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Blog aggregator for economics research

2017-09-22

• Modelling a complex world: Improving macro-models
  by Christian Zimmermann in NEP-DGE blog, 2017-09-22 16:04:25 UTC

  By Warwick J. McKibbin and Andrew Stoeckel http://d.repec.org/n?u=RePEc:een:camaaa:2017-56&r=dge Macro models have come under criticism for their ability to understand or predict major economic events such as the global financial crisis and its aftermath. Some of that criticism is warranted; but, in our view, much is not. This paper contributes to the debate over the adequacy of benchmark DSGE models by showing how three extensions, which are features that have characterized the global economy since the early 2000s, are necessary to improve our understanding of global shocks and policy insigh [...]

• Così la ricerca economica aiuta a scegliere la legge elettorale
  by Pietro Panizza e Francesco Flaviano Russo in La Voce, 2017-09-22 08:46:11 UTC

  Si torna a parlare di riforma della legge elettorale. Meglio un sistema maggioritario o uno proporzionale? Per decidere non dobbiamo pensare solo alle conseguenze politiche, ma anche a quelle sull’economia, dalla spesa pubblica alla corruzione. In attesa di una nuova legge elettorale È ormai dal 2006 che in Italia si parla di riforma della legge elettorale. Alle ultime elezioni politiche del 2013 si è votato con la legge Calderoli, tristemente nota come “Porcellum”, approvata a maggioranza nel dicembre 2005 e poi giudicata in parte incostituzionale nel 2014. Senza ripercorrere la cronaca poli [...]

2017-09-21

• Optimal Ramsey Capital Income Taxation —A Reappraisal
  by Christian Zimmermann in NEP-DGE blog, 2017-09-21 15:29:43 UTC

  By YiLi Chien and Yi Wen http://d.repec.org/n?u=RePEc:fip:fedlwp:2017-024&r=dge This paper addresses a long-standing problem in the optimal Ramsey capital taxation literature. The tractability of our model enables us to solve the Ramsey problem analytically along the entire transitional path. We show that the conventional wisdom on Ramsey tax policy and its underlying intuition and rationales do not hold in our model and may thus be misrepresented in the literature. We uncover a critical trade off for the Ramsey planner between aggregate allocative efficiency in terms of the modified golden ru [...]

• Are consistent expectations better than rational expectations?
  by Christian Zimmermann in NEP-DGE blog, 2017-09-21 15:01:16 UTC

  By Elliot Aurissergues http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01558223&r=dge In this paper, I argue that agents may prefer learning a misspecified model instead of learning the rational expectation model. I consider an economy with two types of agent. Fundamentalists learn a model where endogenous variables depend on relevant exogenous variables whereas followers learn a model where endogenous variables are function of their lagged values. A Fundamentalist is like a DSGE econometrician and a follower is like a VAR econometrician. If followers (resp. fundamentalists) give more accurate for [...]

• Thesis Thursday: Lidia Engel
  by Chris Sampson in The Academic Health Economists' Blog, 2017-09-21 06:00:49 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Lidia Engel who graduated with a PhD from Simon Fraser University . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch . Title Going beyond health-related quality of life for outcome measurement in economic evaluation Supervisors David Whitehurst , Scott Lear , Stirling Bryan Repository link https://theses.lib.sfu.ca/thesis/etd10264 Your thesis explores the potential for expanding the ‘evaluative space’ in economic evaluation. Wh [...]

2017-09-20

• The harm of high housing costs
  by chris in Stumbling and Mumbling, 2017-09-20 12:06:13 UTC

  The Resolution Foundation points out that people are spending three times as much of their incomes on housing today than they were 50 years ago, and that 30-year-olds spend more of their income on housing than did their grandparents at the same age. You can see this as an inter-generational injustice. But there’s another question here: are high house prices bad for the economy generally? I suspect they might be, for several reasons: First, sharply rising house prices are associated with increasing household debt, which increases the chance of a financial crisis which has long- lasting advers [...]

2017-09-19

• Le migrazioni dall’Africa si fermano creando opportunità
  by Mariapia Mendola in La Voce, 2017-09-19 07:38:26 UTC

  Non basta concedere fondi ad alcuni stati africani per fermare l’immigrazione irregolare. È una politica che potrebbe persino rafforzare i trafficanti di uomini se non è accompagnata dalla creazione di opportunità economiche alternative per i migranti. L’accordo contro l’immigrazione irregolare Il recente vertice di Parigi fra i principali paesi europei e tre stati africani (Libia, Ciad e Niger) ha sancito il nuovo approccio alle migrazioni internazionali che prevede una stretta “cooperazione con i paesi di origine”. Questa si basa essenzialmente sul contrasto dell’immigrazione irregolare, i [...]

2017-09-18

• Operational Risk and Financial Stability
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-09-18 11:56:01 UTC

  “There are only two types of organizations: those that know that they’ve been hacked and those that don’t yet know.” Dmitri Alperovitch , Crowdstrike ( CNBC , December 15, 2016) Recent disasters—both natural and man-made—prompt us to reflect on the relationship between operational risk and financial stability. Severe weather in sensitive locations, such as Hurricane Irma in Florida, raises questions about the resilience of the financial infrastructure. The extraordinary breach at Equifax highlights the public goods aspect of data protection, with potential implications for the availability of [...]

2017-09-16

• The benefits of hosting the Olympics are nonexistent — no cities want to host them
  by ? in Business Insider, 2017-09-16 14:30:00 UTC

  Buda Mendes/Getty It’s official: We now have hosts for the next two Summer Olympics. Paris will host in 2024 and Los Angeles in 2028. It looks like a victory for the International Olympic Committee, as the result could be Olympic Games without the embarrassments of  empty seats  and  foul water  of Rio, the massive  cost overruns of Sochi  or the awkward  political moments of Beijing . But the  announcement  also marks a failure: Only two cities competed for the 2024 Summer Olympic Games – Paris and Los Angeles – and two for the 2022 Winter Olympic Games – Beijing and Almaty, Kazakhstan. I’ve [...]

