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- What we don’t know doesn’t hurt us: rational inattention and the permanent income hypothesis in general equilibrium
by Christian Zimmermann in NEP-DGE blog, 2015-03-26 23:59:15 UTC
By Jun Nie, Yulei Luo, Gaowang Wang and Eric Young
This paper derives the general equilibrium effects of rational inattention (or RI; Sims 2003,2010) in a model of incomplete income insurance (Huggett 1993, Wang 2003). We show that,under the assumption of CARA utility with Gaussian shocks, the permanent income hypothesis (PIH) arises in steady state equilibrium due to a balancing of precautionary savings and impatience. We then explore how RI affects the equilibrium joint dynamics of consumption, income and wealth, and find that elastic at [...]
- 11 Facts About Your Soul-Sucking Commute
by ? in scienceofus, 2015-03-26 12:51:00 UTC
Maybe you saw the recent, disheartening news that New Yorkers have longer work weeks than residents of any other major U.S. city. One of the main reasons the New York City work week is so long, according to the new report by city comptroller Scott M. Strin [...]
- Bernanke Says “The Fed Has a Rule.” But It’s Only Constrained Discretion and It Hasn’t Worked
by John Taylor in Economics One, 2015-03-26 04:25:34 UTC
In response to a question about the policy rules bill at Brookings recently, Ben Bernanke remarked that the “The Fed has a rule.” His claim surprised quite a few people, especially given the Fed’s resistance to the policy rules bill, so he then went on to explain : “The Fed’s rule is that we will go for a two percent inflation rate. We will go for the natural rate of unemployment. We will put equal weight on those two things. We will give you information about our projection, our interest rates. That is a rule.” But the rule that Bernanke has in mind is not a rule for the inst [...]
by himaginary in himaginaryの日記, 2015-03-26 00:00:00 UTC
ルールベースの金融政策を追い求める中で クルーグマン や イエレン や サマーズ の発言に噛みついてきたジョン・テイラーが、今度はバーナンキの発言を 槍玉に挙げた 。
- La globalisation financière et son lot de trilemmes
by Martin Anota in D'un champ l'autre, 2015-03-25 21:16:52 UTC
La mondialisation impose de puissantes contraintes aux systèmes économiques, financiers, sociaux et politiques. Michael Bordo et Harold James passent ainsi en revue quatre « trilemmes » identifiés par la littérature en finance internationale.
Le plus connu est le triangle des incompatibilités formalisé par Robert Mundell (1963). Selon lui, il ne peut y avoir simultanément liberté des mouvements des capitaux, fixité du taux de change et autonomie de la politique monétaire. Finalement, ce trilemme suggère que les pays doivent choisir entre deux alternatives : soit [...]
- Busting 5 myths on political-economy analysis
by ? in World Bank Blogs, 2015-03-25 17:02:00 UTC
A young Egyptian protester holding an Egyptian flag, Cairo, Egypt. Photo: Kim Eun Yeul / World Bank
“There has been a broad recognition amongst economists that “institutions matter”: poor countries are not poor because they lack resource [...]
- Alienation: the non-issue
by ? in Stumbling and Mumbling, 2015-03-25 13:19:00 UTC
Matthew Syed in the Times gives us a wonderful example of Marxist thinking. He asks why marathon running is so popular, and says it's because it satisfies a desire for self-improvement which we cannot get from paid labour:
We live in a world where the con [...]
- Grecia e Bulgaria
by Alberto Bagnai in Goofynomics, 2015-03-24 22:39:00 UTC
Su Bruegel.org Guntram Wolff si chiede: "Ma perché due paesi in fondo abbastanza simili come la Grecia e la Bulgaria hanno reagito alla crisi in modo tanto diverso? ", e fa tutto un discorsetto il cui senso è che la Grecia è stata penalizzata dall'imprudenza fiscale del proprio governo. Avrebbero dovuto risparmiare di più, nel tempo delle vacche grasse, ecc. Questo è certamente vero, non lo si discute. Indubbiamente, il fatto di avere un debito già alto, anche se stabile, ha sottratto "spazio fiscale" al governo greco. Ma è tutto lì? Intanto, a me la Bulgaria più che la Grecia ricorda [...]
- Zero UK Inflation
by Mainly Macro in Mainly Macro, 2015-03-24 16:22:00 UTC
Today it was announced that UK consumer price inflation hit zero in February. The ONS estimate that we have to go back to the 1960s for the last time this happened. More importantly, core inflation fell back 0.2% to 1.2%, after 0.1% increases in the previous two months. As Geoff Tily points out , if you take out the 0.2% contribution from the decision to raise student fees (which are hardly an indicator of excess demand), then the Governor could be writing a letter to the Chancellor based on core inflation, and not just the actual inflation rate. The Chancellor is in election mode and so does [...]
- ¿Comprometen las cuotas la calidad de los políticos? No parece.
by Luis Abenza in Politikon, 2015-03-24 09:02:44 UTC
En toda discusiÃ³n sobre la representaciÃ³n de las mujeres en polÃtica, alguien argumenta contra las cuotas en nombre del principio de mÃ©rito y capacidad. Sin embargo, Â¿Existe ese compromiso entre la calidad de los polÃticos y la representaciÃ³n de las mujeres? Â¿Debemos renunciar al mÃ©rito y capacidad si queremos que nuestros gobiernos sean mÃ¡s representativos en tÃ©rminos de gÃ©nero?
En el pasado hemos hablado de cÃ³mo la presencia de las mujeres en las instituciones afecta a muchos aspectos de la vida pÃºblica. Sin embargo, plantear el debate sobre las cuotas como un conflicto entre e [...]
