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- Guest Contribution: “Macroeconomic Effects of High-Frequency Uncertainty Shocks”
by Menzie Chinn in Econbrowser, 2015-06-30 07:30:51 UTC
Today, we are fortunate to have a guest contribution written by Laurent Ferrara (Banque de France and University Paris Ouest Nanterre La Défense) and Pierre Guérin (Bank of Canada). The views expressed here are those of the authors and do not necessarily represent those of the Banque de France or of the Bank of Canada.
Macroeconomic and financial uncertainty is often considered as one of the key drivers of the collapse in global economic activity in 2008-2009 as well as one of the factors hampering the ensuing economic recovery (see, e.g., Stock and Watson (2012) ). While it has long been ac [...]
- I'm not at the Hilton Hawaiian Village, Waikiki ...
by John Whitehead in Environmental Economics, 2015-06-29 13:48:37 UTC
... for the Western Economic Association International 90th Annual Conference (June 28- July 2, 2015); but my co-authors are:
Program Addenda (6/25/15) |� Preliminary Program (5/20/15) | Participants Directory (5/20/15)
Session Information & Instructions �|� Housing Information �| General Information � Participating Allied Societies �|� Exhibitor Info
Tanga McDaniel is presenting " Payment and policy consequentiality in contingent valuation " (see the 6/25 Addenda) and Pamela Wicker is presenting "The Germans' support for hosting summer Olympic games." Both papers find that [...]
- Poking Bigger Holes in China's Great Financial Wall
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-06-29 11:39:06 UTC
At the third plenary session of China’s 18th Central Committee (the “Third Plenum”) in November 2013, China’s leaders adopted a broad national reform strategy (see here for a scorecard of the economic plans). Included were the liberalization of the country’s government-controlled financial system and the internationalization of its currency, the renminbi (RMB). A year ago, we argued that when it comes to freeing both its domestic and its external finances , China had a long way to go. We also suggested that the pace of liberalization would remain gradual, reflecting policymakers’ g [...]
- Self Protection Against Air Pollution in Urban China
by Matthew Kahn in Environmental and Urban Economics, 2015-06-28 20:09:00 UTC
Back in 1972, �Issac Ehrlich and Gary Becker wrote a very important JPE paper on endogenous probabilities. � Consider a simple example of a fire that burns down your house. �This event is a random variable that every family fears. �The probability of this event is partially under the family's control. If nobody in the house smokes or lights candles, this reduces the probability of this horrible event. �If the members of the family enjoy smoking, then it is costly for them to "self protect" by choosing not to smoke. �Avoiding smoking is an ex-ante choice that lowers the probability of a fire. � [...]
- Inequality: the right's problem
by chris in Stumbling and Mumbling, 2015-06-28 12:22:15 UTC
Are trends in UK inequality more of a problem for the right than left?
I'm prompted to ask by the fact that recent years have seen two different trends. On the one hand, there's been increased equality between the moderately well-off and the moderately badly off: the 90/10 and 80/20 ratios for post-tax income have fallen back to 1980s' levels. But on the other hand, top incomes have risen; although the share of incomes going to the top 1% ( Excel ) has fallen since the recession, it is twice what it was in the mid-70s.
One could argue that both these trends should worry the right more than the [...]
- A withdrawal from the Eurozone: Some Simulation Studies
by brianmlucey in Brian M. Lucey, 2015-06-27 19:19:52 UTC
A withdrawal of a member state from the EMU due to market pressure has been a rather popular topic in the public debate in recent years. However, the effects of a withdrawal have been analysed quantitatively surprisingly little. Discussions have been concentrated on the crisis countries, but as the Finnish economic difficulties have deepened also on Finland. In the report, the effects of the potential withdrawal of Greece, one of the weakest economies in the EMU, is studied first. In addition we try to sketch the economic effects of a withdrawal of the relatively more bal- anced Finla [...]
- Dual Currency System as a Solution to the Eurozone Crisis
by brianmlucey in Brian M. Lucey, 2015-06-27 19:09:49 UTC
The paper discusses the role of a dual currency system as a solution to problems experienced by some eurozone countries, especially Greece. The dual currency system as suggested by the author would consist of the euro and a reintroduced national currency, referred to as the ânew drachmaâ. The concept originates from an analysis of the roots of the present crisis, which include a severe loss of international competitiveness by countries hardest hit by the crisis. The analysis leads to the conclusion that devaluation (as opposed to âinternal devaluationâ) may be crucial to dea [...]
- The future of the euro — what happens if a Member State leaves?
by brianmlucey in Brian M. Lucey, 2015-06-27 19:08:46 UTC
The future of the euro — what happens if a Member State leaves?
The continued viability of the Eurozone as a single currency area is challenged from time to time. Some doubt the ability of Italy and other Member States to remain in the zone, given their difficulties in complying with the applicable budgetary rules. Even the French Prime Minister has commented that life was sometimes easier with the franc. This article considers some of the consequences which may ensue in the event that a Member State felt compelled to seek an exit from the Eurozone, and to reintroduce its own nation [...]
- How monetary systems cope with a multitude of dollars
by JP Koning in Moneyness, 2015-06-25 14:34:00 UTC
Over the last few decades, dollars have become incredibly heterogeneous. People can pay for stuff with traditional paper bank notes, debit cards, or a plethora of different credit cards. Each of these dollar brands comes with its own set of services and related costs. On the no frills side is cash. Paying with paper still incurs the lowest transaction costs, although at the same time it offers its owner no associated perks. On the fancy side is an American Express card, which costs around 3.5% per transaction but is twinned with a raft of benefits including reward points, the right to dispute [...]
