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- Jackson Hole XXXV
by John Taylor in Economics One, 2016-08-31 05:53:26 UTC
Everyone keeps asking about this year’s Jackson Hole monetary conference and how it compared with the first. Well, I wrote about the first on my way to this conference, and I have to say the thirty fifth lived up to its billing as “monetary policy frameworks for the future.” One speaker after another proposed new frameworks—some weird, some not so weird—while discussants critiqued and central bankers and economists debated from the floor, and later on the hiking trails. Steve Liesman’s scary but unsurprising CNBC pre-conference survey demonstrated the timeliness of the topic: 60% of Fed watch [...]
- Marketmaking Middlemen
by Christian Zimmermann in NEP-DGE blog, 2016-08-30 15:15:33 UTC
By Pieter Gautier, Bo Hu and Makoto Watanabe
This paper develops a model in which market structure is determined endogenously by the choice of intermediation mode. We consider two representative business modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary holds inventories which he stocks from sellers for the purpose of reselling to buyers; the other is a market-making mode where an intermediary offers a platform for buyers and sellers to trade with each other. In our model, buye [...]
- Gender Wage Gaps and Risky vs. Secure Employment: An Experimental Analysis
by maximorossi in NEP-LTV blog, 2016-08-30 14:57:07 UTC
Jung, Seeun (Inha University) ; Choe, Chung (Hanyang University) ; Oaxaca, Ronald L. (University of Arizona)
In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not [...]
- Wages and Labor Market Slack: Making the Dual Mandate Operational
by maximorossi in NEP-LTV blog, 2016-08-30 14:54:52 UTC
David G. Blanchflower (Peterson Institute for International Economics) ; Adam S. Posen (Peterson Institute for International Economics)
In this paper we examine the impact of rises in inactivity on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the imp [...]
- Pareto models, top incomes, and recent trends in UK income inequality
by maximorossi in NEP-LTV blog, 2016-08-30 14:53:11 UTC
Jenkins, Stephen P.
Statistical agencies and other researchers typically estimate income inequality levels and trends from either household survey data or tax return data, but rarely combine the information in the two types of data source. The result is that very different impressions about how inequality is changing over time may arise. Estimates from tax return data show a substantial rise in inequality over the last two decades in both the UK and USA, whereas survey-based estimates of inequality show much [...]
- Understanding the Dynamics of Labor Income Inequality in Latin America
by maximorossi in NEP-LTV blog, 2016-08-30 14:49:28 UTC
Carlos Rodríguez-Castelán (Poverty and Equity Global Practice, World Bank) ; Luis F. López-Calva (Poverty and Equity Global Practice, World Bank) ; Nora Lustig (Department of Economics, Tulane University) ; Daniel Valderrama (Poverty and Equity Global Practice, World Bank)
Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main factor behind such a decline in income inequality across the reg [...]
- China's Water Pollution Regulation
by Matthew Kahn in Environmental and Urban Economics, 2016-08-30 03:54:00 UTC
Working with my friends at Fudan University, we have released a new paper on the unintended consequences of China's recent water pollution regulation. �You can read the paper here.� [...]
- The Great (Monetary) Unraveling
by Marcus Nunes in Historinhas, 2016-08-29 18:06:00 UTC
In “ Years of Fed Missteps Fueled Disillusion with the Economy and Washington ”, Jon Hilsenrath gives his contribution to the “Great Unraveling” series. He starts off writing:
In the past decade Federal Reserve officials have been flummoxed by a housing bubble that cratered the financial system, a long stretch of slow growth they failed to foresee and inflation persistently undershooting their goal. In response they engineered unpopular financial rescues, launched start-and-stop bond buying and delayed planned interest-rate boosts.
“There are a lot of things that we thought we knew that haven’ [...]
- Opportunities in Finance
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-29 12:30:40 UTC
“We’re really only at 1% of what is possible, and probably even less than that. […] We should be building great things that don’t exist.” Larry Page , Google I/O 2013 Keynote With the summer coming to an end, professors everywhere are greeting a new group of students. So, our thoughts turn to the opportunities and challenges that those interested in finance will face over the course of their careers. Like many important activities, finance is constantly evolving, so the “facts” that students learn in classes today will almost certainly change rapidly. With that in mind, we always strive to [...]
- The pleasure of being nasty
by Martin Gardiner in Improbable Research, 2016-08-29 11:45:55 UTC
Dr. Klaus Abbink (pictured) of Monash Business School has (along with colleague Prof. Dr. Abdolkarim Sadrieh ) experimentally examined the question of pleasure derived from deliberate nastiness – specifically with regard to joy-of-destruction.
“ In the joy-of-destruction game that we introduce, players can burn each other’s money, but we have removed all conventional reasons to do so. No material gain is achieved, no wrongdoing is punished, no inequality is reduced. Nevertheless, we observe a substantial incidence of nasty behavior in our hidden treatment, where spiteful actions could be cover [...]
- The Federal Reserveâs Monetary Policy Toolkit: Past, Present, and Future
by ? in The Big Picture, 2016-08-29 09:00:00 UTC
The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future Chair Janet L. Yellen At “Designing Resilient Monetary Policy Frameworks for the Future,” a symposium sponsored by the Federal Reserve Bank of Kansas City, Jack [...]
