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2017-06-26

• How to Ensure the Crisis Provision of Safe Assets
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-06-26 08:52:56 UTC

  Changes in financial regulation are having a profound impact on the demand for safe assets —assets with a fixed nominal value that may be converted at all times without loss into the means of payment.  Not only is demand for safe assets on the rise, but the ability of the private sector to produce them is being constrained by new rules that limit the extent and nature of things like securitizations. Now, the relevant changes in regulation are varied, but their common goal is to make the financial system more resilient. For example, banks are now required to hold more liquid assets to back liab [...]

2017-06-23

• Banxico mantiene su posición de "halcón" (con un disidente)
  by Alejandro Villagomez in Tintero Económico Diario, 2017-06-23 17:11:00 UTC

  Ayer, jueves 22 de junio, Banxico volvió a aumentar su tasa de referencia en 25 puntos base para ubicarla ya en 7%. Fue una decisión ya esperada por la mayoría del mercado debido a que la misma autoridad monetaria había enviado bastantes "señales" en ese sentido. Sin embargo, esto no quiere decir que haya sido la decisión "correcta" o "adecuada". Yo sigo pensando que es una posición fuertemente de "halcón" por parte del banco central. Mi argumento no es muy distinto de mis últimos posts así que no lo repetiré en detalle. De nueva cuenta hago referencia a principio básico de la teoría monetaria [...]

2017-06-22

• The "bucketing" problem in financial markets
  by noreply@blogger.com (Gulzar Natarajan) in Urbanomics, 2017-06-22 20:54:00 UTC

  In recent weeks rating agencies have come for stinging rebukes from India to China and Russia. Livemint has this story examining whether rating agencies are biased against India and developing countries.  In this context, I had blogged earlier pointing to this article by Nandini Vijayaraghavan which gets to the heart of the problem with any ratings approach - it buckets the target populations, and does ratings based on assessments across and within buckets,  The impediment to the rating agencies upgrading India’s sovereign ratings lies in their methodologies. The sovereign rating methodology f [...]

• The lack of demand for equality
  by chris in Stumbling and Mumbling, 2017-06-22 13:00:48 UTC

  Why do people tolerate inequality? A new paper by Karl Ove Moene and colleagues provides a new explanation: it’s because a small role for merit in income inequality causes a big drop in demand for redistribution. They showed this in some experiments. Over 1000 people were asked to observe pairs of people working on a task for ten minutes, with earnings divided between the pairs in different ways. The spectators were then invited to redistribute some or all of those earnings. When told that one worker got everything and another nothing simply because of a lottery, 68% of spectators chose to e [...]

2017-06-21

• What Does Energy Economics Teach Us About a Zero Carbon Electricity Grid by the year 2050?
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-21 20:28:00 UTC

  Energy engineers are having an interesting fight over whether the US electricity grid can "easily" be 100% renewables (and thus create 0 GHG emissions) in the next 30 years. �A prominent Stanford Engineer an d his team says "yes" �while so me important critics say no. � �In Today's NY Times ("Economics Scene) Eduardo Porter sides with the critics . �The interesting thing here is that no empirical microeconomists who study energy are part of either research team or are quoted in the NY Times. �Yet, at the end of the day --- this is a microeconomics issue. Here are some of the key issues that bo [...]

• Summer School 2017 in Paris
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-21 14:18:00 UTC

  If you look a t these photos, �you might be able to find me in one of them (hint --- look at the dinner photo). �I enjoyed speaking on June 15th 2017. �As I should have guessed, the room was not air conditioned and my students were not that cheery in the heat. �Still, they were a very smart group who posed some interesting questions. �As I discussed the urban economics of climate change adaptation (see here , here , and here ); �the PHD students kept talking about co-ordination failures and adjustment costs. 1. co-ordination failures --- we know that Manhattan is a successful co-agglomeration [...]

• Free markets need equality
  by chris in Stumbling and Mumbling, 2017-06-21 12:34:04 UTC

  These are dark times for free marketeers. Voters are only lukewarm about the virtues of capitalism; the Grenfell disaster is widely regarded as showing the case for greater regulation ; and, as Sam Bowman says , even the Tories “have totally failed to make a broad-brush case for free markets.” I share some of their disquiet. Flawed as they are, markets have virtues as selection and information-aggregation mechanisms. What, then, can be done to strengthen the case for markets? There’s one thing that’s crucial – equality of power. For free markets to have public acceptance, the worst-o [...]

2017-06-20

• Still More On Mariel: The Role of Race
  by maximorossi in NEP-LTV blog, 2017-06-20 14:37:50 UTC

  By: George J. Borjas Card’s (1990) study of the Mariel supply shock remains an important cornerstone of both the literature that measures the labor market impact of immigration, and of the “stylized fact” that immigration might not have much impact on the wage of workers in a receiving country. My recent reappraisal of the Mariel evidence (Borjas, 2017) revealed that the wage of low-skill workers in Miami declined substantially in the years after Mariel, and has already encouraged a number of re-reexaminations. Most recently, Clemens and Hunt (2017) argue that a data quirk in the CPS imp [...]

• Non-Work at Work, Unemployment and Labor Productivity
  by maximorossi in NEP-LTV blog, 2017-06-20 14:37:02 UTC

  By: Burda, Michael C ; Genadek, Katie R. ; Hamermesh, Daniel S. We use the American Time Use Survey (ATUS) 2003-2012 to estimate time spent in non-work on the job. Non-work is substantial and varies positively with local unemployment. Time spent in non-work conditional on any positive amount rises, while the fraction of workers reporting positive values declines with unemployment. Both effects are economically important, and are consistent with a model in which heterogeneous workers are paid efficiency wages. That model correctly predicts the relationship between the incidence of non [...]

