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2021-01-25

• Chris Sampson’s journal round-up for 25th January 2021
  by Chris Sampson in The Academic Health Economists' Blog, 2021-01-25 12:01:17 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Economics & Human Biology Volume 40 I know we keep saying that health economists haven’t been much of a presence in COVID-related policy discussions, but these round-ups are testament to the fact that there is no shortage of economics research on the topic. The latest issue of E&HB is no exception. One article focuses on men [...]

2021-01-24

• Endogenous policy
  by ? in Stumbling and Mumbling, 2021-01-24 13:09:48 UTC

  In a justlycriticisedpiece in the FT, Morgan Stanley’s Ruchir Sharmasays:My team also found a statistically significant link between periods of rising government debt and slow GDP growth. These studies cannot show causation, but the consistent link between [...]

2021-01-21

• Thesis Thursday: Stefan Lipman
  by Chris Sampson in The Academic Health Economists' Blog, 2021-01-21 07:00:04 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Stefan Lipman who has a PhD from Erasmus University Rotterdam . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch . Title Decisions about health: behavioral experiments in health with applications to understand and improve health state valuation Supervisors Werner Brouwer , Arthur Attema Repository link https://repub.eur.nl/pub/130911/ Why did you choose to use behavioural experiments in your research? The use of behav [...]

2021-01-20

• Clouds in Your Coffee? Skyscrapers and their Symbolic Heights
  by Jason Barr in Skynomics Blog, 2021-01-20 13:17:39 UTC

  Jason M. Barr          January 20, 2021 You’re So Vain? On January 4, 2010, the Burj Khalifa officially opened its doors. At 828 meters (2,717 feet) it became the world’s tallest building by a long shot. It overtook the previously tallest building, the Taipei 101, by 302 meters (991 feet). The only rub: Much of Burj is empty space—the top third is a 243-meter (797-foot) spire—where no human will likely ever work or live. The difference between the actual or architectural height (excluding TV and radio antennae) and the highest occupied floor is what the Council on Tall Buildings and Urban Habi [...]

• Zombie Arguments Against Fiscal Stimulus
  by Francesco Saraceno in Sparse Thoughts of a Gloomy European Economist, 2021-01-20 11:58:43 UTC

  Busy days. I just want to drop a quick note on a piece just published on the Financial Times that is puzzling on many levels. Ruchir Sharma pleads against Joe Biden’s stimulus on the ground that it risks “exacerbating inequality and low productivity growth”. The bulk of the argument is in this paragraph: Mr Biden captured this elite view perfectly when he said, in announcing his spending plan: “With interest rates at historic lows, we cannot afford inaction.” This view overlooks the corrosive effects that ever higher deficits and debt have already had on the global economy. These effects, [...]

2021-01-19

• Labor Market Informality and the Business Cycle
  by Christian Zimmermann in NEP-DGE blog, 2021-01-19 00:28:11 UTC

  By Frédéric Lambert, Andrea Pescatori and Frederik Toscani http://d.repec.org/n?u=RePEc:imf:imfwpa:2020/256&r=dge Labor market informality is a pervasive feature of most developing economies. Motivated by the empirical regularity that the labor informality rate falls with GDP per capita, both at business cycle frequency and in a cross-section of countries, and that the Okun’s coefficient falls with the level of labor informality, we build a small open-economy dynamic stochastic general equilibrium model with two sectors, formal and informal, which can replicate these key stylized facts. The mo [...]

2021-01-18

• Open-end Funds vs. ETFs: Lessons from the COVID Stress Test
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2021-01-18 12:19:08 UTC

  “These funds are built on a lie, which is that you can have daily liquidity for assets that fundamentally aren’t liquid. And that leads to an expectation of individuals that it’s not that different from having money in a bank.” Mark Carney, then-Governor of the Bank of England, Speaking to the House of Commons Treasury Committee , June 26, 2019. COVID-19 posed the most severe stress test for financial markets and institutions since the Great Financial Crisis (GFC) of 2007-09. By some measures, the COVID shock’s peak impact was larger than that of the GFC—both the VIX rose higher and intermedia [...]

• Chris Sampson’s journal round-up for 18th January 2021
  by Chris Sampson in The Academic Health Economists' Blog, 2021-01-18 12:00:03 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Journal of Public Economics Volume 193 As far as I can tell, this issue is not a ‘special’ on COVID-19, but it looks a lot like one. Of the 17 articles that are included, eight focus on issues relating to COVID-19. One article addresses a point previously discussed on this blog; the relative importance of lockdown and fea [...]

• How Britain paid for war: bond holders in the Great War 1914-32
  by BankUnderground in Bank Underground, 2021-01-18 09:00:00 UTC

  Norma Cohen This post contributes to our occasional series of guest posts by external researchers who have used the Bank of England’s archives for their work on subjects outside traditional central banking topics . In August 1914, Britain was the world’s wealthiest country. Yet there was no guarantee that government would be able to harness that wealth for World War I. Effectively, Britain was forced into a ‘Battle for Capital’ simultaneous with its military efforts — with the efficacy of the latter dependent on the success of the former. Over 80% of the £7,280 million Britain b [...]

2021-01-16

• Some Rust Belt Urban Economics
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-01-16 13:36:00 UTC

  �In this blog post, I want to market my new co-authored book "Unlocking the Potential of Post Industrial Cities" .� I will do this by talking about past research on the Economics of the Rust Belt.� �Here is chapter one of my book and here is a r ecent video where I talk about the book. The most prominent "Rust Belt" economics paper is the 2005 Glaeser and Gyourko paper on U rban Decline and Durable Housing. � �On a slightly deep level, this paper is about gross flows and sunk capital.� In the 1950s, cities such as Detroit and Pittsburgh were doing quite well as their main manufacturing industr [...]