- My Advice for the NY Times as it Searches for a "Climate Change Editor"
by Matthew Kahn in Environmental and Urban Economics, 2016-08-27 15:48:00 UTC
The NY Times is creating a " green job" �as it will hire a new climate change editor. �Given that Dora and I have written a recent paper on how the NY Times covered the urban mortality transition from 1890 to 1930, I will offer this important newspaper some unsolicited advice. 1. Report on "good news" . � Yes, I understand that newspapers love "bad news" and this was a focus of my paper with Dora. We document that there was little coverage of the good news trend that deaths from infectious water borne disease fell sharply. Only where there upticks in the death rate, did the historical NY Times [...]
- Dr. Krugman is Correct about Urban Quality of Life Progress
by Matthew Kahn in Environmental and Urban Economics, 2016-08-27 15:26:00 UTC
Paul Krugman is correct and Mr. Trump is wrong. �Quality of life has never been better in American center cities. �Of course, Mr. Trump knows that his section of Manhattan is doing great. His real estate there is worth more than ever. �From simple supply and demand, given the inelastic supply --- any price dynamics is driven by demand , thus a high price signals a high demand. �Nobody (except people with school age kids) is excited about suburban living anymore. �This matters because blacks and Hispanics disproportionately live in center cities (but not necessarily in Mr. Trump's part of town) [...]
- An Analysis of Consumer Debt Restructuring Policies
by Christian Zimmermann in NEP-DGE blog, 2016-08-26 15:52:24 UTC
By Joao Cocco and Nuno Clara
We solve a quantitative dynamic model of borrower behavior, whose income is subject to individual specific and aggregate shocks. Lenders provide loans competitively. Recessions are characterized by lower expected earnings growth and a higher likelihood of a large drop in earnings. The model generates procyclical credit demand and countercyclical default. We analyze alternative debt restructuring policies aimed at reducing default during recessions: (i) interest rate reduction; (ii) maturity extension; and (iii) refi [...]
- China's Value Added in Rebuilding U.S Cities
by Matthew Kahn in Environmental and Urban Economics, 2016-08-26 14:20:00 UTC
The LA Times has written an informative piece describing new real estate construction in downtown LA paid for and constructed by Chinese investor teams. � This piece raises several interesting economic points. �Only in the recent past, "Made in China" was viewed as a signal of low quality. �I bet that these new buildings are high quality construction produced in a cost effective way. �One of the themes of my 2016 book is the investment by China in human capital and improved management (i.e MBA education) fuels efficiency. � It is funny that the piece goes on to say that the complicated regulat [...]
- Bonuses: here to stay
by chris in Stumbling and Mumbling, 2016-08-23 11:48:58 UTC
Neil Woodford’s decision to scrap bonuses at his fund management firm poses the question: does this mean big bonuses in the finance industry are on the way out? I don’t think it does.
First, though, a word of praise. Mr Woodford’s colleague Craig Newman is right to say :
There is little correlation between bonus and performance and this is backed by widespread academic evidence.
One reason for this is that badly-designed incentives can incentivize the wrong behaviour, such as short- termism , cooking the books or chasing risk. A further reason is that bonuses can crowd (pdf) out intrinsic mo [...]
- Negative Nominal Interest Rates (again)
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-22 14:13:27 UTC
Negative numbers "make dark of things which are in their nature excessively obvious and simple". British Mathematician Francis Maseres, 1758 There is an obsession with negative nominal interest rates. People seem to think that they make no sense . And, there is a fixation with keeping track of the fraction of sovereign debt that is trading at negative nominal rates. (At this writing, the number is approaching one-third of the total outstanding.) Clearly many central bankers believe that setting the policy rate below zero is a legitimate use of this conventio [...]
- DGP 2 (post ad personam): spettri e corbelli
by Alberto Bagnai in Goofynomics, 2016-08-20 10:12:00 UTC
Le domande si dividono in due: quelle di chi vuole sapere, e quelle di chi vuol far vedere di sapere. Normalmente le prime le pone chi già sa molto. La conoscenza, come sapete, ha un asintoto: Dio. Quindi tutto nessuno può saperlo. Ma conoscere dà dipendenza: chi sa veramente molto, normalmente vuole veramente sapere di più. Chi sa poco, invece, normalmente crede di sapere molto, e si sente in dovere di venire a romperti i corbelli con le sue certezze. Aiutano in questo processo, devastante per la maturazione culturale e quindi democratica della collettività, un paio di illusioni ottiche. La p [...]
- DGP (post ad personam)
by Alberto Bagnai in Goofynomics, 2016-08-19 18:27:00 UTC
The andrea puglisi 18 agosto 2016 00:29 Riconosco che il fit lineare 1970-2007 rende in maniera molto efficace il muro contro cui ci siamo scontrati frontalmente nel 2008. L'efficacia "pittorica" basta e avanza a giustificarlo. Io personalmente lo trovo impressionante. Da fisico (e docente di processi stocastici) mi domando se c'è qualcosa di più. So che questo esula dal "problema", ma la curiosità mi resta. Ho letto i tre post del 2014 sui cammini aleatori, non mi pare che dicano altro da: è molto improbabile (non impossibile) che un random walk (lancio di moneta non truccata ad ogni t [...]
- Cutting Edge California Carbon Policy: Nudging Bus Operators to Use Garbage as Fuel
by Matthew Kahn in Environmental and Urban Economics, 2016-08-19 14:46:00 UTC
Robert Catell has written a great OP-ED for the NY Times that captures another reason why I'm a proud Californian. California's Air Resources Board (ARB) has a mandate to reduce the state's ambient air pollution and greenhouse gas emissions from the transportation sector. The ARB is enacting new rules to encourage major bus entities such as the City of Los Angeles and the City of Santa Monica to run its next generation of buses on food waste. Such "renewable natural gas" is a green fuel because if this same food waste was sent to a dump it would create methane and this methane is a potent [...]