• Body-Weight and Women’s Hours of Work: More Evidence That Marriage Markets Matter
  by maximorossi in NEP-LTV blog, 2017-06-20 14:34:53 UTC

  By: Grossbard, Shoshana (San Diego State University) ; Mukhopadhyay, Sankar (University of Nevada, Reno) Higher body-weight (BMI) can affect labor supply via its effects on outcomes in both labor markets and marriage markets. To the extent that it is associated with lower prospects of being in couple and obtaining intra-couple transfers, we expect that higher BMI will increase willingness to supply labor in labor markets, especially for women. We use US panel data from the NLSY79 and NLSY97 to examine whether body weight influences hours of work in the labor market. We use sibling BMI as [...]

• Selection on Ability and the Early Career Growth in the Gender Wage Gap
  by maximorossi in NEP-LTV blog, 2017-06-20 14:33:44 UTC

  By: Fraga, Eduardo (Yale University) ; Gonzaga, Gustavo (Pontifical Catholic University of Rio de Janeiro (PUC-Rio)) ; Soares, Rodrigo R. (Columbia University) This paper analyzes the effect of selection on ability on the evolution of the gender wage gap during the first years of professional life. We use longitudinal data with 16 years of the early career history of formal sector workers in Brazil. The panel allows us to build a measure of unobserved ability that we use to analyze the dynamics of labor market selection across genders as individuals age. We focus on the cohort born in 19 [...]

• {Economics ∪ History} ∩ {North ∪ Fogel}
  by Thales ZP in NEP-HIS blog, 2017-06-20 04:00:55 UTC

  A Cliometric Counterfactual: What if  There Had Been Neither Fogel nor North? Claude Diebolt (Strasbourg University) and Michael Haupert (University of Wisconsin – La Crosse) Abstract – 1993 Nobel laureates Robert Fogel and Douglass North were pioneers in the “new” economic history, or cliometrics. Their impact on the economic history discipline is great, though not without its critics. In this essay, we use both the “old” narrative form of economic history, and the “new” cliometric form, to analyze the impact each had on the evolution of economic history. URL: http://d.repec.org/n?u=RePEc:a [...]

2017-06-19

• The Treasury's Missed Opportunity
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-06-19 13:01:13 UTC

  “…we expect to be cutting a lot out of Dodd-Frank because, frankly, I have so many people, friends of mine that have nice businesses that can't borrow money, they just can’t get any money because the banks won’t let them borrow because of the rules and regulations in Dodd-Frank....” President Donald Trump’s remarks to the initial gathering of his Strategic and Policy Forum , February 3, 2017. “ The number one problem with Dodd-Frank is that it’s way too complicated and cuts back lending. So we want to strip back parts of Dodd-Frank that prevent banks from lending. And that will be the number o [...]

• Contingencies of Company Law: On the Corporate Form and English Company Law, 1500-1900
  by andrewdsmith in The Past Speaks, 2017-06-19 12:43:22 UTC

  I’m sharing another excellent review piece from Nep-Hist blog run by the multi-talented Bernardo Batiz-Lazo. The NEP-HIS Blog The Development of English Company Law before 1900 By: John D. Turner (Queen’s University Belfast) Abstract: This article outlines the development of English company law in the four centuries before 1900. The main focus is on the evolution of the corporate form and the five key legal characteristics of the corporation – separate legal personality, limited liability, transferable joint stock, delegated management, and investor ownership. The article outlines how these [...]

2017-06-18

• Il moralismo del mainstream
  by Alberto Bagnai in Goofynomics, 2017-06-18 09:28:00 UTC

  Qualche sera fa, dopo un piacevole incontro con alcuni soci romani (piacevole per me, per loro non ne ho idea...) me ne sono andato col nostro tesoriere a sentire il saggio di viola da gamba di Roberta in una chiesa che vi sfido a riconoscere... ma siccome sono buono, vi do subito l'indizio risolutore (la pala d'altare). Chissà quanti di quelli che fra voi vogliono brandire uno spadone a due mani per contrastare l'invasione (?) riconosceranno il santo effigiato? Mentre si andava, Paolo mi raccontava come mi aveva conosciuto: leggendo Le aporie del più Europa su Micromega. Da lì era arrivato al [...]

2017-06-16

• Hey, Economist! How Do You Forecast the Present?
  by Blog Author in Liberty Street Economics, 2017-06-16 15:15:00 UTC

  A Conversation with Domenico Giannone, Argia Sbordone, and Andrea Tambalotti New York Fed macroeconomists have been sharing their “nowcast” of GDP growth on the Bank’s public website since April 2016. Now, they’ve launched an interactive version of the Nowcasting Report , which updates the point forecast each week, but also helps users better visualize the impact of the flow of incoming data on the estimate produced by the model. Tables offer more detail on the data series informing the estimate. The interactive version also reports the staff nowcast back to January 2016, a longer n [...]

2017-06-15

• Thesis Thursday: Miqdad Asaria
  by Chris Sampson in The Academic Health Economists' Blog, 2017-06-15 06:00:19 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 Miqdad Asaria 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 The economics of health inequality in the English National Health Service Supervisors Richard Cookson , Tim Doran Repository link http://etheses.whiterose.ac.uk/16189 What types of inequality are relevant in the context of the NHS? For me the inequalities that really matter are the inequalities in health [...]

2017-06-14

• Credit and Saving Constraints in General Equilibrium: Evidence from Survey Data
  by Christian Zimmermann in NEP-DGE blog, 2017-06-14 18:48:52 UTC

  By Catalina Granda, Franz Hamann and Cesar E. Tamayo http://d.repec.org/n?u=RePEc:bdr:borrec:1002&r=dge In this paper, we build a heterogeneous agents-dynamic general equilibrium model wherein saving constraints interact with credit constraints. Saving constraints in the form of fixed costs to use the financial system lead households to seek informal saving instruments (cash) and result in lower aggregate saving. Credit constraints induce misallocation of capital across producers that in turn lowers output, productivity, and the return to formal financial instruments. We calibrate the model us [...]

