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2016-09-25

• ¿Subirá Banxico su tasa de referencia en su próxima reunión?
  by Alejandro Villagomez in Tintero Económico Diario, 2016-09-25 01:56:00 UTC

  La próxima semana, la Junta de Gobierno del Banco de México tendrá su reunión para decidir sus acciones de política monetaria y la pregunta es si aumentará su tasa de referencia. Cabe mencionar que la semana pasada, la Reserva Federal mantuvo sin cambio su tasa de referencia, aunque en su comunicado señaló que las probabilidades de aumentarla en este año aumentan. Ya diversos analistas han señalado su posición sobre lo que ocurrirá y en esta nota doy mi opinión. En un paper que publiqué junto con Rodolfo Cermeño y Javier Orellana en el 2012, “ Monetary policy rules in asmall open economy: an a [...]

2016-09-24

• New working paper on the Deepwater Horizon oil spill
  by John Whitehead in Environmental Economics, 2016-09-24 09:01:06 UTC

  Lost Recreational Value from the Deepwater Horizon Oil Spill Using Revealed and Stated Preference Data John C. Whitehead , Tim Haab , Sherry Larkin , John Loomis , Sergio Alvarez and Andrew Ropicki No 16-16, Working Papers from Department of Economics, Appalachian State University Abstract: The lost recreational use values from the BP/Deepwater Horizon oil spill in the Gulf of Mexico were estimated from cancelled recreational trips to Northwest Florida. The impacts were calculated using the travel cost method for a single site with primary data collected from an online survey conducted after [...]

• New working paper on the demand for seafood safety
  by John Whitehead in Environmental Economics, 2016-09-24 08:59:04 UTC

  Convergent validity of stated preference methods to estimate willingness-to-pay for seafood traceability: The case of Gulf of Mexico oysters John C. Whitehead , O. Ashton Morgan and William L. Huth No 16-15, Working Papers from Department of Economics, Appalachian State University Abstract: In this study we compare willingness to pay for a seafood traceability system form contingent behavior demand and contingent valuation referendum vote models using data from a survey of Gulf of Mexico oyster consumers following the BP oil spill in 2010. We estimate a fixed effects model of oyster demand us [...]

2016-09-23

• IPA’s weekly links
  by Jeff Mosenkis (IPA) in Chris Blattman, 2016-09-23 15:26:51 UTC

  Guest Post by Jeff Mosenkis of Innovations for Poverty Action . IPA’s looking to fund research in financial services for the poor (especially digital ones), deadline Nov 4th. José A. Quiñonez of the Mission Asset Fund in San Francisco was named a MacArthur Fellow (or “genius”) for his work formalizing informal lending among immigrants to create credit histories, which in turn gives them access to credit cards, loans, and the like. Bruce Wydick and colleagues’ second paper from an RCT evaluating the effects of TOMS shoes in El Salvador came out , concluding: Thus, in a context where most ch [...]

• The safe asset girdle on liquidity
  by SFF in policy economics, 2016-09-23 00:51:03 UTC

  We have mixed views about the phrase “maturity transformation”, found in economic and bank regulatory literature. We like it because it is suggestive of alchemy or developmental biology, and finance is full of alchemy. We don’t like some of the baggage that has been hung on the term, and while we will never defend tradition for its own sake, we wonder what is wrong with “asset/liability mismatch”, which to us seems clearer, and reminds us to think of both sides of the balance sheet. Maturity transformation has a static quality to it, and indeed some of the worst examples of maturity transforma [...]

2016-09-22

• The centrist crisis
  by chris in Stumbling and Mumbling, 2016-09-22 12:36:59 UTC

  Tim Farron said this week that “there is a hole in the centre of British politics right now.” This is true, if not in the sense he intends. What I mean is that several big political developments of recent years are a backlash against centrist politics: the rise of Corbyn; Brexit; the collapse in the LibDems vote in 2015; growing distrust of experts; and increasing hostility to immigration. The hole in centre exists because voters have deserted it. Such trends, of course, have counterparts in the US and much of Europe. There’s a reason for this. Centrism requires a healthy capitalism. Support f [...]