2021-01-13

• Rare disasters, the natural interest rate and monetary policy
  by Christian Zimmermann in NEP-DGE blog, 2021-01-13 18:04:03 UTC

  By Alessandro Cantelmo http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1309_20&r=dge This paper evaluates the impact of rare disasters on the natural interest rate and macroeconomic conditions by simulating a nonlinear New-Keynesian model. The model is calibrated using data on natural disasters in OECD countries. From an ex-ante perspective, disaster risk behaves as a negative demand shock and lowers the natural rate and inflation, even if disasters hit only the supply side of the economy. These effects become larger and nonlinear if extreme natural disasters become more frequent, a scenario compat [...]

• On forecasting
  by chris in Stumbling and Mumbling, 2021-01-13 16:30:53 UTC

  What’s the point of forecasting? This is the question posed for me by Michael Story’s account of superforecasters’ predictions for the course of the pandemic. Take this: Our central estimate that the death toll will peak at 1,278 with an 80% confidence interval of 892 to 5,750. So what? It’s not all clear how this affects the debate about how tight the lockdown should be. That depends upon how the virus is transmitted; the trade-off between mental and physical health; how far the economic effects of the lockdown can be mitigated; and so on. Yes, that claim that the daily death toll could be [...]

• An Infrastructure Inoculation for America’s Recovery
  by Barry Eichengreen in Project Syndicate, 2021-01-13 13:40:59 UTC

  BERKELEY – With the Democrats’ stunning sweep of Georgia’s two Senate run-off elections handing them control of both houses of Congress as of January 20, the idea of $2,000 stimulus checks for every household is sure to be back on the agenda in the United States. But although targeted relief for the unemployed should unquestionably be a priority, it is not clear that $2,000 checks for all would in fact help to sustain the US economic recovery. One post-pandemic scenario is a vigorous demand-driven recovery as people gorge on restaurant meals and other pleasures they’ve missed for the past year [...]

2021-01-12

• Brexit and hate crime: why was the rise more pronounced in areas that voted Remain?
  by LSE BPP in British Politics and Policy at LSE, 2021-01-12 08:00:23 UTC

  The sharp increase in hate crime that was recorded in the aftermath of the Brexit vote was more pronounced in pro-Remain areas, write  Facundo Albornoz , Jake Bradley , and Silvia Sonderegger . They write that this was because the referendum was a source of new information about society’s overall preferences over immigration, enabling those holding anti-immigrant sentiments but living in areas which are generally supportive of diversity to externalise their views.  In the aftermath of the Brexit referendum, the police reported a significant surge in racially motivated hate crime which immediat [...]

2021-01-11

• Chris Sampson’s journal round-up for 11th January 2021
  by Chris Sampson in The Academic Health Economists' Blog, 2021-01-11 12:00:06 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Health Economics Review Volume 10, December 2020 This week’s round-up is a BMC bonanza! HER published four articles in December, demonstrating a variety of topics, methods, and grammatical misdemeanors. A report from a systematic review identifies some issues in the context of discrete choice experiments with primary heal [...]

2021-01-09

• Veblen and Conspicuous Consumption Revisited: The Beneficial Role of "Invisible" Masks During a Pandemic
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-01-09 17:32:00 UTC

  Suppose that masks are invisible,� would more people wear them?� Would more supporters of President Trump wear them?� How much of the opposition to playing it safe and putting on a mask is due to the economics of identity?� � To repeat my question, if you could put on a mask but everyone else wouldn't know that you were wearing one, would this increase your probability of putting it on? Let's review the economics of risk taking. Case #1:� Decision makers who do not have social preferences. In the 1970s, my friend Glenn Blomquist wrote a nice paper on the economics of putting on a seatbelt.� In [...]

2021-01-07

• How Important Is Health Inequality for Lifetime Earnings Inequality?
  by Christian Zimmermann in NEP-DGE blog, 2021-01-07 18:34:35 UTC

  By Roozbeh Hosseini, Karen A. Kopecky and Kai Zhao http://d.repec.org/n?u=RePEc:uct:uconnp:2020-20&r=dge Using a dynamic panel approach, we provide empirical evidence that negative health shocks reduce earnings. The effect is primarily driven by the participation margin and is concentrated in less educated and poor health individuals. We build a dynamic, general equilibrium, lifecycle model that is consistent with these findings. In the model, individuals, whose health is risky and heterogeneous, choose to either work, or not work and apply for social security disability insurance (SSDI). Health [...]

2021-01-06

• The link between unemployment and real economic growth in the UK. Brits are able to retain data quality and integrity
  by Ivan Kitov in Economics as Classical Mechanics, 2021-01-06 13:33:00 UTC

    In 2011, we published a paper modeling the link between the annual change in employment rate and the change rate in the real GDP per capita. This paper also included modeling of a similar link for unemployment.  In 2011, we used data from various sources – the OECD, BEA, BLS, and the Total Economy Database of the Conference Board. Because of the data availability, the period under consideration varied between countries and the longest time series started between 1950 and 1960. For many developed economies, however, the start year was 1970. Since the studied period was limited to 2010, we pro [...]

• Further school closures and weakening economic conditions equate to bleak prospects for the young
  by LSE BPP in British Politics and Policy at LSE, 2021-01-06 08:00:16 UTC

  The further closures of schools that have been announced, while necessary to contain the spread of COVID-19, are likely to exacerbate educational inequalities. Learning losses could have long-term consequences for the life chances of children from disadvantaged backgrounds, explain  Andrew Eyles and  Lee Elliot Major . Closing schools is one of the most difficult decisions that governments have had to make in their efforts to halt the spread of COVID-19. This is a trade-off between the costs to health and education. While ministers have been forced into further closures as coronavirus cases p [...]