2017-09-14

• "Come sò ste riforme?" "Strutturali..."
  by Alberto Bagnai in Goofynomics, 2017-09-14 22:11:00 UTC

  Difficile immaginare due località più diverse di Halle e Maratea. Tanto orizzontale la prima, adagiata a 87 metri di altezza sull'Hallesches Ackerland, una delle tante pianure alluvionali lungo il basso corso della Saale, quanto verticale la seconda, aggrappata a 300 metri di altezza sul Monte S. Biagio, dirimpetto ai 1505 metri del Coccovello (che è sulla mia todo list da un due o tre anni). Lì barbabietole, e un glorioso passato, nel quale si annovera non solo il cicccione ( who can be against us? ), ma anche altro ( das alte Jahr vergangen ist ); qui pini, fichi d'india, bougainvillee, oliv [...]

• Consumer Forecast Revisions: Is Information Really so Sticky?
  by noreply@blogger.com (Carola) in Quantitative Ease, 2017-09-14 16:21:00 UTC

  My paper " Consumer Forecast Revisions: Is Information Really so Sticky? " was just accepted for publication in Economics Letters . This is a short paper that I believe makes an important point.  Sticky information models are one way of modeling imperfect information. In these models, only a fraction (λ) of agents update their information sets each period. If λ is low, information is quite sticky, and that can have important implications for macroeconomic dynamics. There have been several empirical approaches to estimating λ. With micro-level survey data, a non-parametric and time-varying esti [...]

• Bitcoin Mining and Energy Subsidies: The Case of China
  by Matthew Kahn in Environmental and Urban Economics, 2017-09-14 16:07:00 UTC

  Erin Mansur and I have a well cited 2013 JPUBE paper documenting that energy intensive firms cluster where energy prices are low (the paper has several other ideas!). �Siqi Zheng, Jianfeng Wu and Weizeng Sun and I have a 2017 JUE paper studying China's industrial parks. �In these parks, land, capital and electricity is often subsidized. � Th e NY Times reports today on an obvious synergy of �these two papers. �Energy intensive bitcoin companies in China are locating in cheap energy places and mining the coins. This produces cash and carbon because in places with cheap power in China, the power [...]

• Poor Behavior, Good Behavioral Policies? Double Standards for the North and South
  by Svenja Flechtner in Development Economics, 2017-09-14 10:24:56 UTC

  Behavioral approaches to development economics and policy have gained momentum in recent years. A growing number of papers studying behavior of people in poor countries have been published in top journals, accompanied by the rise of randomized controlled trials (RCTs). In 2015, the World Development Report was dedicated to behavioral and cognitive research and policy. Papers studying how to nudge farmers to use fertilizers or increase savings have become classics in the field. Lots of hope has been placed into social experiments and behavioral policies to fight global poverty . Behavioral pol [...]

2017-09-13

• Financial Regulation and Shadow Banking: A Small-Scale DSGE Perspective
  by Christian Zimmermann in NEP-DGE blog, 2017-09-13 16:32:40 UTC

  By Patrick Fève and Olivier Pierrard http://d.repec.org/n?u=RePEc:tse:wpaper:31822&r=dge In this paper, we revisit the role of regulation in a small-scale dynamic stochastic general equilibrium (DSGE) model with interacting traditional and shadow banks. We estimate the model on US data and we show that shadow banking interferes with macro-prudential policies. More precisely, asymmetric regulation causes a leak towards shadow banking which weakens the expected stabilizing effect. A counterfactual experiment shows that a regulation of the whole banking sector would have reduced investment fluctu [...]

• Causas y consecuencias del "populismo"
  by Libertad González in Nada Es Gratis, 2017-09-13 05:00:57 UTC

  Por Libertad González y Santiago Sánchez Pagés En el reciente congreso de la Asociación Europea de Economía en Lisboa, asistimos a una sesión en la que varios economistas europeos compartieron sus investigaciones sobre el llamado fenómeno del “populismo” en Europa. En esta entrada hablaremos en primer lugar de los resultados que se presentaron en esta sesión porque nos parecen informativos y de interés para nuestros lectores. En segundo lugar, reflexionaremos sobre la utilidad y valor de la definición de populismo que estos economistas emplearon en sus ponencias. Spoiler: su utilidad y valor n [...]

2017-09-12

• Why the central bank should be a leading supervisor
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-09-12 21:19:31 UTC

  “Monetary policy and concerns about the structure and condition of banks and the financial system more generally are inextricably intertwined. […]neither monetary policy nor the financial system will be well served if our central bank is deprived from interest in, and influence over, the structure and performance of the financial system.” Paul A. Volcker, March 17, 2010 . Should central banks be a leading supervisor, including supervising systemically important institutions? This is a question that members of the U.S. Congress periodically raise .  Our answer is unequivocally yes . As the lend [...]

2017-09-11

• Chris Sampson’s journal round-up for 11th September 2017
  by Chris Sampson in The Academic Health Economists' Blog, 2017-09-11 11:00:01 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Core items for a standardized resource use measure (ISRUM): expert Delphi consensus survey . Value in Health Published 1st September 2017 Trial-based collection of resource use data, for the purpose of economic [...]

• Lael Brainard: Phillips Curve Confusion
  by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2017-09-11 00:16:00 UTC

  As background for this piece, you can read this forthcoming St. Louis Fed Review article, "Inflation Control: Do Central Bankers Have It Right?" and/or the accompanying slides from a presentation for the Australasian Macroeconomics Society in Canberra, August 2017. The paper gathers together informal stuff I have written on so-called Neo-Fisherism and monetary policy. Conventional central banking inflation control is typically driven by Phillips curve (PC) theory. Roughly, PC theory says that current inflation increases as the difference between some measure of actual aggregate economic activi [...]

