have necessitated a lot of arm-twisting to realize: Israeli sold [...]

• Capital Controls, Currency Wars, and International Cooperation
  by Blog Author in Liberty Street Economics, 2013-05-13 11:00:00 UTC

  Bianca De Paoli and Anna Lipinska The debate over whether there’s a case for limiting capital flows has intensified recently—both in media and academic forums. The traditional view has generally been that the voluntary exchange of funds across borders makes everyone better off: Borrowers have access to cheaper credit while lenders enjoy higher returns on their investments. But, as a recent article in The Economist highlights, this view has been revisited. In this post, we review arguments on this issue and discuss how our recent research contributes to the debate. ���� In a recent sta [...]

2013-05-12

• Links of the Week - 10 May 2013
  by Jonas Feit in Conscience Warrior, 2013-05-12 20:30:00 UTC

  Another big one this week. -ed. The Four Noble Truths of Full Employment : Jared Bernstein This accounting tweak by Fannie Mae and Freddie Mac will mean $60 billion for the U.S. government : Neil Irwin A Thorough Summary of the Ferguson Fiasco : via Brad DeLong Fact Finders (2005): Jonathan Chait Down the Up Staircase : Jared Bernstein The Preferences of the Wealthy and Their Role in Our Politics more from Larry Bartels:� Democracy and the Policy Preferences of Wealthy Americans �(2013)� Economics Still Matters to Poorer Voters �(2008)� Economic Inequality and Political Representation �(2005) [...]

2013-05-11

• Internet and marriage markets
  by UDADISI in UDADISI, 2013-05-11 10:21:00 UTC

  The Internet has the potential to reduce search frictions by allowing individuals to identify faster a larger set of available options that conform to their preferences. One market that stands to benefit from this process is that of marriage. This paper empirically examines the implications of Internet diffusion in the United States since the 1990s on one aspect of this market: marriage rates. Exploring sharp temporal and geographic variation in the pattern of consumer broadband adoption, I find that the latter has significantly contributed to increased marriages rates among 21-30 year olds [...]

2013-05-10

• The Looting of Bogotá
  by Daron Acemoglu and James Robinson in Why Nations Fail, 2013-05-10 15:22:00 UTC

  Colombia is not a country known for good governance or institutions. Long the drug and murder capital of the world, it has been struggling back towards some sort of stability since the government of President Álvaro Uribe between 2002 and 2010 brought large improvements in security. Yet even in the worst of days in the 1990s, the capital city Bogotá provided some small grounds for optimism. Starting with the election of Jaime Castro as mayor in 1992 and accelerating with the election of Antanas Mockus in 1995, Enrique Peñalosa in 1998 and the second Mockus administration between 2001 and 2003 [...]

• How efficient is net neutrality?
  by Economic Logician in Economic Logic, 2013-05-10 14:25:00 UTC

  Net neutrality, the fact tat no one has priority over the use of the Internet, may sound very democratic, but it is also potentially inefficient. A Skype communication, which cannot afford much latency, has the same priority as an email, which can definitely afford to wait a few seconds. The obvious solution is market based: let people pay if they want less latency. This should also make the broadband hogs who need to watch videos absolutely everywhere realize how they are affecting the Internet use of others. But that would give up the ideal that the Internet is free for all and whichever way [...]

2013-05-09

• Il modello tedesco e la notte dei cristalli
  by Alberto Bagnai in Goofynomics, 2013-05-09 16:32:00 UTC

  Da Il Tramonto dell'euro . Fra 1999 e 2008 le riforme Hartz hanno determinato un’esplosione delle forme di lavoro “atipico” di circa il 30 per cento, a fronte di una flessione di circa il 3 per cento dei contratti a tempo indeterminato. Nello stesso periodo, gli “atipici” sono passati dal 20 al 39 per cento degli occupati (sì: in percentuale sono raddoppiati), e la dinamica più rilevante è stata proprio quella dei minijob, aumentati di circa il 50 per cento, fino a riguardare, nel 2008, due milioni e mezzo di tedeschi, e raddoppiando quasi dallo scoppio della crisi al 2011, quando [...]