- Contract Farming and Food Security: Slides of my Presentation at the CSAE Conference
by Marc F. Bellemare in Marc F. Bellemare, 2015-03-24 09:00:20 UTC
This past Sunday I was presenting at the annual conference of the Centre for the Study of African Economies at Oxford. The topic of my talk was “Smallholder Participation in Contract Farming and Food Security,” a paper in which my coauthor Lindsey Novak and I look at the relationship between smallholder participation in agricultural value chains and the duration of the hungry season–how many monthsÂ those households wentÂ without eating three meals a day over the last year–experienced by those smallholder households in Madagascar.
In our paper, we find that
Participation in contract farming i [...]
- Should the UK stay or go? The economic consequences of Britain leaving the EU
by Blog Admin in EUROPP European Politics and Policy, 2015-03-24 07:30:49 UTC
How would a British exit from the EU affect the UK’s economy? Swati Dhingra , Gianmarco Ottaviano and Thomas Sampson outline the economic consequences of a Brexit, writing that reduced integration with EU countries is likely to cost the UK economy far more than is gained from lower contributions to the EU budget.
The direction of UK trade policy with its biggest trade partner – the EU – will be decided in the upcoming general election. The Conservatives are committed to holding an ‘in-or-out’ referendum on membership by 2017 while Labour and the Liberal Democrats have opposed th [...]
- Four concerns about schools at the top of the election agenda
by Sandra McNally, Professor in the School of Economics at University of Surrey in The Conversation, 2015-03-24 06:23:12 UTC
Counting up the costs ahead of the election. Hopscotch via Joanna Stankiewicz-Witek/www.shutterstock.com With education policy set to play an important part in the May general election campaign, debates around the future direction of the school system will take place against the backdrop of fast-paced reforms made during the coalition’s time in office.
These four key issues are likely to face scrutiny when it comes to schools policy.
1. How the UK measures up
Comparisons with Finland, Singapore and Korea abound. The UK continues to perform at about the OECD average in international ranki [...]
- Pourquoi le New Deal français a-t-il échoué ?
by Martin Anota in D'un champ l'autre, 2015-03-23 22:23:46 UTC
De nombreuses études suggèrent que les mesures budgétaires et monétaires associées au New Deal de Roosevelt ont contribué à la reprise américaine en stimulant la demande globale. L’impact sur l’offre est toutefois plus controversé. D’un côté, parmi les nouveaux keynésiens, Gauti Eggertsson (2012) a affirmé que la sortie de la déflation joua un rôle important dans la sortie de la dépression. En facilitant la collusion entre les travailleurs et les entreprises, le New Deal entraîna une hausse des prix et des salaires et mit ainsi un terme à la déflati [...]
- Should we stay or should we go? The economic consequences of leaving the EU
by Joel Suss in British Politics and Policy at LSE, 2015-03-23 14:00:04 UTC
How will a British exit from the EU affect the UK’s economy? In this article, Swati Dhingra , Gianmarco Ottaviano andÂ Thomas Sampson Â outline the economic consequences of a Brexit, writing that reduced integration with EU countries is likely to cost the UK economy far more than is gained from lower contributions to the EU budget.
The direction of UK trade policy with its biggest trade partner â the EU âÂ will be decided in this upcoming general election. The Conservatives are committed to holding an âin-or-outâ referendum on membership by 2017 while Labour and the Liberal Democrats [...]
- A Simple Guide to "Secular Stagnation"
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-03-23 13:00:33 UTC
Since its cyclical peak in 2007 – just prior to the financial crisis – the U.S. economy has grown by only 1.2% at an annual rate. This is down sharply from the 3.0% pace that had prevailed since 1990. The resulting cumulative shortfall now exceeds $2 trillion, or more than $6,500 per capita. Naturally, we all want to know why. And what, if anything, to do about it. The conventional textbook explanation is that the trend of potential output has slowed sharply. Potential output is a supply concept: In the long run, when all prices (including wages and interest rates) have adjusted, aggregate [...]
- Will Fed Tightening Choke Emerging Markets?
by Jeffrey Frankel in Project Syndicate, 2015-03-23 12:00:18 UTC
CAMBRIDGE – As the Federal Reserve moves closer to initiating one of the most long-awaited and widely predicted periods of rising short-term interest rates in the United States, many are asking how emerging markets will be affected. Indeed, the question has been asked at least since May 2013, when then-Fed Chairman Ben Bernanke famously announced that quantitative easing would be “tapered” later that year, causing long-term US interest rates to rise and prompting a reversal of capital flows to emerging markets.
The fear, as IMF Managing Director Christine Lagarde has reminded us , is of [...]
- Group, then Threaten: How Bad Ideas Move Millions by Mark Harrison
by Mark Harrison in Mark Harrison's blog, 2015-03-23 08:00:23 UTC
Writing about web page http://dx.doi.org/10.1098/rsif.2014.0719
I've been thinking: What is it that enables a bad idea suddenly to spread across millions of people? Here are some of the things I have in mind:
In France the National Front is reported as leading all other parties in current opinion polls, having won barely 10 percent of the vote in the 2007 presidential election.
In January's general election, nearly 40 percent of Greek voters supported Syriza, compared wtih fewer than 5 percent as recently as 2009.
Since narrowly rejecting indendence in last year's referendum, Scotland [...]
- Debt Constraints and Unemployment
by Christian Zimmermann in NEP-DGE blog, 2015-03-23 04:29:05 UTC
By Patrick Kehoe, Virgiliu Midrigan and Elena Pastorino
In the Great Contraction, regions of the United States that experienced the largest change in household debt to income ratios also experienced the largest drops in output and employment. Such output drops not only occurred for firms that sell primarily to a local region but also for regional establishments of nation-wide firms that sell highly traded goods to both the rest of the United States and abroad. These patterns are difficult to reconcile with standard models of financial friction [...]
- Key environment policy still unknown in the NSW election
by Neil Perry, Research Lecturer at University of Western Sydney in The Conversation, 2015-03-23 02:34:02 UTC
NSW Labor has promised a Great Koala National Park to protect koalas, but what about more insidious threats to the environment? Nicki Mannix/Flickr , CC BY With less than a week to go until the New South Wales state election, there are still major concerns about what the election holds for the state’s wildlife and ecosystems.
