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- Twitter peut-il prédire l’évolution des marchés financiers ?
by Thomas Renault in Contrepoints, 2015-08-02 05:00:12 UTC
Par Thomas Renault
boule de cristal- Chez Pitch -( CC BY 2.0 )
Depuis vendredi, un article publiÃ© par Les Ãchos intitulÃ© « Comment Twitter est devenu la boule de cristal des marchÃ©s financiers » fait un bon petit buzz sur les rÃ©seaux sociaux. RÃ©alisant ma thÃ¨se de doctorat sur ce sujet depuis maintenant prÃ¨s de trois ans, j’ai tendance Ã Ãªtre assez psychorigide Ã propos de cette thÃ©matique, surtout que les mÃªmes mythes et les mÃªmes erreurs reviennent trÃ¨s souvent dans les articles de presse traitant de Twitter en tant qu’outil de « First-Story Detection » (dÃ©tection d’Ã©vÃ©ne [...]
- Surveys in Crisis
by email@example.com (Carola) in Quantitative Ease, 2015-07-31 19:31:00 UTC
In " Household Surveys in Crisis ,"� Bruce D. Meyer , Wallace K.C. Mok , and� James X. Sullivan �describe household surveys as "one of the main innovations in social science research of the last century." Large, nationally representative household surveys are the source of official rates of unemployment, poverty, and health insurance coverage, and are used to allocate government funds. But the quality of survey data is declining on at least three counts. The first and most commonly studied problem is the rise in unit� nonresponse , meaning fewer people are willing to take a survey when asked. [...]
- Creating markets
by chris in Stumbling and Mumbling, 2015-07-31 13:35:51 UTC
Simon Jenkins ' and James Kirkup 's proposals to privatize lions to protect them has been derided by some as "peak Telegraph" and knowing the price of everything and the value of nothing. This, I fear, highlights the poverty of debate about the use of markets generally.
Simon's and James' thinking derives from the conventional economics of the tragedy of the commons. This says that if wildlife is unowned, nobody has a material incentive to conserve it and there will therefore be a tendency to over-hunt it. If, however, lions could be owned and hunting permits sold, the owner would have an ince [...]
- Catastrophic Climate Change? Lessons from Urban Economics
by Matthew Kahn in Environmental and Urban Economics, 2015-07-30 22:02:00 UTC
The Economist Magazine h as published a "philosophical" piece about climate change mitigation. �I'd like to blog about a single paragraph in this piece related to the benefits of reducing global GHG emissions. A DIRECT Quote: "However, estimating these benefits means that we need to determine the value of a reduction in preventing a possible future catastrophic risk. This is a thorny task. Martin Weitzman, an economist at Harvard University, argues that the expected loss to society because of catastrophic climate change is so large that it cannot be reliably estimated." 1. �What is our definit [...]
- Rising Aspirations Dampen Satisfaction By: Clark, Andrew E. ; Kamesaka, Akiko ; Tamura, Teruyuki
by maximorossi in NEP-LTV blog, 2015-07-30 17:28:00 UTC
It is commonly-believed that education is a good thing for individuals. Yet its correlation with subjective well-being is most often only weakly positive, or even negative, despite the many associated better individual-level outcomes We here square the circle using novel Japanese data on happiness aspirations. If reported happiness comes from a comparison of outcomes to aspirations, then any phenomenon raising both at the same time will have only a muted effect on reported well-being. We find that around half of the happiness effect of education is cancelled out by higher aspirations, and sugg [...]
- Family Values and the Regulation of Labor By: Alberto Alesina (2441/4ia9erre4r9nva2eh5b5sac29o) ; Yann Algan (Département d’économie) ; Pierre Cahuc (Department of Economics) ; null null (Anderson School of Management – Global Economics and Manageme
by maximorossi in NEP-LTV blog, 2015-07-30 17:26:45 UTC
To be efficient, flexible labor markets require geographically mobile workers. Otherwise firms can take advantage of workers’ immobility and extract rents at their expense. In cultures with strong family ties, moving away from home is costly. Thus, to limit the rents of firms and to avoid moving, individuals with strong family ties rationally choose regulated labor markets, even though regulation generates higher unemployment and lower incomes. Empirically, we find that individuals who inherit stronger family ties are less mobile, have lower wages and higher unemployment, and support more stri [...]
- Do more of those in misery suffer from poverty, unemployment or mental illness? By: Sarah Flèche ; Richard Layard
by maximorossi in NEP-LTV blog, 2015-07-30 17:25:31 UTC
Studies of deprivation usually ignore mental illness. This paper uses household panel data from the USA, Australia, Britain and Germany to broaden the analysis. We ask first how many of those in the lowest levels of life-satisfaction suffer from unemployment, poverty, physical ill health, and mental illness. The largest proportion suffer from mental illness. Multiple regression shows that mental illness is not highly correlated with poverty or unemployment, and that it contributes more to explaining the presence of misery than is explained by either poverty or unemployment. This holds both wit [...]
- Adaptation to Poverty in Long-Run Panel Data By: Clark, Andrew E. ; D’Ambrosio, Conchita ; Ghislandi, Simone
by maximorossi in NEP-LTV blog, 2015-07-30 17:24:38 UTC
We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.
Keywords: income, poverty, subje [...]
- When Experienced and Decision Utility Concur: The Case of Income Comparisons By: Clark, Andrew E. (Paris School of Economics) ; Senik, Claudia (Paris School of Economics) ; Yamada, Katsunori (Kindai University)
by maximorossi in NEP-LTV blog, 2015-07-30 17:22:41 UTC
While there is now something of a consensus in the literature on the economics of happiness that income comparisons to others help determine subjective wellbeing, debate continues over the relative importance of own and reference-group income, in particular in research on the Easterlin paradox. The variety of results in this domain have produced some scepticism regarding happiness analysis, and in particular with respect to the measurement of reference-group income. We here use data from an original Internet survey in Japan to compare the results from happiness regressions to those from hypoth [...]