- Residential Choice Patterns by Middle-Class Black and Hispanic Households
by Matthew Kahn in Environmental and Urban Economics, 2015-06-25 03:40:00 UTC
David Leonhardt has written a nice piece �about a recent 2015 Stanford Study by some Sociologists. �The Stanford Study is available here.� � � I am slightly amused because Denise DiPasquale and I made this point 16 years ago in our published 1999 Real Estate Economics paper. � An ungated version of our paper is here. � � While our paper has only generated 38 cites, I think its results are still interesting and relevant. � The empirical sociologists would be wise to read some of the older literature. Here is our abstract: [...]
- MTurk costs more (so what?)
by John Whitehead in Environmental Economics, 2015-06-24 14:45:29 UTC
It still costs less than all of the higher quality substitutes, right?
This week Amazon changed the terms for a service that has become a standard tool in social-science research, and many scholars are complaining that it will mean higher costs to conduct surveys.
The service is called Mechanical Turk, and it is a marketplace that connects people on the Internet looking for paid piecework with anyone who has a small task and is willing to pay someone to do it. The concept is known as crowd-work, and many researchers have used it to pay strangers small amounts to take part in social-science su [...]
- How monitoring online ‘Brexit’ talk can weigh the EU referendum result
by Blog Admin in British Politics and Policy at LSE, 2015-06-24 07:00:28 UTC
The UK electorate will vote on whether to exit the EU in a referendum before the end of 2017. Costas Milas writes thatÂ it is important thatÂ for David Cameron and theÂ government to monitor closely whether ‘Brexit’ talk continues to receive, in coming months, the attention of the EU public. This will help form a set of realistic demands whileÂ alsoÂ ensuring that expectations at home remain well-anchored.
David Cameronâs in/out EU referendum is planned to take place before the end of 2017. As things stand, an arguably slim majority of British voters appears to be rejecting Brexit. Yougov po [...]
- “Bonus Culture: Competitive Pay, Screening and Multitasking,” R. Benabou & J. Tirole (2014)
by afinetheorem in A Fine Theorem, 2015-06-23 19:42:28 UTC
Empirically, bonus pay as a component of overall renumeration has become more common over time, especially in highly competitive industries which involve high levels of human capital; think of something like management of Fortune 500 firms, where the managers now have their salary determined globally rather than locally. This doesn’t strike most economists as a bad thing at first glance: as long as we are measuring productivity correctly, workers who are compensated based on their actual output will both exert the right amount of effort and have the incentive to improve their human capital.
- Ed Lazear's WSJ Piece on the Role of State Policy as a Determinant of Economic Growth
by Matthew Kahn in Environmental and Urban Economics, 2015-06-23 14:47:00 UTC
In today's WSJ, Prof. Lazear has written a piece� highlighting the importance of a state's "business climate" as a driver of local growth. �He focuses on "Right to Work" legislation as a key empirical benchmark for identifying "business friendly" states. � While I agree with him, it is important to note that "unfriendly" states such as California can thrive because it has unique exogenous attributes (climate and amenities) that cannot be found anywhere else in the U.S. �A deeper question is whether the "high tax" leadership of state and local policy in California use the tax revenue to impleme [...]
- Cities, infrastructure and growth
by Diane Coyle in The Enlightened Economist, 2015-06-23 10:35:38 UTC
By way of a follow up to yesterday’s post on the new book Urban Economics and Urban Policy , I read recently a very interesting paper by David Starkie (Investment and Growth: The Impact of Britain’s Post-War Trunk Roads Programme, In Economic Affairs, Feb 2015 ) in which he argues that the construction of the British motorways in the 1960s and 70s had no discernible effect on productivity and growth. One reason was that pre-existing commercial traffic was intra-regional whereas the motorways radiated out from London. Contrast yesterday’s map of how the motorways were planned:
Motorway planning [...]
- When Income Depends on Performance and Luck: The Effects of Culture and Information on Giving By: Pedro Rey-Biel (Universitat Autònoma de Barcelona and Barcelona GSE) ; Roman Sheremeta (Weatherhead School of Management at Case Western Reserve University
by maximorossi in NEP-LTV blog, 2015-06-22 19:01:22 UTC
We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinant [...]
- The Political Economy of Public Income Volatility: With an Application to the Resource Curse By: James A. Robinson ; Ragnar Torvik ; Theirry Verdier
by maximorossi in NEP-LTV blog, 2015-06-22 18:59:09 UTC
We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more efficient. Yet at the same time it also reduces the re-election probability of an incumbent and since some of the policy inefficiencies are concentrated in the future, this makes inefficient policy less costly. We show how this model can help think abou [...]
- Monetary policy and financial inclusion
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-06-22 12:43:25 UTC
Central bankers usually steer clear of discussions about inequality. They view monetary policy as a tool for stabilizing the economy. For many central banks, like the ECB or the Bank of England, this means price stability. For others, like the Federal Reserve, it means a combination of high employment and low inflation. Regardless of the goals, issues involving the distribution of income are generally left to the fiscal authorities. For the most part, this division of labor is sensible. However, their mandates require central banks to make policy tradeoffs that are influenced by the prevailing [...]
- Another reason to prefer Ancova: dealing with changes in measurement between baseline and follow-up
by David McKenzie in Development Impact, 2015-06-22 11:50:00 UTC
A few months ago, Berk blogged about my paper on the case for more T , and in particular, on the point that Ancova estimation can deliver a lot more power than difference-in-differences when outcomes are not strongly autocorrelated. [...]
