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- A First Meeting of Old and New Keynesian Econometric Models
by John Taylor in Economics One, 2014-04-18 00:41:17 UTC
Lawrence Klein who died last October at age 93 is most remembered for the â€œcreation of econometric models and the application to the analysis of economic fluctuations and economic policiesâ€ as the Nobel Prize committee put it in the 1980 citation. Â But in these days of â€œmacroeconomists at warâ€ it is worth remembering that Klein was also a pioneer in exploring the reasons for differences between macro models and the views of the economists who build and estimate them.Â The Model Comparison Seminar that he ran during the 1970s and 1980s brought macroeconomists and t [...]
- â€œCompetition in Persuasion,â€ M. Gentzkow & E. Kamenica (2012)
by afinetheorem in A Fine Theorem, 2014-04-17 19:34:59 UTC
How’s this for fortuitous timing: I’d literally just gone through this paper by Gentzkow and Kamenica yesterday, and this morning it was announced that Gentzkow is the winner of the 2014 Clark Medal ! More on the Clark in a bit, but first, let’s do some theory.
This paper is essentially the multiple sender version of the great Bayesian Persuasion paper by the same authors ( discussed on this site a couple years ago). There are a group of experts who can (under commitment to only sending true signals) send costless signals about the realization of the state. Given the information received, [...]
- QWERTY â€“ Kayâ€™s analysis of a non sub-optimal standard
by bbatiz in NEP-HIS blog, 2014-04-16 17:23:06 UTC
QWERTY and the search for optimality
By: Neil M Kay (University of Strathclyde Business School, Department of Economics)
Abstract: This paper shows how one of the developers of QWERTY continued to use the trade secret that underlay its development to seek further efficiency improvements after its introduction. It provides further evidence that this was the principle used to design QWERTY in the first place and adds further weight to arguments that QWERTY itself was a consequence of creative design and an integral part of a highly efficient system rather than an accident of history. This furthe [...]
- Janet Yellen Gives First Speech On Monetary Policy As Fed Chair
by Matthew Boesler in Business Insider, 2014-04-16 16:25:00 UTC
Janet Yellen just gave her first speech on monetary policy today since assuming office as chairwoman of the Federal Reserve in an event at the Economic Club of New York. Treasury yields have edged higher on her comments. Below is the full text of her speech: Chair Janet L. Yellen At the Economic Club of New York, New York, New York April 16, 2014 Monetary Policy and the Economic Recovery Nearly five years into the expansion that began after the financial crisis and the Great Recession, the recovery has come a long way. More than 8 million jobs have been added to nonfarm payrolls since 2009, a [...]
- Yellen: Monetary Policy and the Economic Recovery
by Mark Thoma in Economist's View, 2014-04-16 10:08:01 UTC
Travel day today, so for now a quick repost of Janet Yellen's speech today, more later as I can:
Monetary Policy and the Economic Recovery, by Janet Yellen, FRB : Nearly five years into the expansion that began after the financial crisis and the Great Recession, the recovery has come a long way. More than 8 million jobs have been added to nonfarm payrolls since 2009, almost the same number lost as a result of the recession. Led by a resurgent auto industry, manufacturing output has also nearly returned to its pre-recession peak. While the housing market still has far to go, it seems to have t [...]
- Climate Windows in Multilateral Aid
by Shifting Wealth in ShiftingWealth, 2014-04-16 09:21:00 UTC
Jim Yong Kim, the World Bank President (â€œOh doctor, doctorâ€¦â€) had â€œThe Phrase that Paysâ€ at the recent IMF-World Bank Spring Meetings 2014: â€œWe know we cannot end extreme poverty by 2030 without tackling climate changeâ€. Dr KimÂ´s statement , to be sure, begs the question why the World Bank (and others, such as the Gates Foundation or the OECD) is so cocksure about ending poverty by 2030? As a matter of prerequisite and logic, ending poverty would imply that Â´we can tackle climate changeÂ´ over the next fifteen years. This is highly unlikely. St [...]