NSW has nearly 300 threatened animal species – including koalas, pygmy-possums , and a number of lesser known species such as Corroborree Frogs and Regent Honeyeaters – and more than 600 species of threatened plants.
Both major parties have made promises to save [...]
- Does education pay off for criminals?
by nawmsayn in ZeeConomics, 2015-03-22 18:56:18 UTC
Returns to education on the labor market are sizable and have been growing. But is this the case for illegitimate activities as well? Do criminals have positive returns to education? On the one hand, less educated individuals are more likely to become criminals. But this doesn’t preclude the possibility that more educated criminals be more successful.
Of course, crime is a rather loose definition that includes a variety of activities. One could expect that there is no returns to education in certain criminal activities. But what about organized crime? Setting up rackets is like extracting opti [...]
- A Quick Point on Models
by JW Mason in The Slack Wire, 2015-03-21 14:18:00 UTC
According to Keynes the purpose of economics is "to provide ourselves with an organised and orderly method of thinking out particular problems"; it is "a way of thinking ... in terms of models joined to the art of choosing models which are relevant to the contemporary world." (Quoted here .) I want to amplify on that just a bit. The test of a good model is not whether it corresponds to the true underlying structure of the world, but whether it usefully captures some of the regularities in the concrete phenomena we observe. There are lots of different regularities, more or less bounded in time, [...]
- Pourquoi les travailleurs américains se sont-ils appauvris ?
by Martin Anota in D'un champ l'autre, 2015-03-21 10:12:15 UTC
Entre 1983 et 2008, les importations américaines de biens manufacturés ont doublé, tandis que l’emploi des firmes multinationales américaines tripla dans les pays à faible revenu. Une part essentielle de ces dynamiques concerne la Chine. Suite à l’accession de cette dernière à l’OMC en 2001, les exportations chinoises vers les Etats-Unis ont connu un boom. Entre 1983 et 2008, 8 % de l’ensemble des importations américaines sur cette période ont été réalisées en provenance de la Chine. Or, le secteur manufacturé américain abritait 16 millions d’emplois [...]
- No One Expects the Spanish Inquisition: More on D.K. Levine and J.M Keynes
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2015-03-20 20:54:00 UTC
I guess I shouldn't be surprised. David Levine's piece on Keynesian economics appears to have generated plenty of heat. See for example the comments section in my post linking to Levine. I'm imagining an angry mob dressed like the Pythons, as in the photo above, running through the streets of Florence looking for Levine. Each has a copy of the General Theory, and they're aiming to inflict torture by taking turns reciting it to David, until he renounces his heretical writings. What drew my attention to Levine's piece initially were blog posts by Brad DeLong and Nick Rowe. If Levine's piece were [...]
- The productivity policy paradox
by ? in Stumbling and Mumbling, 2015-03-20 12:55:00 UTC
"Nearly all future growth depends on a productivity resurgence" says Martin Wolf. This being so, Simon is right to deplore the fact that George Osborne never mentioned the productivity stagnation in his Budget.
This, though, raises a paradox - that whilst [...]
- Help-to-Buy ISAs will end up feathering nests of the wealthy – here's how
by Christian Hilber, Associate Professor of Economic Geography (Reader), Director of MSc in Real Estate Economics and Finance at London School of Economics and Political Science in The Conversation, 2015-03-19 14:23:26 UTC
Feeding the beast? Diana Parkhouse , CC BY George Osborne’s bid to boost home ownership in Britain might look like an effort to give young people a leg-up onto the housing ladder, but the evidence suggests they will be sorely disappointed. The Chancellor of the Exchequer’s budget unveiled a new “Help-to-Buy ISA” savings account which will subsidise deposits for first-time buyers while leaving untouched the fundamental flaws at the heart of our growing housing crisis.
The new ISA savings accounts will be available through banks and building societies from this autumn. In a nutshell, th [...]
- Euro area “lowflation” becomes “deflation”
by ? in FRED blog, 2015-03-19 13:00:39 UTC
Inflation in the euro area is measured by the Harmonized Index of Consumer Prices (HICP).Â “ Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices for the euro area of below 2%” (the red horizontal line). The Governing Council of the ECB clarified that this target should be interpreted as “below, but close to, 2% over the medium term.” In the euro area, as in several other advanced economies, inflation was below target but above zero for about two years (see Contessi, De Pace, Li, 2014 ). The IMF recently defined this environment as “ lowflation .”
- Villes et ségrégation économique et sociale
by email@example.com (Christophe Lévêque) in BS Initiative, 2015-03-19 09:36:58 UTC
- La ségrégation résidentielle d’origine économique est un phénomène important que l’on peut expliquer à travers le fonctionnement du marché immobilier.
- Sur ce marché, les individus les plus pauvres ne peuvent entrer en compétition avec les plus riches pour un même logement. Ces derniers vont donc choisir de vivre dans des zones où les aménités (c’est-à-dire les caractéristiques environnementales et sociales auxquelles les individus accordent de la valeur) sont les plus élevées.
- Le jeu politique local qui détermine les impôts et service publics [...]
- Smallholder Farmers and Agricultural Value Chains: What Is the Policy Relevance?
by Marc F. Bellemare in Marc F. Bellemare, 2015-03-19 09:00:21 UTC
A new article Â (ungated version here ) in World Development crystallized a few of the thoughts I have been mulling over regarding contract farming and the participation of smallholders in agricultural value chains in developing countries–an area where I have done a bunch of work, and wherein I am still doing work.
First, the abstract of the article:
Considerable empirical work relates participation in contract farming with farm profitability. However causation is far from settled as few studies control for endogeneity of participation. Moreover the link between contract farming and equity is [...]