2017-09-09

• A Structural Discrete Choice Model of Amazon's HQ Decision: A Blog Post (not an Econometrica!)
  by Matthew Kahn in Environmental and Urban Economics, 2017-09-09 14:48:00 UTC

  Dating at least back to Dennis Carlton's 1983 RESTAT paper,� � economists have written down an indirect profit equation that measures a given firm's profit if it locates in a given geographic area such as Chicago or Nashville. �Suppose there are 87 of these different locations. �A profit maximizing firm will estimate its profit if it opens its headquarters in each of these locations and then choose the location based on the maximum value across these 87 numbers. Why would a decision maker such as Amazon earn different profit if it builds a headquarters in different locations? 1. the rent it pa [...]

• Immigrants as scapegoats
  by chris in Stumbling and Mumbling, 2017-09-09 12:24:35 UTC

  People who care about things like evidence and prosperity have pointed out that proposals to limit EU immigration after Brexit are bad for the economy . It’s not sufficient, however, merely to point out facts. We must also ask: why – of all the false beliefs it is possible to have about the economy – is the idea that migrants significantly depress wages so widespread and entrenched? In some cases, of course, it’s simply a rationalization of hostility to migrants. Some people would hate immigrants whoever they were and whatever they did. The claim they do economic damage is a cloak for [...]

2017-09-08

• The Amazon HQ City Decision and Lessons for Urban Adaptation to Climate Change
  by Matthew Kahn in Environmental and Urban Economics, 2017-09-08 14:48:00 UTC

  Amazon will soon choose a new location for building its 2nd headquarters. � Chicago may be chosen . �The winning city will receive an influx of high paying jobs and this will boost housing prices, human capital, restaurant demand and tax revenues. �Cities are competing by offering tax breaks. �Will Winner's Curse arise as cities over-pay? Now let me turn to climate change adaptation. �Critics of my free market adaptation work sometimes argue that a large percentage of the population have the wrong beliefs such that these climate deniers under-estimate the risks that a geographic area such as M [...]

2017-09-07

• What Is the "Right" Policy Rate?
  by macroblog in Macroblog, 2017-09-07 17:59:02 UTC

  What is the right monetary policy rate? The Cleveland Fed, via Michael Derby in the Wall Street Journal , provides one answer—or rather, one set of answers: The various flavors of monetary policy rules now out there offer formulas that suggest an ideal setting for policy based on economic variables. The best known of these is the Taylor Rule, named for Stanford University's John Taylor, its author. Economists have produced numerous variations on the Taylor Rule that don't always offer a similar story... There is no agreement in the research literature on a single "best" rule, and diffe [...]

• Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement
  by Christian Zimmermann in NEP-DGE blog, 2017-09-07 15:44:13 UTC

  By Lorenzo Caliendo, Luca David Opromolla, Fernando Parro and Alessandro Sforza http://d.repec.org/n?u=RePEc:cep:cepdps:dp1494&r=dge The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model with trade in goods and labor mobility across countries to study and quantify the economic effects of trade and labor market integration. In our model trade is costly and features households of different skills and nationalities facing costly forward-looking relocatio [...]

2017-09-06

• L'economia è la continuazione della guerra con altri mezzi (articolati)
  by Alberto Bagnai in Goofynomics, 2017-09-06 07:44:00 UTC

  (... sto partendo per Halle, dove dovrò presentare la rete INFER a un seminario organizzato dall'IWH in collaborazione con INFER: potremmo chiamarlo " Alla ricerca dell'inflazione perduta ". Non presento nulla, sono in visita pastorale, magari parlerò anche di a/simmetrie, dovevo fare una discussion, ma all'ultimo l'autore si è ritirato. Vado più che altro per conoscere Gregor von Schweinitz , coautore, insieme con un ex membro del direttivo di INFER, di questo articolo , che ho citato spesso, sperando che ai cretini del 30% venisse in mente di leggerlo. Ma son vane speranze. Comunque, la vitt [...]

2017-09-04

• More on New p-Value Thresholds
  by Francis Diebold in No Hesitations, 2017-09-04 17:17:00 UTC

  I recently blogged �on a new proposal heavily backed by elite statisticians to "redefine statistical significance", forthcoming in the elite journal Nature Human Behavior . (A link to the proposal appears at the end of this post.)� I have a bit more to say.� It's not just that I find the proposal counterproductive; I have to admit that I also find it genuinely annoying, bordering on offensive. I find it inconceivable that the authors' p<.005 recommendation will affect their own behavior, or that of others like them. They're all skilled statisticians, hardly so naive as to declare a "discov [...]

• Eclipsing LIBOR
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-09-04 12:29:38 UTC

  “…the volume of unsecured wholesale lending has declined markedly…. This development makes LIBOR more susceptible to manipulation, and poses the risk that it may not be possible to publish the benchmark on an ongoing basis if transactions decline further.” FSOC 2016 Annual Report , page 5. The manipulation of the London Interbank Offered Rate (LIBOR) began more than a decade ago. Employees of leading global firms submitted false reports to the British Banking Association (BBA), first to influence the value of LIBOR-linked derivatives, and later (during the financial crisis) to conceal the dete [...]