- Unconventional Monetary Policy in an Interconnected World!
by paragwaknis in Musings of the Sorts, 2014-04-15 19:54:42 UTC
I came across this news item from CNBC about Bernanke and Rajan face-off and that was enough to break the long blogging hiatus! ÃÂ Rajan raises an important question that should be addressed given today’s closely connected economic systems. In the context of unconventional monetary policies, he asksÃÂ “ If the policy hurts the rest of the world more than it helps the United States, should this policy be pursued?” ÃÂ This question is important because there has been a lot of debate about the domestic impact of Fed’s QE policies , but not much has been said aboutÃÂ the effects of such polici [...]
- When blind is not beautiful
by Matt in Aid Thoughts, 2014-04-15 09:30:58 UTC
“Hello? Is it a placebo effect that you’re looking for?
Over at Boring Development , Francisco Toro picks up on the recent Bulte et. al. paper which attempts to implement a double-blind protocol in a `standard’ policy RCT. The study’s abstract:
Randomized controlled trials (RCTs) in the social sciences are typically not double-blind, so participants know they are Ã¢â¬ÅtreatedÃ¢â¬Â and will adjust their behavior accordingly. Such effort responses complicate the assessment of impact. To gauge the potential magnitude of effort responses we implement a conventional RCT and double-blind trial i [...]
- Capital Liberalization and Inequality
by Dan Crawford in Angry Bear, 2014-04-15 06:35:00 UTC
by Joseph Joyce (is a Professor of Economics at Wellesley College and the Faculty Director of the Madeleine Korbel Albright Institute for Global Affairs)
Capital Liberalization and Inequality
Inequality, which has drawn a great deal of comment and analysis following the publication of Thomas Pikettyâ€™s Capital in the Twenty-First Century , has sometimes been seen as a byproduct to increased international trade. But now other international economic linkages are being investigated. The International Monetary Fundâ€™s Managing Director, Christine Lagarde, has acknowledged the need to t [...]
- Liberal Cities and the High (Median Rent/Median Household Income) Ratio
by Matthew Kahn in Environmental and Urban Economics, 2014-04-15 01:47:00 UTC
The NY Times� �reports that there are many liberal cities where the median rent divided by the median household income is greater than 30%. �The Times interprets this fact that the middle class can't afford to live in a series of cities ranging from Los Angeles, to Miami to San Francisco to NYC. � Interestingly, College Station Texas also has a high ratio. Why might liberal cities be increasingly unaffordable? � �Recall that the ratio has median rent in the numerator. �Liberal cities tend to be desirable places in terms of quality of life (in part because of all of those wise urban planning po [...]
- Capital and destiny
by Diane Coyle in The Enlightened Economist, 2014-04-14 14:46:05 UTC
It is with some trepidation that I offer my review of Thomas Piketty’s Capital in the 21st Century , as so much has been written, almost all of it verging on the adulatory. Of course it’s an important book – who could disagree with that when almost everybody in my world is talking about it, and it has cemented the question of inequality of income and wealth on the economic policy agenda? The book has obviously plugged into the zeitgeist. It has some flaws too.
Piketty’s construction of a long-run multi-country World Top Incomes Database for income and wealth, along with Emmanuel Saez and Anth [...]
- Informal economics
by Diane Coyle in The Enlightened Economist, 2014-04-12 12:44:51 UTC
In a discussion on Twitter last week about the rebasing exercise that increased Nigeria’s GDP by 89%, Olumide Abimbola offered to provide a reading list in informal economic activity – and here it is , very useful.The list includes Keith Hart’s pioneering paper – Keith wrote a retrospective as the intro to a more recent (2006) book, Linking the Formal and Informal Economy: Concepts and Policies , edited by Basudeb Guha-Khasnobis, Ravi Kanbur and Elinor Ostrom.
I have a couple of other suggestions to add.
For estimates of the size of the informal economy in different countries, the work of Frie [...]