- Capitalism - What Comes Next?
by Vikas Shah in Thought Economics, 2015-03-19 08:00:00 UTC
In this exclusive interview series, we speak to Nobel Prize Winning Economist, Edmund Phelps ( Director of the Columbia University Center on Capitalism & Society and the McVickar Professor of Political Economy at Columbia University ) and Professor Lawrence ‘Larry’ Summers ( Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama ). We look at the story of modern capitalism, the benefits it has brought, and the challenges [...]
- Pourquoi l’industrie américaine pollue-t-elle moins ?
by Martin Anota in D'un champ l'autre, 2015-03-18 22:47:06 UTC
Plus précisément, entre 1990 et 2000, la valeur réelle de la production manufacturière américaine a augmenté d’un tiers et pourtant le volume des principaux polluants atmosphériques (comme les oxydes d’azote, les particules fines, le dioxyde de soufre et des composantes organiques volatils) émis par le secteur manufacturier a chuté en moyenne de 35 %. Après 2000, la croissance de la production manufacturière réelle a ralenti, pourtant les émissions polluantes de l’industrie ont chuté à nouveau de 25 points de pourcentage par rapport à leurs niveaux de [...]
- Alarming Number Of Women Think Spousal Abuse Is Sometimes OK
by ? in Health, 2015-03-18 16:16:00 UTC
In many countries, more than a third of women think a husband is sometimes justified in beating his wife. Researchers say this attitude contributes to the high rate of domestic violence worldwide.� E-Mail This [...]
- Percorsi di globalizzazione
by Alberto Bagnai in Goofynomics, 2015-03-18 15:51:00 UTC
Come sa chi sta su Twitter e non è ancora stato bloccato (gli altri sono figliastri), oggi sono stato al liceo linguistico De Sanctis per parlare un paio d'ora nel quadro della "coggestione". Inutile dire che sulle mie classi non tramonta mai l'attenzione. Mi ricordo di una volta che una mia collega entrò durante un mio esame scritto per chiedermi non so che cosa. Mi guardò un po' interdetta... "Ma che silenzio!" E io: "Perché, durante i tuoi scritti parlano? Ma io glielo dico il primo giorno: a fine corso ci saranno un esame scritto e uno orale. A quello scritto non si deve parla, a quell [...]
- Back to Research
by Matthew Kahn in Environmental and Urban Economics, 2015-03-17 21:37:00 UTC
Over the last 5 weeks, I have been teaching four times a week as I taught on Mondays, Wednesdays and Fridays and on Saturdays (for 7 hours each time!). �I'm on the verge of being done. � I report to work at USC in mid-August. � What will I do for next 5 months? I expect to meet the following performance targets; 1. Siqi Zheng and I will publish our book about Pollution in China 2. Siqi and I will finish two of our new China Industrial Parks papers 3. I will revise my book review of Jeff Sachs' new book for the Journal of Economic Literature 4. I will finish my co-authored paper on the urban ec [...]
- Que el real no te tape el dólar
by Natalio Ruiz in Cosas que pasan, 2015-03-16 22:38:00 UTC
Con el real en niveles de 3,25 se han encendido voces de alarma entre economistas, periodistas y seguramente más de algún industrial, temiendo por la competitividad de la economía (industria) argentina. Al mismo tiempo, se nota que el euro ha descendido hasta 1,05, casi la paridad con el dólar. Muy curiosamente, pareciera que somos pocos los que vemos alguna relación entre ambos. Sucede que, en realidad, no está devaluando Brasil. Tampoco Europa. Al contrario, es el dólar el que está subiendo furtemente . Y esto no es nuevo, sino que se remonta a mitad del año pasado: Éste es el grá [...]
- Gli Stati Uniti sono una nazione, non una federazione
by Alberto Bagnai in Goofynomics, 2015-03-16 20:33:00 UTC
( ...ho più volte insistito su questo concetto, che è stato posto alla mia attenzione da Gianni Bulgari, e che distrugge qualsiasi velleità di "superamento dei nazionalismi con gli Stati Uniti d'Europa", tanto caro agli imbecilli di sinistra - notate che parlando di imbecilli di sinistra mi apro al dubbio che a sinistra non ci siano solo imbecilli , ma la pazienza prima o poi finirà... Vincere il nazionalismo creando una supernazione - ovviamente per portare la pace facendo guerra alla Cina! - è evidentemente contraddittorio, e sappiamo dove porta. Porta qui: Del resto, banale ma signific [...]
- High top tax rates drive away inventors
by Ben Southwood in Adam Smith Institute, 2015-03-16 11:52:12 UTC
There are plenty of reasons we might want moderately high top tax rates. If we do them cleverly (e.g. taxing consumption, not income, and definitelyÂ not capital or transactions) they can raise the revenue we may need for redistribution and goods everyone seems to believe only the government can provide, while not causing too many efficiency costs.
But there are also lots of reasons we might not want tax rates to go up too high. Eventually we pass the top of the Laffer Curve (it probably peaks when marginal rates + national insurance + benefit withdrawal + the tax rate effects of VAT + so on a [...]
- Why are richer people more successful?
by nawmsayn in ZeeConomics, 2015-03-15 14:14:06 UTC
It is a fact that kids from more advantageous backgrounds have better life outcomes: kids whose parents are richer and/or educated are themselves more likely to be rich and educated. Why is this the case?
Of course, there is a lack of social mobility involved: rich kids have better opportunities. But today, in most developed countries, poor kids have the very same opportunities in theory. This is because education all the way through high school (and in many countries even beyond that) is free or heavily subsidized. What is it then that makes kids from a more advantageous background more succe [...]
- The self-centred bias
by chris in Stumbling and Mumbling, 2015-03-15 13:14:28 UTC
The film critic Pauline Kael is reputed to have said after the 1972 election: "I don’t know how Richard Nixon could have won. I don’t know anybody who voted for him." The quote is apocryphal , but it captures a widespread error of judgement - our tendency to exaggerate the extent to which others agree with us. A new paper by Eugenio Proto and Daniel Sgroi shows just how common this tendency is.