- A New Consensus Physics Problem
by Mike Isaacson in Vulgar Economics, 2015-06-20 14:00:00 UTC
This past semester, I took a seminar on economic methodology. Throughout the course, we talked a lot about the New Consensus obsession with microfoundations among other things. I presented this physics problem to the class and the New Consensus answer. Problem: You have enough 1 cm diameter marbles to fill a 40 cm diameter, 30 cm high bucket. If you were to pour them in, how many marbles would be touching the bottom of the bucket. New Consensus Answer: All of them. Since an individual marble will be pulled down by the force of gravity to the bottom of the bucket, this means that each marble wi [...]
by himaginary in himaginaryの日記, 2015-06-20 00:00:00 UTC
ここ で紹介したDavid Andolfattoに対するポール・ローマーの批判に対し、Andolfattoが表題のエントリ（原題は「Competitive Innovation」）で 反論している 。ただ、そこで彼が反例として提示したモデルは、Dietz Vollrathが 6/5エントリ で解説したボルドリン＝レヴァイン（BL） *1 とほぼ同様と思われるので、そちらの解説を引用してみる。
In the end, though, a (the?) key point is that BL assume that ideas are in fact rival goods. A working paper version of this paper mentions the following in [...]
- After school shootings, students fare poorly in math, English
by Louis-Philippe Beland, Assistant Professor of Economics at Louisiana State University in The Conversation, 2015-06-17 10:12:17 UTC
School shootings have future consequences for kids. Gun image via www.shutterstock.com While school shootings have received widespread media attention, their impact on enrollment and student performance is not well-known. High school shootings can leave potentially damaging effects on both students and schools.
Could extreme violence in high schools hinder the ability of students to learn? Could it also influence their decision about whether to stay or change school?
As researchers studying the economics of education, we conducted a study on the effect of extreme violence in high schools in [...]
- Meta-Granger Causality Testing
by firstname.lastname@example.org (David Stern) in Stochastic Trend, 2015-06-17 09:50:00 UTC
I have a new working paper with Stephan Bruns on the meta-analysis of Granger causality test statistics. This is a methodological paper that follows up on our meta-analysis of the energy-GDP Granger causality literature that was published in the Energy Journal last year . There are several biases in the published literature on the energy-output relationship, which we document in the Energy Journal paper: 1. Publication bias due to sampling variability - the common tendency for statistically significant results to be preferentially published. This is either because journals reject papers that d [...]
- I collaborazionisti
by Alberto Bagnai in Goofynomics, 2015-06-16 20:11:00 UTC
(... qualche contributo al dibbattito... )( Oggi sono andato in banca - firma grafometrica - poi in palestra. Ho chiesto un caffè, mi son cambiato, sono entrato in sala pesi, ho guardato il remoergometro... Ma qualcosa non ha convinto lo Junker prussiano - non Jean-Claude - che è in me. Ho girato le spalle, son tornato nello spogliatoio, mi sono ricambiato, e son tornato a casa, dove in effetti ho constatato di avere un po' di febbre. Grande giubilo , perché almeno c'era un cazzo di motivo per il quale mi sentivo come mi sentivo, cioè non normale: avrò un po' di quell'influenza intestinal [...]
- "Heterodox Economists Don't Do Math" Reader
by Mike Isaacson in Vulgar Economics, 2015-06-16 17:00:00 UTC
Anwar Shaikh - All the Humbug Papers. Literally all of them. Herbert Simon - A Formal Theory of the Employment Relation Thomas Herndon et al. - Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff Duncan Foley and Deepankar Basu - Dynamics of Output and Employment in the U.S. Economy Jesus de Felipe and John McCombie - The CES Production Function, the Accounting Identity, and Occam's Razor [...]
- Robots Seem to Be Improving Productivity, Not Costing Jobs
by Mark Muro in HBR Blog Network, 2015-06-16 14:00:33 UTC
Nearly 30 years ago, in 1987, the Nobel-winning economist Robert Solow surveyed the impact of IT on the economy and concluded that “you can see the computer age everywhere but in the productivity statistics.”
Solow’s quip crystallized a frustrating disconnect in the 1980s. Why did an observed technology boom coincide with a prolonged slump in the productivity data? Companies were using computers, but they didn’t seem to be getting any more productive.
Strangely, it took another seven years for U.S. productivity growth to surge. At last, the computers Solow and everyone else saw around them [...]
- As cash becomes quaint, are ATMs on path to obsolescence?
by Bernardo Batiz-Lazo, Professor of Business History and Bank Management at Bangor University in The Conversation, 2015-06-16 10:08:02 UTC
Is it time for the ATM's requiem? Old ATM via www.shutterstock.com Before the advent of the internet, the greatest gain in customer convenience within retail banking came from the creation of automated teller machines (ATMs).
ATMs led to significant advances in how customers access financial services because – coupled with the direct deposit – they freed workers from so many routine tasks. No more depositing a paycheck in person, inquiring about balances or paying utilities solely during banking hours. ATMs enabled impromptu dinners and last-minute shopping over the weekend.
But now that [...]
- Bridging Gender Gaps? The Rise and Deceleration of Female Labor Force Participation in Latin America: An overview. By: Leonardo Gasparini (CEDLAS – UNLP) ; Mariana Marchionni (CEDLAS – UNLP)
by maximorossi in NEP-LTV blog, 2015-06-15 17:30:59 UTC
This book contributes to the understanding of female labor force participation in Latin America by documenting the changes that took place over the last two decades, exploring their determinants, analyzing their consequences on labor and social outcomes, and discussing implications for public policy. The book highlights a potentially worrisome finding: after around half a century of sustained growth, there are signs of a widespread and significant deceleration in the entry of women into the Latin American labor markets. A version of this [...]
- Do More of those in Misery Suffer From Poverty, Unemployment or Mental Illness? By: Sarah Flèche ; Richard Layard
by maximorossi in NEP-LTV blog, 2015-06-15 17:29:53 UTC
Studies of deprivation usually ignore mental illness. This paper uses household panel data from the USA, Australia, Britain and Germany to broaden the analysis. We ask first how many of those in the lowest levels of life-satisfaction suffer from unemployment, poverty, physical ill health, and mental illness. The largest proportion suffer from mental illness. Multiple regression shows that mental illness is not highly correlated with poverty or unemployment, and that it contributes more to explaining the presence of misery than is explai [...]