- #tbt Matias Vernengo 2006 Technology, Finance, and Dependency: Latin American Radical Political Economy in Retrospect
by Mike Isaacson in Vulgar Economics, 2015-07-30 14:00:00 UTC
Through my odd traverse through economics education, I admittedly haven't gotten into Dependency Theory. This past weekend, I decided to finally look into it. In general, I'm rather impressed. As an anarchist, I generally appreciate any theory which takes as its foundation relationships of power in thinking through social and political relations. This paper by Matias Vernengo provides a great introduction to dependency theory. Vernengo, who maintains the blog Naked Keynesianism , outlines the development of Dependency Theory through the scholarship of primarily Latin American and US American n [...]
- Government Resistance to Human Capital
by Anton Tarasenko in Economics and Development, 2015-07-30 12:42:31 UTC
James Heckman has a great paper called “ Policies to foster human capital “. Apart from excellent integration of economics intoÂ government policies, this paperÂ relentlessly reminds the readerÂ about the lifetime aspects of investments in human capital:
Heckman and Carneiro – 2003 – Human Capital Policy
Heckman refers to the evidences that late investments do not pay off. Late learning costs money, including foregone earnings, but it only modestly increases wage rates and generates less human capital, since investments are made closer to retirement.
Heckman also criticizes the excessive atten [...]
- In Praise of David Neumark
by Adam Ozimek in Modeled Behavior, 2015-07-30 00:07:00 UTC
When opponents of minimum wage hikes cite empirical research, they almost always point to David Neumark who has written a book on this topic, done leading research, and remains at the forefront of the academic debate. This I think leads to the impression by some that opposition over the minimum wage is just âconservative economistsâ like David Neumark reflecting their conservative bias. This is a mischaracterization of Neumark, whose research is hard to put in a box. Instead, Neumark is just a thoughtful labor economist who happens to think the literature shows non-trivial negative employm [...]
- The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation By: Goldin, Claudia D. ; Katz, Lawrence F.
by maximorossi in NEP-LTV blog, 2015-07-29 18:07:55 UTC
Pharmacy has become a female-majority profession that is highly remunerated with a small gender earnings gap and low earnings dispersion relative to other occupations. We sketch a labor market framework based on the theory of equalizing differences to integrate and interpret our empirical findings on earnings, hours of work, and the part-time work wage penalty for pharmacists. Using extensive surveys of pharmacists for 2000, 2004, and 2009 as well as samples from the American Community Surveys and the Current Population Surveys, we explore the gender earnings gap, the penalty to part-time work [...]
- The Dynamics of Inequality By: Xavier Gabaix ; Jean-Michel Lasry ; Pierre-Louis Lions ; Benjamin Moll
by maximorossi in NEP-LTV blog, 2015-07-29 18:06:52 UTC
The past forty years have seen a rapid rise in top income inequality in the United States. While there is a large number of existing theories of the Pareto tails of the income and wealth distributions at a given point in time, almost none of these address the fast rise in top inequality observed in the data. We show that standard theories, which build on a random growth mechanism, generate transition dynamics that are an order of magnitude too slow relative to those observed in the data. We then suggest parsimonious deviations from the basic model that can explain such changes, namely heteroge [...]
- Not Working At Work: Loafing, Unemployment and Labor Productivity By: Burda, Michael C ; Genadek, Katie R. ; Hamermesh, Daniel S.
by maximorossi in NEP-LTV blog, 2015-07-29 18:05:51 UTC
Using the American Time Use Survey (ATUS) 2003-12, we estimate time spent by workers in non-work while on the job. Non-work time is substantial and varies positively with the local unemployment rate. While the average time spent by workers in non-work conditional on any positive non-work rises with the unemployment rate, the fraction of workers who report time in non-work varies pro-cyclically, declining in recessions. These results are consistent with a model in which heterogeneous workers are paid efficiency wages to refrain from loafing on the job. That model correctly predicts relationship [...]
- Youth Unemployment in Old Europe: The Polar Cases of France and Germany By: Pierre Cahuc (Department of Economics) ; Stéphane Carcillo (Departement d’Economie de Sciences Po) ; Ulf Rinne (Institute for the Study of Labor (IZA)) ; Klaus F. Zimmermann (
by maximorossi in NEP-LTV blog, 2015-07-29 18:03:56 UTC
France and Germany are two polar cases in the European debate about rising youth unemployment. Similar to what can be observed in Southern European countries, a “lost generation” may arise in France. In stark contrast, youth unemployment has been on continuous decline in Germany for many years, hardly affected by the Great Recession. This paper analyzes the diametrically opposed developments in the two countries to derive policy lessons. As the fundamental differences in youth unemployment primarily result from structural differences in labor policy and in the (vocational) education system [...]
- Does Protecting Older Workers from Discrimination Make It Harder to Get Hired? Evidence from Disability Discrimination Laws By: David Neumark ; Joanne Song ; Patrick Button
by maximorossi in NEP-LTV blog, 2015-07-29 18:02:29 UTC
We explore the effects of disability discrimination laws on hiring of older workers. A concern with anti-discrimination laws is that they may reduce hiring by raising the cost of terminations and – in the specific case of disability discrimination laws – raising the cost of employment because of the need to accommodate disabled workers. Moreover, disability discrimination laws can affect non-disabled older workers because they are fairly likely to develop work-related disabilities, yet are not protected by these laws. Using state variation in disability discrimination protections, we find [...]