2021-01-04

• Fix Money Funds Now
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2021-01-04 12:12:06 UTC

  “ Free of capital constraints, official reserve requirements, and deposit insurance charges, these MMMFs are truly hidden in the shadows of banking markets. […] While generally conservatively managed, the funds are demonstrably vulnerable in troubled times to disturbing runs .” Former Federal Reserve Chair Paul Volcker, William Taylor Memorial Lecture , September 23, 2011. On September 19, 2008, at the height of the financial crisis, the U.S. Treasury announced that it would guarantee the liabilities of money market mutual funds (MMMFs). And, the Federal Reserve created an emergency facility ( [...]

• Chris Sampson’s journal round-up for 4th January 2021
  by Chris Sampson in The Academic Health Economists' Blog, 2021-01-04 12:00:05 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Health Economics Volume 30, Issue 1 The latest issue of Health Economics includes several articles on the topic of multi-sectoral evaluation. One study seeks to marry QALY-based analyses with consumption value, for an overall measure of wellbeing effects in economic evaluation . The researchers call it OQoL: overall quality [...]

2020-12-30

• The Economics of Personal Responsibility and Human Development
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-12-30 14:10:00 UTC

   Congratulations to Nick Kristof of the New York Times.  I am really impressed with this discussion between him and Carol in Berkeley.   My mother's name is Carol and she has been to Berkeley and I'm wondering if my mom wrote the following response; Here is the NY Times Source and my remarks appear below.   By all means, let’s talk about “personal responsibility”’  — Nicholas Kristof Carol in Berkeley, Calif., on “ Who Killed the Knapp Family? ” (Jan. 9): So long as poverty is seen as an individual or cultural failing (e.g. the culture of poverty which was linked to race, even though the evide [...]

2020-12-29

• Modern professional sport is an ultimate expression of gender and race segregation
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-29 16:35:00 UTC

  I had a post o n the Winter Olympic s as an example of hostile racial segregation. The winners of the Olympics have the same fame and honor as the winners of the (summer) Olympic Games. They almost all belong to one race and this predominance cannot be resolved - no natural snow and ice for the majority of UN countries. This segregation is based on historical prejudice.� It is even more outrageous because modern sport is professional and the absence of equal conditions is the worst expression of all kinds of inequality, including economic.� Another example of professional segregation is the ge [...]

• Will President Biden's Low Carbon Policy Efforts be Slowed Down by the Gruenspecht Effect and Slow Economic Growth?
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-12-29 13:24:00 UTC

  �In recent decades, U.S Clean Air Regulations have focused on reducing the emissions of new cars, new factories and new power plants.� Old cars, old factories and old power plants have often been "grandfathered" and haven't faced regulations.� Given the durability of capital, this differential regulation creates long lags between "cause" and "effect". In this case, the cause is the new regulations and the effect is environmental progress. The Gruenspecht effect refers to an economist who in his Yale PHD thesis argued that the Clean Air Act can unintentionally make air pollution worse in the sh [...]

2020-12-28

• Chris Sampson’s journal round-up for 28th December 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-12-28 12:00:00 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Applied Health Economics and Health Policy Volume 18, Issue 6 This month we have a themed issue of AHEHP on health financing in sub-Saharan Africa, with all of the articles open access. The challenges are summarised in the opening editorial , and many of the papers focus on informing methods for future research. A couple [...]

2020-12-27

• We have validated our model allowing for an accurate prediction of GDP growth using unemployment estimates
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-27 19:33:00 UTC

    According to the gap version of Okun’s law, there exists a negative relation between the output gap, ( Y p -Y)/Y p , where Y p is potential output at full employment and Y is actual output, and the deviation of the actual unemployment rate, u , from its natural rate, u n . The overall GDP or output includes the change in population as an extensive component which is not necessary dependent on other macroeconomic variables. Econometrically, it is mandatory to use macroeconomic variables of the same origin and dimension. Therefore, we use real GDP per capita, G, and rewrite Okun’s law in the f [...]

2020-12-24

• In the Year 2030, How Will Applied Microeconomists Study the Consequences of the 2020 COVID Shock?
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-12-24 15:02:00 UTC

  An active research field in climate economics uses natural disasters as "natural experiments" to learn about the economic effects of such shocks.� Amine Ouazad and I study how major hurricanes impact bank lending and securitization pa tterns in this study .� �Gary Lin, Rhiannon Jerch and I study local public finance dynamics in the aftermath of disaste rs in this study. � � In both papers, our estimation strategy relies on the fact that we have a "treatment group" and a "control group".� �Intuitively, there are places that are roughly similar that have and have not been recently hit with a sho [...]

2020-12-23

• Can We All Turn Japanese?
  by Tyler Durden in Zero Hedge, 2020-12-23 22:40:00 UTC

  Can We All Turn Japanese? Submitted by Tuomas Malinen of GnS Economics Now that the first serious mutation of the Coronavirus has apparently emerged, many are wondering how well the global economy will cope.  “Not well” is what we consider the rather obvious answer. However, some hope the world economy will now manage to avoid general collapse by massive government intrusion mirroring the Japanese experience, “Japanification”, even though this will result in nothing more than permanent economic stagnation and the massive growth of sovereign debt.  While a questionable—if not tr [...]

• The Microeconomics of the Rise of Green Buildings and Climate Change Adaptation: A California Example
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-12-23 16:05:00 UTC

  �In this blog post, I'd like to introduce a "mashup " where I combine ideas about green buildings, the rise of Work from Home, climate change adaptation, and non-linear pricing of electricity to make some predictions about the rise of the green economy. People who know my work, know that I've published several papers on green buildings.�� To make my main point, I need to establish several other points; Point #1;� In California, there is a sharp geographic temperature gradient such that areas closer to the water (Santa Monica, Berkeley) are much cooler than more inland places (say 30 or 40 mile [...]