They show that students at the University of Warwick tend to over-estimate the numbers of fellow students: who are as happy or sad as themselves; who share their political orientation; and who own t [...]
- Chi più spende (prima) meno spende (dopo): dinamica del debito pubblico nei PECO
by Alberto Bagnai in Goofynomics, 2015-03-14 13:42:00 UTC
( dai, aiutatemi col mio discorzetto... )Allora: sto preparando le slides per FIBA , e il tema che mi sono dato è: le lezioni del Sud per l'Est Europa. Non è molto originale, ci aveva già pensato Claudia Buch nientemeno che nel 1998: Lessons for Central and Eastern Europe ! Quando me ne sono accorto ho pensato: "Sfiga!". Poi ho letto il paper della collega, e ho pensato: #DAR! Siccome io sono stato tanto disponibile con voi, ora voi sarete tanto disponibili con me, e il mio discorso a FIBA sarà il primo esempio al mondo di crowd-keynote speech : lo farò coi vostri commenti. Mi raccomando: [...]
- Insiders, faux insiders, efficiency and equity in the stockmarket: with a thought experiment and an abstract
by Nicholas Gruen in Club Troppo, 2015-03-14 04:27:45 UTC
We’ve gone from the assumption that there’s a necessary tradeoff between efficiency and equity to a state in which it’s almost de rigueur to point out the ways in which inequity can harm efficiency with quite some speed. Why even the OECD, while it hands homilies about how ‘reform’ is always the answer even if it’s relative absence pretty obviously not the central problem, now publishes papers which claim to calibrate the negative impact of income inequality on growth .Â Meanwhile at Troppo we’ve always been interested in those beautiful ways in which human utility and solidarity – efficiency [...]
- La croissance des entreprises contribue aux inégalités de salaires
by Martin Anota in D'un champ l'autre, 2015-03-13 23:55:41 UTC
Plusieurs pays avancés semblent connaître une détérioration de la répartition du revenu du travail. Aux Etats-Unis, les salaires réels des 1 % des salariés les mieux pays ont augmenté de 191 % entre 1980 et 2011, tandis que les salaires médians ont chuté de 5 % The Economist, 2015]. Il pourrait en l’occurrence s’agir d’une « polarisation » entre les hauts salaires et les bas salaires. Une partie de la littérature s’est alors focalisée sur la prime de qualification (skill premium), c’est-à-dire l’écart de salaire entre les travailleurs les plus qu [...]
- The disaster reality that must change
by ? in World Bank Blogs, 2015-03-13 21:45:00 UTC
Cyclone Pam, March 13, 2015. Satellite image via NASA
It’s one of the harsh realities of today.
Just as representatives from around the globe began to gather in Sendai, Japan, for an international disaster risk conference, authorities in Va [...]
- A Review of Public Transit in Los Angeles
by Matthew Kahn in Environmental and Urban Economics, 2015-03-13 00:56:00 UTC
I live in Westwood on the West Side of Los Angeles. �Today I had to travel about 11 miles to the City Center. � I thought about calling Uber but then I decided to run a field experiment. �While I won't publish this in the QJE, I would like to tell you about my adventure. �I walked to the corner of Wilshire and Beverly Glenn. It was a sunny beautiful day today and I arrived at the bus stop and sat on a bench. The other people waiting for the bus were scrolling through their cell phones. �The 720 Express bus arrived and I got on. �I already own a "tap card" and tapped my $1.5 fare. �My bus quick [...]
- Forecasting Future Growth
by dvollrath in The Growth Economics Blog, 2015-03-12 16:15:17 UTC
In a post a few days ago I made a distinction between looking at “measured growth over a few decades” and “the long-run growth rate of GDP”. The point was that while we can calculate the former, the latter is something that we have to be more speculative about.
As part of that post, I dropped in a comment about Robert Gordon’s work on the long-run growth rate of GDP. I said “He also argues that g will fall due to us running out of useful things to innovate on”, where “g” is the growth rate of output per worker. That is a far too glib characterization of Gordon’s work. So, first, my apologies [...]
- Guest Contribution: “Nowcasting Global GDP Growth”
by Menzie Chinn in Econbrowser, 2015-03-12 04:56:18 UTC
Today, we are fortunate to present a guest contribution written by Laurent Ferrara (Banque de France, Head of the International Macro Division) and Cl�ment Marsilli (Banque de France, Economist at the International Macro Division). The findings, interpretations, and conclusions expressed in this article are entirely those of the authors. They do not necessarily represent the views of the Banque de France.
The International Monetary Fund (IMF) provides in its bi-annual World Economic Outlook ( WEO ) report estimates of world GDP growth that are considered by experts in the field as benchmark [...]
- Lucas and His Critics
by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2015-03-11 20:30:00 UTC
Thanks to Brad DeLong and Noah Smith for resurrecting a 2011 panel discussion on the roots of modern macroeconomics, which includes Michael Lovell, Robert Lucas, the late Dale Mortensen, Robert Shiller, and Neil Wallace. If you're interested in the history of macro thought, this is fascinating. What's of interest to DeLong and Smith is something else altogether, though. As Noah lets on at the outset, it's basically macro-dissing. Noah tells us about two kinds of macro-dissers: Attacker Group 1: "Old Keynesian" economists who want to use aggregate-only models. Attacker Group 2: Decision theoris [...]
- 279 – Garbage in, garbage out?
by David Pannell in Pannell Discussions, 2015-03-11 15:00:26 UTC
As the developer of various decision tools, I’ve lost track of the number of times I’ve heard somebody say, in a grave, authoritative tone, “a model is only as good as the information you feed into it”. Or, more pithily, “garbage in, garbage out”. It’s a truism, of course, but the implications for decision makers may not be quite what you think.
The value of the information generated by a decision tool depends, of course, on the quality of input data used to drive the tool. Usually, if there is much uncertainty about the true values of the inputs, the outputs from a decision tool [...]