2016-09-20

• In defence of technology shocks
  by chris in Stumbling and Mumbling, 2016-09-20 12:38:32 UTC

  In his attack (pdf) upon macroeconomic theory, Paul Romer is especially critical of the real business cycle view that recessions are caused by negative technology shocks. He calls them “phlogiston shocks” and says: there is no microeconomic evidence for the negative phlogiston shocks that the model invokes nor any sensible theoretical interpretation of what a negative phlogiston shock would mean. Simon accuses him of attacking a straw man, saying that “the insistence on productivity shocks as business cycle drivers is pretty dated.” And the standard undergraduate textbook, Carlin and Soskice [...]

• What’s the optimum debt / GDP ratio, and what’s the optimum interest to pay on that debt?
  by Ralph Musgrave in Ralphonomics, 2016-09-20 08:02:00 UTC

  Summary.   This article deals with the differences between Modern Monetary Theory and what Simon Wren-Lewis (Oxford economics prof) calls the “consensus assignment” (which more or less equals the conventional wisdom). I argue below that if the best of MMT and the best of SW-L’s ideas are combined, one ends with the ideal system, and that involves two important elements. First it results in a national debt that pays the optimum rate of interest: zero or near zero. Second, it results in the optimum debt / GDP ratio. But since the interest on that debt is zero or near zero, that so called debt is [...]

• Economic complexity, institutions and income inequality
  by Guest author in OECD Insights, 2016-09-20 06:22:48 UTC

  César Hidalgo and Dominik Hartmann , Macro Connections, The MIT Media Lab Is a country’s ability to generate and distribute income determined by its productive structure? Decades ago Simon Kuznets proposed an inverted-u-shaped relationship describing the connection between a country’s average level of income and its level of income inequality. Kuznets’ curve suggested that income inequality would first rise and then fall as countries’ income moved from low to high. Yet, the curve has proven difficult to verify empirically. The inverted-u-shaped relationship fails to hold when several Latin Ame [...]

2016-09-19

• Immigration as social mobility
  by chris in Stumbling and Mumbling, 2016-09-19 12:49:08 UTC

  Last week, Theresa May spoke of wanting to increase social mobility, so that “it’s your talent and hard work that matter, not where you were born.” This week she wants to restrict immigration. There’s a massive contradiction here. I say this for a trivially obvious reason – that migration is a fantastic form of social mobility because it raises people out of poverty . Orley Ashenfelter, for example, shows (pdf) that real wages at McDonalds are seven times higher in the US than in India: Indians are poorer than westerners not because they’re less talented or lazier but because India is a poorer [...]

• Reforming mutual funds: a proposal to improve financial market resilience
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-09-19 12:46:34 UTC

  U.S. capital markets are the deepest and broadest in the world, fortifying the country’s financial system and making its assets both liquid and attractive. A major part of this capital market advantage is due to the role played by mutual funds, which provide retail investors with a low-cost means of diversifying risk while earning a market return on their savings. However, a growing class of mutual funds—those that hold mostly illiquid assets—appear to be a potential source of systemic risk. In this post we explain why, and then go on to suggest a change that is simple to implement and might m [...]

• Could sortition help against corruption, part II
  by Paul Frijters in Club Troppo, 2016-09-19 05:25:33 UTC

  In part 1, I looked at whether it made sense to have random individuals inserted into parliament, or to let policies be decided by juries full of randomly chosen individuals. Both were argued to be unworkable and likely to lead to more corruption, rather than less: policies that favour the special interests are so entwined with large legislative programs that it is not feasible or desirable to have them judged by juries of amateurs. And random members of the public spending years in parliament have even less incentive to be honest than members of long-standing political parties with brand-name [...]

2016-09-18

• Gains to Trade in Carbon Markets Between Liberals and Conservatives
  by Matthew Kahn in Environmental and Urban Economics, 2016-09-18 18:17:00 UTC

  This blog post will e xpand on my recent blog post �on breaking the political gridlock over carbon pricing. �As I have explained before, liberals and conservatives disagree over the "property right" concerning whether we have the right to produce GHG emissions for a price of $0. �Conservatives say "yes" and Liberals say no and they want to use collective action to increase the price of carbon dioxide per ton to $35 and to let people know that this price will rise over time. �In my peer reviewed research, I have documented that Conservatives vote against this proposed policy. Recently, Michael [...]