- Endogenous Labor Share Cycles: Theory and Evidence
by Christian Zimmermann in NEP-DGE blog, 2015-07-28 13:32:10 UTC
By Peter McAdam, Jakub Muck and Jakub Growiek
ased on long US time series we document a range of empirical properties of the labor’s share of GDP, including its substantial medium-run swings. We explore the extent to which these empirical regularities can be explained by a calibrated micro-founded long-run economic growth model with normalized CES technology and endogenous labor- and capital-augmenting technical change driven by purposeful directed R&D investments. It is found that dynamic macroeconomic trade-offs created by arrivals of both typ [...]
- On centrist utopianism
by ? in Stumbling and Mumbling, 2015-07-28 13:29:00 UTC
Here are some things we've seen recently:
�- Andy Haldane says shareholder capitalism is too short-termist, without asking whether it is possible to change this, or whether short-termism might in fact be a rational response to massive uncertainty abou [...]
- QED 53: quando c'è la salute c'è tutto (tre anni dopo).
by Alberto Bagnai in Goofynomics, 2015-07-28 10:20:00 UTC
Molto brevemente, perché poi devo farvi un bel sermone a parte... Come vedete, le cose stanno andando nella direzione nella quale temevamo sarebbero andate. Mi piacerebbe pensare di essere un menagramo. In realtà, come qui abbiamo studiato insieme, in quanto sta accadendo c'è una logica ben precisa, che ha operato decine di volte nel corso della "terza globalizzazione" (dal 1980 in poi). L'abbiamo descritta in termini letterari come " Romanzo di centro e periferia ", e in termini scientifici come ciclo (minskyano) di Frenkel . Ora siamo alla fase finale: la liquidazione. Non potendo svaluta [...]
- 'Are We Overestimating Inflation (Again?)'
by Mark Thoma in Economist's View, 2015-07-28 00:24:00 UTC
Cecchetti & Schoenholtz:
Are we overestimating inflation (again?) : Twenty years ago, a group of experts – the “ Boskin Commission ” – concluded that the U.S. consumer price index (CPI) systematically overstated inflation by 0.8 to 1.6 percentage points each year. Taking these findings to heart, the Bureau of Labor Statistics (BLS) got to work reducing this bias, so that by the mid-2000s, experts felt it had fallen by as much as half a percentage point.
We bring this up because there is a concern that as a consequence of the way in which we measure information technology (IT), healt [...]
- Rebonato on Bond-Yield Econometrics
by Francis Diebold in No Hesitations, 2015-07-27 14:09:00 UTC
Riccardo Rebonato (R) has a fascinating new paper , which builds most directly on important earlier work of� Cieslak and Povala (2010) (CP).� The cool thing about CP is the way it advances and blends both the spanning literature ("all information of relevance for yield prediction is embedded in the current term structure," e.g. via forward-rate tent functions as in Cochrane-Piazessi (2004) ), and the non-spanning literature ( "not all information of relevance for yield prediction is embedded in the current term structure," e.g. because certain macro variables seem to help predict risk premia, [...]
- Neoclassical Production Function Reader
by Mike Isaacson in Vulgar Economics, 2015-07-27 14:00:00 UTC
Two-Factor Production Function Charles Cobb & Paul Douglas - A Theory of Production Robert Solow - Technical Change and the Aggregate Production Function Anwar Shaikh - Laws of Production and Laws of Algebra: Humbug II CES Function Kenneth Arrow, et al. - Capital Labor Substitution and Economic Efficiency Jesus Felipe & John McCombie - The CES Production Function, the accounting identity, and Occam's razor Endogenous Technical Change Paul Romer - Endogenous Technological Change Francesco Caselli - Accounting for Cross-Country Income Differences Michael Isaacson - Braaaaaaaains! The Undead Humb [...]
- Are we overestimating inflation (again?)
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-07-27 12:16:54 UTC
Twenty years ago, a group of experts – the “ Boskin Commission ” – concluded that the U.S. consumer price index (CPI) systematically overstated inflation by 0.8 to 1.6 percentage points each year. Taking these findings to heart, the Bureau of Labor Statistics (BLS) got to work reducing this bias, so that by the mid-2000s, experts felt it had fallen by as much as half a percentage point. We bring this up because there is a concern that as a consequence of the way in which we measure information technology (IT), health care, digital content and the like, the degree to which conventional [...]
- Are China's Mayors Good at "Picking Winners"? An Evaluation of Managed Industrial Policy
by Matthew Kahn in Environmental and Urban Economics, 2015-07-25 21:47:00 UTC
Jianfeng Wu, Siqi Zheng, Weizeng Sun and I have just released a new NBER paper titled "The Birth of Edge Cities in China: Measuring the Spillover Effects of Industrial Parks". Abstract Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other. The resulting local economic growth creates new opportunities for real estate developers and retailers that develop properties and stores close to the new park. The city mayor has the politica [...]
- On welfare incentives
by chris in Stumbling and Mumbling, 2015-07-25 12:35:55 UTC
A loyal reader has chastised my defence of welfare benefits for ignoring incentive effects. This deserves a reply.
The issue here is not about Osborne's welfare cuts, simply because these haven't, net, made much difference to incentives. On the one hand, the rise in the "living wage" relative to Universal Credit will increase incentives to work. But on the other hand, this won't affect under-25s (who aren't covered by the wage floor); cuts to in-work tax credits reduce work incentives; and the higher taper rate reduces incentives to work longer. Overall, says the Resolution Foundation's David [...]
- Cross-country co-movement in long-term interest rates: a DSGE approach
by Christian Zimmermann in NEP-DGE blog, 2015-07-24 15:58:29 UTC
By Thomas Chin, Thomai Filippeli and Konstantinos Theodoridis
Long-term interest rates in a number of small open inflation-targeting economies co-move more strongly with US long-term rates than with short-term rates in those economies. We augment a standard small open economy model with imperfectly substitutable government bonds and time-varying term premia, that captures this phenomenon. The estimated model fits a range of US and UK data remarkably well, and produces term premium estimates that are comparable to estimates from the affine term [...]