• Why insurance works better with some adverse selection
  by Guy Thomas in The Academic Health Economists' Blog, 2017-06-14 06:00:02 UTC

  Adverse selection, a process whereby low-risk individuals drop out of the insurance pool, leaving only high-risk individuals, arises when the individuals purchasing insurance have better information regarding their risk status than does the insurer. […] In the limit, adverse selection can make insurance markets unsustainable. Even short of the market disappearing altogether… The market cannot offer a full set of insurance contracts, reducing allocative efficiency. The story summarised above ( by Jeremiah Hurley ) is familiar to all health economists. Adverse selection is generally understood t [...]

2017-06-13

• Knightian uncertainty and credit cycles
  by Christian Zimmermann in NEP-DGE blog, 2017-06-13 20:13:22 UTC

  By Eddie Gerba and Dawid Żochowski http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172068&r=dge The Great Recession has been characterised by the two stylized facts: the buildup of leverage in the household sector in the period preceding the recession and a protracted economic recovery that followed. We attempt to explain these two facts as an information friction, whereby agents are uncertain about a new state of the economy following a financial innovation. To this end, we extend Boz and Mendoza (2014) by explicitly modelling the credit markets and by modifying the learning to an adaptive set-up. [...]

• Challenging the Role of Capital Adequacy using Historical Data
  by Banking Blogger in NEP-HIS blog, 2017-06-13 14:08:03 UTC

  Bank Capital Redux: Solvency, Liquidity, and Crisis By Òscar Jordà (Federal Reserve Bank of San Francisco and University of California Davis), Bjorn Richter (University of Bonn), Moritz Schularick (University of Bonn) and Alan M. Taylor (University of California Davis). Abstract: Higher capital ratios are unlikely to prevent a financial crisis. This is empirically true both for the entire history of advanced economies between 1870 and 2013 and for the post-WW2 period, and holds both within and between countries. We reach this startling conclusion using newly collected data on the liability sid [...]

2017-06-12

• Fintech, Central Banking and Digital Currency
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-06-12 12:28:11 UTC

  “The advantages of competition and deregulation must be sought in ways that do not impair the payments system or subject it to interruptions and breakdowns.” James Tobin, “ Financial Innovation and Deregulation in Perspective ,” BOJ Monetary and Economic Studies , September 1985. How will financial innovation alter the role of central banks? As the structure of banking and finance changes, what will happen to the mechanisms and frameworks for setting monetary and financial policy? Over the past several decades, with the development of inflation targeting, central banks have delivered price sta [...]

• Sam Watson’s journal round-up for 12th June 2017
  by Sam Watson in The Academic Health Economists' Blog, 2017-06-12 11:00:00 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 . Machine learning: an applied econometric approach . Journal of Economic Perspectives [ RePEc ]  Published Spring 2017 Machine learning tools have become ubiquitous in the software we use on a day to day basis. F [...]

• The pervasive externalities of pro-social behaviour: who knew?
  by Nicholas Gruen in Club Troppo, 2017-06-12 05:06:54 UTC

  What is this picture doing here? It is one of the images selected by Google when I typed in “now is the time for complacency”. It clearly has a deep connection with that idea. I can’t comment further except to say that Google has a great deal of AI devoted to these kinds of issues, so I comment the graphic to you. Spillover Effects of Institutions on Cooperative Behavior, Preferences and Beliefs By: Engl, Florian (University of Cologne) ; Riedl, Arno (Maastricht University) ; Weber, Roberto A. (University of Zurich) Abstract: Institutions are an important means for fostering prosocial behavior [...]

2017-06-09

• The Economics of Pollution Exposure
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-09 17:07:00 UTC

  The Fed of Richmond has p ublished an excellent interview with Janet Currie. � � Janet has written several high quality papers investigating the consequences of pollution exposure but this work raises the issue of why people choose to expose themselves to pollution. �In this blog post, I will pose several possibility and sketch some of my old research. 1. Hypothesis #1; � People have rational expectations of how pollution affects them but people differ with respect to their income and poor people choose to live in cheap rent (high pollution) places and are injured by the pollution. 2. �Hypothe [...]

• More on Bitcoin and the conditions for a takeover of fiat money
  by Tony Yates in longandvariable, 2017-06-09 15:17:53 UTC

  Something I did not stress about the likelihood of a crypto-currency takeover in my Alphaville post that I should have done, and which cropped up in a Twitter exchange with Joe Weisenthal, relates to the fact that in theory, and even in history, the unit of account and medium of exchange can differ/have differed. So, here, the question I started with was the low likelihood that Bitcoin or similar might take over soon, given the small value of currency in circulation relative to the value of paper US dollars. [100bn compared to 1.4trn]. In this 2000 paper by Woodford he explains how the central [...]

• 格安運賃による空の旅、メリットとデメリット
  by ? in ライフハッカー［日本版］, 2017-06-09 03:00:00 UTC

  格安運賃による空の旅は、あなたが思っているほど素晴らしいものでは [...]

2017-06-06

• The Data We Have vs. the Data We Need: A Comment on the State of the “Divergence” Debate (Part I)
  by Manuel A. Bautista-González in NEP-HIS blog, 2017-06-06 20:09:58 UTC

  How Well Did Facts Travel to Support Protracted Debate on the History of the Great Divergence between Western Europe and Imperial China? By: Kent Deng (London School of Economics), Patrick O’Brien (London School of Economics) Abstract: This paper tackles the issue of how reliable the currently circulated ‘facts’ really are regarding the ‘Great Divergence’ debate. Our findings indicate strongly that ‘facts’ of premodern China are often of low quality and fragmented. Consequently, the application of these ‘facts’ can be misleading and harmful. URL:  http://econpapers.repec.org/paper/pramprapa/77 [...]

• Why Are NYC's Subway Trains So Old?
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-06 14:23:00 UTC

  Yes, NYC has an old subway system but that doesn't explain the interesting fact presented in the NY Times today that the C trains are over 53 years old. � �Binding budget constraints provide the explanation for why this rich city (that relies on public transit) isn't investing in public capital. �As we document in this NBER Paper , �progressive big cities generously pay unionized public sector workers. � Due to the Buy America Mandate, such cities also pay more than the international price for pieces of capital (read our 2015 JUE paper). �The combination of paying public labor a very high sala [...]