- EconPapers: The Economics of the Gift
by Alessandro Cerboni in Knowledge Team, 2014-04-11 20:44:37 UTC
See on Scoop.it – Bounded Rationality and Beyond
By David Reinstein
Abstract This essay broadly considers gifts, giving, and gift economies, modern and pre-modern, from a mainstream (and behavioural) economics perspective. I present a selective survey of the literature focusing on six key points: 1. Commercial transactions sustained by reputation are not easily distinguishable from gift exchange economies; 2. Gift-giving allows the giver to accumulate goods that cannot be purchased commercially; 3. When the giver retains some use, experience, or control over the gift, she shares in the consum [...]
- China: Future Migration Hotspot?
by Jonathan Finegold in Economic Thought, 2014-04-11 18:56:46 UTC
China is still a sending state, more migrants leave than come in. According to the World Bank , about 1.5 million people emigrated from China in 2012, on net. I am not sure how much of that includes emigration to Hong Kong and Macau. Still, compared to the United States, which received, on net, 5 million immigrants, China does not seem like a major attraction to migrants. But, will China always be a sending state, or will it soon begin to receive net immigration? Immigration is already an important facet of the Chinese economy, and there is reason to suspect that China, like Western Europe and [...]
- On forgetting land in models of secular stagnation
by Nick Rowe in Worthwhile Canadian Initiative, 2014-04-11 11:22:19 UTC
If I see one more model of secular stagnation and negative equilibrium real interest rates, that does not include land....I'm going to throw a real wobbly.
What is it with you townies? Have you never looked out of the window, when you fly (do you ever drive?) from one city to another, and wondered about all that stuff you see out there? It's called "land". It grows food, that you eat. And that land is valuable stuff, and there's a lot of it, and it can last a very long time, and it pays rent (or owner-equivalent rent). And if the rent on that land is strictly positive (which it is), and if the [...]
- Hypothetical Bias presentation at TAMU; & et cetera
by John Whitehead in Environmental Economics, 2014-04-11 09:37:46 UTC
I was in College Station, TX at the end of March to talk about hypothetical bias of stated preference data to the folks in agricultural economics (here is the PDF of the PPT ). I covered three recent papers that have ex-ante/ex-post SP/RP data which, as a whole, show (I argue):
ex-ante SP data is positively correlated with ex-post RP data;
there is hypothetical bias in ex-ante SP data (i.e., survey respondents say they'll do more of activity X than they actually end up doing);
the hypothetical bias can be adjusted (ex-ante) to reflect future behavior fairly accurately.
Here is the abstract f [...]
- ACA and EMTRs
by Eric Crampton in Offsetting Behaviour, 2014-04-11 04:02:00 UTC
Income-linked benefits with abatement regimes can do nasty things to work incentives. Here's Casey Mulligan on the recent changes to US health care :Under the Affordable Care Act, between six and eleven million workers would increase their disposable income by cutting their weekly work hours. About half of them would primarily do so by making themselves eligible for the ACA's federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars. The remainder would do so primarily by r [...]
- Local Government Financing
by Eric Crampton in Offsetting Behaviour, 2014-04-10 21:08:00 UTC
Local Government New Zealand is looking for alternative funding mechanisms .Basing rates on property values alone may soon no longer be sustainable as the sole taxation form for many councils, says Local Government New Zealand (LGNZ). Instead, it would investigate other forms of taxation such as local consumption and local income taxes as "complementary alternatives". ... The LGNZ Local Government Funding Review comes as an ageing population contributes to an increased number of asset rich/cash poor ratepayers who struggle to pay their rates. Some councils also face major growth pressures to f [...]
- How Not to Do Macroeconomics
by Unlearningecon in Unlearning Economics, 2014-04-10 19:03:17 UTC
A frustrating recurrence for critics of ‘mainstream’ economics is the assertion that they are criticising the economics of bygone days: that those phenomena which they assert economists do not consider are, in fact, at the forefront of economics research, and that the critics’ ignorance demonstrates that they are out of touch with modern economics – and therefore not fit to criticise it at all.
Nowhere is this more apparent than with macroeconomics. Macroeconomists are commonly accused of failing to incorporate dynamics in the financial sector such as debt, bubbles and even banks themselves, b [...]