• All hail news aggregators!
  by Economic Logician in Economic Logic, 2013-05-09 14:17:00 UTC

  Newspapers have been fighting a losing battle with news aggregators on the grounds that the latter allow readers to bypass the newspaper front pages by deep linking to news articles, thereby reducing advertising income. This argument has always puzzled me, as news aggregators allow readers to discover these articles in the first place. It appears, though, that news aggregators have a different and so far neglected impact on the newspaper industry: the content of newspapers is changing. Doh‐Shin Jeon and Nikrooz Nasr Esfahani imagine a world where newspapers try to steal readers from each oth [...]

• Debts and deficits: why a string of deficits does not necessarily spell the end of the world
  by Graham White, Associate Professor, School of Economics at University of Sydney in The Conversation, 2013-05-09 02:35:25 UTC

  The debate about long-term public finance and the role of government is one that is most definitely needed. However, there are two aspects to this debate that are often conflated. First, there is the issue of a sustainable public debt to GDP trajectory. It is here that the issue of the optimum size of the budget balance and whether deficits are sustainable in any sense arises. The second aspect of debate about public finance and the role of government is the composition of the budget: the mix of expenditures and revenues required to achieve budget targets – be they deficits or surpluses �� [...]

2013-05-08

• What�s So General about the General Theory?
  by Jonathan Finegold in Economic Thought, 2013-05-08 15:23:44 UTC

  Bruce Bartlett considers the title of John M. Keynes� magnum opus , The General Theory of Employment, Interest, and Money , an �unfortunate error.� According to Bartlett, Keynes� core insight is the liquidity trap, which he defines as a situation where both inflation and interest rates are low, making bonds and money close substitutes. Thus, Keynes� economics are mostly applicable only when an economy is in a liquidity trap. I think Bartlett has it mostly wrong. The liquidity trap only plays a small role in The General Theory , and the book�s major contribution � at least, as intended by Keyne [...]

• On the virtues of honest apologies
  by Economic Logician in Economic Logic, 2013-05-08 14:22:00 UTC

  Apologizing can be very hard, especially when your pride is hurt. And sometimes one opts for a fake apology, not really meaning it. But this does not really fool the apologizee, doesn't? Is the latter then unlikely to forgive? Of course, an economist has an answer to this question. Verena Utikal performs a laboratory experiment wherein the dictator game is manipulated to sometimes keep outcomes out of the control of the dictator, who can send a message. The receiver can then act on outcome and message, but without knowing whether the outcome was a choice of the dictator. Dictators do send diff [...]

• Solution-Driven Specification of DSGE Models
  by Christian Zimmermann in NEP-DGE blog, 2013-05-08 13:34:28 UTC

  By Francisco Blasques http://d.repec.org/n?u=RePEc:dgr:uvatin:20130062&r=dge This paper proposes a functional specification approach for dynamic stochastic general equilibrium (DSGE) models that explores the properties of the solution method used to approximate policy functions. In particular, the solution-driven specification takes the properties of the solution method directly into account when designing the structural model in order to deliver enhanced flexibility and facilitate parameter identification within the structure imposed by the underlying economic theory. A prototypical applicati [...]

• A case for inequality?
  by chris dillow in Stumbling and Mumbling, 2013-05-08 12:20:03 UTC

  Here are two interesting new papers on inequality. First, LSE researchers say : Household characteristics account for only part of the cross-country variation in household wealth and its distribution. The largest share of the differences remains unexplained pointing towards the importance of country specific effects. If this seems unsurprising, it shouldn't be. It undermines the rightist idea that inequality is due merely to differences in individuals' skills or savings propensities. In this sense, it corroborates other evidence which shows that there is no correlation across countries or ov [...]