2017-09-03

• LE INARR€STABILI RIFORM€: LA GARA A CHI CE L'HA PIU' PICCOLO, L'INDICATORE
  by Quarantotto in Orizzonte48, 2017-09-03 14:53:00 UTC

  L'ottimo Poggiopoggiolini ha inviato un post sullo "stato dell'arte" delle mitologiche riforme strutturali: quelle che quando falliscono ogni minimo obiettivo, di crescita e di occupazione, sbandierato da decenni, sono sempre giustificate perché non se ne sono fatte ancora abbastanza...e gli effetti di lungo periodo, giustamente, sono comunque di volerci tutti morti. Ho colto l'occasione di tale lavoro per acquisire anche la cooperazione di Arturo (che in materia ha dato contributi "imperdibili " e plurimi ), utilizzando il prode Bazaar come coordinatore di ricerca... Il risultato è un lavoro [...]

• A Few Thoughts About a Paul Krugman Urban Economics Tweet
  by Matthew Kahn in Environmental and Urban Economics, 2017-09-03 14:38:00 UTC

  Dr Krugman tweeted this. � �I am not smart enough to completely see his thoughts embodied in these 140 characters but I am going to try because this raises a fundamental issue in urban economics. �Below, I reproduce his cross-U.S city graph of log population density as a function of log population. I believe that Dr. K wants you to see that "smart growth" progressive cities are above the regression line while sprawling cities such as Houston, Dallas and Atlanta are below the regression line. �So what? A city such as SF (San Fran) has a higher population density than its population would on ave [...]

2017-09-01

• Banking Panics and Output Dynamics
  by Christian Zimmermann in NEP-DGE blog, 2017-09-01 14:50:31 UTC

  By Daniel Sanches http://d.repec.org/n?u=RePEc:fip:fedpwp:17-20&r=dge This paper develops a dynamic general equilibrium model with an essential role for an illiquid banking system to investigate output dynamics in the event of a banking crisis. In particular, it considers the ex-post efficient policy response to a banking crisis as part of the dynamic equilibrium analysis. It is shown that the trajectory of real output following a panic episode crucially depends on the cost of converting long-term assets into liquid funds. For small values of the liquidation cost, the recession associated with [...]

2017-08-31

• Linking the Growth of Globalisation with the Evolution of Transport Technology
  by bbatiz in NEP-HIS blog, 2017-08-31 14:54:51 UTC

  The Rise of American Ingenuity: Innovation and Inventors of the Golden Age By Ufuk Akcigit  (University of Chicago), John Grigsby (University of Chicago) and Tom Nicholas (Harvard Business School) Abstract: We examine the golden age of U.S. innovation by undertaking a major data collection exercise linking historical U.S. patents to state and county-level aggregates and matching inventors to Federal Censuses between 1880 and 1940. We identify a causal relationship between patented inventions and long-run economic growth and outline a basic framework for analyzing key macro and micro-level dete [...]

• Hurricane Harvey's Economic Damage
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-31 13:12:00 UTC

  In a previous post, I wrote about Harvey �and I have also don e a radio interview about the local economics of disasters. �� The key point to keep in mind here is the importance of protecting life in the face of a severe disaster. �The death rate (deaths per million people exposed) is really low and this is wonderful and basic economics predicts this. Look at the cover from today's NY Post. � $160 billion looks like a very big number. �This is the current estimate of the total cost caused by this disaster. But the number doesn't look so big when you remember that the US economy's GNP is 1 9 tr [...]

2017-08-30

• “Resetting the Urban Network,” G. Michaels & F. Rauch (2017)
  by afinetheorem in A Fine Theorem, 2017-08-30 22:59:42 UTC

  Cities have two important properties: they are enormously consequential for people’s economic prosperity, and they are very sticky. That stickiness is twofold: cities do not change their shape rapidly in response to changing economic or technological opportunities (consider, e.g., Hornbeck and Keniston on the positive effects of the Great Fire of Boston ), and people are hesitant to leave their existing non-economic social network ( Deryagina et al show that Katrina victims, a third of whom never return to New Orleans, are materially better off as soon as three years after the hurricane, earn [...]

• Widespread misuse of statistical significance in health economics
  by Sam Watson in The Academic Health Economists' Blog, 2017-08-30 06:00:11 UTC

  Despite widespread cautionary messages,  p -values and claims of statistical significance are continuously misused. One of the most common errors is to mistake statistical significance for economic, clinical, or political significance. This error may manifest itself by authors interpreting only ‘statistically significant’ results as important, or even neglecting to examine the magnitude of estimated coefficients. For example, we’ve written previously about a claim of how statistically insignificant results are ‘meaningless’ . Another common error is to ‘transpose the conditional’, that is to i [...]

2017-08-29

• Dynastic Precautionary Savings
  by Christian Zimmermann in NEP-DGE blog, 2017-08-29 15:41:40 UTC

  By Corina Boar http://d.repec.org/n?u=RePEc:red:sed017:343&r=dge This paper demonstrates that parents accumulate savings to insure their children against income risk. I refer to these as dynastic precautionary savings. Using a sample of matched parent-child pairs from the Panel Study of Income Dynamics, I test for dynastic precautionary savings by examining the response of parental consumption to the child’s permanent income uncertainty. I exploit variation in permanent income risk across age and industry-occupation groups to confirm that higher uncertainty in the child’s permanent income depr [...]

• [統計][経済][科学]新発見の統計的有意性のp値の閾値は5%から0.5%に下げよ
  by himaginary in himaginaryの日記, 2017-08-29 00:00:00 UTC

  と主張する論文が現下の統計学における最もホットなトピック／議論／展開である、としてFrancis Dieboldが 紹介している 。 論文 のタイトルはズバリ「統計的有意性の再定義（Redefine Statistical Significance）」で、 Nature Human Behavior に掲載予定との由。著者は総勢72名に及び、 こちらのエントリ で紹介したErnst Fehrも名を連ねているほか、日本人では 今井耕介 氏や Shinichi Nakagawa 氏の名前も見受けられる *1 。 その1行要旨（One Sentence Summary）は概ね表題の通りで、原文は「We propose to change the default P-value threshold for statistical significance for claims of new discoveries from 0.05 to 0.005.」となっている。 以下は本文の冒頭部。 The lack of reproducibility of scientific studies has caused growing concern over the credibility of claims of new discoveries based on “statisticall [...]