- The male wage premium
by jamesz in TVHE, 2015-07-24 15:33:00 UTC
Wage inequality between men and women has split opinion in the UK after the Government last week announced that all large firms would have to publish the gap in average earnings between their male and female employees. In light of that debate, today’s HESA data on the pay of recent graduates is interesting. It shows that female graduates are slightly more likely than male graduates to be in work a year after graduating, but they earn considerably less.
Of course, that’s not necessarily a causal link and Ben Southwood rightly pointed out that , in the US, similar results are due to differences [...]
- Yes, Labour must change
by ? in Stumbling and Mumbling, 2015-07-24 13:02:00 UTC
Tony Blair's speech this week, paradoxically, reminded us of the need for new, radical economic policies. He said:
The most important characteristic of this world is: the scope, scale and speed of change. Change defines it.
Let's leave aside the obvious [...]
- Are firms ever going to empty their war chests?
by bankunderground in Bank Underground, 2015-07-24 09:30:00 UTC
Katie Farrant and Magda Rutkowska
UK private non-financial corporations (PNFCs) consistently ran a financial surplus between 2002 and 2013. They now hold around Â£1.8 trillion of financial assets, including Â£0.5 trillion of cash. This has attracted attention from policymakers and the media. Should we expect companies to spend these assets to finance investment? The MPC considers this to be possible (see e.g. the February 2015 Inflation Report ). Many agree, calling on companies to spend their âcash hoardsâ (see e.g. these articles in the Telegraph and the FT ). Here, we explain why we thi [...]
- Fertility, Longevity and International Capital Flows
by Christian Zimmermann in NEP-DGE blog, 2015-07-23 00:18:52 UTC
By Zs�fia B�r�ny, Nicolas Coeurdacier and St�phane Guibaud
The neoclassical growth model predicts large capital flows towards fast-growing emerging countries. We show that incorporating fertility and longevity into a lifecycle model of savings changes the standard predictions when countries differ in their ability to borrow inter-temporally and across generations through social security. In this environment, global aging triggers capital flows from emerging to developed countries, and countries’ current ac [...]
- A second correction in the Journal of Economic Perspectives
by John Whitehead in Environmental Economics, 2015-07-22 16:27:55 UTC
From Retraction Watch :�
The� Journal of Economic Perspectives � has published a second correction for a 2009� paper �that argued that some amount of global warming could lead to economic gains. ...
After the first correction was published, several people contacted the� JEP �to point out more issues with the paper. Editors worked with [Richard] Tol and outside researchers to update the paper again. ...
The latest correction probably wouldn’t be the end of the argument. In the final section of the latest correction, the JEP has provided an index of methods and materials in anticipation of fu [...]
- The Big Lesson of the Eurozone Crisis
by firstname.lastname@example.org (David Beckworth) in Macro and Other Market Musings, 2015-07-22 16:03:00 UTC
Paul Krugman notes that Eurozone crisis is a vindication of that optimum currency area (OCA) theory. I agree but would note the crisis also sheds light on the specialization versus endogeneity debate surrounding the OCA criteria. Interestingly, Krugman himself wrote some of the literature in this debate back in the early-to-mid 1990s. So what is the specialization versus endogeneity debate? To answer this question, first recall that the OCA theory says members of a currency union should share similar business cycles, have economic shock absorbers (fiscal transfers, labor mobility, and price fl [...]
- Random thoughts on happiness: how to be happy?
by noname in ZeeConomics, 2015-07-22 08:16:39 UTC
Happiness is a relative concept. Specifically, how happy you are depends on what your aspirations are, or how high you set the bar. For instance, if you are a blue-collar worker with a relatively low salary, and your current goal is to go on a camping trip to the Rockies, and you can do it, then, ceteris paribus , you are probably happier than a rich investment banker whose goal is to buy a private island but cannot do it because his bonus wasn’t as high as expected.
Of course an economist might ask, does the probability that one’s aspirations are fulfilled vary with income? One would expect t [...]
- Ozusowanie – obowiązkowy zestaw dla każdego
by k.mokrzycka in Obserwator Finansowy, 2015-07-21 08:37:58 UTC
RÃ³Å¼nicÄ miÄdzy pracownikiem etatowym a kontraktowym (u nas nazywanym Åmieciowym) wyjaÅnia Alex Tabarrok. Przymuszenie pracodawcÃ³w, by pracownicy kontraktowi otrzymywali wszelkie beneficja jak etatowi, to jak przymuszenie wszystkich hamburgerowni do podawania hamburgerÃ³w z frytkami i colÄ
, bo tak bÄdzie zgodnie z zasada sprawiedliwoÅci (kaÅ¼dy zasÅuguje na Happy Meal). OczywiÅcie pracodawcy obniÅ¼Ä
wÃ³wczas pÅace pracownikÃ³w. Wymaganie, by firmy obdarzaÅy benefitami kaÅ¼dego pracownika oznacza przymuszenie, by sprzedawaÅy pracownikom benefity, ktÃ³rych wartoÅÄ pracownicy uzn [...]
- Unpleasant debt dynamics: Can fiscal consolidations raise debt ratios?
by Christian Zimmermann in NEP-DGE blog, 2015-07-20 21:06:56 UTC
By Gabriela Castro, Ricardo Felix, Paulo Julio and Jose Maria
Using PESSOA, a medium-scale DSGE model for a small euro-area economy, we evaluate how fiscal adjustments impact short- and medium-term debt dynamics and output for alternative policy options, and budgetary and economic conditions. Fiscal adjustments may increase the public debt-to-GDP ratio in the short run, even for consolidations carried out in normal times in economies characterized by moderate indebtedness levels. Financial turmoils and hikes in the nationwide risk premia, c [...]