2017-06-05

• One Comment on Dr. Krugman's NY Times Column
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-05 16:52:00 UTC

  Paul Krugman has written a new column   about President Trump and the climate change mitigation Paris Treaty.  Here is a direct quote: "The same goes for claims that trying to rein in emissions will do terrible economic damage and destroy millions of jobs. Such claims are, if you think about it, completely inconsistent with everything Republicans supposedly believe about economics. After all, they insist that the private sector is infinitely flexible and innovative; the magic of the marketplace can solve all problems. But then they claim that these magical markets would roll over and die if we [...]

• Labor's Declining Share: A Primer
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-06-05 12:43:02 UTC

  “The stability of the proportion of the national dividend accruing to labor […] is one of the most surprising, yet best-established, facts in the whole range of economic statistics [….] Indeed, […] the result remains a bit of a miracle.” J. M. Keynes, “Relative Movements of Real Wages and Profit,” The Economic Journal , March 1939 “It was known for some time that the share of wages and the share of profits in the national income has shown a remarkable constancy in “developed” capitalist economies.” Nicholas Kaldor, “A Model of Economic Growth,” The Economic Journal , December 1957. “The object [...]

2017-06-04

• An Economic Explanation for Why Republicans Do Not Prioritize Fighting Climate Change
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-04 03:55:00 UTC

  The NY Times has published a long article that contains many interesting ideas focused on why Republicans oppose climate change regulation. �The Koch Brothers make an appearance as the Times reporters argue that the Kochs use their $ to influence public opinion. � In this blog post, I will propose a different theory. 1. �Republicans live in the suburbs and live a "high carbon footprint" lifestyle and thus will bear more of the economic incidence of a higher carbon tax than center city progressives. �So, the average Republican faces a higher price if the carbon tax is enacted. �See my papers he [...]

2017-06-03

• June Reading List
  by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2017-06-03 14:16:00 UTC

  Here are some suggestions for you: Ai, C. and E. C. Norton , 2003. Interaction terms in logit and probit models. Economics Letters , 80, 123-129. Hirschberg, J. and J. Lye , 2017. Inverting the indirect - the ellipse and the Boomerang: Visualizing the confidence intervals of the structural coefficient from two-stage least squares. Journal of Econometrics , in press. Kim, I. and S. Park , 2017. Likelihood ratio tests for multivariate normality. Communications in Statistics - Theory and Methods , in press. Knotek, E. S. and S. Zaman , 2017. Financial nowcasts and their usefulness in macroeconomi [...]

• The Tory, Very Sensible, Promise Not To Raise UK Income Tax
  by Tim Worstall in Tim Worstall (Forbes), 2017-06-03 07:39:00 UTC

  There is, as we should all know, a general election going on in Britain and the two major opposition parties, Labour and the Lib Dems, have promised to raise income tax although in different ways. The Tories, aka the Conservatives, have havered over promising to not do so, until today. That two different frontliners say the same thing does show that this is a planned announcement, not just someone making it up on the hoof. And so we’ve a rather clear divide here, between those who would increase the tax burden and those who would not. Given my own proclivities, in favour of a smaller state, I’ [...]

2017-06-02

• Some Nuances Concerning President Trump's Recent Decision on the Paris Treaty
  by Matthew Kahn in Environmental and Urban Economics, 2017-06-02 13:51:00 UTC

  I go to Paris soon. �While I can't speak French, here is what I will say to those who ask me about President Trump's decision. � First, I do not support his decision but the issues here are much more nuanced than either he �or the New York Times argues. 1. Given that we are risk averse and climate change poses a set of "known unknowns" and "unknown unknowns" we need to set up rules of the game to reduce our risk exposure. �Reducing global GHG emissions is a type of insurance policy. �This is why I support the flexible treaty. 2. �While this treaty is weak in terms of enforcement and coddling o [...]

• Living Up to Expectations: How Job Training Made Women Better Off and Men Worse Off
  by maximorossi in NEP-LTV blog, 2017-06-02 12:34:48 UTC

  By: Paloma Acevedo ; Guillermo Cruces ; Paul Gertler ; Sebastian Martinez We study the interaction between job and soft skills training on expectations and labor market outcomes in the context of a youth training program in the Dominican Republic. Program applicants were randomly assigned to one of 3 modalities: a full treatment consisting of hard and soft skills training plus an internship, a partial treatment consisting of soft skills training plus an internship, or a control group. We find strong and lasting effects of the program on personal skills acquisition and expectations, b [...]

• Structural inequality: The case of Sweden
  by maximorossi in NEP-LTV blog, 2017-06-02 12:28:10 UTC

  By: Olof Robling ; Jon Kristian Pareliussen (OECD) Structural trends not directly related to labour market functioning and redistribution have made a sizeable contribution to inequality and poverty in Sweden, but occupy only limited space in the income inequality debate. To fill this gap, we put a quarter of a century of rising inequality in Sweden in a new perspective by quantifying the effect of changing household composition, age structure, industry structure, educational attainment and immigration on inequality. The influence of structural changes on inequality is derived from mi [...]

• Is Global Equality the Enemy of National Equality?
  by maximorossi in NEP-LTV blog, 2017-06-02 12:26:07 UTC

    By: Rodrik, Dani (University of Chicago) The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the “China shock” is receding and other low-income countries are unlikely to replicate China’s export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While t [...]

• Challenged by Migration: Europe’s Options
  by maximorossi in NEP-LTV blog, 2017-06-02 12:24:10 UTC

  Challenged by Migration: Europe’s Options By: Constant, Amelie F. ; Zimmermann, Klaus F. This paper examines the migration and labor mobility in the European Union and elaborates on their importance for the existence of the EU. Against all measures of success, the current public debate seems to suggest that the political consensus that migration is beneficial is broken. This comes with a crisis of European institutions in general. Migration and labor mobility have not been at the origin of the perceived cultural shift. The EU in its current form and ambition could perfectly survive or [...]