• Using the Supply and Demand Model to Understand China's Recent Electricity and Coal Shortage
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-12-23 14:07:00 UTC

  �The New York Times has p ublished an excellent piece about an emerging coal shortage in China.� Let's use the supply and demand framework to study this issue.� Aggregate demand for coal in China is rising because it is winter and much of the nation's winter heating is supplied by burning coal.� The manufacturing sector is making a comeback and this sector uses plenty of electricity.� At the same time that aggregate demand is rising, aggregate supply has declined because the national Chinese government is in the midst of a feud with Australia. A ustralia is a leading exporter of coal to China. [...]

• Why Doesn’t New York Construct the World’s Tallest Building Anymore?
  by Jason Barr in Skynomics Blog, 2020-12-23 13:17:41 UTC

  Jason M. Barr       December 23, 2020 The Space Race At the end of the Roaring Twenties , New York City witnessed a three-way race for the world’s tallest building. First was the Bank of Manhattan Building, at 40 Wall Street, which topped out at 927 feet (283 meters, 70 stories) in November 1929 and officially opened in May 1930. Next came the Chrysler Building (1,046 feet 319 meters, 77 stories), whose final height was riveted into place concurrently with the Bank of Manhattan but was not formally revealed until its rival was finished. Finally was the granddaddy of them all, the Empire State [...]

• New EU members have no chance to catch up the most developed countries
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-23 12:45:00 UTC

    In 2005, we published a paper quantitatively describing the transition of the former socialist countries to a new state similar to capitalism .  In 2009 , we extended our model and predicted the evolution of real GDP per capita in 27 countries, including two virtual countries: the U.S.S.R and Czechoslovakia. Briefly, despite different social, cultural, ethnical, racial, demographical, religious, and technological histories our model demonstrates general success in the overall prediction between the start point (1989 to 1991) and the year of 2006(7). In all cases, the most accurate prediction [...]

2020-12-22

• Real GDP is likely not correct as the inflation estimates are weird
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-22 13:21:00 UTC

    We revisited several times our original post published in 2011 on biased metrology of macroeconomic measurements. New data are needed to validate the original hypothesis or to reject it. It is important to retain in mind that economics as science often fails and gives counterproductive results due to inaccurate or biased measurements of the most basic macroeconomics variables – price inflation, labor force, unemployment, nominal GDP. In one of our previous post s, we focused on the estimates of real GDP in the USA before and after 1979 and here we extend the US case by several other cases. A [...]

2020-12-21

• Consumer Credit With Over-Optimistic Borrowers
  by Christian Zimmermann in NEP-DGE blog, 2020-12-21 19:08:44 UTC

  By Florian Exler, Igor Livshits, James MacGee and Michèle Tertilt http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_245&r=dge (paper is the first on the list once you click on this link) There is active debate over whether borrowers’ cognitive biases create a need for regulation to limit the misuse of credit. To tackle this question, we incorporate overoptimistic borrowers into an incomplete markets model with consumer bankruptcy. Lenders price loans, forming beliefs—type scores—about borrowers’ types. Since over-optimistic borrowers face worse income risk but incorrectly believe they are [...]

• On the potential non-equivalent exchange between developed countries
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-21 18:16:00 UTC

    I am in the middle of modeling the relationship between the labor force, unemployment, and price inflation.   Twelve years ago we reported several statistical models revealing a linear lagged relationship between these three parameters in developed (e.g., USA , UK , Japan , Germany , France , Austria ) countries. It is time to revisit them and validate these models with new data published since 2010. There are several problems we have to overcome before the published data can be used in statistical estimates. The most important problem is the change in definitions of all three parameters. Fo [...]

• Our prediction from 2008 on the evolution of unemployment rate in Italy at an 11-year horizon is still valid
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-21 15:35:00 UTC

  In this blog, we regularly revisit our prediction of the rate of unemployment in Italy, which had been made in our 2008 paper. (The previous revision was in 2017 .) Five years after this publication, we found that the accuracy of prediction was excellent. We decided that our model works well. Since the model has a natural 11-year horizon, we were able to check our original (2008!) prediction for 2013 and 2016 and now for 2019 using new estimates of the unemployment rate in Italy (here we use the OECD database ).  According to the OECD, the unemployment rate in 2019 was 9.95%. For 2017, the rat [...]

• Big Tech, Fintech, and the Future of Credit
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-12-21 15:06:54 UTC

  “ Microfinance is a positive development; it has clearly helped substantial numbers of poor people escape poverty…  However, microfinance is not a substitute for institution building... ” then-Federal Reserve Board Governor Frederic S. Mishkin, April 26, 2007 . Lenders want to know that borrowers will pay them back. That means assessing creditworthiness before making a loan and then monitoring borrowers to ensure timely payment in full. Lenders have three principal tools for raising the likelihood of that firms will repay. First, they look for borrowers with a sufficiently large personal stake [...]

• Chris Sampson’s journal round-up for 21st December 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-12-21 12:00:05 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . PharmacoEconomics – Open Volume 4, Issue 4 Last week, we published a post pondering the role of health economists in the COVID-19 pandemic response. One way in which our methods and mentality can surely be useful is in prioritising COVID-19 vaccination . And so leads the latest issue of PharmacoEconomics – Open , with a comm [...]

2020-12-19

• Annual Review 2020
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2020-12-19 07:18:00 UTC

  I've been doing these annual reviews since 2011. They're mainly an exercise for me to see what I accomplished and what I didn't in the previous year. In the first half of the year we had the bushfires, the hailstorm, and then the pandemic and the "shutdown". On 5 January we woke up to orange light and visibility of only a couple of hundred metres at best where I live. It felt like being on the surface of Titan (but much warmer :)). My brother visited from Israel later in the month when conditions were a little better. The day he arrived was the hailstorm . Shortly after that the Orroral Valley [...]