- Incorporating energy into production functions
by Steve Keen in Steve Keen's Debtwatch, 2016-08-19 12:17:18 UTC
In my last post on my Debtwatch blog , I finished by saying that the Physiocrats were the only School of economics to properly consider the role of energy in production. They ascribed it solely to agriculture exploiting the free energy of the Sun , and specifically to land, which absorbed this free energy and stored it in agricultural products. As Richard Cantillon put it in 1730:
The Land is the Source or Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Conveniencies, and Superfluities of Life. (C [...]
- A Closer Look at the Federal Reserveâs Securities Lending Program
by Guest Author in The Big Picture, 2016-08-19 09:00:29 UTC
A Closer Look at the Federal Reserve’s Securities Lending Program
Michael Fleming, Frank Keane, Jake Schurmeier, and Emma Weiss
Liberty Street Economics, August 17, 2016
The Federal Reserve lends specific Treasury and agency debt securities held in its System Open Market Account (SOMA)—and accepts general Treasury securities as collateral—through its daily securities lending program. The program supports Treasury and agency debt market function by providing a secondary and temporary source of securities to the broader market through the Fed’s trading counterparties, the primary dealers [...]
- The Value of a Statistical Life Revisited: Evidence from Hostage Negotiations with Iran
by Matthew Kahn in Environmental and Urban Economics, 2016-08-18 21:28:00 UTC
The US government paid Iran $400 million dollars to guarantee the survival of 4 Americans. � So, my calculation suggests that the U.S government values a statistical life at $100 million. �This is a lot larger than the $7 million that is the standard number used in government cost/benefit regulation calculations. � At $100 million per life saved, many regulations will now pass a cost/benefit test. �This will expand the scope of government. � Dora Costa and I have a paper documenting how the value of a statistical life grows over time but $100 million appears to be high relative to past reveale [...]
- "Hosting The Olympics Is A Terrible Investment"
by ? in Environmental Economics, 2016-08-18 19:30:00 UTC
When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion. But by the time the Vanderlei de Lima lit th [...]
- "Hosting The Olympics Is A Terrible Investment"
by John Whitehead in Environmental Economics, 2016-08-18 15:30:49 UTC
When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion . But by the time the Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still. ...
The numbers above come from a new study l [...]
- Implementing successful reforms: The case of social assistance in South Africa
by ? in Let's Talk Development, 2016-08-18 14:40:00 UTC
South Africa’s social assistance system – through a comprehensive set of cash transfers -- covers nearly 16 million people. This is a big improvement from 1994, when cash transfers reached fewer than three million beneficiaries and suffered fr [...]
- On job polarization
by chris in Stumbling and Mumbling, 2016-08-18 12:29:29 UTC
Job polarization is a big problem. This is one message I take from figures released yesterday by the ONS showing employment by occupation .
These show that in the last ten years we’ve seen big rises in “professional occupations” and in managers, directors and senior officials – up by 23.3% and 15.5% respectively. But we’ve seen falls in secretarial and skilled jobs. And within the “unskilled” occupations, there’s been a shift from machine workers to care workers; this is partly due to the 3.5% drop in manufacturing output during this period.
These numbers exclude the self-employed, and don’t [...]
- Some Economics of Persistent Social Networks
by Matthew Kahn in Environmental and Urban Economics, 2016-08-17 16:33:00 UTC
Dora Costa, Swen Wilson, Chris Roudiez and I have release d a new NBER Working Paper� � that I must admit that I like. �There have been plenty of "peer effects" papers written by economists. � A novel feature of our new paper is that we look at "long term" peer effects in an important historical setting. � Consider the following example. �You are a white male Northerner who was born in 1840. �During the U.S Civil War, you fight for the Union and you are 22 years old. � �Using Robert Fogel's great data, we can reconstruct your peer group during the war (defined as the 99 other men in your war c [...]
- On the Evils of Hodrick-Prescott Detrending
by Francis Diebold in No Hesitations, 2016-08-17 13:45:00 UTC
[If you're reading this in email, remember -- here and always -- to click through on the title to get the math to render.] Jim Hamilton has a very cool new paper, " Why You Should Never Use the Hodrick-Prescott (HP) Filter ". Of course we've known of the pitfalls of HP ever since Cogley and Nason (1995) brought them into razor-sharp focus decades ago. �The title of the even-earlier Nelson and Kang (1981) classic, "Spurious Periodicity in Inappropriately Detrended Time Series", says it all. �Nelson-Kang made the spurious-periodicity case against polynomial detrending of I(1) series. �Hamilton m [...]
- Illicit use of the Hodrick-Prescott?
by The Arthurian in The New Arthurian Economics, 2016-08-17 11:05:00 UTC
The Hodrick and Prescott (1980, 1997) filter (hereafter, the HP filter) has become a standard method for removing trend movements in the business cycle literature.
I'm reading Notes on Adjusting the Hodrick-Prescott Filter for the Frequency of Observations , a short PDF by Morten O. Ravn and Harald Uhlig. The paper is © 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology, so they're probably right.
Most applications of this filter have been to quarterly data, but data is often available only at the annual frequency, whereas in o [...]