- Leveraging the link: Public Investment Management and Public-Private Partnerships
by ? in World Bank Blogs, 2015-07-20 17:25:00 UTC
Jordan is my second home, as I have worked there, off and on, since the late 1990s. I have watched Amman grow from a relaxed city into a hustling, bustling regional business and financial hub. Even though my Arabic is still rusty, there is no shortage of d [...]
- Letter from Delhi, Part 1
by Triplecrisis in Triple Crisis, 2015-07-20 12:00:44 UTC
Air Pollution as Environmental Injustice
This is part 1 of a two-part series from UMass-Amherst professor of economics and regular Triple Crisis contributor James K. Boyce. This part focuses on disparate exposure to air pollution in Dehli. Part 2, to be posted next week, focuses on solutions to the problem.
James K. Boyce
Arriving in Delhi in January, at the height of the winter pollution season, you notice the air as soon as you step off the plane. A pungent smell with hints of burning rubber and diesel fumes assaults the nose and stings the eyes. On the highway into the city center, a digita [...]
- ‘Metrics Monday: Outliers
by Marc F. Bellemare in Marc F. Bellemare, 2015-07-20 09:00:00 UTC
(Credit: Wolfram MathWorld.)
This post is not about Gladwellian pabulum. Rather, it is about the econometric problem posed by outliers, whoseÂ presence of extreme-valued observations in a data set whose presence might cause problems of estimation and inference, and which a few colleagues have asked for a ‘Metrics Monday post on a few weeks ago.
Outliers cause estimation problems because they bias point estimates. They cause inference problems because they cause standard errors to be too large,Â thereby making it more likely that one will fail to reject a false null, i.e., a type II error. For [...]
- Maternal time investment in early childhood
by noname in ZeeConomics, 2015-07-19 12:17:51 UTC
Researchers have shown that early childhood (pre-primary) education is quite important. Skill differences among children already exist by the time they start primary school, and they’re likely to persist over time. But how do these skill differences arise?
Factors including income, family structure, parental education, maternal employment, child care, school quality and neighborhood characteristics all play a role. But the subject of this post is maternal time investment in early childhood.
To address this question, Del Bono et al. (2015) ( ungated ) use data from more than 8,000 British chil [...]
- Labour's economic narrative
by chris in Stumbling and Mumbling, 2015-07-19 11:31:59 UTC
I like Paul Bernal's description of Blairites as like Elvis impersonators who only impersonate the old, fat conservative rather than the younger radical man.
I'd add that one way in which this is true is that the young Blair had a distinctive economic narrative. Globalization and technical change, he said, were transforming the economy and required new policies - such as more education because low-skilled jobs were disappearing overseas, and macroeconomic stability to attract and retain investment.
This narrative had its faults. But it was an act of genius compared to the fiction that dominat [...]
- No Evidence of Distortion?
by Don Boudreaux in Cafe Hayek, 2015-07-18 22:02:47 UTC
Tweet Suppose that, say, Bob Higgs or George Will or Richard Epstein or Holman Jenkins or Deirdre McCloskey or David Boaz – or, really, any well-respected public intellectual known to favor free markets – wrote the following in a major publication:
Thereâs just no evidence that raising the minimum wage fails to destroy some jobs, even when the starting point is as low as it is in modern America.
What would be the political left’s reaction to this assertion? Â Almost certainly a reaction from the political left would occur quickly and be full of indignation and accusations [...]
- Paul Krugman Enters the Field of Labor Economics
by Matthew Kahn in Environmental and Urban Economics, 2015-07-17 16:21:00 UTC
Did Prof. David Neumark agree with Paul Krugman's NY Times piece today praising the benefits of raising the minimum wage? � Here are some direct quotes that challenged some things that Becker, Heckman, Rosen, Lazear, Murphy and Topel taught me a long time ago. "Many economists used to think of the labor market as being pretty much like the market for anything else, with the prices of different kinds of labor — that is, wage rates — fully determined by supply and demand. So if wages for many workers have stagnated or declined, it must be because demand for their services is falling." ..... [...]
- Labor market reforms and current account imbalances: Beggar-thy-neighbor policies in a currency union?
by Christian Zimmermann in NEP-DGE blog, 2015-07-17 13:48:53 UTC
By Timo Baas and Ansgar Belke
Member countries of the European Monetary Union (EMU) initiated wideranging labor market reforms in the last decade. This process is ongoing as countries that are faced with serious labor market imbalances perceive reforms as the fastest way to restore competitiveness within a currency union. This fosters fears among observers about a beggar-thy-neighbor policy that leaves non-reforming countries with a loss in competitiveness and an increase in foreign debt. Using a two-country, two-sector search and matching DSGE [...]
- How can MOOCs boost higher education in developing countries?
by ? in Agenda - The World Economic Forum, 2015-07-17 07:30:00 UTC
There has been a lot of talk and research on massive open online courses (MOOCs) and their potential impact, but is it really applicable to developing countries? How can universities take advantage of online content? And what kind of regulations and qualit [...]
- Links and Quotes for July 15, 2015: inequality, innovation, Chicago, and more
by James Pethokoukis in AEIdeas, 2015-07-15 20:49:19 UTC
A pretty good mid-week selection: A Discussion of Thomas Pikettyâs Capital in the Twenty-First Century: Does More Capital Increase Inequality? –Â Maxim Pinkovskiy | Â “One policy prescription that Capital implies is that supporting economic growth should help keep inequality low. Higher rates of growth (if rÂ remains steady) decrease the gap r â g and lower the steady-state capital-output ratio. So, an additional argument for policies aimed at improving the overall efficiency of the economyâsuch as reforming education, streamlining regulations, or investing in public goodsâis that th [...]