2016-09-17

• The Economics Research Agenda on Climate Change Adaptation
  by Matthew Kahn in Environmental and Urban Economics, 2016-09-17 15:28:00 UTC

  There are plenty of economics researchers estimating historical reduced form models estimating how past climate shocks (i.e heat waves, natural disasters) impacted economic activity in the developing and developed world. �While Nick Kristof salutes this work , this isn't the right way to approach the adaptation question of how costly will it be to adapt to the new climate change conditions that we have collectively unleashed. �I can say this because I have written many of these papers (read this and this ). The cost of adapting to climate change hinges on expectations, innovation, durable capi [...]

2016-09-16

• Grammar schools & stereotype threat
  by chris in Stumbling and Mumbling, 2016-09-16 13:22:19 UTC

  In the debate about grammar schools, everybody assumes that it is those who pass the 11+ who should be admitted to them. But why should this be? Mightn’t it be more efficient instead to admit those who do badly? I ask because of some recent experiments by Victor Gonzales at Tilburg University. He got people to solve some Raven’s matrices . Then he randomly gave out medals and asked people to redo the tests. He found that low-ability people who got a medal improved substantially, whilst high-ability people who didn’t get one did just as well. The reason for this lies in self-serving biases . Lo [...]

• Economics, DSGE and Reality: a personal story
  by Mainly Macro in Mainly Macro, 2016-09-16 08:11:00 UTC

  As I do not win prizes very often, I thought I would use the occasion of this one to write something much more personal than I normally allow myself. But this mini autobiography has a theme involving something quite topical: the relationship between academic macroeconomics and reality, and in particular the debate over DSGE modelling and the lack of economics in current policymaking. [1] I first learnt economics at Cambridge, a department which at that time was hopelessly split between different factions or ‘schools of thought’. I thought if this is what being an academic is all about I want n [...]

2016-09-15

• Will Progressives Pay Climate Skeptics to Stop Polluting?
  by Matthew Kahn in Environmental and Urban Economics, 2016-09-15 13:12:00 UTC

  There are two pieces to the climate change policy debate focused on "pricing carbon". �One is an incentive effect. All economists agree that if a $35 a ton carbon dioxide tax could be introduced that this would create supply and demand side incentives to decarbonize the world economy. �But, there is also a property rights/income effects question. �Today, �fossil fuel consumers do not pay a tax proportional to their GHG emissions. �Progressives want to take away this "property right" by making this group pay for their emissions. � In a sense, progressives want to punish the suburban, meat eatin [...]

• Shaking things up in China
  by ? in FRED blog, 2016-09-15 13:00:07 UTC

  During President Obama’s recent visit to China, even getting off the plane involved political upheaval: The  New York Times described the mood as “tense” when disagreements between Chinese and U.S. officials compelled the president to use an alternative stairway to deplane Air Force One. Chinese economic policy has also been tense for some time now, independent of their ability or willingness to accommodate a foreign 747. The graph above plots the Economic Policy Uncertainty Index from  Baker, Bloom, and Davis  for the U.S. and China. This index scans news articles about a country and records [...]

2016-09-14

• Constant versus Variable Markups: Implications for the Law of One Price
  by Hakan Yilmazkuday in Hakan Yilmazkuday's Blog, 2016-09-14 23:35:00 UTC

  Constant versus Variable Markups: Implications for the Law of One Price One sentence summary : The case of constant markups corresponds to log-linear trade regressions, while a special case of variable markups corresponds to lin-log trade regressions; marginal costs of production contribute most to the deviations from the Law of One Price. The corresponding paper by Hakan Yilmazkuday has been accepted for publication at International Review of Economics and Finance . The working paper version is available here. Abstract This paper compares the implications of having constant versus variable ma [...]