- A Closer Look at the Federal Reserve's Securities Lending Program
by Blog Author in Liberty Street Economics, 2016-08-17 11:00:00 UTC
Michael Fleming, Frank Keane, Jake Schurmeier, and Emma Weiss
The Federal Reserve lends specific Treasury and agency debt securities held in its System Open Market Account (SOMA)—and accepts general Treasury securities as collateral—through its daily securities lending program. The program supports Treasury and agency debt market function by providing a secondary and temporary source of securities to the broader market through the Fed’s trading counterparties, the primary dealers . Importantly, the size and composition of the SOMA portfolio reflect past monetary policy decisions, l [...]
- More Support for a Higher Inflation Target
by email@example.com (Carola) in Quantitative Ease, 2016-08-16 11:24:00 UTC
Ever since the FOMC announcement in 2012 that 2% PCE inflation is consistent with the Fed's price stability mandate, economists have questioned whether the 2% target is optimal. In 2013, for example, Laurence Ball made the case for a 4% target. Two new NBER working papers out this week each approach the topic of the optimal inflation target from different angles. Both, I think, can be interpreted as supportive of a somewhat higher target-- or at least of the idea that moderately higher inflation has greater benefits and smaller costs than conventionally believed. The first, by Marc Dordal-i-C [...]
- firms and inequality
by ? in Macromom, 2016-08-15 21:44:59 UTC
I agree with Adam Ozimek (aka Modeled Behavior ) that the role of firms in rising income inequality is a Big Open Question. I've been lucky enough to see " Firming Up Inequality " by Song, Price, Guvenen, Bloom, and von Wachter presented twice in the past two years ... this research keeps getting more insightful and remains thought provoking. Here's the abstract of the paper: "Using a massive, new, matched employer-employee database that we construct for the United States, we show that the rise in earnings inequality between workers over the last three decades has primarily been a between-firm [...]
- Hosting The Olympics Is A Terrible Investment
by Clay Dillow in FiveThirtyEight Economics, 2016-08-15 15:35:38 UTC
When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion . But by the time Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still. But it could be much worse. The 2014 Winter Games in Sochi blew [...]
- Real GDP per capita
by Masa in Devecondata, 2016-08-15 12:42:00 UTC
World Development Indicators �(WDI) - in current/constant local currency unit and in current/constant US dollars since 1960 --- Penn World Table �(PWT) - in purchasing power parity since 1950 See here for my rough summary of data construction. See Nuxoll (1994) for the validity of using economic growth rates from Penn World Table. See also Feenstra et al. (2004) For version 5.6, there is an augmented version constructed by� Fearon and Laitin (2003) . Which is�used by� Miguel et al. (2004) , hence contained in� their dataset . --- Comparison of WDI vs PWT Discussing PWT version 6, Johnson et al [...]
- The FOMC's Prudent Caution
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-15 12:40:46 UTC
Imagine Fed Governor Rip van Winkle waking from a 10-year nap to find that trend inflation is only a bit shy of the 2% target, the unemployment rate is close to its long-run steady state, and the Fed’s balance sheet is five times larger than when he fell asleep. As we wrote two years ago , you could forgive him for expecting the federal funds rate to be closer to 4% than ½%. And, you would understand his astonishment when he learns that financial market expectations of policy tightening have collapsed amid continued economic expansion (see chart). Federal Funds Futures Implied Rate, January 20 [...]
- Freakonomics economist asked people to flip 20,000 virtual coins to make big life decisions â hereâs what he found
by ? in Business Insider, 2016-08-13 15:57:42 UTC
Samantha Lee/Business Insider Steven Levitt, the University of Chicago economist who co-authored the book Freakonomics: The Hidden Side of Everything, says he’s long been fascinated by the social pressure against quitting, whether that means quitting a project, a job, or a marriage. “Behavioral biases tend to push the idea of not quitting, because you get the pain up front but the benefits down the road,” Levitt says.
So he was excited, he says, to do a “very different kind” of research project, one that infiltrates people’s everyday lives and examines what is most important to them.
Most aca [...]
- QED 65: che ha fatto er PIL? Statistica e propaganda.
by Alberto Bagnai in Goofynomics, 2016-08-12 09:29:00 UTC
Sarà stato l'inizio del 2015. Non posso ricordare la data esatta, e nemmeno le circostanze (eravamo a cena? Eravamo a un seminario "d'area"?), e non posso citare la persona, perché mi ha detto di essere permalosa (ma allora non dovrebbe fare il politico). Io dicevo: "Amici, compagni, avete un'occasione d'oro. È del tutto ovvio che Renzi sgrugnerà sul tema economico. Fategli una battaglia seria su questo. Secondo me avreste dovuto insistere di più sul jobs act [ Ndr: a quel tempo non c'erano ancora state le sollevazioni contro la loi travail in Francia e quindi la sinistra europea aveva perso m [...]
- Self-Fulfilling Sovereign Debt Crises
by Christian Zimmermann in NEP-DGE blog, 2016-08-10 17:31:41 UTC
By Mark Aguiar, Satyajit Chatterjee, Harold Cole and Zachary Stangebye
Sovereign debt spreads occasionally exhibit sharp, large spikes in spreads over risk-free bonds. We document that these movements are only weakly correlated with movements in domestic output and are frequently followed by reductions in the face value of debt outstanding. Motivated by this evidence, we propose a quantitative model with long-term bonds and three sources of risk: fluctuations in the growth of domestic income; movements in the risk premia associated with defaul [...]