- Innovation and Top Income Inequality By: Philippe Aghion ; Ufuk Akcigit ; Antonin Bergeaud ; Richard Blundell ; David Hémous
by maximorossi in NEP-LTV blog, 2015-06-15 17:28:49 UTC
In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top [...]
- Analysing Income Distribution Changes : Anonymous Versus Panel Income Approaches By: Gary S. Fields ; Robert Duval-Hernández ; George Jakubson
by maximorossi in NEP-LTV blog, 2015-06-15 17:27:16 UTC
We reconcile, both theoretically and empirically, changes in inequality with panel income changes over periods of economic growth and decline. We also explore what factors account for the trends of short-run inequality and of inequality in individual average earnings. Finally, we explore what factors account for the equalization brought about by economic mobility. Using panel earnings data from Mexico we find that earnings changes are convergent, irrespective of whether inequality rises or falls. This is caused by a small fraction o [...]
- Dodd-Frank: Five Years After
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-06-15 12:30:40 UTC
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory reform in the United States since the 1930s. DF explicitly aims to limit systemic risk, allow for the safe resolution of the largest intermediaries, submit risky nonbanks to greater scrutiny, and reform derivatives trading. How to celebrate its fifth birthday? Well, if you are like us, it will be a sober affair, reflecting serious worries about the continued vulnerability of the financial system. Let’s have a look at the most noteworth [...]
- Nominal devaluation and real wages
by Alberto Bagnai in Goofynomics, 2015-06-15 09:55:00 UTC
( apologies for my English: constructive remarks, or even destructive, are welcome, if you dare... ) When things get tough, the tough get going. As the perspective of a Grexit becomes more likely, thereby confuting the ludicrous thesis of a supposed "irreversibility" of the euro, the propaganda resorts to its weapons of mass destruction: Nobel Prizes. I use to say that only two human things are irreversible: stupidity and death (although in the second case we have a brilliant counterexample). I was mistaken: there is a third human thing which seems to be irreversible: the firm belief of econom [...]
- Durable but Crumbling Urban Infrastructure: The Political Economy of Spatial Investment in Public Capital
by Matthew Kahn in Environmental and Urban Economics, 2015-06-14 16:02:00 UTC
The NY Times reviews Rosabeth Kanter's new book called "Move". �Keynesians like to point to "infrastructure" as a leading example of a public capital stock that we are under-investing in. � For example, here is a FT piece by Larry Summers. �Why are we turning down investing in projects with positive present discounted value? These projects would create locate construction jobs and would increase safety, and urban speed. �So, why is JFK Airport so nasty? Why are so many of Los Angeles roads filled with potholes? Would these issues exist in China? �Why is the USA under-investing in a capital sto [...]
- Horses for Courses
by Mike Isaacson in Vulgar Economics, 2015-06-14 15:00:00 UTC
The other day, Branko Milanovic wrote a blog post detailing his reservations of the Palma index . For those unfamiliar, Palma is a proposed substitute for the Gini index . Whereas Gini measures the longest perpendicular distance between the Lorenz Curve -- which shows the percentage of overall income going to given percentages of the population -- and a line representing complete equality, Palma is a simple ratio between the incomes of the top 10% and the bottom 40%. Palma came about as the result of an observed regularity in inequality data showing that the 50% of the population between these [...]
- 'What Assumptions Matter for Growth Theory?'
by Mark Thoma in Economist's View, 2015-06-14 09:35:37 UTC
Dietz Vollrath explains the "mathiness" debate (and also Euler's theorem in a part of the post I left out). Glad he's interpreting Romer -- it's very helpful:
What Assumptions Matter for Growth�Theory? : The whole “mathiness” debate that Paul Romer started tumbled onwards this week... I was able to get a little clarity in this whole “price-taking” versus “market power” part of the debate. I’ll circle back to the actual “mathiness” issue at the end of the post.
There are really two questions we are dealing with here. First, do inputs to production earn their marginal product? [...]
- Vincolo esterno e declino italiano (KPD10)
by Alberto Bagnai in Goofynomics, 2015-06-13 21:06:00 UTC
(... benvenuti alla decima puntata del ciclo "keynesianesimo per le dame". Allacciate le cinture, state decollando verso la frontiera della ricerca post-keynesiana... ) ( ...sono esausto. L’editore mi ha mandato un contratto e mi chiede che ne penso. E che ne devo pensare? Tu sei onesto, sei un professionista, sei pure simpatico: il contratto sarà fatto bene. Il problema non è il contratto: sono io. Vi avevo detto che sarebbe stato un anno lungo e a me non passa veramente più. Tante soddisfazioni, per carità, ma il mio corpo non mi segue. Sto anche entrando in un mood un po’ più buddi [...]
- What Assumptions Matter for Growth Theory?
by dvollrath in The Growth Economics Blog, 2015-06-13 18:42:51 UTC
The whole “mathiness” debate that Paul Romer started tumbled onwards this week while I spent four days in a car driving from Houston to Quechee, Vermont. I was able to keep up with several new entries ( Harford , Rowe , Andolfatto , Romer ) regarding the specifics of growth theory when it was my turn in the passenger seat. I also had running around in my head a series of e-mails I shared with Pietro Peretto , who helped clear up a lot of questions regarding this debate (The usual disclaimer applies – Pietro is not responsible for anything stupid I say here).
Somewhere along I-40 and I-81 I wa [...]