- Austerity in the UK: past, present and future
by Joel Suss in British Politics and Policy at LSE, 2015-03-11 08:18:49 UTC
In this article, John Van Reenen Â looks at the UK’s economic performance since the global financial crisis and assesses the impact of austerity policies. He also examines the fiscal plans of the threeÂ major parties overÂ the next Parliament, finding that, while all areÂ currently planning for continued and severe austerity, the ConservativesâÂ planÂ would bring down the debt level more quickly but at the cost of lower investment, growth and employment.
UK economic performance has been dismal in recent years. Compared with historic trends, GDP per capita was nearly 16% lower in 2014 â a l [...]
- Comment les exportations réagissent-elles à la compétitivité-coût ?
by Martin Anota in D'un champ l'autre, 2015-03-10 21:16:11 UTC
Avec la mondialisation des échanges et l’intégration des pays émergents sur les marchés internationaux, on pourrait croire que les exportations sont devenues davantage sensibles aux coûts, ce qui rendrait plus pressant la maîtrise de ces derniers. En effet, si les entreprises voient leurs coûts de production augmenter, elles sont susceptibles de répercuter cette hausse sur les prix de vente pour maintenir leur profit ; avec l’essoufflement résultant de la demande extérieure, l’économie risque alors de connaître une détérioration de son solde extérieur, [...]
- Economists! Be more Marxist
by chris in Stumbling and Mumbling, 2015-03-10 14:26:10 UTC
I pointed out yesterday that Marx was right: inequality generates an ideology which defends that inequality. This, though, is just one of many instances in which experimental or empirical evidence has vindicated him.For example:
- The "economics of life" literature pioneered (pdf) by Gary Becker - as exemplified by Jeremy Greenwood's work on how technical change has changed sexual mores and family life - confirms Marx's claim that "The mode of production of material life conditions the general process of social, political and intellectual life."
- Some experimental evidence vindicates Mar [...]
- Is it Possible to Escape the #ResourceCurse?
by mlmorell in NEP-HIS blog, 2015-03-10 09:07:37 UTC
Mining and Indonesiaâs Economy: Institutions and Value Adding, 1870-2010
By Pierre van der Eng, The Australian National University (Canberra) (firstname.lastname@example.org)
Abstract: Indonesia has long been a major producer of minerals for international markets. Starting in 2014, it implemented legislation banning exports of unprocessed minerals and requiring producers to invest in processing facilities to add more value before export. This paper establishes what light past experiences in Indonesia with mining sheds on this recent development. It quantifies and discusses the growth of mining [...]
- Lecture on Identity, Motivation and Incentives
by Liam Delaney in Economics, Psychology and Policy, 2015-03-09 14:25:00 UTC
I am currently giving a set of lectures as part of modules on behavioural economics�in Stirling. I am posting brief informal summaries of some of these lectures on the blog to generate discussion. Thanks to Mark Egan for a lot of help in putting these together online.� The section on Identity, Motivation and Incentives contains a lot of interlocking aspects. Many of these topics are very heavily connected to the idea that emotions influence behaviour and peoples responses to outcomes and we will revisit some of these ideas in the next topic - also many of them are connected to other topics in [...]
- Inspired by Bryan Caplan on Straw-Manning
by Don Boudreaux in Cafe Hayek, 2015-03-09 13:09:37 UTC
(Don Boudreaux) My colleague Bryan Caplan, over at EconLog, productively ponders the practice of straw-manning . Â This paragraph is especially insightful and important:
To quality as straw manning, of course, the leading/best adherents [of a viewpoint, ideology, or Â proposition] have to reject the rank-and-file’s painfully bad positions.Â Since leadership is largely a popularity contest, straw manning leading adherents remains fairly rare, too.Â Few intellectual leaders rise to the top of their local pecking orders by pedantically explaining all the ways their side should amend their belov [...]
- The Stock-Bond Disconnect
by Kenneth Rogoff in Project Syndicate, 2015-03-09 12:30:13 UTC
CAMBRIDGE – How should one understand the disconnect between the new highs reached by global equity indices and the new depths plumbed by real interest rates worldwide? Several competing explanations attempt to reconcile these trends, and getting it right is essential for calibrating monetary and fiscal policy appropriately.
The most popular explanations downplay risk factors in a way that can be dangerously misleading. For example, the “secular stagnation" theory claims that low interest rates tell the true story. The global economy is suffering from a chronic demand shortfall, which [...]
- Finance is great, but it can be a real drag, too
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-03-09 12:04:57 UTC
When we were college students in the mid-1970s, some of our friends wanted to change the world and our understanding of it. They worked on things like galactic structures, superconductors, computer algorithms, subcellular mechanisms, and genetic coding. Their work aimed at providing cheap energy, improving information technology, curing cancer, and generally making our lives and our appreciation of the world around us better. By the 1990s, attitudes had changed. Many top students, including newly-minted Ph.D.s, moved from natural science and engineering to finance. Their goal was to get high-p [...]
- Genetic Factors in Savings Behavior
by dvollrath in The Growth Economics Blog, 2015-03-08 22:26:00 UTC
There is a recent article by Henrik Cronqvist and Stephan Siegel on the origins of savings behavior (published in JPE, but link is for working paper). They use the Swedish Twin Registry, which gives them data on roughly 15,000 twins, and link that to the deep Swedish data on income, savings, employment, and other information. They use this to examine whether savings behavior has a genetic component. Essentially, they are asking whether genetically similar people (twins) have similar savings behaviors. Figuring this out is hard, as twins share not just genes but also share home environments.
- Is industrialization conducive to economic prosperity?
by nawmsayn in ZeeConomics, 2015-03-08 17:01:43 UTC
Conventional wisdom suggests that industry is important for economic development. And while indeed the rise of industry coincided with the time when economic growth took off in the Western world, historically industrial regions (such as the Rust Belt in the US, the Midlands in the UK, or the Ruhr Valley in Germany) are currently struggling economically relative to other regions within their respective countries.