• Household Borrowing Constraints and Residential Investment Dynamics
  by Christian Zimmermann in NEP-DGE blog, 2016-09-14 21:08:01 UTC

  By Hashmat Khan and Jean-François Rouillard http://d.repec.org/n?u=RePEc:shr:wpaper:16-04&r=dge Why does residential investment lead output in the US and Canada but it is coincident in eurozone countries? In this paper we explore the role of home-equity loans used to boost consumption as a channel that affects residential investment. We consider a multi-agent model where some home-owning households face borrowing constraints that reflect home-equity loans or refinancing constraints. The main contribution of our paper is to highlight that the severity of the households’ borrowing constraints in [...]

• Dirk Ehnts — The euro zone crisis: What would John Maynard do?
  by contrarianmedia@hotmail.com (Mike Norman) in Mike Norman Economics, 2016-09-14 14:53:00 UTC

  Abstract In his letter to US President Franklin D. Roosevelt Keynes (1933) wrote about "the technique of recovery itself". An increase in output is brought about by an increase in purchasing power, Keynes argues, which can come from three sectors: households, firms and government. Using the IS/MY macroeconomic model developed by Ehnts (2014), which features sectoral balances and endogenous money, the situation of some euro zone members is examined with a focus on the three techniques of recovery: increases in debt of the respective sectors as defined by Keynes. A fourth technique, an increase [...]

• Some Links
  by Don Boudreaux in Cafe Hayek, 2016-09-14 14:02:52 UTC

  (Don Boudreaux) Tweet Shikha Dalmia looks with clear eyes on Muslims in America . Edward Conard argues that American innovationism is a source of both rising financial inequality in America and rising standards of living for the masses around the world .  (Ignore Conard’s closing complaint about American trade deficits; as David Henderson explained , Conard gets this topic wrong.)   Here’s a slice from Conard’s essay: Instead, advocates of redistribution cavalierly diminish the importance of incentives. They claim the success of America’s 1% stems from rising cronyism despite overwhelming [...]

• I'm thinking about changing the name of this blog to "Environmental and Urban Economics"
  by John Whitehead in Environmental Economics, 2016-09-14 10:44:20 UTC

  From the inbox: The editors of Urban Studies have now had a chance to read the revised version of your article entitled "Public support for hosting the Olympic Summer Games in Germany: The CVM approach" and I am happy to say that we would like to publish it in Urban Studies. Yay! Here is a link to the working paper: http://econpapers.repec.org/paper/aplwpaper/15-06.htm .� My key takeaway from this paper (and this one ) is that CVM does not necessarily need to be conducted with a one-shot dichotomous choice referendum valuation question, which turns out to be the least efficient type of quest [...]

• Bibliography on Post Keynesian Economics
  by LK in Social Democracy for the 21st Century: A Post Keynesian Perspective, 2016-09-14 10:00:00 UTC

  The bibliography below is assembled from my various posts, and provides a list of the most important books and articles on various topics within Post Keynesian economics. It is divided into the following sections: (1) Introductory Studies (2) Advanced Overviews and Specialised Studies (3) History of Post Keynesian Economics (4) Methodology (5) Uncertainty (6) Endogenous Money (7) Price Theory (8) Trade Theory (9) On the Work of George L. S. Shackle. This is a work in progress. I am not claiming it is exhaustive by any means. There are plenty of additional categories that could be included. Als [...]

• La importancia de las evaluaciones educativas como herramienta de transparencia y mejora (II)
  by Ismael Sanz Labrador in Politikon, 2016-09-14 08:00:29 UTC

  En la primera parte del artículo hablamos sobre la importancia de las evaluaciones educativas, hoy sobre sus críticas. Críticas: “teaching to the test” y efecto sobre centros desfavorecidos Dos han sido las críticas que han recibido generalmente las pruebas externas. Sobre el “teaching to the test” los estudios resumidos en el artículo de los profesores Hanushek y Woessmann señalan que aquellos países o regiones en donde existe un examen nacional externo y estandarizado obtienen mejores resultados en pruebas internacionales muy diferentes a ese examen nacional como son PISA, TIMSS y PIRLS. La [...]

• The euro zone crisis: What would John Maynard do? (working paper)
  by Dirk in econoblog101, 2016-09-14 07:41:16 UTC

  I have just published a working paper online ( link ) with the above title. What would John Maynard have thought about the euro zone crisis, and perhaps more importantly, what would he have done? The answer, most people think, is in the General Theory (1936), which was published 80 years ago. Why this is correct, there are other writings by Keynes in which he summarizes his ideas in much shorter space. The one that my article dissects is his letter to FDR, the US president, from December 31 1933. It was published in the NY Times and can be read online ( link ). Keynes describes three possible [...]