• My Recent Political Economy Work
  by Matthew Kahn in Environmental and Urban Economics, 2013-05-08 00:54:00 UTC

  We all know that "political economy" is hot stuff these days. �In this blog post, I will succinctly state my recent efforts on this subject. � You will be relieved to know that all of my work has been empirical. �I will discuss this work in random order. Paper #1; � In joint work with Stuart Gabriel and Ryan Vaughn, we use a unique micro data set to study a major subprime lenders' loans between 2003 and the end of 2006. �We document that this bank played favorites in terms of Congressional Geography. �Borrowers who lived in Congressional Districts where the Representative was a Congressional L [...]

2013-05-07

• May I have your votes please?
  by Thijs in eco.nomie.nl, 2013-05-07 20:59:24 UTC

  Over een week begint in Malmö de eerste halve finale van het 58 e Eurovisie songfestival . Op zaterdag 18 mei staat, als alles goed gaat, de winnende artiest even voor middernacht een toegift te zingen voor enkele honderden miljoenen televisiekijkers. De econoom kijkt geïnteresseerd mee. Het is veelzeggend dat Portugal dit jaar zal ontbreken vanwege bezuinigingen op de publieke omroep, terwijl de Duitse inzending nu al een wereldwijd exportsucces is. Maar belangrijker is dat het festival een uniek inkijkje geeft in de verhoudingen tussen de verschillende landen in Europa (en omstreken), en [...]

• Study: Higher levels of homeownership can kill jobs
  by Brad Plumer in Ezra Klein's Wonkblog, 2013-05-07 16:11:16 UTC

  Economists have long wondered whether higher rates of homeownership can actually make unemployment even worse. One possibility is that if people are tied down to their homes, it's harder to move to find a suitable job. So maybe more people should rent. Back in the 1990s, British economist Andrew Oswald first showed that higher levels of homeownership were correlated with higher levels of unemployment across European countries and within the United States. Other possible variables — such as unionization rates — didn't explain the variation in joblessness nearly as well. The idea that o [...]

• Too much legalese at the WTO
  by Economic Logician in Economic Logic, 2013-05-07 13:36:00 UTC

  The World Trade Organization exists to foster free trade and to resolve disputes about unfair trade practices. It is thus an organization that treats with legal issues over an eminently economic matter. How much is Economics used in the process? Or has the WTO been captured by lawyers. Thomas Prusa looks at three recent decisions in the dispute process. While it is not possible to see what happened inside the WTO, it seems pretty clear from the decisions that the Economics in them is lacking. It just looks like a situation where economists have been bypassed and the decision may make legal sen [...]

• [A&C] Origins and prospects of the Euro existential crisis
  by Lb in Pensieri Economici, 2013-05-07 11:27:00 UTC

  Luigi Bonatti & Andrea Fracasso, 2013. " Origins and prospects of the Euro existential crisis ," DEM Discussion Papers 2013/03, Department of Economics and Management.� Gli autori cercano, con questo breve articolo, di rispondere a questo problema: come mai la crisi � nata negli Usa, ma � l�Europa che ne sta soffrendo pi� a lungo e pi� duramente? E quali saranno gli sviluppi futuri della crisi(1)? Il primo passo che gli autori compiono � quello di riassumere il processo che ha portato alla creazione dell�Euro. L�idea della moneta unica � nata da due necessit� complementari: la Germania e i pa [...]

• Quartz 18-->Show Me the Money!
  by ? in Confessions of a Supply-Side Liberal, 2013-05-07 07:30:20 UTC

  Link to the Column on Quartz Here is the full text of my 18th Quartz column,  “The Stanford economists are so wrong: A tighter budget won’t be accompanied by tighter monetary policy.”   I honestly couldn’t think of a good working title of my own before my editor Mitra Kalita gave it the title it has on Quartz. But it finally came to me what I wanted my version of the title to be: the main theme is short-run monetary policy dominance, so my title is “Show Me the Money!” The heart of this column is a discussion of the paper I wrote with Susanto Basu and John Fernald:   “Are Tec [...]