2020-12-16

• Does the injunction gap violate implementers' fair trial rights under the ECHR?
  by Léon Dijkman in The IPKat, 2020-12-16 09:28:00 UTC

  In jurisdictions with bifurcated patent systems, infringement claims and invalidity attacks are heard in separate proceedings, before different courts. Bifurcation is often defended on the grounds that the validity of the patent can be assessed by judges with technical expertise. Germany, Hungary and Austria each have bifurcated patent systems. A compromise position was adopted in Article 33(3) of the Agreement on a Unified Patent Court , whereby the division hearing an infringement claim may either refer invalidity claims to the central division or hear both claims with the assistance of a te [...]

2020-12-14

• On the Purchasing Power of Money in an Exchange Economy
  by Christian Zimmermann in NEP-DGE blog, 2020-12-14 21:42:38 UTC

  By Juliusz Radwanski http://d.repec.org/n?u=RePEc:pra:mprapa:104244&r=dge A model is constructed in which completely unbacked fiat money, issued by generic supplier implementing realistically specified monetary policy designed to obey certain sufficient conditions, is endogenously accepted by rational individuals at uniquely determined price level. The model generalizes Lucas (1978) to an economy with frictions and specialization in production, without imposing the cash-in-advance constraint. The uniqueness of equilibrium is the consequence of complete characterization of both the environment, [...]

2020-12-13

• Growth rate of the GDP per capita revisited. 3. The results from 2007, 2009, and 2012 revisited. The model
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-13 11:01:00 UTC

    GDP per capita data revisited We start with a revision of the period after 1950. Originally, we estimated the evolution of annual increment before 2003 . Then data for the period between 2004 and 2007 were added the prediction of the model was estimated. In 2012 , 4 new readings were added for all involved countries. In 2006, we made a model-based assumption (see Appendix in this post for the model description) that all large deviations from the linear trend in the annual GDP per capita should fade away in the near future. In this post, we claim that this assumption was an extremely successf [...]

2020-12-12

• Growth rate of the GDP per capita revisited. 1. Comparison of the TED 2013 and Maddison Project Database 2020
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-12 11:35:00 UTC

  The history of physics has many examples when the measured values of fundamental physical constants were corrected according to new measurements using more sensitive instruments and methods. A good example is a change in the gravitational constant. In economics, the changing time series is commonplace. Moreover, most of the economic time series are accompanied by disclaimers that the measurements in adjacent years are incompatible due to change in measurement methodology and/definition of parameters. This is true even for such a simple process as population counting, and the population estimat [...]

2020-12-11

• The Debt Dogs that Didn’t Bark
  by Barry Eichengreen in Project Syndicate, 2020-12-11 16:56:37 UTC

  BERKELEY– Last March, when COVID-19 infected the world economy, many observers feared that emerging markets and developing countries would suffer the most, financially and otherwise. Economically, they relied on commodity exports, remittances, and tourism, all of which fell through the floor with the pandemic. There was every reason to expect a tsunami of financial crises and debt defaults. The tsunami never arrived. Just six countries – Argentina, Ecuador, Belize, Lebanon, Suriname, and Zambia – have defaulted on their sovereign debt, and only the first two have restructured their debts. But [...]

• Optimal quantitative easing in a monetary union
  by Christian Zimmermann in NEP-DGE blog, 2020-12-11 15:39:06 UTC

  By Serdar Kabaca, Renske Maas, Kostas Mavromatis and Romanos Priftis http://d.repec.org/n?u=RePEc:dnb:dnbwpp:697&r=dge This paper explores the optimal allocation of government bond purchases within a monetary union, using a two-region DSGE model, where regions are asymmetric with respect to economic size and portfolio characteristics: the extent of substitutability between assets of different maturity and origin, asset home bias, and steady-state levels of government debt. An optimal quantitative easing (QE) policy under commitment does not only reflect different region sizes, but is also a fu [...]

2020-12-10

• 'Great Demographic Reversal' & Shifting Wealth
  by ReibReisen in ShiftingWealth, 2020-12-10 16:03:00 UTC

    China's rise since the 1980s has brought an era of low inflation and real interest rates; it also stimulated emerging economies. This combination has resulted in high prices for equities, real estate and commodities. The impact on personal income distribution has been positive globally, but negative within most countries. In a highly acclaimed book, Charles Goodhart and Manoj Pradhan announce the end of the golden age [1] . Changes in demography will reverse decades of trends: declining growth in wages and inflation, falling interest rates, and greater inequality between countries, while ine [...]

• Debating ‘State Capitalism’ in Turkey: Beyond False Dichotomies
  by mehmetermanerol in Development Economics, 2020-12-10 09:32:00 UTC

  Following the 2016 failed coup attempt, and in the context of increasing mistrust towards the West, Turkey’s president Erdogan reflected his discontent with the EU and argued that Turkey should instead join the Shanghai Five , namely the Shanghai Cooperation Organisation (SCO) led primarily by China and Russia. Soon after, despite being a NATO member, Turkey signed a deal with Russia to buy the S-400 air defence missile system. Taken together with Turkey’s other ‘adventures’ in its region, these developments were perceived as manifestations of a changing political economy of Turkey, and w [...]

2020-12-09

• Short-Run Dynamics in a Search-Theoretic Model of Monetary Exchange
  by Christian Zimmermann in NEP-DGE blog, 2020-12-09 16:22:26 UTC

  By Jonathan Chiu and Miguel Molico http://d.repec.org/n?u=RePEc:bca:bocawp:20-48&r=dge We study the short-run effects of monetary policy in a search-theoretic monetary model in which agents are subject to idiosyncratic liquidity shocks as well as aggregate monetary shocks. Namely, we analyze the role of the endogenous non-degenerate distribution of liquidity, liquidity constraints, and decentralized trade in the transmission and propagation of monetary policy shocks. Money is injected through lump-sum transfers, which have redistributive and persistent effects on output and prices. We propose [...]