2016-09-13

• How do we get off fossil fuels when we’ve always feared change?
  by Nathanael Johnson in Grist Business and Technology, 2016-09-13 10:18:01 UTC

  If we are going to escape our climate crisis, we will need to embrace new things. We’ll need a boggling expansion of clean energy. We’ll need a titanic shift to less polluting and more bountiful ways of growing food. And, even as we do that, we’ll need to make more of everything with less energy. All of this requires a lot of innovation. No problem, you say. Everybody loves innovation. The predictable slobbering over each new Apple gadget proves we’re infatuated with technology, right? Not according to Calestous Juma, a professor of international development at Harvard. In his new book, Inno [...]

• La importancia de las evaluaciones educativas como herramienta de transparencia y mejora (I)
  by Ismael Sanz Labrador in Politikon, 2016-09-13 08:00:05 UTC

  La evaluación de los sistemas educativos no es nada nuevo ni en el panorama nacional, ni en el internacional. En 24 de los 34 países que configuran la OCDE existe una prueba externa y estandarizada (PISA, 2010, página 229 del Volumen IV, OCDE 2013 Synergies for Better Learning: An International Perspective on Evaluation and Assessment). Dos de cada tres alumnos de los países más desarrollados del mundo se encuentran en sistemas educativos en los que se realizan este tipo de pruebas. La OCDE en “Education at a Glance, 2011” indica que existe una tendencia al alza en el empleo de pruebas externa [...]

2016-09-12

• Informal Labor and the Efficiency Cost of Social Programs: Evidence from the Brazilian Unemployment Insurance Program
  by maximorossi in NEP-LTV blog, 2016-09-12 18:51:07 UTC

    By: Gerard, Francois ; Gonzaga, Gustavo It is widely believed that the presence of a large informal sector increases the efficiency cost of social programs — transfer and social insurance programs — in developing countries. We evaluate such claims for policies that have been heavily studied in countries with low informality — increases in unemployment insurance (UI) benefits. We introduce informal work opportunities into a canonical model of optimal UI that specifies the typical tradeoff between workers’ need for insurance and the efficiency cost from distorting their incentives to [...]

• Violence against Rich Ethnic Minorities: A Theory of Instrumental Scapegoating
  by maximorossi in NEP-LTV blog, 2016-09-12 18:50:14 UTC

  By: Yann Bramoullé (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS) ; Pauline Morault (Aix-Marseille University (Aix-Marseille School of Economics), CNRS& EHESS) In many parts of the developing world, ethnic minorities play a central role in the economy. Examples include Chinese throughout Southeast Asia, Indians in East Africa and Lebanese in West Africa. These rich minorities are often subject to popular violence and extortion, and are treated ambiguously by local politicians. We develop a formal framework to analyze the interactions between a rent-seeki [...]

• Top Incomes and the Gender Divide
  by maximorossi in NEP-LTV blog, 2016-09-12 18:49:10 UTC

    By: A.B. Atkinson (Nuffield College, Oxford; London School of Economics; and INET at the Oxford Martin School) ; A. Casarico (Università Bocconi; CESifo; and Dondena Centre for Research on Social Dynamics and Public Policy) ; S. Voitchovsky (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Graduate Institute of International and Development Studies, Geneva) In the recent research on top incomes, there has been little discussion of gender. How many of the top 1 and 10 per cent are women? A great deal is known about gender differentials in [...]

• Inequality Aversion and Coalition Formation
  by maximorossi in NEP-LTV blog, 2016-09-12 18:48:25 UTC

  � By: David M. McEvoy ; John K. Stranlund We explore the formation of coalitions to provide a public good when some players are averse to payoff inequality between coalition members and non-members. A model is presented to demonstrate how inequality-averse preferences could cause players to deliberately block profitable but inequitable coalitions from forming, and how the likelihood of such blocks is affected by the magnitude of payoff inequality. We then empirically examine coalition formation rates using laboratory experiments. Our results show that profitable coalitions are less li [...]