• Un ejemplo cl�sico de restricciones a la entrada: el caso de las farmacias
  by Gerard Llobet in Nada Es Gratis, 2013-05-07 06:00:29 UTC

  El caso de las farmacias es paradigm�tico de muchas de las restricciones que existen en este pa�s. Las regulaciones estar�an justificadas si contribuyeran al bien com�n. Sin embargo, todo parece indicar que m�s bien es al contrario y estas restricciones son perjudiciales para la econom�a y los ciudadanos en general. Afortunadamente, varias reformas del gobierno podr�an reducir su incidencia en el futuro. El mercado de las farmacias es at�pico en varias dimensiones. La m�s importante es que, a diferencia de lo que sucede en otros mercados, gran parte de los productos que venden tienen un preci [...]

• Moving back home- Determining the household size!
  by paragwaknis in Musings of the Sorts, 2013-05-07 04:50:57 UTC

  I am great fan of Greg Kaplan’s paper `Moving Back home’ in which he motivates moving back with parents as an insurance mechanism against labor market risks. I think, apart from explaining consumption and savings responses of low income households, it highlights one of the most important economic determinants of household size for not only the US but also for other countries. When no other insurance mechanisms are available, people tend to huddle up economizing on costs of living and minimizing labor market risk through skill set diversification (much like portfolio diversification!). This exp [...]

2013-05-06

• My Recent Reading
  by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2013-05-06 23:10:00 UTC

  Here are some of the papers that I have been reading in the past few days: Majid M. Al-Sadoon , 2013. Geometric and long run aspects of Granger causality. Discussion Paper, Barcelona Graduate School of Economics. David Ardia & Lennart Hoogerheide , 2013. GARCH models for daily stock returns: Impact of estimation frequency on value-at-risk and expected shortfall forecasts. Tinbergen Institute Discussion Paper. Otilia Boldia & Alastair R. Hall , 2013. Estimation and inference in unstable nonlinear least squares models. Journal of Econometrics , 172, 158-167.� � Kazuhito Higa , 2013. Estimating [...]

• Burgernomics
  by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2013-05-06 21:32:00 UTC

  Looking through the papers that are "in press" at Economics Letters today, I came across a paper by Anthony Landry, titled " Borders and Big Macs ". (The link is to the working paper version.) Here's the abstract: "I provide new estimates of border frictions for 14 countries using local, national, and international Big Mac prices. I find that borders generally introduce only small price wedges, far smaller than those observed across New York City neighboring locations." This led me to wonder just how many academic papers have been written using the well-known "Big Mac Index" ( BMI ) that's [...]

• Mis-selling: from impressions to evidence
  by Ajay Shah in Citizen Economists, 2013-05-06 19:00:40 UTC

  by Renuka Sane . Retail finance in India is once again in the news for reasons of fraud, this time in the form of the Saradha Group in West Bengal. There is a general sense that such schemes proliferate because of the failure of financial inclusion, and that better supervision by current regulators will bring us back on track. The problems of mis-selling however, are not confined to the unregulated chit-fund industry. For many years now, problems of consumer protection have been gathering prominence. While there is concern about the collision between hard-driving financi [...]

• More on Naive Fiscal Cynicism
  by Mainly Macro in Mainly Macro, 2013-05-06 16:19:00 UTC

  Paul Krugman is absolutely right that one of the rationales for the IMF and others framing fiscal policy in terms of the ‘speed of consolidation’ is a belief that left to themselves politicians will always and everywhere let debt rise. As he points out, the facts for the US tell a rather different story. Here I want to add a couple of additional points by looking at experience outside the US. As should be well known by now, UK government debt was over a 100% of GDP between the wars, but declined rapidly and consistently to 50% from the second war to the mid 1970s. (See here , or this u [...]