• Personality Traits, Intra-household Allocation and the Gender Wage Gap
  by maximorossi in NEP-LTV blog, 2017-06-02 12:23:14 UTC

  By: Christopher Flinn (New York University) ; Petra Todd (University of Pennsylvania) ; Weilong Zhang (University of Pennsylvania) A model of how personality traits affect household time and resource allocation decisions and wages is developed and estimated. In the model, households choose between two modes of behavior: cooperative or noncooperative. Spouses receive wage offers and allocate time to supplying labor market hours and to producing a public good. Personality traits, measured by the so-called Big Five traits, can affect household bargaining weights and wage offers. Model p [...]

2017-06-01

• Should Unconventional Monetary Policies Become Conventional?
  by Christian Zimmermann in NEP-DGE blog, 2017-06-01 19:31:22 UTC

  By Dominic Quint and Pau Rabanal http://d.repec.org/n?u=RePEc:imf:imfwpa:17/85&r=dge The large recession that followed the Global Financial Crisis of 2008-09 triggered unprecedented monetary policy easing around the world. Most central banks in advanced economies deployed new instruments to affect credit conditions and to provide liquidity at a large scale after shortterm policy rates reached their effective lower bound. In this paper, we study if this new set of tools, commonly labeled as unconventional monetary policies (UMP), should still be used when economic conditions and interest rates [...]

• Euler Equations, Subjective Expectations and Income Shocks
  by maximorossi in NEP-LTV blog, 2017-06-01 13:49:51 UTC

    By: Attanasio, Orazio (UCL) ; Kovacs, Agnes (University of Oxford) ; Molnar, Krisztina (Dept. of Economics, Norwegian School of Economics and Business Administration) In this paper, we make three substantive contributions: first, we use elicited subjective income expectations to identify the levels of permanent and transitory income shocks in a life-cycle framework; second, we use these shocks to assess whether households’ consumption is insulated from them; third, we use the shock data to estimate an Euler equation for consumption. We find that households are able to smooth transit [...]

• Inequality, redistribution and cultural integration in the Welfare State
  by maximorossi in NEP-LTV blog, 2017-06-01 13:40:29 UTC

    By: Bisin, Alberto ; Verdier, Thierry This paper constructs a simple theoretical political economy model to analyze the dynamic interactions between redistribution, public good provision and cultural integration of minority groups. Cultural differentiation erodes the support for general public good provision and vertical redistribution, reducing in turn the attractiveness of adoption of the mainstream culture by the minority groups. Our model shows the possibility for multiple politico-cultural steady state trajectories depending strongly on the initial degree of cultural differenti [...]

• Americans’ Responses to Terrorism and Mass-Shooting: Evidence from the American Time Use Survey and Well-Being Module
  by maximorossi in NEP-LTV blog, 2017-06-01 13:39:29 UTC

  By: Clark, Andrew ; Stancanelli, Elena A small but significant literature concludes that terrorism impacts the economy, although the impact of mass-shooting has not yet been addressed by economists. We compare the economic effects of two tragedies: the 2013 Boston Marathon Bombing and the 2012 Sandy Hook School Shooting. Fatal attacks are rare on any given day, and to estimate their effects we combine RDD with differences-in-differences. Using diaries of daily activities for a representative, random sample of Americans, we find a decline of over half an hour per day in average hours [...]

• Perceptions of Distributive Justice in Latin America During a Period of Falling Inequality
  by maximorossi in NEP-LTV blog, 2017-06-01 13:37:24 UTC

    By: Germán Reyes (The World Bank and CEDLAS) ; Leonardo Gasparini (CEDLAS-FCE and CONICET.) In this paper we explore perceptions of distributive justice in Latin America during the 2000s and its relationship with income inequality. In line with the fall in income inequality in the region, we document a widespread, although modest, decrease in the share of the population that believes income distribution is unfair. The fall in the perception of unfairness holds across very heterogeneous groups of the population. Moreover, perceptions evolved in the same direction as income inequality [...]

• QED74: "Dottò, è 'a frizzione! Come 'a tocchi sossòrdi..."
  by Alberto Bagnai in Goofynomics, 2017-06-01 09:23:00 UTC

  (... settantaquattro: è un numero difettivo e odioso . Nonostante la scelta sia casuale, e nonostante io non stia per parlarvi di divisori, ma di moltiplicatori, non ci poteva essere numero più appropriato per quello che in effetti è il QED del sesto KPD , nonché, letterariamente, la naturale prosecuzione di " Sparecchiavo ...". Fatto il punto nave per i nuovi lettori, che crescono in quantità e qualità, "o buon Appollo, al solito lavoro fammi del tuo valor siffatto vaso, come dimandi a li mortacci loro"... ) Riccardo Barbieri Hermitte è una persona elegante, competente, e preoccupata, certo a [...]

• Contingencies of Company Law: On the Corporate Form and English Company Law, 1500-1900
  by bbatiz in NEP-HIS blog, 2017-06-01 03:02:38 UTC

  The Development of English Company Law before 1900 By: John D. Turner (Queen’s University Belfast) Abstract: This article outlines the development of English company law in the four centuries before 1900. The main focus is on the evolution of the corporate form and the five key legal characteristics of the corporation – separate legal personality, limited liability, transferable joint stock, delegated management, and investor ownership. The article outlines how these features developed in guilds, regulated companies, and the great mercantilist and moneyed companies. I then move on to examine t [...]

2017-05-31

• Low Inflation at "Essentially Full Employment"
  by noreply@blogger.com (Carola) in Quantitative Ease, 2017-05-31 15:33:00 UTC

  Yesterday , Brad Delong took issue with Charles Evans' recent claim that "Today, we have essentially returned to full employment in the U.S." Evans, President of the Federal Reserve Bank of Chicago and a member of the FOMC, was speaking before the Bank of Japan Institute for Monetary and Economic Studies in Tokyo on " lessons learned and challenges ahead " in monetary policy. Delong points out that the age 25-54 employment-to-population ratio in the United States of 78.5% is low by historical standards and given social and demographic trends. Evans' claim that the U.S. has returned to full emp [...]