2017-08-28

• Who Bears the Incidence of Hurricane Harvey's Economic Damage?
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-28 14:11:00 UTC

  Here are some questions that I do not know the answer to: � How much economic damage will Hurricane Harvey cause? �Given that 11 trillion gallons of rain have fallen on Houston, will Houston's long run economy be injured? How quickly do modern cities bounce back from natural disasters? More closely related to my research; it appears that this disaster's death count (and death rate per million people) is low (relative to Sandy and Katrina). � � Searching the Internet, I see that 5 people have died in the storm. �An economist would ask, over the typical weekend in a large city such as Houston, h [...]

• Fire, fury and the national debt limit
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-08-28 11:59:18 UTC

  “We lowered our rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term [budget] progress … will remain a contentious and fitful process.” S&P Global Ratings August 5, 2011. During the 2016 campaign, then-candidate Donald Trump discussed his broad experience with debt. He would bring the skills and sensibilities of a real estate mogul to government debt management, and the result would be a better deal for the American public. He even broached the idea of renegotiating the [...]

2017-08-27

• New p-Value Thresholds for Statistical Significance
  by Francis Diebold in No Hesitations, 2017-08-27 23:46:00 UTC

  This is presently among the hottest topics / discussions / developments in statistics. �Seriously. �Just look at the abstract and dozens of distinguished authors of the paper below, which is forthcoming in one of the world's leading science outlets,� Nature Human Behavior . Of course data mining, or overfitting, or whatever you want to call it, has always been a problem, which has always warranted strong and healthy skepticism regarding alleged "new discoveries". �But the whole point of examining p-values is to AVOID anchoring on arbitrary significance thresholds, whether the old magic .05 or [...]

2017-08-26

• Principles of money.
  by Ralph Musgrave in Ralphonomics, 2017-08-26 16:57:00 UTC

  James Tobin devoted about 6,000 words to discussing whether deposit insurance was desirable in an article entitled “The case for preserving regulatory distinctions”. The paragraphs below are my stab at the same question (about 1,000 words). Needless to say I think my arguments and conclusion are clearer and more concise than Tobin’s – why else would have written this article?…:-) 1. Everyone is entitled to some sort of depository or bank where they can store money in a totally safe manner. Apart from individual people, many employers find that service of use. 2. That service costs a finite amo [...]

2017-08-25

• Medicine and the microfoundations hegemony in macroeconomics
  by Mainly Macro in Mainly Macro, 2017-08-25 08:20:00 UTC

  Mainly for economists I’m beginning to think I should have made much more of analogies between economics and medicine in discussing what I call the microfoundations hegemony: the idea that the only ‘proper’ macroeconomic models are those that have all their equations consistently derived from microeconomic theory. The analogy I have in mind is that biology represents microfoundations, and statistical analysis linking, say, smoking to lung cancer are the non-microfounded models. (I've used the analogy in other contexts .) I was thinking about this in the context of a paper I have just finished [...]

• ¿Cómo aumentar los ingresos de los docentes en Uruguay? Parte II
  by Guillermo Alves in Razones y personas: repensando Uruguay, 2017-08-25 01:35:00 UTC

  En dos notas anteriores vimos que Uruguay tiene un problema persistente de escasez de docentes en enseñanza primaria y enseñanza media [1] [2] . *  Dicha escasez se explica tanto por una oferta de trabajo reducida debido a décadas de salarios bajísimos **  como por el crecimiento reciente de la demanda de docentes asociada la expansión de modalidades de tiempo extendido, de las horas de coordinación en secundaria y de distintos programas que ocupan más docentes, como maestros comunitarios. La falta de docentes supone un freno estructural a la implementación de reformas como la universalización [...]

2017-08-24

• On the Long-term Determinants of Cultural Traits: Family Structures in the Past
  by guidoalfani in NEP-HIS blog, 2017-08-24 04:22:13 UTC

  Origins and Implications of Family Structure across Italian Provinces in Historical Perspective By Graziella Bertocchi  (Modena and Reggia Emilia University and IZA) and Monica Bozzano  (Modena and Reggia Emilia University) Abstract : In this study we review the literature on the origins and implications of family structure in historical perspective with a focus on Italian provinces. Furthermore we present newly collected data on three of the main features of family structure: female mean age at marriage, the female celibacy rate, and the fraction of illegitimate births. The data are collected [...]

2017-08-23

• Bribery, Cooperation, and the Evolution of Prosocial Institutions
  by Michael Muthukrishna in Pro-Market, 2017-08-23 22:22:06 UTC

  How the science of cooperation and cultural evolution will give us new tools in combating corruption.     Illustration by Vector Open Stock , via Flickr ( CC BY 2.0 ) There is nothing natural 1) Putting aside what it means for something to be natural for our species, suffice to say these are recent inventions in our evolutionary history, by no means culturally universal, and not shared by our closest cousins. about democracy. There is nothing natural about living in communities with complete strangers. There is nothing natural about large-scale anonymous cooperation. Yet, this morning, I boug [...]

• [Segnalazioni] Salari e disuguaglianza, Europa, ruolo nel credito nelle recessioni
  by keynesblog in Keynes Blog, 2017-08-23 17:05:03 UTC

  Segnaliamo alcuni paper di recente pubblicazione dalla newsletter New Economics Papers on Post Keynesian Economics : Are higher wages good for business? An assessment under alternative innovation and investment scenarios Caiani, Alessandro; Russo, Alberto; Gallegati, Mauro Questo paper mira a indagare l’interazione tra disuguaglianza, dinamiche dell’innovazione e comportamenti di investimento nella definizione dei modelli a lungo termine dello sviluppo di un’economia chiusa. Estendendo l’analisi proposta da Caiani et al. (2017) esploriamo gli effetti di regimi salariali alternativi in diversi [...]