- Ethnic Inequality
by maximorossi in NEP-LTV blog, 2016-08-10 14:45:56 UTC
Alesina, Alberto Francesco ; Michalopoulos, Stelios ; Papaioannou, Ellias
This study explores the consequences and origins of between-ethnicity economic inequality across countries. First, combining satellite images of nighttime luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries. We also compile proxies of overall spatial inequality and regional inequality across administrative units. Second, we uncover a strong negative association between ethnic inequality and contemporary comparative develop [...]
- âTongue Tideâ: The Economics of Language Offers Important Lessons for How Europe Can Best Integrate Migrants
by maximorossi in NEP-LTV blog, 2016-08-10 14:45:01 UTC
Chiswick, Barry R. (George Washington University)
This policy analysis discusses issues regarding the migration to Europe of large numbers of immigrants and refugees who, on arrival, do not know their host country’s language. It reviews problems of economic integration into the labor market, the consequences of the formation of immigrant enclaves divorced from the host country labor market, and considers public policies to facilitate their linguistic and economic integration.
immigrants, refugees, language, enclaves, Europe, discrimination
F22 J15 J24 J31 J61
- Exposure to Poverty and Productivity
by maximorossi in NEP-LTV blog, 2016-08-10 14:43:53 UTC
Dalton, Patricio (Tilburg University, Center For Economic Research) ; Gonzalez Jimenez, Victor (Tilburg University, Center For Economic Research) ; Noussair, Charles (Tilburg University, Center For Economic Research)
We study whether poverty can induce affective states that decrease productivity. In a controlled laboratory setting, we find that subjects randomly assigned to a treatment, in which they view a video featuring individuals that live in extreme poverty, exhibit lower subsequent productivity compared to subjects assigned to a control treatment. Questionnaire responses, as w [...]
- Family, Community and Long-Term Earnings Inequality
by maximorossi in NEP-LTV blog, 2016-08-10 14:42:50 UTC
Bingley, Paul (Danish National Centre for Social Research (SFI)) ; Cappellari, Lorenzo (Università Cattolica del Sacro Cuore) ; Tatsiramos, Konstantinos (University of Nottingham)
This paper studies the influence of family, schools and neighborhoods on life-cycle earnings inequality. We develop an earnings dynamics model linking brothers, schoolmates and teenage parish neighbors using population register data for Denmark. We exploit differences in the timing of family mobility and the partial overlap of schools and neighborhoods to separately identify sorting from community and famil [...]
- My socialism
by chris in Stumbling and Mumbling, 2016-08-10 12:52:20 UTC
Geoffrey Hodgson poses an old question: what is socialism?
I share his dissatisfaction with Corbyn’s definition as a way of living in which “everybody cares for everyone else.” For me, socialism is not about being well-meaning busybodies. Rather, the care must be expressed via institutions which meet people’s needs whilst treating them with dignity. On this score alone, our welfare state and immigration system fail.
So, can I come up with a better answer to Geoffrey’s question? Here’s my personal and idiosyncratic take.
First, a caveat. Like Marx, I’m not keen on detailed blueprints. Capitalis [...]
- Missing Coefficient in Environmental Economics and Policy Studies Paper
by firstname.lastname@example.org (David Stern) in Stochastic Trend, 2016-08-10 03:32:00 UTC
I don't like looking at my published papers because I hate finding mistakes. Today I saw that there is a missing coefficient in Table 2 of my recent paper with Donglan Zha " Economic growth and particulate pollution concentrations in China ". In the column for Equation (2) for PM 2.5 the coefficient for the interaction between growth and the level of GDP per capita is missing. The table should look like this: I checked my correspondence with the journal production team. They made lots of mistakes in rendering the tables and I went through more than one round of trying to get them to fix them. [...]
- The Economics of Environmental Protests in China
by Matthew Kahn in Environmental and Urban Economics, 2016-08-09 17:17:00 UTC
The NY Times reports that in China's Lianyungang that there are protests related to reducing the population's exposure to a nuclear fuel reprocessing facility. Such awakening "environmentalism" is a theme of my new book; Blue Skies Over Beijing. Chinese urbanites are increasingly well educated and due to social media are well aware of the environmental conditions they face. While the NY Times often writes about media censorship in China, the Chinese people continue to be free to express their concerns about environmental conditions. The Central Government does worry that shrewd activi [...]
- Bosses pay: the right's problem
by chris in Stumbling and Mumbling, 2016-08-09 13:14:48 UTC
The High Pay Centre said yesterday that FTSE 100 CEOs’ pay rose 10% last year to an average of almost £5.5m. It’s obvious that the left should find this a problem. I want to suggest that it should also be a problem for the right too, for four reasons.
First, high CEO pay is due in at least part to a market failure. Milton Friedman famously said : “If I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.” This is what happens when CEO pay is set by remuneration committees. Brian Bell and John Van Reenen point out (pdf) , [...]
- Urban Economic Growth Causes Climate Change Adaptation
by Matthew Kahn in Environmental and Urban Economics, 2016-08-08 16:26:00 UTC
The NY Times has published an editorial on climate change adaptation. It argues that the poorest nations have the least capacity to adapt. To flip this around, this implies that economic growth facilitates climate change adaptation. Given that urbanization fuels economic growth, I see an endorsement of my view that urbanization causes adaptation. This has been a theme of my research for the last six years. In its short piece, the editorial lacks nuance. There is little discussion of how capitalism (beyond causing economic growth) fuels adaptation. Try buying a cell phone in 1960 or log [...]