- Are ideas really non-rival?
by Nick Rowe in Worthwhile Canadian Initiative, 2015-06-13 10:16:13 UTC
I was writing a simple teaching post, on ideas and increasing returns to scale, in micro and macro. I wrote down "Ideas are non-rival". Then I thought I had better explain what I meant by that. Then I thought about professors, who do research (thinking up new ideas), and teaching (communicating existing ideas to other people). Then I thought about how some professors like research but don't like teaching. Then I thought about this post.
Sure, two people can use the same idea (ideas are non-rival), but can't eat the same apple (apples are rival). But the second person can't use that idea unless [...]
- The need for a longer (but not too long) history of microfinance
by philmader in governance across borders, 2015-06-12 14:11:07 UTC
Excerpt from “The Political Economy of Microfinance: Financializing Poverty”, Chapter 2, A Genealogy of Microfinance.
Two basic types of story are commonly told about the origins of modern microfinance. One is the underhistoricized version, whereby Dr Muhammad Yunus (and/or a handful of other pioneers) “invented” or “discovered” it: “The modern microfinance movement began in Bangladesh in 1977, as an experiment by economics professor Muhammad Yunus … Over the next three decades, the model he established became widely accepted and replicated in other countries as a way to fight [...]
- The Burundi crisis: Local Grievances, Ethnicity, and the Economy.
by Olivier Sterck in The CSAE Blog, 2015-06-12 11:12:14 UTC
President of Burundi Pierre Nkurunziza visits South Africa, 3-4 Nov 2014 (photo credit: GovernmentZA).
When president Nkurunziza announced his intention to run for a third term, serious unrest exploded in the streets of Bujumbura. In the last three weeks, violent clashes with the police have triggered fears of a new civil war and destabilisation of the entire African Great Lakes region. So far, the international community has been unable to calm the situation and over 110,000 Burundians have already fled the country. The Oxford Central Africa Forum hosted a round-table on the 15th of May t [...]
- Female Labor Force Participation in Latin America: Evidence of Deceleration
by maximorossi in NEP-LTV blog, 2015-06-10 12:43:12 UTC
By: Leonardo Gasparini (CEDLAS-UNLP and CONICET) ; Mariana Marchionni (CEDLAS-UNLP and CONICET) ; Nicolás Badaracco (CEDLAS-UNLP) ; Joaquín Serrano (CEDLAS-UNLP and CONICET)
This paper documents changes in female labor force participation (LFP) in Latin America exploiting a large database of microdata from household surveys of 15 countries in the period 1992-2012. We find evidence for a significant deceleration in the rate of increase of female LFP in the 2000s, breaking the marked increasing pattern that characterized the region for at [...]
- By Choice and by Necessity: Entrepreneurship and Self-Employment in the Developing World
by maximorossi in NEP-LTV blog, 2015-06-10 12:38:56 UTC
By: David Margolis (CES – Centre d’Ã©conomie de la Sorbonne – UP1 – UniversitÃ© PanthÃ©on-Sorbonne – CNRS, EEP-PSE – Ecole d’Ãconomie de Paris – Paris School of Economics, IZA – Institute for the Study of Labor)
Over half of all workers in the developing world are self-employed. Although some self-employment is chosen by entrepreneurs with well-defined projects and ambitions, roughly two thirds results from individuals having no better alternatives. The importance of self-employment in the overall distribution of jobs is determin [...]
- The Stress Cost of Children
by maximorossi in NEP-LTV blog, 2015-06-10 12:37:21 UTC
By: Hielke Buddelmeyer ; Daniel S. Hamermesh ; Mark Wooden
We use longitudinal data describing couples in Australia from 2001-12 and Germany from 2002-12 to examine how demographic events affect perceived time and financial stress. Consistent with the view of measures of stress as proxies for the Lagrangean multipliers in models of household production, we show that births increase time stress, especially among mothers, and that the effects last at least several years. Births generally also raise financial stress slightly. The monetary e [...]
- “Empire State of Mind”: The Land Value of Manhattan, 1950-2013
by Manuel Bautista in NEP-HIS blog, 2015-06-10 08:32:41 UTC
What’s Manhattan Worth? A Land Values Index from 1950 to 2013.
by Jason Barr, Rutgers University (email@example.com), Fred Smith, Davidson College (firstname.lastname@example.org), and Sayali Kulkarni, Rutgers University (email@example.com).
Abstract :Â Using vacantÂ land Â sales, we constructÂ aÂ land Â valueÂ index Â forÂ Manhattan Â from 1950 to 2013. We find three major cycles (1950 to 1977, 1977 to 1993, and 1993 to 2007), withÂ land Â values Â reaching their nadir in 1977, two years after the cityâs fiscal crises. Overall, we find the average annual real growth rate to be 5.1%. Sinc [...]
- The Neoliberal Model is not Sustainable but State Driven Models have not Proven to be Any Better: How About We Just Redistribute the Wealth?
by stefanotijerina in NEP-HIS blog, 2015-06-09 06:15:53 UTC
State Versus Market in Developing Countries in the Twenty First Century
by Kalim Siddiqui (University of Huddersfield)(firstname.lastname@example.org)
This paper analyses the issue of the state versus the market in developing countries. There was wide ranging debate in the 1950s and 1960s about the role of the state in their economy when these countries attained independence, with developing their economies and eradicating poverty and backwardness being seen as their key priority. In the post-World War II period, the all-pervasive ‘laissez-faire’ model of development was rejected, beca [...]
- The cheapest way to fix South Africa’s education catastrophe
by Johan Fourie in Johan Fourie's Blog, 2015-06-09 05:47:39 UTC
A muppet a day will make you clever one day: More funding for early childhood education is the cheapest solution to addressÂ South Africa’s harrowing education outcomes
There is little doubt that one of the main constraints to South African economic development and prosperityÂ has been the failure of our education system. The new government in 1994 inherited an intolerably unequal system, with white kids receiving world-class education while black kids obtained such a poor quality of education that only the really talented ones could escape the poverty cycle. Two decades later, while the racia [...]