• Where Governments Should Spend More
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-12-09 12:53:36 UTC

  “ I think there is a strong case for a substantially more ambitious national infrastructure investment program, perhaps on the order of one percent of GDP each year going forward .” Harvard Professor Lawrence Summers, January 18, 2017 . As a result of the pandemic, U.S. general government debt (federal, state, and local obligations combined) has surged above 130 percent of GDP, more than double what it was in 2007. And, recent U.S. experience is far from unique. Looking at the G20, average public debt rose from 52% of GDP in 2007 to 74% in 2019 and is projected to reach 91% next year. Unsurpri [...]

2020-12-07

• Consumer price index for energy revisited - energy will be cheap in relative terms till 2030
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-07 18:15:00 UTC

    In one of our recent posts , we analyzed the difference between the headline and core CPI and reported that the latter has been growing faster than the former one since 2010-2012. This means that food and energy currently have lower price-setting power than all other ingredients of the headline CPI. As a result, we move through the era of low energy prices in the next decade, as the projected trend in the headline and core CPI shows. In this post, we analyze the difference between the core CPI and energy price index (food price index might introduce some bias in the estimation of the energy [...]

• The Infrastructure Spending Challenge
  by Kenneth Rogoff in Project Syndicate, 2020-12-07 13:55:33 UTC

  CAMBRIDGE – Encouraging news about more effective anti-viral treatments and promising vaccines is fueling cautious optimism that rich countries, at least, could tame the COVID-19 pandemic by the end of 2021. For now, though, as a brutal second wave cascades around the world, broad and robust relief remains essential. Governments should allow public debt to rise further to mitigate the catastrophe, even if there are longer-term costs . But where will new growth, already tepid in advanced economies before the pandemic, come from? Macroeconomists of all stripes broadly agree that productive infra [...]

• Chris Sampson’s journal round-up for 7th December 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-12-07 12:00:03 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Health Economics Volume 29, Issue 12 The December issue of Health Economics is particularly chunky, featuring 20 articles. A couple of articles are loosely relevant to the COVID-19 pandemic. One study attempts to estimate the welfare loss associated with an Ebola outbreak in Liberia, coming out with a headline figure of b [...]

2020-12-05

• Revisited CPI data confirm our prediction - energy prices will not be growing faster than other goods and services in the next ten years
  by Ivan Kitov in Economics as Classical Mechanics, 2020-12-05 18:32:00 UTC

  � Economic variables measured by economic agencies and institutions present a unique source of valuable information for a scientist with a background in physics. Instead of building thought experiments based on shaky assumptions, as economists usually do, physicists first look into the data and try to find regular behavior, which can be described by simple functions/equations. Such regular behavior allows predicting the future behavior of economic (and physical) variables, and this is what we do in hard sciences. �The evolution of the consumer price index (CPI) in the USA is one of such variab [...]

2020-12-03

• Perché la nomina di una rettrice fa ancora notizia
  by Alessandra Casarico, Maria Laura Di Tommaso e Silvia Pasqua in La Voce, 2020-12-03 11:05:15 UTC

  All’inizio della carriera accademica, in tutte le discipline le percentuali di ricercatori e ricercatrici sono simili. Ma nei passaggi successivi gli uomini prevalgono. Eppure, la diversità di genere è importante. E non solo per ragioni di equità. Il soffitto di cristallo nelle università È di pochi giorni fa la notizia che La Sapienza ha una rettrice donna, Antonella Polimeni, la prima nella lunga storia dell’ateneo. La notizia è stata ripresa da tutti i giornali perché è “una” rettrice. Sono infatti solo sette (su 84) le università italiane guidate da donne. Le donne, come si sa, incontrano [...]

2020-12-02

• To avoid shipwreck, imagine a "stranded-compensated" principle
  by nadine in Eco Notepad, 2020-12-02 16:32:53 UTC

  Published on 12/03/2020 1st prize-winning blog in the 2020 Eco Notepad Challenge - by Mathilde Salin et Louis Daumas Less than a generation lies ahead of us to carry out the bulk of the changes needed to attenuate climate change. Such a rapid transition will imply the loss of a significant share of the physical, human and financial capital accumulated in carbon-intensive sectors. We need to acknowledge this loss and look at ways of making it tolerable. billet_1er_prix_conc_vebis.pdf An example: Propagation of stranded assets in the extractive sector Sources: authors and Cahen-Fourot et [...]

• Pour éviter le naufrage, imaginer un principe « échoué-compensé »
  by Gerard EDMOND in Bloc-Notes Eco, 2020-12-02 14:11:53 UTC

  Publié le 03/12/2020 1er prix du concours organisé par Bloc-notes Éco, édition 2020 -  par Mathilde Salin et Louis Daumas Il reste moins d’une génération pour accomplir l’essentiel des mutations permettant d’atténuer le changement climatique. Une transition aussi rapide impliquera la perte d’une part non négligeable du capital physique, humain et financier accumulé dans les secteurs intensifs en carbone. Il s’agit de prendre acte de cette perte et d’explorer des pistes pour la rendre tolérable. billet_190_vfr.pdf Un exemple : Propagation des actifs échoués dans le secteur de l’extraction [...]

2020-11-30

• Philippe Steiner on matching and romance, and transplants
  by Al Roth in Market Design, 2020-11-30 13:14:00 UTC

    The French economic sociologist Philippe Steiner, who studies (among other things) how markets and gift giving can coexist, has a short piece about dating platforms. Plateformes d’appariement, rencontres amoureuses et mondes marchands ("Matching platforms, romantic encounters and trading worlds") by Philippe Steiner, Dans Revue Française de Socio-Économie 2020/2 (n° 25), pages 161 à 166 Via google translate: "Two elements can serve to close this brief reflection on the meeting of economic sociology and the sociology of sexuality. "The appearance of a commercial intermediary modifies the soci [...]