• 236 � Ranking environmental projects 2: Divide by costs
  by David Pannell in Pannell Discussions, 2013-05-06 15:02:37 UTC

  Episode 2 in this series on principles to follow when ranking environmental projects. This one discusses one aspect of the metric used to rank projects: how to include costs. Suppose you manage an environmental program that has a budget available for spending on environmental projects and there is not enough money to fund every proposed project. You have to decide which projects to fund. How should you do it? The first principle is that projects should be ranked using a metric (a formula) that consists of a measure of project benefits divided by a measure of project costs. Economists call this [...]

• State of economy for less-educated young people compounds growing Opportunity Gap
  by socialcapital in Social Capital Blog, 2013-05-06 14:55:44 UTC

  Pell City 2007 HS graduation; Flick/kwsanders While parts of the economy have rebounded since the Great Recession of 2008, the effects have been much worse for the poor , and especially the less-educated young Americans, and those not fortunate enough to graduate from college. Since 2008, the housing market has started to bounce back. The stock market, for those fortunate enough to have net savings rather than a negative net worth has more than recovered its recessionary losses (pictured is the S&P500 index). The economy has created 6.15 million jobs from March 2010 through April 2013 (based [...]

• Strict environmental policy through tax competition
  by Economic Logician in Economic Logic, 2013-05-06 13:48:00 UTC

  Tax competition is a double-edged sword: it keeps government on their toes regarding their expenses, but it also saps their ability to provide public goods. Generally, you would want some level of cooperation across authorities, like in a cartel, as pure tax competition is not believed to reach optimal outcomes. This is particularly true with environmental regulation and taxation. Cees Withagen and Alex Halsema claim that tax competition may lead to a first best in an environment with cross-border pollution. The important word here is "may" as it still needs to be established that it can happe [...]

• The Persistence of de Facto Power: Elites and Economic Development in the US South, 1840-1960
  by Nicholas Gruen in Club Troppo, 2013-05-06 13:16:20 UTC

  By: Philipp Ager (Universitat Pompeu Fabra) URL: http://d.repec.org/n?u=RePEc:hes:wpaper:0038&r=his Wealthy elites may end up retarding economic development for their own interests. This paper examines how the historical planter elite of the Southern US affected economic development at the county level between 1840 and 1960. To capture the planter elite�s potential to exercise de facto power, I construct a new dataset on the personal wealth of the richest Southern planters before the American Civil War. I find that counties with a relatively wealthier planter elite before the Civil War perform [...]

• On endogenous preferences
  by chris dillow in Stumbling and Mumbling, 2013-05-06 12:51:02 UTC

  The other day, I quoted Steven Lukes to the effect that one manifestation of capitalists' power is that voters do not challenge that power. This claim needs substantiating. Let's start from the reasonable premise that voters do seem content with inequalities of power and income. Why might this be? One possibility is that it reflects a rational, autonomous preference. Maybe inequality is a price worth paying for economic freedom and prosperity, and that if we had a more socialist society people would rebel and choose managerialist capitalism. The other possibility is that contentment with inequ [...]

• Son las Instituciones, en el Largo Plazo, Siempre Eficientes?
  by Nicolas Cachanosky in Punto de Vista Economico, 2013-05-06 03:10:12 UTC

  Ese fue el tema de un interesante intercambio entre Daron Acemoglu (MIT) y James Robinson (Harvard) por un lado y Pete Leeson (GMU) por el otro. ¿Es eficiencia el motivo por el cual se adoptan instituciones democráticas? ¿Pueden en el largo plazo las instituciones ser ineficientes, o el largo plazo presupone corregir las ineficiencias? ¿Qué muestra el caso de los piratas estudiado por Leeson? En su primer post , Acemoglu y Robinson sostienen que la democracia (elección mediante voto) no se adopta por motivos de eficiencia, sino que se adopta por motivos de poder. El problema con el argu [...]

