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- 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 [...]
- 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. [...]
- 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 [...]
- 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 [...]