• Chris Sampson’s journal round-up for 30th November 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-11-30 12:00:05 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Journal of Health Economics Volume 74 Everyone is thinking about vaccination. A study in the December issue of JHE looks at the spillover effects of the flu jab in the Netherlands. The researchers found that the programme, involving a free jab for over-65s, had positive and negative spillovers. Adults under 65 in the same ho [...]

2020-11-28

• Political Numbers
  by ReibReisen in ShiftingWealth, 2020-11-28 18:35:00 UTC

    A lucid book [1] by the epistemologist Oliver Schlaudt (Heidelberg U) shows how fact-focused policy advice can undermine democratic decision-making. Performance indicators and rankings are "political numbers", they supposedly stand for rational decision-making. However, prior political judgements and dubious assumptions usually determine the mechanism by which a society that believes in numbers constantly nurtures the illusion that politics is basically superfluous. This is particularly evident in the case of international organisations such as the IMF, OECD or World Bank, which are particul [...]

2020-11-27

• Productivity and Climate Change Adaptation in a Spatial Economy
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-11-27 19:22:00 UTC

  �This blog post builds on my last post on a related topic.� � � �My critics say to me;� "Matt, our centers of productivity are located in coastal places and these places face ever increasing climate risks.� In a Paul Krugman� style "History versus Expectations" economy, we have built our productive hubs in places that are now under siege and our economy could be wiped out by future punches."� Note that these persistence pessimists downplay the role of Expectations.� Lucas lives on.� Capital is finite lived and there is always a new generation of young people.� They don't need to follow the her [...]

• Demographics and the Decline in Firm Entry: Lessons from a Life-Cycle Model
  by Christian Zimmermann in NEP-DGE blog, 2020-11-27 15:41:16 UTC

  By Oke Röhe and Nikolai Stähler http://d.repec.org/n?u=RePEc:zbw:vfsc20:224603&r=dge Since the mid-1970s, firm entry rates in the United States have declined significantly. This also holds for other OECD countries over the past years. At the same time, these economies experienced a gradual process of population aging. Applying a tractable life-cycle model with endogenous firm dynamics, we show that falling US firm entry rates can be explained by demographic transition. Specifically, our model simulations suggest that aging can account for up to one third of the observed decrease in US firm ent [...]

• Biden’s Modest Multilateralism
  by Jeffrey Frankel in Project Syndicate, 2020-11-27 14:20:43 UTC

  CAMBRIDGE – Like the Joni Mitchell song puts it, “You don’t know what you’ve got ‘til it’s gone.” For example, classroom education was often deemed boring by students and obsolete by tech visionaries. Then, COVID-19 made it difficult or impossible to meet in person. Now we yearn for in-class experiences. Perhaps the same is true of international economic cooperation . Multilateral institutions such as the World Trade Organization, the International Monetary Fund, and the United Nations agencies have long been unpopular among much of the public for supposedly encroaching on national sovereignty [...]

• Research Review | 27 November 2020 | Inflation
  by James Picerno in The Capital Spectator, 2020-11-27 05:02:31 UTC

  The Trade-off between Inflation and Unemployment in an MMT World Emilio Carnevali (Northumbria U.) and Matteo Deleidi (Roma Tre U.) October 2020 This paper is focused on Modern Monetary Theory’s (MMT) treatment of inflation from an open economy perspective. It analyzes how the inflation process is explained within the MMT framework and provides empirical evidence in support of this vision. However, it also makes use of a stock-flow consistent (open economy) model to underline some limits of the theory when it is applied in the context of a non-US (relatively) open economy with a flexible excha [...]

2020-11-26

• Climate Change Adaptation in a Spatial Economy
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-11-26 16:10:00 UTC

  The point of this blog post is to explore how to use the Rosen/Roback spatial compensating differentials model to evaluate the challenge of climate change adaptation.� In the original Rosen/Roback model, tied local public goods were exogenously determined, common knowledge, and not changing over time.� In English, San Francisco has great summer weather and Detroit does not and everyone knows this.� The final assumption in the model is that people face zero migration costs.� Given these assumptions, people arbitrage as they move across locations.� In equilibrium, nobody moves because they are i [...]

• Does India’s Gender Budget Need a Rethink?
  by shreyanambiar2 in Development Economics, 2020-11-26 08:50:00 UTC

  India was a pioneering country when it first introduced a Gender Budget in 2001 as part of its annual Financial Year Budget. Gender Budgeting (GB) highlights the inherently different experiences in receiving financial and welfare support from the state due to their differing needs, priorities and access and serves to ameliorate the barriers to economic inclusion faced by women through a plethora of state financing.  India’s Gender Budget Statement (GBS) has been released in two parts since 2005 . Each ministry highlights allocations that are – women specific allocations where 100% of the b [...]

• Asymmetric Carbon Emissions-Output Elasticities
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2020-11-26 02:34:00 UTC

  This semester my masters' research essay student, Kate Martin, revisited the topic of whether the carbon emissions-output elasticity is greater in recessions than in economic expansions. In other words, does a 1% increase in output increase carbon emissions by less than a 1% fall in output reduces them? Sheldon (2017) used quarterly US GDP data and carbon emissions data from the 1950s to 2011 and found that the elasticity in recessions was much larger than in expansions when it was not significantly different to zero. There was also a strong positive drift in emissions of 5.8% p.a. To measure [...]