2013-05-05

• Credit frictions and the cleansing effect of recessions
  by Christian Zimmermann in NEP-DGE blog, 2013-05-05 17:15:39 UTC

  By Sophie Osotimehin and Francesco Pappad� http://d.repec.org/n?u=RePEc:vir:virpap:403&r=dge Recessions are conventionally considered as times when the least productive firms are driven out of the market. Do credit frictions hamper this cleansing effect of recessions? We build and calibrate a model of firm dynamics with endogenous exit and credit frictions to investigate this question. We find that, despite their distortionary effect on the selection of exiting firms, credit frictions do not reverse the cleansing effect of recession. Average idiosyncratic productivity rises following an advers [...]

• Matching Dilemma
  by Jonas Feit in Conscience Warrior, 2013-05-05 12:00:00 UTC

  Via The Onion:� No One In Limo Going To Prom With The One They Wanted Perhaps these guys could've done it better. [...]

• Por qué el BCE no nos ayuda (más)
  by Jorge Galindo in Politikon, 2013-05-05 09:11:13 UTC

  Cada vez que Mario Draghi (y antes Jean-Claude Trichet) salen a dar su rueda de prensa mensual, un nutrido grupo de analistas, periodistas, comentaristas y ciudadanos se preguntan más o menos por qué el BCE no nos ayuda más. Por qué no están dispuestos a bajar las tasas de interés a cero o a expandir más la base monetaria a través de la compra masiva de activos al estilo de la FED con objeto de permitir una inflación más alta. Esta mayor inflación facilitaría el crecimiento, supondría una (cierta) redistribución a favor de los deudores haciendo el proceso de desapalancamiento alg [...]

• �Railroads of the Raj: Estimating the Impact of Transportation Infrastructure,� D. Donaldson (2013)
  by afinetheorem in A Fine Theorem, 2013-05-05 05:59:13 UTC

  Somehow I�ve never written about Dave Donaldson�s incredible Indian railroad paper before; as it has a fair claim on being the best job market paper in the past few years, it�s time to rectify that. I believe Donaldson spent eight years as LSE working on his PhD, largely made up of this paper. And that time led to a well-received result: in addition to conferences, a note on the title page mentions that the paper has been presented at Berkeley, BU, Brown, Chicago, Harvard, the IMF, LSE, MIT, the Minneapolis Fed, Northwestern, Nottingham, NYU, Oxford, Penn, Penn State, the Philly Fed, Princet [...]

2013-05-04

• A short bibliography on CAP greening - by Alan Matthews
  by Alan Matthews in CAP Reform.eu, 2013-05-04 16:11:51 UTC

  As this was a relatively quiet week for news on CAP reform, I thought it might be useful to gather together in one place some references to the debate that has taken place on CAP greening since the publication of the Commission’s proposals in October 2011. This remains one of the knottiest issues to resolve in the CAP trilogues. These papers provide a guide to the general issues in this debate. There is also an emerging literature which attempts to estimate the impact for particular regions and farming systems of implementing the greening measures which I do not cover here. The papers are pr [...]

• UKIP: the victory of the ruling class
  by chris dillow in Stumbling and Mumbling, 2013-05-04 11:44:21 UTC

  In a protest against an out-of-touch political class, the British public have voted for a party led by someone whose class background is indistinguishable from Cameron's or Clegg's. In this respect, UKIP's success demonstrates not the weakness of the ruling class, but the exact opposite - its complete victory. I don't just mean this in the sense that political power is held in the hands of such a narrow group that the Dulwich-educated son of a stockbroker can present himself as an outsider. What I mean is that, as Adam says , UKIP is not an anti-establishment party . For example: - The demand [...]

• Microfounded Social Welfare Functions
  by Mainly Macro in Mainly Macro, 2013-05-04 10:12:00 UTC

  More on Beauty and Truth for economists I have just been rereading Ricardo Caballero’s Journal of Economic Perspectives paper entitled “Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome”. I particularly like this quote: The dynamic stochastic general equilibrium strategy is so attractive, and even plain addictive, because it allows one to generate impulse responses that can be fully described in terms of seemingly scientific statements. The model is an irresistible snake-charmer. I thought of this when describing here (footnote [5]) Woodfo [...]

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