- Efficiency wages for MPs?
by chris dillow in Stumbling and Mumbling, 2014-04-10 14:01:23 UTC
In all the fuss about Maria Miller's resignation, a simple point has been ignored - that the issue here is a mainstream economic one. It's the principal-agent problem . How can principals (voters) ensure that their agents (MPs) behave in ways they want (keeping their hands out the till)?
Broadly speaking, there are three ways to achieve this.
One is simply to hire better people. However, given that most people would vote for a dead pig if it wore the right coloured rosette, this requires radical change.
A second possibility is to exercise greater direct oversight. In the Miller context, this r [...]
- A Southern Economist
by Matthew Kahn in Environmental and Urban Economics, 2014-04-10 03:57:00 UTC
I will be in Virginia next Thursday and in Georgia on Friday. � I'm grateful to my friends at James Madison University 's Economics Department �for giving me the chance to speak about my Climatopolis book. �When I published it back in 2010, it wasn't cool to be thinking about the micro economics of climate change adaptation. � Watch this video for a taste of my thinking. � On Friday at GSU, I'll have the chance to talk about my work on public transit buses. � � �People have very different reactions to this paper. �I presented it at UCLA and people really liked it. �I presented it at the Harris [...]
- The FRB/US Model and Inflation
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2014-04-09 19:44:00 UTC
The Board of Governors has posted details on the structure of the FRB/US model, the data used in estimating the model, published work using the model, etc. If you have access to EViews, it appears you can also run simulations. There is even a long disclaimer, presumably to cover cases where someone takes the model too seriously, uses it for retirement planning or some such, and then wants to sue the Fed. On this, I have a proposal, which is a blanket disclaimer to cover everything - public speaking by Fed employees, casual chit-chat in the coffee shop, whatever: Please don't ever pay close att [...]
- Rob Lowe & the left's dilemma
by chris dillow in Stumbling and Mumbling, 2014-04-09 12:59:16 UTC
Rob Lowe, one of the stars of the greatest TV show ever made* has drawn our attention to a dilemma for leftist politics. He says : "There's this unbelievable bias and prejudice against quote-unquote good-looking people."
In one big sense this is plain false. There's abundant evidence around the world that there's discrimination in favour of good-looking people; they earn substantially more (pdf) Â than ugly ones. I doubt if Mr Lowe would have had so successful a career if he looked like Michael Gove**.
And yet on the other hand, there's a grain of truth in what he says. It's plausible that [...]
- Capital Market Access as IDA Eligibility Criterion â€“ Worthless and Dangerous
by Shifting Wealth in ShiftingWealth, 2014-04-09 10:45:00 UTC
In 1960, private capital flows to poor countries were unimportant relative to trade; they were fairly tranquil and consisted mostly of direct foreign investment. That year, IDA was established in recognition of the fact that, for many of the poorest countries, private capital and market based multilateral sources of financing were not adequate. From the start, demand for IDA resources outstripped supply. Hence the need to ration demand for concessional finance through defining eligibility criteria. Apart from the concept of relative poverty, as measured by GNI per capita below an agreed thre [...]
- A NY Times Piece Examining When Green Nudges Backfire
by Matthew Kahn in Environmental and Urban Economics, 2014-04-09 04:20:00 UTC
T his NY Times piece about motivating both liberals and conservatives to engage on climate change is worth reading. � Back in the 1990s, applied economists wrestled with the general issue of what exogenous variables have a monotonic impact on raising the probability of taking a given action. �See page 1343 of this paper for an example from health economics. �In the case of environmental policy, the same "treatment" (i.e hearing about Al Gore's new thoughts) may have different consequences for different people. � Some people who are sympathetic to his world view will be "turned on" by his new i [...]
- Social Security and the Interactions Between Aggregate and Idiosyncratic Risk
by Christian Zimmermann in NEP-DGE blog, 2014-04-09 02:38:42 UTC
By Daniel Harenberg and Alexander Ludwig
We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and aggregate risk. We argue that interactions between the two risks are important for this question. One is a direct interaction in the form of a countercyclical variance of idiosyncratic income risk. The other indirectly emerges over a household’s life-cycle because retirement savings contain the history of idiosyncratic and aggregate shocks. We show that this leads to risk interactions [...]