- Google's Zeitgeist Update as of July 2015: Rising Interest in Gay Marriage and Declining Interest in Global Warming
by Matthew Kahn in Environmental and Urban Economics, 2015-07-15 20:28:00 UTC
Google offers plenty of insights at a low cost. � Below, I use Google Trends� �to make a graph of Google Web Search activity in the United States from January 2004 until the present. �To keep this simple, I contrast time series patterns in search for "Gay Marriage" versus search for "Global Warming" �(climate change generates little search activity). � Do you note any patterns in the diagram below? �The red line represents the Global Warming time series. It rises until 2007 and then it has shrunk sharply in recent years. Despite active efforts by the NY Times and other thought leaders to highl [...]
- Maybe the fundamentals of the US economy are strong, and Americans are just impatient
by James Pethokoukis in AEIdeas, 2015-07-15 16:47:38 UTC
Maybe the US is stuck with a 2% economy. Secular stagnation as far as the eye can see. After all, US productivity growth has been anemic for decade. Maybe the techno-pessimists are right that all the buzz of activity in Silicon Valley really doesn’t amount to much. What’s an app vs. electrification or the internal combustion engine? Then again, maybe we are having trouble measuring the gains from modern innovation and technological change. Or maybe we just aren’t patient enough for the fruits to arrive.Â From ”Â Wall of Worries: Reflections on the Secular Stagnation Debate” byÂ Barry Eichengre [...]
- Who are most hurt by South Africa’s new visa regulations?
by ? in Johan Fourie's blog, 2015-07-14 18:33:00 UTC
No buyers, no job: Women at the Khayelitsha craft market rely on large numbers of tourists to make a living
At the beginning of June, South Africa imposed two new visa regulations for families traveling to South Africa. The first was that�any child wh [...]
- Links from the Wall Street Journal: Green Lego and Safer Plane Rides in Asia
by Matthew Kahn in Environmental and Urban Economics, 2015-07-14 15:40:00 UTC
Lego is a popular building block in kids toys. Have you ever noticed that Lego pieces are built out of plastic? � The WSJ journal reports that the manufacturer wants to reduce its carbon footprint by swapping out plastic and using a "bio-based" input instead. �Ingenuity again. In other news, as the middle class grows in Southeast Asia --- billions of flight miles are taking place and air fatalities have occurred. � There is an increased demand for air safety in this region. � The economics of air travel risk raises several issues; 1. �salient risk --- we all "fear" flying but it is safer than [...]
- Monetary and macroprudential policy with foreign currency loans
by Christian Zimmermann in NEP-DGE blog, 2015-07-14 13:54:22 UTC
By MichaÅ Brzoza-Brzezina, Marcin Kolasa and Krzysztof Makarski
In a number of countries a substantial proportion of mortgage loans is denominated in foreign currency. In this paper we demonstrate how their presence affects economic policy and agents’ welfare. To this end we construct a small open economy model with housing loans denominated in domestic or foreign currency. The model is calibrated for Poland – a typical small open economy with a large share of foreign currency loans (FCL). We show that FCLs negatively affect the transmis [...]
- In defence of welfare
by ? in Stumbling and Mumbling, 2015-07-14 13:11:00 UTC
The Guardian says Harriet Harman is worried that Labour "will be viewed as the party of welfare, not work". This is unfortunate, because someone must stand up for welfare.
First, let's remember that working-age welfare recipients are, to some extent, not a [...]
- Understanding Diffusion Models of Growth
by dvollrath in The Growth Economics Blog, 2015-07-13 17:29:37 UTC
There has been a recent bloom of research that studies the diffusion of ideas and economic growth. Alvarez, Buera, and Lucas (2013), Lucas (2009), Lucas and Moll (2014), and Perla and Tonetti (2014) are some of the most prominent examples. In each case, firms or individuals learn new techniques after meeting other firms or individuals with better ideas. The papers show the assumptions under which this type of diffusion or imitation process will lead to constant, sustained growth.
I’ve been trying to get my head around what these models teach me about the process of economic growth. I’m going [...]
- After Greece: Saving EMU
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-07-13 12:37:21 UTC
Euro-area leaders announced yet another agreement with Greece this morning. However, the survival of the euro area has never been about the fate of Greece. Instead, it is whether the Europeans will implement the reforms necessary to keep the euro area together. If they do, the common currency will endure. If they don’t, then the euro may not survive the next big adverse shock. Saving the euro requires the creation of a truly pan-European financial system. While a unified financial market would surely improve capital allocation across the continent, it is a full euro-area banking union that i [...]
- Seeking feedback: Towards a New Keynesian Theory of the Price Level
by bankunderground in Bank Underground, 2015-07-13 07:30:00 UTC
How do central banks achieve nominal stability?Â In a new working paper, I show that in a version of the textbook New Keynesian model with incomplete information, beyond establishing the steady-state inflation rate a central bank doesnât need to do anything for prices (and not just the rate of inflation) to remain determinate and stationary.Â The paper is available viaÂ theÂ Staff Working Paper No.532 Â orÂ my research page (a non-technical summary is here ). Itâs still a work in progress and any feedback is welcome, so please feel free toÂ contact me .
The headline res [...]
- MOOCs and e-learning for higher education in developing countries: the case of Tajikistan
by ? in World Bank Blogs, 2015-07-13 03:48:00 UTC
There has been a lot of talk and research on massive open online courses (MOOCs) and their potential impact, but is it really applicable to developing countries? How can universities take advantage of online content? And what kind of regulations and qualit [...]