- Grammar schools: the new Brexit
by chris in Stumbling and Mumbling, 2016-08-08 12:40:33 UTC
I went to a grammar school. Had I not done so, I doubt I would have gone to Oxford; I’m not one of those arrogant twats who thinks he would have “succeeded” in any environment. You might imagine, therefore, that I’d support new grammar schools as a means of increasing social mobility.
You’d be wrong.
One big reason for this is that I was atypical in getting into a grammar from a poor background. Chris Cook points out that in Kent, where grammars still exist, poorer kids are far less likely to attend them than richer ones. This corroborates work by Adele Atkinson, Paul Gregg and Brendon McConne [...]
- Are European Stress Tests Stressful Enough?
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-08 12:30:02 UTC
We are huge fans of stress tests. In many ways, they are the best macroprudential tool we have for reducing the frequency and severity of financial crises. The idea behind stress tests is simple: see if all financial institutions can simultaneously withstand a major negative macroeconomic event—a big fall in real output, a large decline in equity and property prices, a substantial widening of interest-rate spreads, an adverse move in the exchange rate. And, importantly, assume that in response to these adverse circumstances banks have no way to sell assets or raise equity. That is, the stress [...]
- Ouverture des commerces le dimanche : mythes et rÃ©alitÃ© [Replay]
by Vincent Benard in Contrepoints, 2016-08-07 03:40:59 UTC
Par Vincent Bénard.
Un article de l’ Institut Turgot .
Ouverture des commerces le dimanche-Cactus de la jardinerie by Sunny Ripert ( CC BY-SA 2.0 )
La question du travail dominical a connu de nombreux rebondissements liés à la guerre commerciale que se livrent les enseignes de bricolage, certaines ayant obtenu le droit d’ouvrir le dimanche, d’autres pas. Les magasins de certaines enseignes peuvent rester ouverts parce qu’ils sont implantés dans des périmètres d’usages de consommation exceptionnelle (PUCE), tandis que d’autres, qui ont choisi de répartir des magasins plus petits selon un mail [...]
- Does the Tesla + Solar City Merger = A Big Green Lobbying Machine?
by Matthew Kahn in Environmental and Urban Economics, 2016-08-05 17:04:00 UTC
Mergers make economic sense if there are economies of scope across the entities and if there are certain intellectual spillovers and specific investments that will take place in the new merged entity which wouldn't have occurred if the two firms had remained separate. � Mergers can also create a diversified conglomerate. Of course, mergers can create short run market power for the new big entity. �We know all of this. �In the context of the proposed merger of Tesla and Solar City , I would like to talk about "green subsidy" lobbying and firm size. � First, some background. �In this NBER Workin [...]
- Cassa per il Mezzogiorno, un fallimento per scarso civismo*
by Giovanna D'Adda e Guido De Blasio in La Voce, 2016-08-05 08:10:09 UTC
La bassa qualità del settore pubblico e le inferiori dotazioni di capitale sociale sono due tra i principali elementi di arretratezza dell’economia del Sud. Ma uno studio suggerisce che il primo aspetto può essere più rilevante del secondo. Una conferma dalle vicende della Cassa per il Mezzogiorno.
La Cassa per il Mezzogiorno e le sue due fasi
Le ricostruzioni di carattere storico (ad esempio, Emanuele Felice e Amedeo Lepore ) mostrano che l’azione della Cassa per il Mezzogiorno è stata efficace solo nel primo periodo di intervento. Lo spartiacque decisivo è costituito dalla legge 717 del 196 [...]
- India just took a big step towards transforming into âa single common marketâ
by email@example.com (Chloe Pfeiffer) in Business Insider, 2016-08-04 19:58:00 UTC
Thomson Reuters In a historic move on Wednesday evening, India’s upper house of parliament passed a constitutional amendment that clears a path for the most significant tax reform for India since independence.
That tax reform would be the Goods and Services Tax (GST), which would replace at least 17 state and federal taxes with one unified tax and put India on the path toward being a “single common market.”
The GST has a lot of potential benefits, number one simply being a substantially simplified tax structure. According to a note from Morgan Stanley, India is ranked 157 out of 189 countries [...]
- I disallineamenti dell'euro
by Alberto Bagnai in Goofynomics, 2016-08-04 18:34:00 UTC
Donne, è arrivato l'arrotino... Twitter è sì una fogna (soprattutto da quando è stata bandita la crociata dei poracci, replica della più nota ma sostanzialmente isomorfa crociata dei pezzenti ), ma riserva comunque dei momenti esilaranti. Col poco campo che ho a disposizione dove mi trovo, oggi mi è capitato di travedere questo tweet: Devo dire di essere prevenuto negativamente verso Oxford Economics. Mi dà, così, dall'esterno, l'impressione di essere una versione ripulita e presentabile (in quanto pseudoindipendente) del nostro Centro Studi Confindustria, quello che ha definitivamente scavato [...]
- Links and quotes for August 4, 2016: Hiring and productivity, the ethics of prenatal testing, and more
by Sarah Gustafson in AEIdeas, 2016-08-04 17:30:47 UTC
Hiring at firms, large and small – FRED
What makes small and large firms different and how does this explain the very different experiences during the Great Recession? This behavior is consistent with a job ladder across firms, a line of research explored extensively by Giuseppe Moscarini and Fabian Postel-Vinay : If larger firms tend to be more productive, they can offer higher wages and attract workers from smaller, less-productive firms. As the cycle turns downward, they no longer pursue new workers, as workers are less profitable. This means that growth at large firms slows down because t [...]