• Think Again and Again About the Natural Rate of Interest
  by John Taylor in Economics One, 2016-09-12 15:45:56 UTC

  In a recent Wall Street Journal piece, “ Think You Know the Natural Rate of Interest? Think Again ,” James Mackintosh warns about the high level of uncertainty in recent estimates of the equilibrium interest rate—commonly called r* or the natural rate—that are being factored into monetary policy decisions by the Fed.  See discussion by Fed Chair Janet Yellen for example.  Mackintosh’s argument is simple. He takes the confidence intervals (uncertainty ranges) from the recent study by Kathryn Holston, Thomas Laubach, and John Williams, which, as in an earlier paper by Laubach and Williams, finds [...]

• Inflation and Fiscal Policy
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-09-12 13:01:59 UTC

  Why is it proving so difficult to raise inflation? For generations after World War II, this was not something that worried economists. Yet, today, even as central banks lower policy rates close to zero (or below) and expand their balance sheets beyond what anyone previously imagined possible (see chart), inflation remains stubbornly below target in most of the advanced world. Central Bank Assets (Percent of GDP), 1999-2Q 2016 Note: The final observation for the euro area is 1Q 2016; the final observation for Japan is based on assets through May 2016. [...]

• #goofy5
  by Alberto Bagnai in Goofynomics, 2016-09-12 10:19:00 UTC

  La verità. Scritta su un documento ufficiale della Commissione Europea, il rapporto Employment and Social Development in Europe 2013 . Correva l'anno 2014, e, come potete facilmente immaginare, non ho proprio idea di come il team di economisti coordinati da László Andor fosse giunto a simili conclusioni. Vi prego solo di apprezzare la differenza fra un post-Keynesiano e un neokeynesiano. Quello che il post-Keynesiano Andor affermava, anche se a noi può sembrare banale (e a molti di voi solo con il senno di poi, e solo perché mi avete incontrato), non era una cosa così ovvia da dire nel 2014, [...]

2016-09-11

• Stock-Flow Consistent models: response to Jo Michell
  by Mainly Macro in Mainly Macro, 2016-09-11 08:27:00 UTC

  Jo has a thoughtful and constructive response to my post discussing a recent Bank of England paper that presents a new Stock-Flow Consistent (SFC) model. One of the reasons it is constructive is because it is not tribal: too many followers of heterodox schools seem to just want to rubbish mainstream macro and suggest their particular school represents the new dawn. So I thought I might make a few points on Jo’s post that might be helpful. A model that includes a lot of institutional detail is not a virtue in itself: indeed if at the end of the day these institutions do not matter too much i [...]

2016-09-10

• The great Indian GDP measurement controversy
  by Ajay Shah in Ajay Shah's blog, 2016-09-10 02:49:00 UTC

  by Rajeswari Sengupta . In 2015, the Central Statistical Office (CSO) revised the way GDP is calculated in India. According to the new series, India is the fastest growing large economy in the world, with a 7.1 percent real growth rate. Other trusted measures of the state of the economy convey a discordant picture . This discrepancy has led to an active debate comprising two parts. One part of the debate has been arguments about the extent to which the official GDP data are accurate. The second part of the debate is based on criticising CSO's methods. This article summarises the literature t [...]

2016-09-09

• SPOTLIGHT: ORIANA BANDIERA
  by sanukriti in Gender Matters, 2016-09-09 17:15:00 UTC

  – The Spotlight series highlights the research of female economists, one at a time. – Oriana Bandiera is a Professor of Economics at the London School of Economics. She received a Ph.D. degree from Boston College and BSc/ MSc degrees from Bocconi University. Oriana is also the Director of STICERD  and a co-director at IGC and CEPR . She is a co-editor of JOLE and Economica and serves on the editorial boards of EJ, JDE, JEEA, and JEL. Oriana’s research analyses organizations and labor markets in different settings. Her work has been published in top journals, including the American Economic Re [...]