- Here's every Greek financial crisis since 1829
by Andy Kiersz in Business Insider, 2015-07-12 14:37:00 UTC
Greece's current financial crisis appears to be far from over. But as we wait to see what happens next, it's worth noting that Greece has a long history of financial crises. In their landmark 2010 paper "From Financial Crash to Debt Crisis" and elaborated on in their book, "This Time Is Different: Eight Centuries of Financial Folly," economists Carmen Reinhart and Kenneth Rogoff assembled a comprehensive timeline of financial crises around the world going back to the start of the 19th century. Reinhart and Rogoff classified six major types of financial crises: Banking Crises : Bank runs and s [...]
by Mike Isaacson in Vulgar Economics, 2015-07-12 13:00:00 UTC
After weeks of googling myself, I am pleased to announce that my working paper on human capital augmented production functions is finally live on RePEc. You can view it here . You might recognize the theoretical proof from a previous post I wrote on here a few months ago while the paper was still in development. What is in the paper that was not in the blog post are as follows: A reasonable review of the literature A simulation to drive the point home Zombie puns Enjoy, and leave comments below. Or cite me in a rejoinder - that would be cool too! [...]
- Is inequality good for growth?
by noname in ZeeConomics, 2015-07-12 12:01:24 UTC
Whether inequality affects growth is an interesting question for at least two reasons. First, today inequality is a hot topic, and many claim it is bad for our economy. Is there any truth to these claims? Should we actively try to reduce inequality?
Second, if wealth distribution matters for growth, then differences in development among countries can potentially be (partially) explained by their initial, historical wealth distributions. For instance, if inequality is good for growth, then it could be that countries with high inequality at the dawn of the Industrial Revolution (i.e. when growth [...]
- The Chinese Solution to Pollution is Dilution?
by Matthew Kahn in Environmental and Urban Economics, 2015-07-12 03:50:00 UTC
This news item reports that the Beijing Central Government will move several low level government activities out of Beijing. �For those economists who know some economic geography, this Government decisions mirrors the discussion in this excellent IER paper called Firm Fragmentation and Urban Patterns. � � �In this information age, it makes no sense to have low level government functions taking up valuable center city Beijing real estate when this activity can be decentralized to cheaper places. �The superstar city land can be deployed to more efficient uses and the decentralization of this ac [...]
- Education's Impact on Health: Selection or Treatment Effects?
by Matthew Kahn in Environmental and Urban Economics, 2015-07-12 03:02:00 UTC
The causal effects of education on health is an important and optimistic hypothesis. More than 40 years ago, �Michael Grossman started this literature with this paper written based on Gary Becker's household production function approach. �This is an optimistic hypothesis because educational attainment is rising all over the world. If education causes one to be a more efficient producer of health then new educated cohorts will be healthier, more productive people. They will be better parents, be more involved with their friends, family and their workplace. �The wealth of nations ultimately is t [...]
- Minimum wages & jobs
by chris in Stumbling and Mumbling, 2015-07-10 13:04:35 UTC
I woke up this morning with a slight headache, so I took a paracetamol and now feel fine. But if one paracetamol makes me feel OK then surely a hundred will make me feel fantastic.
You might spot an error in this thinking. It is, though, the same mistake that some critics of me (and Tim Harford and Martin Wolf and Ryan Bourne ) are making when they question our hostility towards the proposed rise in the minimum wage.
I'll grant that most studies (pdf) of the impact of the UK minimum wage have found no significant impact upon employment - although (pdf) there ( pdf ) are exceptions to this (pd [...]
- Benign liquidity traps
by Tyler Cowen in Marginal Revolution, 2015-07-10 04:01:17 UTC
Stefan Homburg has a new paper on this topic .Â I don’t quite get how the model hands together, but still the effort alone strikes me as very real progress in this area:
Japan has been in a benign liquidity trap since 1990. In a benign liquidity trap, interest rates approach zero, prices decline, and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with JapanÂ´s performance and resolves puzzles associated with liquidity traps. Possible [...]
- #tbt Gary Becker 1962 Irrational Behavior and Economic Theory
by Mike Isaacson in Vulgar Economics, 2015-07-09 15:00:00 UTC
Gary Becker is often known for his penchant for the hyper-rational. The large body of his work attempts to tease individualistic rationality out of seemingly irrational behavior. In this pursuit, he sought to include all sorts of moral values into the "utility function" to explain things like monogamy , addiction , and suicide . Thus, it might come as a surprise to most to learn that one of his earlier papers made the case that one didn't need any sort of utility function at all in order to derive normal economic behavior. According to one of my mentors, this paper is the best thing Becker eve [...]
- Trading on Leaked Macroeconomic Data
by email@example.com (Carola) in Quantitative Ease, 2015-07-08 17:14:00 UTC
The official release times of U.S. macroeconomic data are big deals in financial markets. A new paper finds�evidence of�substantial informed trading before the official release time of certain macroeconomic variables, suggesting that information is often leaked.�Alexander Kurov,�Alessio Sancetta,�Georg H. Strasser, and�Marketa Halova Wolfe examine high-frequency stock index and Treasury futures markets data around releases of U.S. macroeconomic announcements: These announcements are quintessential updates to public information on the economy and fundamental inputs to asset pricing. More than a [...]
- 'Trading on Leaked Macroeconomic Data'
by Mark Thoma in Economist's View, 2015-07-08 10:39:09 UTC
Trading on Leaked Macroeconomic Data : The official release times of U.S. macroeconomic data are big deals in financial markets. A new paper finds�evidence of�substantial informed trading before the official release time of certain macroeconomic variables, suggesting that information is often leaked.�Alexander Kurov,�Alessio Sancetta,�Georg H. Strasser, and�Marketa Halova Wolfe examine high-frequency stock index and Treasury futures markets data around releases of U.S. macroeconomic announcement...
They consider the 30 macroeconomic announcements that other authors have shown [...]
- Some Recent Research on Exchange Rates
by Menzie Chinn in Econbrowser, 2015-07-07 14:36:46 UTC
Here is some interesting work I’ve seen recently in Paris and Cambridge, MA.