- The Economics of City Carbon Footprint Measurement
by Matthew Kahn in Environmental and Urban Economics, 2016-08-04 17:09:00 UTC
Reuters reports that cities all over the world are "rushing" to measure their respective carbon footprints. Sounds good to me. �The article argues that this public reporting has been caused by the COP 21 Paris Meeting on carbon mitigation. �Such measurement is a necessary step for mitigation. I have published two papers on city carbon footprints with a focus on household (not industrial) emissions. �Here is our US paper �and here is our China paper. � I have also written about industrial urban carbon footprints base d on data from China. A payoff of this measurement mandate will be more data c [...]
- Hiring at firms, large and small
by ? in FRED blog, 2016-08-04 13:00:06 UTC
The Great Recession, with its layoffs and slow hiring, drastically decreased the employment rate. But not every firm behaved the same, and there are striking patterns across firm size. At small firms, employment fell by less and recovered to pre-recession levels more quickly than at large firms. The graph shows this consistent pattern through the firm-size distribution. (Note that the level of employment for each size category is normalized to the level in December 2007, just before the recession.)
Employment at the smallest firms (1 to 19 employees) fell by 2.7% at the nadir in June 2010 and [...]
by sanukriti in Gender Matters, 2016-08-03 12:54:28 UTC
Golda Meir , Israel’s first female Prime Minister, in office 1969-1974
Janet Jagan, an American married to an Indo-Guyanese man, became the President of Guyana in 1997. The economist Tansu Çiller was Turkey’s first female Prime Minister; in an unprecedented move that still seems radical, her husband took her surname. This and a lot more interesting stuff in this New Yorker piece on women in politics .
Mass Media and Social Change: Can We Use Television to Fight Poverty? A new paper by Eliana La Ferrara in Journal of the European Economic Association. A related short piece at VOX on the e [...]
- Research: Innovation Suffers When Drug Companies Merge
by Justus Haucap in HBR Blog Network, 2016-08-03 12:05:51 UTC
We know that mergers and acquisitions are challenging for the companies involved . But we spend less time thinking about the challenge they pose for antitrust authorities. This regulator has to decide whether to approve a merger based on its predicted outcome for the businesses and society as a whole. Generally, if consumers are likely to be harmed, authorities prefer to block the merger . If not, it gets the nod. Sometimes, approval is granted on certain conditions.
It’s mind-bogglingly tricky, though, to predict a merger’s effects. Regulators try to model how prices, sales, and even the co [...]
- This investment has an average 10% return
by ? in Forum:Blog, 2016-08-03 09:58:00 UTC
Investing in schooling has long term economic benefits, explains Harry Patrinos. [...]
- Massachusetts Just Banned Companies From Asking Job Applicants How Much They Make
by Jordan Weissmann in Moneybox, 2016-08-02 20:56:50 UTC
When it comes to negotiating salaries, employers tend to have some built-in advantages over workers—namely, they know more. Companies spend lots of money on consultants who can tell them the market rate for, say, an accountant or database manager. They can ask job applicants about their previous salaries. They often discourage staff from discussing their pay among themselves, even when doing so might violate the law , making it tough for Cathy in marketing to figure out whether the guy two cubicles down really makes more than her.
You and me? We can go on sites like Payscale or Glassdoor to t [...]
- Optimal Unemployment Insurance and International Risk Sharing
by Christian Zimmermann in NEP-DGE blog, 2016-08-02 14:30:20 UTC
By St�phane Moyen, Nikolai St�hler and Fabian Winkler
e discuss how cross-country unemployment insurance can be used to improve international risk sharing. We use a two-country business cycle model with incomplete financial markets and frictional labor markets where the unemployment insurance scheme operates across both countries. Cross-country insurance through the unemployment insurance system can be achieved without affecting unemployment outcomes. The Ramsey-optimal policy however prescribes a more countercyclical replacement rate when [...]
- IES : lâavenir des libertÃ©s individuelles se joue maintenant !
by Auteur invitÃ© in Contrepoints, 2016-08-02 02:40:51 UTC
Par Guillaume Thomas et Danell Benguigui.
By: Aitor Escauriaza – CC BY 2.0
Dirigé par Pierre Garello , l’Institute for Economic Studies organise depuis 1989 des événements similaires dans toute l’Europe. Mais ces rencontres aixoises (qui se déroulaient en même temps que les médiatiques Rencontres Économiques) s’inscrivent dans la continuité des Universités d’été de la Nouvelle Économie Aix organisées par Jacques Garello depuis 1978. À l’époque où le marxisme régnait en maître à l’Université un groupe de jeunes économistes avait relevé le pari fou de redonner ses titres de noblesse au libéralis [...]
- Trends in returns to schooling: why governments should invest more in peopleâs skills
by ? in World Bank Blogs, 2016-08-01 16:52:00 UTC
Students at a training center.
One of the biggest economic benefits of schooling are labor market earnings. For many people, education and experience are their only assets. This is why I believe that it’s very important to know the economic benefits [...]