This post not only looks at why this is the case, but also at whether conventional wisdom is wrong: was it really industrialization per se that allowed economic growth to skyrocket in [...]
- Energy Prices, Growth, and the Channels in Between: Theory and Evidence
by email@example.com (David Stern) in Stochastic Trend, 2015-03-08 08:02:00 UTC
Lucas Bretschger has an interesting new paper in Resource and Energy Economics titled: " Energy prices, growth, and the channels in between: Theory and evidence ". The paper argues that countries with higher energy use per capita grow slower in the long-run though reductions in energy use lower output in the short-run. The long-run effect is due to an induced increase in capital accumulation and because the model is similar to AK endogenous growth models, innovation. The paper is motivated by the stylized fact that in a sample of 37 countries, countries with higher per capita energy use grow s [...]
- Has the Long-run Growth Rate Changed?
by dvollrath in The Growth Economics Blog, 2015-03-07 21:02:09 UTC
My actual job bothered to intrude on my life over the last week, so I’ve got a bit of material stored up for the blog. Today, I’m going to hit on a definitional issue that creates lots of problems in talking about growth. I see it all the time in my undergraduate course, and it is my fault for not being clearer.
If I ask you “Has the long-run growth rate of the U.S. declined?”, the answer depends crucially on what I mean by “long-run growth rate”. I think of there as being two distinct definitions.
The measured growth rate of GDP over a long period of time: The measured long-run growth rat [...]
- Cet obscur taux d’intérêt naturel
by Martin Anota in D'un champ l'autre, 2015-03-07 16:33:56 UTC
Les taux d’intérêt sont actuellement faibles dans les pays avancés et, avec la perspective que la BCE adopte un assouplissement quantitatif, plusieurs taux d’intérêt sont entrés en territoire négatif ces derniers mois dans les pays de la zone euro, ce qui suggère que des tendances lourdes sont à l’œuvre pour les pousser à la baisse. La littérature économique suppose qu’il existe un taux d’intérêt qui équilibre l’offre et la demande de fonds prêtables, donc maintient l’économie au plein emploi sans générer de pressions inflationnistes : c’est l [...]
- Nullzinsgrenze: Kosten für Lagerung und Sicherung
by Acemaxx-Analytics in Acemaxx-Analytics, 2015-03-07 15:05:00 UTC
Wenn die Nominalzinsen weiter fallen , dann werden wir zu den Anfängen der Goldschmieden zurückkehren, schreiben Cecchetti und Schoenholtz in ihrem gemeinsam verwalteten Blog .Die Goldschmiede waren die Vorläufer der modernen Bankiers, schreiben die Autoren weiter. Um das in ihren Tresoren hinterlegte Gold zu bescheinigen, stellten sie Quittungen aus. Vielleicht war es sogar die Entstehung des fractional reserve banking Systems, da die Goldschmiede einen Teil des Golds verwendeten, um Kredite zu geben. Mittlerweile hat eine Reihe von Banken den Zinssatz für Einlagen unter Null gesetzt: Die [...]
- QED 44: Varoufake e gli 00740
by Alberto Bagnai in Goofynomics, 2015-03-07 00:49:00 UTC
Paris, le 12 juin 1942. A M. Darquier de Pellepoix. Paris. Monsieur, J'ai l'honneur de présenter à votre haute et bienveillante attention l'exposé suivant : Garde assermenté, au cimetière du Père-Lachaise, nous avons parmi nous un nommé Elia Kougel, Juif 100 p. 100, sans aucune référence militaire, sans avoir jamais figuré sur les listes de classement des emplois réservés ; il a été nommé alors que les Français mutilés de 1914-1918, continuent à « sécher » sur lesdites listes précitées. Comment se fait-il aussi que cet individu ait été assermenté avant d'être natura [...]
- “The Contributions of the Economics of Information to Twentieth Century Economics,” J. Stiglitz (2000)
by afinetheorem in A Fine Theorem, 2015-03-06 23:09:03 UTC
There have been three major methodological developments in economics since 1970. First, following the Lucas Critique we are reluctant to accept policy advice which is not the result of directed behavior on the part of individuals and firms. Second, developments in game theory have made it possible to reformulate questions like “why do firms exist?”, “what will result from regulating a particular industry in a particular way?”, “what can I infer about the state of the world from an offer to trade?”, among many others. Third, imperfect and asymmetric information was shown to be of first-order [...]
- #treciento (la storia continua...)
by Alberto Bagnai in Goofynomics, 2015-03-06 06:48:00 UTC
Rispondendo a un amico che mi segnalava una lieve imprecisione, sono stato colto da un sussulto di autorazzismo, del quale mi pento (e quindi, prima, mi confesso, o comunque, se l'ordine non è questo, poi quello giusto ce lo dirà il teologo di turno): noi non siamo il paese del fact checking . Siamo il paese dell'osservatorio di Pavia, che a quanto ho capito è una cosa che investe risorse per stabilire quanti minuti una ventina di persone diverse ci abbiano messo per dire la stessa cosa, ovviamente falsa. Ma quello che conta non è l'oggetto: è la spartizione... Mio io, mi pento e mi dolgo [...]
by himaginary in himaginaryの日記, 2015-03-06 00:00:00 UTC
少し前 に、テイラールールの法制化に反対する議論を紹介したが、そのうちのクルーグマンの1/31エントリにテイラーが反応し、表題のエントリ（原題は「Paul Krugman Pontificating on Policy Rules」）で概ね以下のようなことを 述べている 。
- Wages as social constructs
by chris in Stumbling and Mumbling, 2015-03-05 13:55:15 UTC
This passage from Paul Krugman has stirred controversy :
Conservatives — with the backing, I have to admit, of many economists — normally argue that the market for labor is like the market for anything else. The law of supply and demand, they say, determines the level of wages..