2017-08-22

• Willing the ends but not the means
  by ? in Stumbling and Mumbling, 2017-08-22 12:39:00 UTC

  There’s a link between two of my recent posts which I’d like to bring out. It’s that actually-existing centrists and rightists make a mistake of willing the ends but not the means. For example, centrists rightly want us to remain in the E [...]

2017-08-21

• Quality matters: alcohol edition
  by Eric Crampton in Offsetting Behaviour, 2017-08-21 23:36:00 UTC

  I've noted John Gibson's work showing that standard demand estimation techniques overestimate the price elasticity of demand for sugary drinks, and consequently overestimate the effects of soda taxes. Gibson shows that, because most empirical work uses household expenditure on the product category divided by some measure of average price, that work bunches together consumer shifts along both quality and quantity dimensions. If people mostly respond to price hikes by shifting to cheaper brands or cheaper packaging (big bottles versus cans, for example), then the demand estimates will mistake qu [...]

• El gobierno del PP y la regulación independiente
  by Francesc Trillas in Progrés Real/Progreso Real, 2017-08-21 15:59:00 UTC

  Sorprendentemente el gobierno del PP se ha alineado con la izquierda radical al considerar que los organismos reguladores independientes son antidemocráticos. Lo ha descubierto el periodista del diario El País Claudi Pérez hurgando en los argumentos escritos que el gobierno español ha presentado ante requerimientos de la Comisión Europea. Una vez más, las autoridades de la UE han tenido que tirar de las orejas a nuestros ministros (tan supuestamente liberales y europeístas) en cuestiones relacionadas con nuestras industrias de red o con la política de defensa de la competencia. Es por esto que [...]

• Renegotiating NAFTA is putting lipstick on a pig
  by Robert E. Scott in Working Economics, 2017-08-21 15:29:10 UTC

  The first round of the Trump administration’s NAFTA renegotiations began in Washington wrapped up on Saturday. The negotiators will meet again in September in Mexico City and then again in October in Canada. The United States has not yet proposed any specific measures on important issues such as labor rights, currency manipulation , or rules of origin . By all accounts, these negotiations are more likely to hurt than help most working Americans, who would be better served by efforts to target countries with large, global trade surpluses such as China, the European Union (EU) and Japan. Rather [...]

• President Trump's Buy America: Lessons from Public Sector Bus Procurement
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-21 15:22:00 UTC

  President Trump's team seek to renegotiate parts of NAFT A to encourage the revitalization of U.S manufacturing. �How is consumer welfare affected if there is some domestic protectionism to keep foreign imports out? �In our 2015 paper, we explore this theme in the case of public transit buses. � We argue that the "Buy America Act" encourages urban transit agencies to purchase U.S produced buses. This shield stops cities such as Santa Monica from buying cheaper, more energy efficient buses from Japan and South Korea. �This protectionism gives some monopoly power to small inefficient U.S produce [...]

• Econometrics vs. Statistics
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-21 15:01:00 UTC

  We are teaching our 16 year old son the dark art of econometrics. � �I asked him the following question. �Nutritionists claim that eating peanut butter makes you fat. � A statistician (who is not trained in economics) has attended a "field experiment" conference in Cambridge and has received a big grant to randomly assign jars of peanut butter to people. �To keep this simple, let's assume that people assigned to the treatment group always eat their peanut butter (no free disposal, no secondary markets in selling peanut butter). � The statistician observes the weekly weight of each person in hi [...]

• Sexism and discrimination in economics and how you can help fix it
  by thebusinesscycleblog in The business cycle blog, 2017-08-21 14:36:24 UTC

  The paper by Alice Wu on blatant misogyny in a blog frequented by some economists is disturbing.  Some links to relevant work and proposals for how to help: Alice Wu’s paper and a summary from Justin Wolfers; An analysis of diversity in economics by Amanda Bayer and Cecilia Rouse, and the website on promoting diversity from Amanda Bayer; Jeff Brown’s post on steps senior members of the profession can take. [...]

• Markets in the shadow of the eclipse : Could the solar eclipse affect stock market activity?
  by ? in FRED blog, 2017-08-21 13:00:49 UTC

  Some researchers have studied the possible effects that astronomical and meteorological conditions have on the stock market. So, what should investors do about the total solar eclipse today? First, the bad news: As you’re reading this, it’s already too late to react. Second, the good news: The graph above depicts the weekly returns of the Wilshire Index, with colored vertical lines depicting three annular solar eclipses visible from the U.S. during the sample period. (The gray bars represent recession periods.) At least for the annular variety, there’s not much to write home about regarding t [...]

• Ninth Anniversary of the GSEs' Conservatorships: Not a Time to Celebrate
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-08-21 12:38:21 UTC

  Guest post by Lawrence J. White , Robert Kavesh Professor of Economics, NYU Stern School of Business. In the summer of 2008, Fannie Mae and Freddie Mac’s financial positions deteriorated sharply: the result of inadequate capital (equity financing) for the risks in the residential mortgages that they held and had securitized. On September 6, 2008, their regulator, the Federal Housing Finance Agency (FHFA), removed senior management and placed these government-sponsored enterprises (GSEs) into conservatorships. Since then, the FHFA and the U.S. Treasury (which extended almost $188 billion to kee [...]

• Sam Watson’s journal round-up for 21st August 2017
  by Sam Watson in The Academic Health Economists' Blog, 2017-08-21 11:00:35 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Multidimensional performance assessment of public sector organisations using dominance criteria . Health Economics [ RePEc ]  Published 18th August 2017 The empirical assessment of the performance or quality of [...]