- The World of ETFs
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-01 11:56:32 UTC
The first U.S. exchange-traded fund (ETF)—the SPY based on the S&P500—began trading in 1993. Since then, the number of such funds has grown dramatically, so that by mid-2016 there were more than 1,600 ETFs on U.S. exchanges valued at roughly $2.2 trillion. This means that ETFs are now roughly one-sixth the size of open-end mutual funds. And, with this ETF growth has come a broadening in their scope and character. Today, there are ETFs that include less liquid assets such as corporate bonds and emerging market equities, and there are funds that provide inverse or leveraged exposure to the under [...]
- Graduate taxes, not student loans, for Ireland
by brianmlucey in Brian M. Lucey, 2016-08-01 05:33:23 UTC
Governments usually, and often quite correctly, come in for severe stick for lack of joined up thinking. In that regard it is quite pleasant to see the initiative from the Department of Social Protection on moneylenders . Linking repayment to credit union loans to welfare payments allows low risk in lending and thus low interest rates. Would that similar joined up thinking pervaded the issue of student loans.
Post the Cassells report the landscape on higher education funding has become clearer. With it, and the appointment of a more business and teaching orientated Higher Education Authority [...]
- Multiple Equilibria, Installment #2
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2016-07-31 19:19:00 UTC
The goal in this post is to provide some more illumination with respect to Narayana's note, and my previous post. As well, if I could eliminate Nick Rowe's confusion, that would be great. The problem at hand is one of multiple equilibria. Sometimes multiple equilibrium models are used in an attempt to explain real-world phenomena. That's Roger Farmer's approach - maybe we're stuck in bad, suboptimal states because of self-filfilling low expectations. Sometimes policy rules can lead to multiple equilibria in models we study. That's considered problematic as, to analyze policy in a coherent fash [...]
- Can NYC Handle the Heat?
by Matthew Kahn in Environmental and Urban Economics, 2016-07-29 15:02:00 UTC
In 2016, we are finally allowed to talk about urban resilience to climate change. As I have argued for 8 years now, richer cities can "take a punch". Go visit Singapore to see proof. T he NY Times writes a "city section" piece that the recent week of extreme heat caused NYC residents to stay inside and to suffer when outside but that long term damage was minimal. Pretty hot. Days were in the low to mid-90s, but felt more like the low 100s with the humidity. Nearly 1.5 million people visited the city’s eight beaches. The Hudson River was warmed, on the hottest day, to 79.7 degrees, roughly t [...]
- European Identity and Redistributive Preferences
by maximorossi in NEP-LTV blog, 2016-07-29 01:04:49 UTC
By: Joan Costa-i-Font ; Frank Cowell
How important is spatial identity in shifting preferences for redistribution? This paper takes advantage of within-country variability in the adoption of a single currency as an instrument to examine the impact of the rescaling of spatial identity in Europe. We draw upon data from the last three decades of waves of the European Values Survey and we examine the impact of joining the single currency on preferences for redistribution. Our instrumentation strategy relies on using the exogenous effect of joining a common currency, alongside a battery of robustne [...]
- The Gender Wage Gap: Extent, Trends, and Explanations
by maximorossi in NEP-LTV blog, 2016-07-29 01:00:36 UTC
By: Francine D. Blau ; Lawrence M. Kahn
Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to ide [...]
- Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries
by maximorossi in NEP-LTV blog, 2016-07-27 18:07:04 UTC
Erling Barth ; James Davis ; Richard B. Freeman ; Sari Pekkala Kerr
Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries
- Job Creation in a Multi-Sector Labor Market Model for Developing Economies
by maximorossi in NEP-LTV blog, 2016-07-27 18:05:30 UTC
Basu, Arnab ; Chau, Nancy H ; Fields, Gary S ; Kanbur, Ravi
This paper proposes an overlapping generations multi-sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self-employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multisector labor market models in which the creation of high-wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U-shaped relationships [...]
- Income Poverty, Affluence and Polarisation Viewed From The Median
by maximorossi in NEP-LTV blog, 2016-07-27 18:04:45 UTC
Rolf Aaberge ; A.B. Atkinson ; Henrik Sigstad
The present paper brings together different features of the distribution of income – poverty, affluence and dispersion – in a single framework that allows ready comparisons across countries. We believe that such a unified framework contributes both to the policy debate and to the theoretical understanding of inequality. There are at present largely separate literatures on the measurement of poverty, and (to a limited degree) affluence, and on bi-polariszation. In relation to the EU social indicators, the paper may be seen as providing com [...]
- The challenge of measuring UK wealth inequality in the 2000s
by maximorossi in NEP-LTV blog, 2016-07-27 18:04:01 UTC
Facundo Alvaredo ; Anthony B. Atkinson ; Salvatore Morelli
The concentration of personal wealth is now receiving a great deal of attention – after having been neglected for many years. One reason is the growing recognition that, in seeking explanations for rising income inequality, we need to look not only at wages and earned income but also at income from capital, particularly at the top of the distribution. In this paper, we use evidence from existing data sources to attempt to answer three questions: (i) What is the share of total personal wealth that is owned by the top 1 per cen [...]
- Recall and Unemployment
by Christian Zimmermann in NEP-DGE blog, 2016-07-26 19:28:17 UTC
Shigeru Fujita and Guiseppe Moscaraini
Using data from the Survey of Income and Program Participation (SIPP) covering 1990-2013, we document that a surprisingly large number of workers return to their previous employer after a jobless spell, and experience very different unemployment and employment outcomes than job switchers. Furthermore, the probability of recall is much less cyclical and volatile than the probability of finding a new job. Building on these facts, we introduce a recall option in a canonical search-and-matching business- cycle [...]