2020-11-24

• Higher education funding, welfare and inequality in equilibrium
  by Christian Zimmermann in NEP-DGE blog, 2020-11-24 16:06:19 UTC

  By Gustavo Mellior http://d.repec.org/n?u=RePEc:ukc:ukcedp:2005&r=dge This paper analyses theoretically and quantitatively the effect that different higher education funding policies have on welfare (on aggregate and at the individual level) and wealth inequality. A heterogeneous agent model in continuous time, which has uninsurable income risk and endogenous educational choice is used to evaluate five different higher education financing schemes. Educational investments can be self financed, supported by government guaranteed student loans – that may come with or without income contingent sup [...]

• What's in store for r*?
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-11-24 13:15:29 UTC

  “ Navigating by the stars can sound straightforward. Guiding policy by the stars in practice, however, has been quite challenging of late because our best assessments of the location of the stars have been changing significantly .” Federal Reserve Board Chair Jerome H. Powell, August 24, 2018 . It is amazing how things we once thought impossible, or at least extremely improbable, can become commonplace. Ten-year government bond yields in most of Europe and Japan are at or below zero. And, for U.S. Treasurys, the yield has been below 1 percent since March. That is, the sovereign yield curve in [...]

2020-11-23

• Chris Sampson’s journal round-up for 23rd November 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-11-23 12:00:14 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. If you’d like to write one of our weekly journal round-ups, get in touch . Medical Decision Making Volume 40, Issue 7 It could be very good timing, or it could be very bad. Any day now, a paper arguing that ‘dead’ should be excluded from health state valuation exercises will be published as an OHE Research Paper, written by me and a couple of other blog contributors ( here , when it’s ready). In th [...]

• What sport can tell us about inequality
  by Johan Fourie in Johan Fourie's Blog, 2020-11-23 06:00:49 UTC

  Sport is often a microcosm of broader patterns in society. Societal issues such as racism, diversity and gender have recently been brought to the fore on playing fields across the world. But sport can also say something about the economic incentives in society. Take the relationship between a country’s inequality and its economic performance. Most of us would argue that inequality hurts growth, that a highly unequal society inhibits the productive potential of those at the bottom of the income distribution. Some, though, would say that inequality, even severe inequality, is a necessary condit [...]

2020-11-22

• Climate Change Adaptation for Urban Indian Slum Dwellers: A New Economics Research Agenda
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-11-22 14:40:00 UTC

  �I have been to India once.� In this note, I would like to sketch out a research agenda on the microeconomics of urban slum dweller adaptation to emerging climate risk.� My points will only zero in on India's specifics a couple of times.� There are many slums throughout the developing world.� I will only focus on the challenge of extreme heat exposure. My starting point is Rob ert Townsend's 1994 Econometrica paper.�� � � His empirics focus on rural India as he tests for whether arrangements take place between farmers to smooth their idiosyncratic income shocks.� Risk averse poor people have a [...]

2020-11-21

• Dissecting Trade and Business Cycle Co-movement
  by Christian Zimmermann in NEP-DGE blog, 2020-11-21 18:17:41 UTC

  By Paul Hilhak Ko http://d.repec.org/n?u=RePEc:jmp:jm2020:pko1026&r=dge International business cycles have become highly synchronized across countries in the past three decades, yet there is a lack of consensus on whether this is due to an increase in the correlation of country-specific shocks or due to increased economic integration. To understand this empirical phenomenon, I develop a multi-country real business cycle model with international trade that captures several potential explanations: shocks to productivity, demand, leisure, investment, sectoral expenditures, and trade- linkages. By [...]

2020-11-19

• COVID-19 and the Market for Skyscrapers
  by Jason Barr in Skynomics Blog, 2020-11-19 13:09:50 UTC

  Jason M. Barr        November 19, 2020 In the 21st century, Planet Earth has gone on a skyscraper building spree. Since 1995, for example, the number of skyscrapers (150 meters or taller) completed each year has grown at a rate of 8.8%. The height of the tallest completed building has risen at an average annual rate of 2.5%. In short, tall—and taller—buildings have been in great demand. Then on March 11, 2020, the World Health Organization officially declared the COVID-19 Pandemic . How will it affect the market for tall buildings? And what does the market tell us about the future of our citie [...]

• Thesis Thursday: Junran Cao
  by Chris Sampson in The Academic Health Economists' Blog, 2020-11-19 07:00:03 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Junran Cao who has a PhD from the University of Western Australia . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch . Title Three essays in health economics Supervisor Anu Rammohan Repository link https://doi.org/10.26182/5f361a8d2ad8a What inspired your research topics? The overarching theme in my topic selections is their relevance to policy-making. In this I received valuable help from my thesis supervisor, Profes [...]

2020-11-18

• Full employment, capitalism & regress
  by chris in Stumbling and Mumbling, 2020-11-18 14:20:55 UTC

  The Guardian is reinventing the wheel. Its leader yesterday said : Nobody but the government can take responsibility for maintaining the total level of spending in the economy at a level that keeps the country as close to full employment as possible. Like all the best ideas, this is not original. In fact, it’s as new as powdered eggs or Woolton pie . It echoes this from William Beveridge in 1944 (pdf) : It must be a function of the State in future to ensure adequate total outlay and by consequence to protect its citizens against mass unemployment. ( Full Employment in a Free Society , p29) [...]

2020-11-16

• Get by with a little help from my friends (and shopkeepers): Household borrowing in response to Covid 19
  by x in Ajay Shah's blog, 2020-11-16 04:06:00 UTC

  by Renuka Sane and Ajay Shah The lockdown in the early days of the Covid 19 pandemic in India impacted on on economic activity. Between April and August 2020, 18.9 million salaried people lost their jobs , difficulties were faced by migrant labourers , and small and medium businesses . Deshpande (2020) shows that overall employment dropped sharply post-lockdown, with larger drops for women than men. Household incomes were adversely affected. As an example, survey work by Lee, Sahai, Baylis and Greenstone (2020) shows that two months into the lockdown poor and non-mig [...]

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