• Falta de sueño y pérdidas de productividad
  by Sergi Jiménez in Nada Es Gratis, 2017-05-31 05:00:22 UTC

  por  Joan Costa Font N.E: Una versión, diferente, en inglés, de este post se publicó en voxeu El número de horas que duerme la persona promedio se viene reduciendo en la mayoría de países europeos, pero todavía ignoramos sus efectos sobre la actividad económica y el rendimiento económico. España, en particular, se posiciona entre los países de Europa que menos se duerme . Entre los factores importantes que lo explican está el ‘reloj biológico’, esto es, el hecho que la temperatura nocturna tiende a ser más elevada que en otros países y, además, la mayor exposición a horas de sol. Por otra part [...]

2017-05-30

• Unsayable truths
  by chris in Stumbling and Mumbling, 2017-05-30 13:05:48 UTC

  There are some truths that politicians find it hard to express – and this warps our political debate. This is my reaction to a piece by Janan Ganesh. He accuses Labour and the Tories of an “indifference” to economic growth, because both parties believe that the vote for Brexit was a “cry for something more than the soulless quest for 2.5-ish per cent annual output expansion”. Such an interpretation, he says, is wrong: The British did not brave the costs to vote for exit. They just did not believe there were costs. As these costs become apparent, however, he warns, the country will [...]

2017-05-29

• Dr. Krugman's Analysis of the Demise of Coal Ignores Economic and Political Geography
  by Matthew Kahn in Environmental and Urban Economics, 2017-05-29 14:42:00 UTC

  Paul Krugman won the Nobel Prize in part for his work on economic geography. �Today, he has published a very good piece on the economics of coal while ignoring local economic and political geography. �That is interesting on several levels. �A few months ago Jonathan Eyer and I released this NBER working paper. The paper's title is "Prolonging Coal's Sunset". �We argue that coal is heavy to ship so electric utilities closer to mines should be closer to the margin of adopting it as their primary fuel for producing power. �Such a trade gravity model does a good job of explaining coal shipments bu [...]

• The Phillips Curve: A Primer
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-05-29 11:34:30 UTC

  Economists have debated the relationship between inflation and unemployment at least since A.W. Phillips’s study of U.K. data from 1861 to 1957 was published 60 years ago . The idea that a tight or slack labor market should result in faster or slower wage gains seems like a natural corollary to standard economic thinking about how prices respond to deviations of demand from supply. But, over the years, disputes about this Phillips curve relationship have been and remain fierce. As the U.S. labor market tightens, and unemployment approaches levels we have not seen in more than 15 years, the que [...]

2017-05-26

• A "Julian Simon" Style Test of the Climate Change Adaptation Hypothesis
  by Matthew Kahn in Environmental and Urban Economics, 2017-05-26 16:16:00 UTC

  President Obam a just gave a major speech in which he argues that climate change is causing food prices to spike. � Economists often write down models of induced innovation (see Acemoglu and Lin 2004 or my recent NBER paper ). � If entrepreneurs smell profits from developing more robust and resilient foods and figuring out how to store foods and where to grow food (i.e Canada), will the price of food really spike in the medium term? �Is President Obama correct to be pessimistic about innovation in the agriculture sector? �Or are the endogenous technological change economists correct? � Ehrlich [...]

• Study: Employers Are Less Likely to Hire a Woman Who Wears a Headscarf
  by Sarah Green Carmichael in HBR Blog Network, 2017-05-26 12:05:09 UTC

  Jennifer Maravillas for HBR Earlier this year the European Union’s highest court ruled that employers could prohibit employees from wearing visible religious symbols at work, as long as they banned  all  religious wear, and did not single out a particular religion. However, the case centered on two Muslim women who had been fired for refusing to remove their headscarves while on the job, and the ruling was  seized on  by politicians in Germany, France, and the Netherlands as a “headscarf ban.” It’s the latest event in Europe’s  long-simmering tensions over the various forms of Muslim veili [...]

2017-05-25

• Nuclear industry prices itself out of power market, demands taxpayers keep it afloat
  by Joe Romm in Think Progress, 2017-05-25 16:59:10 UTC

  The nuclear industry has simply priced itself out of the power market. Now it demands new subsidies. Cooling towers at the Three Mile Island nuclear power plant in Middletown, PA, May 22, 2017. CREDIT: AP/Matt Rourke The nuclear industry is so uncompetitive that half of U.S. nuclear power plants are no longer profitable . And if existing nukes are uneconomic, it’s no surprise that new nuclear plants are wildly unaffordable . New York and Illinois have already agreed to more than $700 million a year in subsidies, and if all northeast and mid-Atlantic nukes got similar subsidies, it would cost U [...]

• Poverty, ambition & reference levels
  by chris in Stumbling and Mumbling, 2017-05-25 12:12:17 UTC

  I’ve written before about how inequality perpetuates itself through differences in confidence : people from rich backgrounds have the chutzpah to blag good jobs for which they are unqualified , whilst those from poorer backgrounds have confidence knocked out of them. However, a new paper by David Chivers suggests there’s another mechanism which can have the same effect – differences in aspirations. He shows that people who are just above the poverty line are scared to take risks for fear of falling into poverty. This traps them into low-paying but safeish jobs. By contrast, risks are tak [...]

2017-05-24

• Is the Glass Half Full?: Positivist Views on American Consumption
  by stefanotijerina in NEP-HIS blog, 2017-05-24 06:45:44 UTC

  Fifty Years of Growth in American Consumption, Income, and Wages By Bruce Sacerdote (Darmouth) Abstract: Despite the large increase in U.S. income inequality, consumption for families at the 25th and 50th percentiles of income has grown steadily over the time period 1960-2015. The number of cars per household with below median income has doubled since 1980 and the number of bedrooms per household has grown 10 percent despite decreases in household size. The finding of zero growth in American real wages since the 1970s is driven in part by the choice of the CPI-U as the price deflator; small bi [...]