First up, the Banque de France and Sciences Po organized a workshop on Recent Developments in Exchange Rate Economics
Here’s the program (links may go to older versions of the papers, and some presentations haven’t quite made it to paper form):
Quality, Trade and Exchange Rate Pass-Through
Natalie Chen (University of Warwick)
Luciana Juvenal (International Monetary Fund)
Discussant: Philippe Martin (Sciences Po)
Invoicing Currency, Firm Size and Hedging
Isabelle Mejean (Ecole Polytechnique)
Julien Martin (Univers [...]
- Welfare state trade-offs
by chris in Stumbling and Mumbling, 2015-07-07 12:58:06 UTC
You wouldn't guess it from some of the more simple -minded calls for cuts in welfare benefits, but changes to welfare spending involve some tricky choices. Here are a few of the trade-offs involved:
1. A big welfare state vs cyclical risk . The fact is that recessions (pdf ) are unpredictable . This means that monetary and fiscal policy cannot prevent recessions because policy-makers cannot see them coming. In this context, a big welfare state acts as an automatic stabilizer, ensuring that people don't suffer big falls in income if they suffer job loss or cuts in their hours.
UK history is con [...]
- Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States by Eric A. Hanushek (firstname.lastname@example.org), Jens Ruhose (email@example.com) and Ludger Woessmann (firstname.lastname@example.org)
by maximorossi in NEP-LTV blog, 2015-07-07 00:06:24 UTC
Abstract: Although many U.S. state policies presume that human capital is important for state economic development, there is little research linking better education to state incomes. In a complement to international studies of income differences, we investigate the extent to which quality-adjusted measures of human capital can explain within-country income differences. We develop detailed measures of state human capital based on school attainment from census micro data and on cognitive skills from state- and country-of-origin achievement tests. Partitioning curre [...]
- Texas Governor Rick Perry Presents Some Solid Econ 101 Logic
by Matthew Kahn in Environmental and Urban Economics, 2015-07-06 20:30:00 UTC
In this gated WSJ Editorial , Gov. Rick Perry is quoted and says; "There is a lot of talk in Washington about inequality. Income inequality. But there is a lot less talk about the inequality that arises from the high cost of everyday life. �In blue state coastal cities, you have these strict zoning laws, environmental regulations that have prevented builders from expanding the housing supply. And that may be great for the venture capitalist who wants to keep a nice view of San Francisco Bay, but it's not so great for the single mother working two jobs in order to pay rent and still put food on [...]
- Energy Leapfrogging (or Not)
by email@example.com (David Stern) in Stochastic Trend, 2015-07-06 12:20:00 UTC
Arthur van Benthem has a recent paper in the Journal of the Association of Environmental and Resource Economists titled "Energy Leapfrogging". The main thesis of the paper is that despite presumed improvements in the energy efficiency of individual technologies such as cars and refrigerators, energy intensity in developing countries today is similar to what it was in today's developed countries when they were at a similar income level. There is no "energy leapfrogging". This is also an implication of our paper " Energy and Economic Growth: the Stylized Facts ". If there has been an almost cons [...]
- China's stock market boom and bust
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-07-06 11:23:21 UTC
Ask a well-educated person which country boasts the largest equity market and you’ll usually get the right answer: the United States. Ask which country has the second largest market and you’re likely to get a range of answers: Japan? Britain? Germany? The answer is China. In terms of annual trading volume, China’s equity market has been #2 since 2009. Measured by total market capitalization, it has been #2 for seven of the past nine years. As of May 2015, the market capitalization of domestic issues on the booming Shanghai (SSE) and Shenzhen (SZE) exchanges combined surpassed US$10 trill [...]
- Dodd-Frank: Five Years After
by Stephen G. Cecchetti in Huffington Post Business, 2015-07-05 11:57:50 UTC
Note to Editors: This post is coauthored with authorized HuffPo blogger Kermit Schoenholt z. On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory reform in the United States since the 1930s. DF explicitly aims to limit systemic risk, allow for the safe resolution of the largest intermediaries, submit risky nonbanks to greater scrutiny, and reform derivatives trading. How to celebrate its fifth birthday? Well, if you are like us, it will be a sober affair, reflecting serious worries about [...]
- Dodd-Frank: Five Years After
by Stephen G. Cecchetti in Huffington Post Business, 2015-07-05 07:57:50 UTC
Note to Editors: This post is coauthored with authorized HuffPo blogger Kermit Schoenholt z.
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory reform in the United States since the 1930s. DF explicitly aims to limit systemic risk, allow for the safe resolution of the largest intermediaries, submit risky nonbanks to greater scrutiny, and reform derivatives trading.
How to celebrate its fifth birthday? Well, if you are like us, it will be a sober affair, reflecting serious worries abou [...]
- The something for nothing culture
by chris in Stumbling and Mumbling, 2015-07-04 12:28:19 UTC
One thing I'd like George Osborne to do in Wednesday's "emergency" Budget is to end the something for nothing culture.
I know someone who has made almost £400,000 tax-free without working - equivalent to almost 20 years of getting the maximum welfare benefits the Tories are considering. Thanks to this, he is looking forward to a prosperous early retirement. This is surely unfair, given that so many younger people might have to work until they drop .
That someone, of course, is me. And the £400,000 is the tax-free profit I made from rising house prices.
In this respect, I am typically Britis [...]
- #tbt Shapley & Shubik 1964 Ownership and the Production Function
by Mike Isaacson in Vulgar Economics, 2015-07-02 14:00:00 UTC
Before the modern era of competitive game theory -- what one of my mentors refers to as the "neoclassical bicycle repair shop" -- game theory was a tool with which to challenge neoclassical dogma about how individuals behaved at the microeconomic level. Lloyd Shapley, in particular, revolutionized cooperative game theory with what came to be known as the Shapley value -- a quantitative measure of whether or not to take a particular role in a game. This form of game theory -- what might by today's standards of competitive game theory resemble a sort of meta-game theory -- sought to investigate [...]