- Why the mortgage interest tax deduction should disappear, but won't
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-06-08 12:24:14 UTC
In the run-up to the 2012 U.S. Presidential election, Planet Money asked five economists from across the political spectrum for proposals that they would like to see in the platform of the candidates. The diverse group agreed, first and foremost, on the wisdom of eliminating the tax deductibility of mortgage interest.� The vast majority of economists probably agree. We certainly do. But it won’t happen, because politicians with aspirations for reelection find it toxic. What inspires us to discuss this now? An important anniversary in our profession’s understanding of economic policy. Forty [...]
- Dynamic equilibrium with rare events and heterogeneous Epstein-Zin investors
by Christian Zimmermann in NEP-DGE blog, 2015-06-08 03:23:38 UTC
By Georgy Chabakauri
We consider a general equilibrium Lucas (1978) economy with one consumption good and two heterogeneous Epstein-Zin investors. The output is subject to rare large drops or, more generally, can have non-lognormal distribution with higher cumulants. The heterogeneity in preferences generates excess stock return volatilities, procyclical price-dividend ratios and interest rates, and countercyclical market prices of risk when the elasticity of intertemporal substitution (EIS) is greater than one. Moreover, the latter results c [...]
- Austerity as a Knowledge Transmission Mechanism failure
by Mainly Macro in Mainly Macro, 2015-06-07 08:45:00 UTC
In this post I talked about the Knowledge Transmission Mechanism: the process by which academic ideas do or do not get translated into economic policy. I pointed to the importance of what I called ‘policy intermediaries’ in this process: civil servants, think tanks, policy entrepreneurs, the media, and occasionally financial sector economists and central banks. Here I want to ask whether thinking about these intermediaries could help explain the continuing popularity amongst policy makers of austerity during a liquidity trap, even though there is an academic consensus behind the idea that [...]
by Leopoldo Fergusson in Foco Económico, 2015-06-06 17:23:38 UTC
Posted in Spanish onÂ May 26, 2015.
( @LeopoldoTweets )
Paul Romer sparked a debate about âmathinessâ in the theory of economic growth with a recent article presented in the latest meetings of the American Economic Association. The paper blends several arguments , not all of them entirely fair and some connected to the ideological dispute on state intervention in the economy, but his main message is simple and powerful: math is not science.
Romer is worried that scholars use math (and sometimes sloppy math) not as a tool to explore abstractions and rigorously investigate the answers to rel [...]
- Market Power versus Price-taking in Economic Growth
by dvollrath in The Growth Economics Blog, 2015-06-05 21:13:53 UTC
I’m sure you’ve been breathlessly following along with the discussion on “mathiness” that Paul Romer kicked off (see here , here , here ). Romer used several growth models to illustrate his point about “mathiness”, and his critique centered around the assumption of price-taking by firms and/or individuals in these papers. His argument was that these papers used “mathiness” as a kind of camouflage for their price-taking assumptions. Romer argues that the reasonable way to understand growth is to allow for market power by some firms and/or individuals over their ideas.
From what I can see, the [...]
- Economic arguments as stalking horses
by Noah Smith in Noahpinion, 2015-06-05 14:23:00 UTC
On Twitter, Russ Roberts said something I tend to agree with: Just a curious coincidence that economists who like stimulus want bigger government and those who oppose it prefer smaller.� In fact, he said something very similar back in 2011: The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against it because of their prior ideological beliefs. Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews[.] Now, Roberts doesn't actually know Krugma [...]
- #tbt John Hicks 1980 "IS-LM": An Explanation
by Mike Isaacson in Vulgar Economics, 2015-06-04 17:00:00 UTC
Nearly every intermediate macroeconomics class teaches the IS-LM model. I have to admit it never really made sense to me until grad school. To be technical, it never made sense to me, but I learned how the assumptions of the model worked. This model, originally created by John Hicks as a pedagogical tool, became an analytical monster. This article was an attempt to correct this misapplication. It didn't work. Download the article here [...]
- Weitzman on "When does the world wake up and address climate change?"
by Matthew Kahn in Environmental and Urban Economics, 2015-06-04 15:50:00 UTC
I am reading the transcript of Martin Weitzman's recent appearance on Econtalk.� � �Professor Weitzman seeks to attract readers for his excellent new book Climate Shock (joint with Gernot Wagner). � At the 28th minute of the interview, here is an exact quote. Keep in mind that the guest is Martin Weitzman and he is being interviewed by Russ Roberts (Russ). "Guest: So you've got to negotiate with n parties somehow. Russ: It's not going to happen. Guest: Yeah. Russ: I want to read a paragraph from the opening of your book. It might be the first paragraph. I can't remember. But I cut and pasted i [...]
- Ten Things Every Economist Should Know about the Gold Standard
by George Selgin in Free Banking, 2015-06-04 14:44:07 UTC
At the risk of sounding like a broken record (well, OK–at the risk of continuing to sound like a broken record), I'd like to say a bit more about economists' tendency to get their monetary history wrong.Â In particular, I'd like to take aim at common myths about the gold standard.
If there's one monetary history topic that tends to get handled especially sloppily by monetary economists, not to mention other sorts, this is it.Â Â Sure, the gold standard was hardly perfect, and gold bugs themselves sometimes make silly claims about their favorite former monetary standard . Â But these things [...]
- The Political Economy of Public Income Volatility: With an Application to the Resource Curse
by maximorossi in NEP-LTV blog, 2015-06-04 13:59:22 UTC
By: James A. Robinson ; Ragnar Torvik ; Thierry Verdier
We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more efficient. Yet at the same time it also reduces the re-election probability of an incumbent and since some of the policy inefficiencies are concentrated in the future, this makes inefficient polic [...]