But labor economists have long questioned this view. Soylent Green — I mean, the labor force — is people. And because workers are people, wages are not, in fact, like the price of butter, and how much workers are paid depends as much on social forces and political power as it does on simple supply and demand.
- Género, mercado laboral y políticas públicas en España: tres décadas de evolución
by Virginia Sánchez Marcos in Politikon, 2015-03-05 09:13:18 UTC
Uno de los cambios más importantes ocurrido en la economía española durante las últimas tres décadas es el incremento de la participación laboral de las mujeres. Sin embargo, persisten diferencias sustanciales en las tasas de empleo por género y son considerables las diferencias en la tasa de paro, así como en la incidencia de la temporalidad. Además, las mujeres están segregadas en ciertas ocupaciones y existe un diferencial salarial entre hombres y mujeres que se agudiza cuando tenemos en cuenta las características de las mujeres empleadas.
En un trabajo publicado recientemente en [...]
- Optimal Income Taxation with Asset Accumulation
by Christian Zimmermann in NEP-DGE blog, 2015-03-05 05:42:45 UTC
By Árpád Ábrahám, Sebastian Koehne and Nicola Pavoni
Several frictions restrict the government’s ability to tax assets. First of all, it is very costly to monitor trades on international asset markets. Moreover, agents can resort to non-observable low-return assets such as cash, gold or foreign currencies if taxes on observable assets become too high. This paper shows that limitations in asset observability have important consequences for the taxation of labor income. Using a dynamic moral hazard model of social insurance, we find that optim [...]
- Federal Reserve Communication with Congress
by firstname.lastname@example.org (Carola) in Quantitative Ease, 2015-03-05 01:27:00 UTC
In 2003, Ben Bernanke described a central bank's communication strategy as " regular procedures for communicating with the political authorities, the financial markets, and the general public." The fact that there are� three target audiences of monetary policy communication, with three distinct sets of needs and concerns, is an important point. Alan Blinder and coauthors note that most of the research on monetary policy communication has focused on communication with financial markets. In my working paper " Fed Speak on Main Street ," I focus on communication with the general public. But with [...]
- Les errances de la courbe de Phillips en zone euro
by Martin Anota in D'un champ l'autre, 2015-03-04 18:43:29 UTC
La crise financière mondiale a généré tout un débat autour de la courbe de Phillips en 2008. Malgré la forte baisse de la production et la hausse du chômage, le taux d’inflation n’a diminué que temporairement lors de la crise financière. Une courbe de Phillips traditionnelle aurait pourtant suggéré qu’une telle contraction de la production aurait dû provoquer un plus fort ralentissement de l’inflation, voire une déflation durable. Réciproquement, les responsables de la Fed se demandent aujourd’hui pourquoi l’inflation n’accélère pas aux Etats-Unis mal [...]
- Waiting on a waiver - what the WTO's new services initiative could mean for LDCs
by ? in World Bank Blogs, 2015-03-04 16:56:00 UTC
The World Trade Organization (WTO) Trade Facilitation Agreement (TFA) has been getting a great deal of attention since it was finalized at the 2013 Bali Ministerial Conference– and rightly so. As we’ve written before on this blog, trade facili [...]
- The Economics of Ph.D. Students Forming Unions
by Matthew Kahn in Environmental and Urban Economics, 2015-03-04 15:27:00 UTC
When I taught at Columbia University in the early 1990s, I wondered about our Ph.D. program. �Yes, we were an Ivy League School but at that time Columbia Econ's senior faculty focused on a narrow set of topics such as International Trade. �I also wondered about all of the Ph.D. students in other fields such as English and History whose academic job prospects were likely to be much worse. �Yet, these humanities subjects were Columbia's past strength and the place kept enrolling dozens of such students. �I believe that Yale has the same issue. �Today the NY Times reports that Columbia's Ph.D. st [...]
- China Invests in Improving its Environmental Governance
by Matthew Kahn in Environmental and Urban Economics, 2015-03-04 14:29:00 UTC
My co-author Prof. Siqi Zheng teaches at Tsinghua University in Beijing. �Her University is one of the top schools in China and proudly calls itself the MIT of China. � Until recently, the President of her university was an energetic 51 years old named� Chen Jining. � �Dr. Chen's Google Scholar page is here.� � � President Chen has now taken a major job in the Chinese Central Government as he now is the leader of China's Ministry of Environmental Protection (MEP) (see this� news story ). �Siqi and I believe that this is very good news for China. � Why would such an accomplished man accept this [...]
- When biases collide
by chris in Stumbling and Mumbling, 2015-03-04 14:17:54 UTC
Here's Leicester manager Nigel Pearson talking about tonight's game against Man City:
Do I expect any backlash or do I take encouragement from their recent results? I think a bit of both.
This is an example of how mistaken beliefs can cancel out. On the one hand, we have the hot hand fallacy (well, cold hand in this case); the idea that unusually bad performance persists*. On the other, there's the gambler 's fallacy; the idea that a run of unusually bad outcomes increases the likelihood of a good one. In giving equal weight to both errors, Mr Pearson has come to a reasonable judgment.
- Sull’uscita dall’euro non siamo “catastrofisti”. Una risposta a Gennaro Zezza
by keynesblog in Keynes Blog, 2015-03-04 11:35:04 UTC
In un articolo pubblicato da Economia e Politica , Gennaro Zezza, tra le altre cose, risponde al nostro articolo sugli eccessivi ottimismi sull’uscita dall’euro . Ci pare perÃ² di poter dire che la risposta di Gennaro non fuga i dubbi lÃ¬ espressi.
Preliminarmente chiariamo un fatto essenziale ai fini della discussione. Secondo Zezza:
La redazione di Keynes blog sembra concordare con Biasco sulle conseguenze catastrofiche, per il sistema finanziario internazionale, di una rottura della eurozona, ed enfatizza il modesto impatto che la svalutazione di una ânuova valutaâ avrebbe sulla cres [...]