2017-08-20

• Why corporate social responsibility fails to promote peace in Papua New Guinea
  by Kylie McKenna in Development Policy Blog, 2017-08-20 20:00:23 UTC

  Papua New Guinea (PNG) has long been a site of analysis for exploring the links between natural resources and conflict, having been used as an example in prominent studies of the natural resource curse and as a source of learning in international debates on corporate social responsibility (CSR). The forced closure of the Panguna mine in Bougainville in 1989 due to conflict was a major catalyst for the adoption of CSR in PNG. Despite this 28-year history, company-community conflict remains a significant and ongoing challenge across the country. A possible explanation is that CSR counterintuitiv [...]

2017-08-19

• How rent prices compare to the number of coffee shops in every Manhattan neighborhood
  by ? in Business Insider, 2017-08-19 15:55:00 UTC

  Bryan Thomas/Getty Images The American city runs on coffee. It is somewhat of a luxury item, especially if you consider the cost of fancy cafes serving espresso and pour over drinks (generally referred to as third wave coffee). For this reason, some measure of coffee shops could be useful as a barometer of city and neighborhood  cost . Our hypothesis is that an area with a greater number of coffee shops would have a population with a larger disposable income, who can also afford more expensive housing.  So, in US cities, are the number of coffee shops and rent prices connected in any way? We a [...]

• My analysis of low rates and monetary policy–link to Ben Bernanke comments and FEDS version
  by thebusinesscycleblog in The business cycle blog, 2017-08-19 15:26:04 UTC

  My paper from the spring Brookings meeting, with John Roberts, has been published in FEDS .  Ben Bernanke discusses the paper here . [...]

• Misallocation vs. Solving Co-Ordination Failures: The Case of China's Investment in Industrial Parks
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-19 13:54:00 UTC

  China's economy is growing faster than the U.S economy. �Yes, China is "catching up" to the rich U.S but what role does the activist, rich and powerful Chinese Communist Party play in explaining this? �There are two different views on this subject. �Milton Friedman would argue that China's economy would be growing even faster if the CCP allowed the invisible hand to operate and didn't play political favorites. � This is the political misallocation hypothesis that I will return to below. � The second hypothesis is a type of Keynesian "Big Push" claim that activist government c an solve co-ordin [...]

2017-08-18

• China's Transition to a Human Capital Economy
  by Matthew Kahn in Environmental and Urban Economics, 2017-08-18 11:30:00 UTC

  The NY Times has published an interesting piece abo ut the rise of Chinese Tech companies . � For decades, China was known to "borrow" Western technology but now this large nation is becoming a producer of intellectual property and I have argued that this will lead this nation to enforce intellectual property laws. As China has invested in its own universities and sent millions of young people to study at Western Universities, the nation's stock of human capital has increased. � In our 2016 Princeton Press book, Siqi Zheng and I argue that the rise of the human capital economy in China has two [...]

2017-08-17

• Foreign-owned firms and productivity
  by bankunderground in Bank Underground, 2017-08-17 08:00:54 UTC

  Sandra Batten and Dena Jacobs Many governments around the world pursued policies to free up capital flows from the late 1970s to early 1990s with the aim of boosting productivity.  There’s now a debate raging about the costs and benefits of globalisation. While detractors highlight concerns about inequality , supporters of capital liberalisation point to the productivity growth it has fostered. Drawing on a unique UK firm-level dataset that merges data from the ONS business and innovation surveys, we show that foreign-owned companies are more productive than domestically owned firms and that [...]

• Thesis Thursday: Estela Capelas Barbosa
  by Chris Sampson in The Academic Health Economists' Blog, 2017-08-17 06:00:01 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Estela Capelas Barbosa who graduated with a PhD from the University of York . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Overall unfair inequality in health care: an application to Brazil Supervisor Richard Cookson Repository link http://etheses.whiterose.ac.uk/16649/ What’s the difference between fair and unfair inequality, and why is it important to distinguish the two? Not all inequality is the same. Whilst most [...]

2017-08-15

• Could Innovations in Democratic Participation Shake Us Out of Our Civil Disillusionment?
  by ? in Pacific Standard. Smart Journalism. Real Solutions., 2017-08-15 23:00:00 UTC

  History proves that, when governments listen, citizens reward them both politically and financially.There are several indications of broad disillusionment with democratic governance. From rising polarization to a growing lack of trust in government institu [...]

• The behavioural economics paradox
  by chris in Stumbling and Mumbling, 2017-08-15 12:25:19 UTC

  People aren’t as daft as some behavioural economists would have us believe. This is the message of a new paper by Olivier Bargain and colleagues. They studied the choices of British workers of how long to work, and found that: People behave on average as if they were maximizing SWB…A majority of individuals actually make decisions that are in line with the maximization of income-leisure satisfaction. Of course, there are exceptions to this. But many of these are because people are constrained by labour market institutions and policies: some people work too much because they can’t find [...]

2017-08-14

• What explains the rise of populism?
  by Johan Fourie in Johan Fourie's Blog, 2017-08-14 14:47:55 UTC

  Consider the following thought experiment: Sibusiso and Thulani each own a firm that competes with the other. In each of the following scenarios, Sibusiso’s firm outcompetes Thulani’s. Which of the four do you consider unfair competition? Sibusiso works hard, saves and invests his profits, and invents new techniques and products, while Thulani’s products change little and he loses market share. Sibusiso finds a higher quality input supplier in the US, which makes his products better and he therefore takes market share from Thulani. Sibusiso outsources some of his services to Bangladesh, wher [...]

• Adverse Selection: A Primer
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-08-14 12:40:51 UTC

  Information is the basis for our economic and financial decisions. As buyers, we collect information about products before entering into a transaction. As investors, the same goes for information about firms seeking our funds. This is information that sellers and fund-seeking firms typically have. But, when it is too difficult or too costly to collect information, markets function poorly or not at all. This form of asymmetric information ―where two parties to a potential transaction have unequal knowledge―is a particularly serious hindrance to the operation of financial markets. If, for some r [...]