- Monitoring the evolution of income poverty and real incomes over time
by maximorossi in NEP-LTV blog, 2015-06-04 13:58:13 UTC
By: A.B. Atkinson ; Anne-Catherine Guio ; Eric Marlier
This paper brings together two approaches to the monitoring of household living standards: the macro-economic (national accounts) analysis of aggregates and the social indicators based on household microdata (European Union Statistics on Income and Living Conditions [EU-SILC]). Both are essential. The national accounts are necessary to provide an overall perspective; the distributional data in EU-SILC are necessary to measure income poverty. The progress, or lack of progress, in re [...]
- New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit
by maximorossi in NEP-LTV blog, 2015-06-04 13:56:59 UTC
By: Joseph E. Stiglitz
A significant amount of the increase in the wealth income ratio in recent decades is due to an increase in the value of land. We present a series of models that explain why land prices may have increased. These models help us understand the increase in both the wealth income ratio and wealth inequality. One model focuses on certain locations as being positional good. In another, we show that land bubbles are a natural part of market economies, and that on “bubble paths”, wealth may increase, even as the real we [...]
- The income distribution in the UK: A picture of advantage and disadvantage
by maximorossi in NEP-LTV blog, 2015-06-04 13:55:48 UTC
By: Stephen P Jenkins
This paper describes the UK income distribution and how it has evolved over the last 50 years. It also includes some comparisons with the income distributions of other rich countries. Multiple perspectives on the distribution are provided: there is evidence about real income levels and inequality, and the prevalence of affluence and of poverty.
Keywords: Inequality, poverty, affluence, income distribution, United Kingdom
JEL: D31 I32
URL: http://d.repec.org/n?u=RePEc:cep:sticas:case186&r=ltv [...]
- The Occupational Segregation of Black Women in the United States: A Look at its Evolution from 1940 to 2010
by maximorossi in NEP-LTV blog, 2015-06-04 13:53:50 UTC
By: Olga Alonso-Villar ; Coral del Río
Based on detailed occupation titles and making use of measures that do not require pairwise comparisons among demographic groups, this paper shows that the occupational segregation of Black women declined dramatically in 1940-1980, decreased slightly in 1980-2000, and remained stagnant in 2000-2010. An important contribution of this paper is the quantification of the well-being losses that these women derive from their occupational sorting. The segregation reduction was indeed accompanied by well-be [...]
- When Should Governments Subsidize Health? The Case of Mass Deworming
by maximorossi in NEP-LTV blog, 2015-06-04 13:52:47 UTC
By: Amrita Ahuja ; Sarah Baird ; Joan Hamory Hicks ; Michael Kremer ; Edward Miguel ; Shawn Powers
We discuss how evidence and theory can be combined to provide insight on the appropriate subsidy level for health products, focusing on the specific case of deworming. Although intestinal worm infections can be treated using safe, low-cost drugs, some have challenged the view that mass school-based deworming should be a policy priority. We review well-identified research which both uses experimental or quasi-experimental methods to demonstr [...]
- Changing Income Inequality and Panel Income Changes
by maximorossi in NEP-LTV blog, 2015-06-04 13:51:27 UTC
By: Duval Hernández, Robert (University of Cyprus) ; Fields, Gary S. (Cornell University) ; Jakubson, George H. (Cornell University)
When economic growth (or economic decline) takes place, who benefits and who is hurt how much? The more traditional way of answering this question is to compare two or more comparable cross sections and gauge changing income inequality among countries or individuals. A newer way is to utilize data on a panel of countries or a panel of people and assess the pattern of panel income changes. How do these two [...]
- The problem of greater equality
by chris in Stumbling and Mumbling, 2015-06-04 13:44:15 UTC
Inequality has fallen in the UK - which might be worrying.
This sounds like an odd thing to say. But it's the natural implication of what Ben Chu rightly says . He notes that whilst the Gini coefficient hasn't changed much since the early 90s, the share of income going to the top 1% has risen.
However, we can think of the Gini coefficient as a single measure of all inequalities: the gap between the top 1% and the second percentile, plus the gap between the second and third percentiles, and so on. For this reason, the same Gini coefficient can describe very different societies.
The Gini coef [...]
- Does Moving for a Job Mean Higher Wages?
by Guest Author in The Big Picture, 2015-06-04 09:00:28 UTC
Does Moving for a Job Mean Higher Wages?
St. Louis Fed, May 25, 2015
For more than 20 years, the number of people moving from state to state has been declining. A study by Raven Molloy, Christopher Smith and Abigail Wozniak found that the gross mobility rate has fallen by about 50 percent over this period.1 Both the causes and implications of this decline are not perfectly clear, but the authors want to tie the decline to the concurrent decline in many types of labor market transitions, such as job-to-job and occupation-to-occupation switches.
When thinking about the rel [...]
- Are you the best? Put your knowledge to the test
by ? in World Bank Blogs, 2015-06-03 12:37:00 UTC
This week we have the second installment of the Which World Banker Are You? quiz. Think the AI Policy is some cool new law for robotics? Well, think again. Answer five questions to find out if you’re an aspiring, newbie, seasoned, or expert [...]
- Surviving self-deluded leaders
by chris in Stumbling and Mumbling, 2015-06-02 13:27:49 UTC
Andrew Hill in the FT has a nice piece on the self-delusion of chief executives such as Sepp Blatter, Li Hejun and Dick Fuld. He could easily have broadened the point into politics. For example, Dan Hodges has said of Ed Miliband:
He created his own world and lived in it. This explains his preternatural calm and his astonishing self-belief — but it also explains why he drove his party over a cliff.
The point here is that there are forces which increase the chances of a leader being self-deluded, for example:
- As Andrew says, self-belief is a valuable trait: the candidate who says "yes, [...]