2017-05-22

• Regulatory Discretion and Asset Prices
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-05-22 11:54:21 UTC

  “… positive trends can sometimes evolve into prices that increase more than fundamentals justify.”  Eric Rosengren , President and CEO, Federal Reserve Bank of Boston, May 9, 2017. The Federal Reserve’s annual stress test is the de facto capital planning regime for the largest U.S. banks. Not surprisingly, it comes under frequent attack from bank CEOs who argue, as Jamie Dimon recently did, that “banks have too much capital…and more of that capital can be safely used to finance the economy” (see page 22 here ). From their perspective, this makes sense. Bank shareholders, who the CEOs represent [...]

• Chris Sampson’s journal round-up for 22nd May 2017
  by Chris Sampson in The Academic Health Economists' Blog, 2017-05-22 11:00:45 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 . The effect of health care expenditure on patient outcomes: evidence from English neonatal care . Health Economics [ PubMed ] Published 12th May 2017 Recently, people have started trying to identify opportunity c [...]

2017-05-21

• Exchange Rate Disconnect in General Equilibrium
  by Christian Zimmermann in NEP-DGE blog, 2017-05-21 19:58:55 UTC

  By Oleg Itskhoki and Dmitry Mukhin http://d.repec.org/n?u=RePEc:nbr:nberwo:23401&r=dge We propose a dynamic general equilibrium model of exchange rate determination, which simultaneously accounts for all major puzzles associated with nominal and real exchange rates. This includes the Meese-Rogoff disconnect puzzle, the PPP puzzle, the terms-of-trade puzzle, the Backus- Smith puzzle, and the UIP puzzle. The model has two main building blocks — the driving force (or the exogenous shock process) and the transmission mechanism — both crucial for the quantitative success of the model. The transmiss [...]

2017-05-19

• NPR’s Podcast on Demonetization
  by paragwaknis in Musings of the Sorts, 2017-05-19 18:14:51 UTC

  NPR’s Planet Money did a two part podcast on Anil Bokil and his organization Arthakranti who convinced Prime Minister of India Mr. Narendra Modi about demonetization as a solution to India’s poverty, corruption, and black money related problems. This was back in 2013 when Mr. Modi was Chief Minister of Gujrat. Arthkranti is a plan conceived by some accountants and engineers to curb corruption and improving tax compliance in India. According to them, limiting the use of cash is one of the solutions. I have already talked about what is wrong with this solution here , here , and here . I also wro [...]

2017-05-17

• When bad arguments work
  by chris in Stumbling and Mumbling, 2017-05-17 12:25:39 UTC

  Many of the most common arguments against Labour’s policies are laughably bad – such as the claim that people earning a little over £80,000 a year will have to pay very much more tax; or the idea that higher top taxes wreck the economy; or the demand that individual spending plans be fully costed; or the notion that nationalization is a cost to the Exchequer. In pointing this out, however, people like me are missing something important – that even lousy arguments have the power to persuade. Robert Cialdini gives us an example of this in Influence . He tells of an experiment in which a w [...]

• House Prices, Geographical Mobility, and Unemployment
  by Christian Zimmermann in NEP-DGE blog, 2017-05-17 00:22:37 UTC

  By Marcus Mølbak Ingholt http://d.repec.org/n?u=RePEc:kud:kuiedp:1706&r=dge Geographical mobility correlates positively with house prices and negatively with unemployment over the U.S. business cycle. I present a DSGE model in which declining house prices and tight credit conditions impede the mobility of indebted workers. This reduces the workers’ cross-area competition for jobs, causing wages and unemployment to rise. A Bayesian estimation shows that this channel more than quadruples the response of unemployment to adverse housing market shocks. The estimation also shows that adverse housing [...]

2017-05-16

• Top taxes & growth
  by chris in Stumbling and Mumbling, 2017-05-16 12:47:45 UTC

  Rich people don’t like paying taxes. This is pretty much the only thing we’ve learned from some of the hysterical reaction in the papers to Labour’s plan to raise taxes on the rich. Let’s remember the historical facts here. Low tax rates aren’t associated with faster growth – if anything the opposite. For example, in 1988 Nigella’s dad cut the top income tax rate from 60% to 40%. Since then, GDP per head has grown by an average of 1.4 per cent per year. That compares to growth in the 29 years before the cut of 2.6% - and that was a time which included top tax rates on earned inco [...]

2017-05-15

• Fiscal Policy, Inequality, and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfers
  by pmakdissi in NEP-ARA blog, 2017-05-15 18:50:40 UTC

  By Ali Enami (PhD Candidate, Department of Economics, Tulane University), Nora Lustig (Samuel Z. Stone Professor of Latin American Economics, Tulane University; director of the Commitment to Equity institute; nonresident fellow of Center for Global Development and Inter-American Dialogue), and Alireza Taqdiri . http://d.repec.org/n?u=RePEc:tul:ceqwps:48&r=ara Policy Brief In December 2010, Iran’s government replaced its energy and bread subsidies with a lump-sum cash transfer known as the Targeted Subsidy Program (TSP) (Guillaume et. al. 2011). The transfer was set at about $40 (current 2011 d [...]

2017-05-10

• Information heterogeneity, housing dynamics and the business cycle
  by Christian Zimmermann in NEP-DGE blog, 2017-05-10 21:30:07 UTC

  By Zi-Yi Guo http://d.repec.org/n?u=RePEc:zbw:ifwedp:201717&r=dge Empirical evidence shows that house prices are highly volatile and closely correlated with the business cycle, and the fact is at odds with the evidence that rental prices are relatively stable and almost uncorrelated with the business cycle. To explain the fact, we introduce information heterogeneity into a standard dynamic stochastic general equilibrium (DSGE) model with financial frictions. Agents are endowed with heterogeneous shocks, and rationally extract information from market activities. Since agents are confused by cha [...]