2017-08-11

• Do you take all of your holiday allowance? Maybe not, if you live in these countries
  by ? in Forum:Blog, 2017-08-11 14:23:00 UTC

  Japanese workers are least likely to take their full annual vacation entitlement, according to a new poll. [...]

• Tony Atkinson and his Legacy
  by maximorossi in NEP-LTV blog, 2017-08-11 12:48:42 UTC

  By: A Brandolini  ;  Stephen P Jenkins  ;  John Micklewright Tony Atkinson is universally celebrated for his outstanding contributions to the measurement and analysis of inequality, but he never saw the study of inequality as a separate branch of economics. He was an economist in the classical sense, rejecting any sub-field labelling of his interests and expertise, and he made contributions right across economics. His death on 1 January 2017 deprived the world of both an intellectual giant and a deeply committed public servant in the broadest sense of the term. This collective tribute hi [...]

• The Difficult School-to-Work Transition of High School Dropouts: Evidence from a field experiment
  by maximorossi in NEP-LTV blog, 2017-08-11 12:47:41 UTC

  By: Cahuc, Pierre  ;  Carcillo, Stéphane  ;  Minea, Andreea This paper investigates the effects of the labor market experience of high school dropouts four years after leaving school by sending fictitious resumes to real job postings in France. Compared to those who have stayed unemployed since leaving school, the callback rate is not raised for those with employment experience, whether it is subsidized or non-subsidized, in the market or non-market sector, if there is no training accompanied by skill certification. In particular, we find no stigma effect associated with subsidized o [...]

• Populism and the Economics of Globalization
  by maximorossi in NEP-LTV blog, 2017-08-11 12:46:34 UTC

  By: Rodrik, Dani Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the seco [...]

• Economics of a good night’s sleep
  by maximorossi in NEP-LTV blog, 2017-08-11 12:45:56 UTC

  By: Joan Costa-i-Font  ;  Sarah Flèche Parents whose sleep quality is reduced by young children waking them in the night are less likely to work, work shorter hours and/or earn less than otherwise similar people who enjoy a good night’s sleep. The negative labour market effects of sleep disruption caused by children are particularly strong for low-skilled mothers. These are among the findings of research by Joan Costa-i-Font and Sarah Flèche, which uses data on 14,000 families in and around the city of Bristol in the UK to investigate the link between mothers’ employment outcomes and the [...]

• Firms and Labor Market Inequality: Evidence and Some Theory
  by maximorossi in NEP-LTV blog, 2017-08-11 12:45:10 UTC

  By: David Card  ;  Ana Rute Cardoso  ;  Jörg Heining  ;  Patrick Kline We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05 to 0.15. Studies of wage determination with worker and firm fixed effects typically find that firm-specific premiums explain 20% of overall wage variation. To interpret these findings we develop a model of wage setting in which workers have idiosyncratic tastes for different workplaces. Simple [...]

• Big Data and Unemployment Analysis
  by maximorossi in NEP-LTV blog, 2017-08-11 12:44:18 UTC

  By: Simionescu, Mihaela  ;  Zimmermann, Klaus F. Internet or “big” data are increasingly measuring the relevant activities of individuals, households, firms and public agents in a timely way. The information set involves large numbers of observations and embraces flexible conceptual forms and experimental settings. Therefore, internet data are extremely useful to study a wide variety of human resource issues including forecasting, nowcasting, detecting health issues and well-being, capturing the matching process in various parts of individual life, and measuring complex processes where t [...]

• Why Are Some Immigrant Groups More Successful than Others?
  by maximorossi in NEP-LTV blog, 2017-08-11 12:43:27 UTC

  By: Edward P. Lazear Success, measured by earnings or education, of immigrants in the US varies dramatically by country of origin. For example, average educational attainment among immigrants ranges from 9 to 16 years, depending on source country. Perhaps surprisingly, immigrants from Algeria have higher educational attainment than those from Israel or Japan. Also true is that there is a strong inverse relation of attainment to number of immigrants from that country. These patterns result because in the US, immigrant slots are rationed. Selection from the top of the source country’s abil [...]

• Survey Under-Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK’s SPI Adjustment?
  by maximorossi in NEP-LTV blog, 2017-08-11 12:42:47 UTC

  By: Richard V. Burkhauser  ;  Nicolas Hérault  ;  Stephen P. Jenkins  ;  Roger Wilkins Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK’s pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very ric [...]

• Gender, Age, and Competition: a Disappearing Gap?
  by maximorossi in NEP-LTV blog, 2017-08-11 12:41:53 UTC

  By: Jeffrey Flory  ;  Uri Gneezy  ;  Kenneth Leonard  ;  John List Research on competitiveness at the individual level has emphasized sex as a physiological determinant, focusing on the gap in preference for competitive environments between young men and women. This study presents evidence that women’s preferences over competition change with age such that the gender gap, while large for young adults, disappears in older populations due to the fact that older women are much more competitive. Our finding that tastes for competition appear just as strong among older women as they are among [...]

• How Restricted is the Job Mobility of Skilled Temporary Work Visa Holders?
  by maximorossi in NEP-LTV blog, 2017-08-11 12:40:46 UTC

  By: Jennifer Hunt Using the National Survey of College Graduates, I investigate the degree to which holders of temporary work visas in the United States are mobile between employers. Holders of temporary work visas either have legal restrictions on their ability to change employers (particularly holders of intra-company transferee visas, L-1s) or may be reluctant to leave an employer who has sponsored them for permanent residence (particularly holders of specialty worker visas, H-1Bs). I find that the voluntary job changing rate is similar for temporary visa holders and natives with [...]

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