- South Africa’s first financial crisis
by Johan Fourie in Johan Fourie's Blog, 2015-06-01 19:33:56 UTC
A certificate of credit to the value of 20 rijksdaalders (rix dollars). Source: Tropenmuseum of the Royal Tropical Institute
It happened much like any other financial crisis: the government was spending more than it could collect, imports outweighed exports, and to combat these twin deficits, the government printed money. Easy money meant that borrowing increased. The exchange rate depreciated, inflation shot through the roof. And with the domestic economy in a bad state, the global economy took a turn for the worse, which meant local lenders, notably a large, unregulated merchant house, defau [...]
- Cambridge Capital Critique Reader
by Mike Isaacson in Vulgar Economics, 2015-06-01 17:29:00 UTC
Joan Robinson - The Production Function and the Theory of Capital Joan Robinson - Prelude to a Critique of Economic Theory Luigi Pasinetti - Switches of Technique and the "Rate of Return" in Capital Theory Pierangelo Garegnani - Heterogeneous Capital, the Production Function and the Theory of Distribution Anwar Shaikh - Laws of Production and Laws of Algebra: The Humbug Production Function A.J. Cohen and Geoff Harcourt - What Ever Happened to the Capital Theory Controversies? Gary Mongiovi - The Cambridge Tradition in Economics: An Interview with G. C. Harcourt [...]
- The left, & social change
by chris in Stumbling and Mumbling, 2015-06-01 12:56:36 UTC
Why are many lefties so thick? Three recent events pose this question: the mob that harassed Douglas Carswell; Len McCluskey's threat to sue Nick Cohen for libel; and the vandalism of a war memorial by anti-Tory protestors.
There's a common theme here. These episodes reinforce the worst image of the left - that it (we) are self-righteous bullies who care nothing for the liberties or sensibilities of others. I fear, therefore, that they actually detract from the left's cause.
For this reason, they reinforce Nick's criticism - that the left has lost "any notion of how to change a society."
- Banking the Masses
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-06-01 12:13:12 UTC
Just three years ago, the World Bank estimated that 2½ billion adults (15 years and above) had no access to modern finance: no bank deposit, no formal credit, and no means of payment other than cash or barter. Stunningly, the Bank now estimates that even as the global population has increased, the number of “unbanked” has dropped by 20 percent. Between 2011 and 2014, 700 million adults have gained at least basic financial access via banks or mobile phone payments systems. This spectacular progress is clearly welcome. The rise of “financial inclusion” – the access by lower-income hou [...]
- Adaptation to India's Heat
by Matthew Kahn in Environmental and Urban Economics, 2015-05-31 22:31:00 UTC
India has suffered from a massive recent heatwave. � Read this article (which details incentives to report heat as the cause of death because it triggers a government payment) and you will find an optimistic paragraph. "Since 1998, when a heat wave sweeping through entire Odisha had resulted in 2,042 deaths in the state, the toll has been falling due to a series of steps taken by the government, such as awareness programmes on TV and radio, rescheduling of office hours and restriction on public transport between 12 noon and 3.30 pm." I conjecture that over the 17 years since 1998, private hous [...]
- Il vincolo esterno (KPD9)
by Alberto Bagnai in Goofynomics, 2015-05-31 21:11:00 UTC
(... benvenuti alla nona lezione del ciclo "Keynesianesimo Per le Dame": oggi parleremo di robba postkeynesiana buonisssssima... ) Sappiamo che uno dei pretesi vantaggi dell’unione monetaria era, nelle intenzioni dei suoi proponenti, quello di rimuovere sostanzialmente il vincolo esterno per i paesi partecipanti (lo abbiamo visto, ad esempio, anche qui , nel paragrafo “and the winner is...”). Ma sappiamo anche cos’è il vincolo esterno? Mi riferisco qui non al vincolo inteso nella sua political economy , come ce lo descrive Featherstone , cioè al modo in cui le varie élite europee us [...]
- Are parents more risk-averse?
by noname in ZeeConomics, 2015-05-31 11:34:56 UTC
Risk preferences (i.e. whether someone likes or dislikes risk) are important for a variety of decisions. These include for instance career choice or financial decisions. But just how much do risk preferences vary over one’s lifetime?
Studies have shown that there can be macro shocks to risk attitudes. This could happen for instance when natural disasters, civil conflicts or financial crises happen. Micro (individual) level shocks to risk preferences have also been documented in case of job displacement or serious health diagnoses. This post presents evidence that becoming a parent also affects [...]
- Lessons from Urban Economics for the Politics of Expanding Investment in Pre-K Early Education
by Matthew Kahn in Environmental and Urban Economics, 2015-05-31 03:06:00 UTC
Kyle Barron and I have released a new NBER Working Paper� �that uses several voting and expenditure data sets to explore the political economy �of pre-K education investment expansion. �One of the world's top economists ( James Heckman) has convincingly argued that the expansion of pre-K is a rare public policy intervention that offers both efficiency gains and equity gains. In our paper, we argue that urban economics offers key ideas for understanding why and when local voters will choose to invest their tax dollars in expanding pre-K. Point #1: �While pre-K appears to be a person based human [...]
- Should Aer Lingus and IAG get together? Maybe…
by brianmlucey in Brian M. Lucey, 2015-05-30 06:28:39 UTC
Much has been written about the Aer Lingus saga over the last year. A decision now seems to be immenent, that the government will sell its stake to BA. Ryanair will, presumably, follow.
A good way to make a small fortune in the airline industry is to start with a large one. Running airlines is a losing proposition. As of about 5 years ago the cumulative profitability of all US airlines over the previous 60 years was negative. Indeed over perhaps a century the industry has lost money, cumulatively . That is an astounding figure. These losses are not down to a few catastrophic years either but r [...]