• Why Do Children Love Those Fad Toys So?
  by ? in Health, 2017-05-10 16:25:00 UTC

  Today it's fidget spinners, but soon it will be another little gizmo that children dearly, desperately want. The complicated social dynamics of childhood are one big reason.(Image credit: Robert Gourley/Flickr) [...]

• Why Do Children Love Those Fad Toys So?
  by ? in Shots - Health News, 2017-05-10 16:25:00 UTC

  Today it's fidget spinners, but soon it will be another little gizmo that children dearly, desperately want. The complicated social dynamics of childhood are one big reason.(Image credit: Robert Gourley/Flickr) [...]

2017-05-09

• Is US Manufacturing Really Great Again?
  by Doug Campbell in Douglas L. Campbell, 2017-05-09 18:36:00 UTC

  One chart, more than any other, has influenced people's beliefs about the US manufacturing sector, as can be see by this debate here , and here �(the latter a link to the Autor/Harrison/DeLong/Krugman debate, all of whom I am enormous fans of). This graph (below) apparently exposes the lie that trade has played a significant roll in hollowing out manufacturing jobs. It shows that manufacturing employment as a share of total non-farm employment has been declining on a fairly steady trend. In fact, in recent years, it has even outperformed this long-run trend. Thus, it seems we can forget the id [...]

• Multilateral Development Banks: Policy Options for the Next German Government
  by Shifting Wealth in ShiftingWealth, 2017-05-09 16:18:00 UTC

  This post first was published early May in German on request of Stephan Klingebiel for the German Development Institute:  http://blogs.die-gdi.de/2017/05/02/die-zukunft-der-multilateralen-entwicklungsbanken/ 2015 was the year of important summit promises made by the UN and heads of states that yielded some of the most ambitious global commitments ever made : 1.        The 3 rd Conference on Financing for Development in Addis Ababa; 2.        The Summit in New York on Sustainable Development Goals (SDGs); and 3.        The 21 st Climate Change Conference in Paris. 2016 followed to witness the d [...]

• The need for an immigration target
  by chris in Stumbling and Mumbling, 2017-05-09 12:20:17 UTC

  Good judges are sceptical of Theresa May’s repetition of her failed promise to reduce migration. The Migration Observatory says the target is “not feasible in the short term and difficult to achieve in the long-term.“ And Stephen Bush says that even if it could be achieved, the effects would be “pretty terrible”. This is true. And it’s irrelevant. It misses the point that the Tories need an immigration target, and they need it to fail. This is because it’s a deflection strategy. The Tories want to blame immigration for poor public services and low wages. For the most part, howeve [...]

2017-05-08

• Would Italy be better off without the euro?
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2017-05-08 12:32:00 UTC

  With Sunday’s election of President Emmanuel Macron, voters confirmed that France remains a bedrock of the euro area, buttressing the region’s financial markets. But political risks to the euro have not disappeared. In coming months, concerns probably will turn to Italy, where the leader of one popular party has called for a referendum on leaving the euro area , and where parliamentary elections must be held before 20 May 2018 . From an economic perspective, Italy stands on a knife-edge. The economy is smaller and less productive than it was in 2001, while government debt has jumped by 30 perc [...]

2017-05-07

• Some California City Worker Pension Economics
  by Matthew Kahn in Environmental and Urban Economics, 2017-05-07 20:22:00 UTC

  The New York Times has reported a story on Puerto Rico's fiscal challenges. �The area has a large deficit and a large part of this is due to allowing workers to retire on a generous pension plan at roughly age 50. �Using my micro data from California, I'd like to teach you a few facts about generous public sector pensions. �I use these data in t his recent NBER Working Paper. For 214,026 California workers in the year 2015, I know that they work for a city government such as Santa Monica and I know the youngest age they can retire at and their pension terms. � I use these data to calculate the [...]

• Do interest rates matter?
  by noreply@blogger.com (Gulzar Natarajan) in Urbanomics, 2017-05-07 19:15:00 UTC

  Central bank rate cycles have become the pivot around which economic discussions converge. But is this perceived central role reflected in the actions of economic agents? In other words, do businesses respond to rate cuts with increased investments and vice-versa? Do their hurdle rates change in response to rate changes? The historical  evidence  on the inverse relationship between interest rate and investment changes have been mixed. A 2014 Federal Reserve of Washington paper that did a cross-sectional analysis of the findings of the Global Business Outlook Survey conducted in the second quar [...]

• It's not the economy, stupid
  by chris in Stumbling and Mumbling, 2017-05-07 12:09:53 UTC

  It looks as if the conventional wisdom is wrong. For years, this has been that elections are determined by the economy – as embodied in the slogan , “it’s the economy, stupid.” This election, however, looks like being an exception. Ms May seems to be getting her wish that the election should be about Brexit, even though the move will probably impoverish us. Years of stagnating real wages have not produced a backlash against the government. Voters support immigration controls even though these are bad for the economy*. And the question of how to raise productivity – which many economists would [...]

2017-05-06

• Reclutamento docenti, cambiano le regole ma è urgente applicarle
  by Lavoce.info in Il Fatto Quotidiano, 2017-05-06 09:09:55 UTC

  Il governo ha riformato il sistema di reclutamento dei docenti. La novità è promettente. Vi è però il rischio che tutto sia rimandato al futuro. E nel frattempo la scuola italiana può ritrovarsi ad affrontare gli stessi problemi dell’ultimo biennio. di Paolo Sestito (Fonte: Lavoce.info )* Rischi dopo la riforma Nel nuovo sistema di reclutamento degli insegnanti , l’ingresso in ruolo sarà riservato a chi, in possesso della laurea (ma senza necessità di altri titoli successivi), superi un concorso nonché le valutazioni intermedie e finali di un successivo percorso triennale di formazione e ti [...]

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