• Monetary Policy in a Post-Crisis World: Beyond the Taylor Rule
  by Perry G. Mehrling in INET Blog, 2016-09-09 13:43:57 UTC

  The following is in blog form the substance of a talk I gave Sept 7 at a Mercatus conference, "Monetary Policy Rules for a Post-Crisis World. " "Rules versus discretion" is a hardy perennial of monetary policy debate, dating from earliest debates between Bullionists and anti-Bullionists, to the 19th century Currency School versus Banking School, up to the 20th century monetarists versus Keynesians. The reason this debate is perennial, according to me, is that it is fundamentally about whether the current state of affairs requires more discipline or mo [...]

2016-09-08

• Central Bank Liabilities Part II: Currency, Negative Nominal Interest Rates, etc.
  by Stephen Williamson in Stephen Williamson: New Monetarist Economics, 2016-09-08 18:54:00 UTC

  Central banks are indeed banks. As financial intermediaries, their social role depends on what a central bank can do that some private financial intermediary cannot, or cannot do as well. Fundamentally, financial intermediation is asset transformation - how the intermediary structures itself so that its liabilities have attractive properties as compared to its assets. In our changing world, central banks have to adapt their liabilities to evolving technologies and macroeconomic developments. My first installment on this topic was about new types of central bank liabilities - the idea that a ce [...]

• Introducing the Atlanta Fed's Taylor Rule Utility
  by macroblog in Macroblog, 2016-09-08 16:10:27 UTC

  Simplicity isn't always a virtue, but when it comes to complex decision-making processes—for example, a central bank setting a policy rate—having simple benchmarks is often helpful. As students and observers of monetary policy well know, the common currency in the central banking world is the so-called "Taylor rule." The Taylor rule is an equation introduced by John Taylor in a seminal 1993 paper that prescribes a value for the federal funds rate—the interest rate targeted by the Federal Open Market Committee (FOMC)—based on readings of inflation and the output gap. The output gap measures the [...]

• When newer isn't better
  by chris in Stumbling and Mumbling, 2016-09-08 13:43:26 UTC

  William Broadway, a student at Loughborough University, has invented a way of keeping vaccines cool which might save over a million lives by reviving an invention of Albert Einstein’s. This reminds us of an important fact – that intellectual progress isn’t necessarily linear. Instead, good ideas can be forgotten and bad ones developed, so that science can regress . For example, the Romans knew how to remove cataracts, knowledge which wasn’t rediscovered until the 20 th century; the steam engine was invented in the first century AD, but long forgotten; and the standard of battlefield medicine m [...]

2016-09-07

• Supply and Demand for Discrimination: An Experiment Using Photos
  by maximorossi in NEP-LTV blog, 2016-09-07 17:06:21 UTC

    By: Anthony Heyes ; John List URL: http://d.repec.org/n?u=RePEc:feb:artefa:00448&r=ltv There is a large and diverse body of evidence that people condition their behavior on the characteristics of others. If type is visible then one agent seeing another with whom they are interacting, or observing some other close proxy for type, can affect outcomes. Goldin and Rouse (2000) showed that the adoption of “blind” auditions—with a screen concealing each candidate’s identity from the jury—increased significantly the likelihood of a female being hired at five major American orchestras. O [...]

• Does Mass Deworming Affect Child Nutrition? Meta-analysis, Cost-Effectiveness, and Statistical Power
  by maximorossi in NEP-LTV blog, 2016-09-07 17:03:51 UTC

  � By: Croke, Kevin ; Hicks, Joan Hamory ; Hsu, Eric ; Kremer, Michael ; Miguel, Edward The WHO has recently debated whether to reaffirm its long-standing recommendation of mass drug administration (MDA) in areas with more than 20% prevalence of soil-transmitted helminths (hookworm, whipworm, and roundworm). There is consensus that the relevant deworming drugs are safe and effective, so the key question facing policymakers is whether the expected benefits of MDA exceed the roughly $0.30 per treatment cost. The literature on long run educational and economic impacts of deworming suggest [...]

• World income inequality databases: an assessment of WIID and SWIID
  by maximorossi in NEP-LTV blog, 2016-09-07 17:02:55 UTC

    By: Stephen P. Jenkins This article assesses two secondary data compilations about income inequality – the World Income Inequality Database (WIIDv2c), and the Standardized World Income Inequality Database (SWIIDv4.0) which is based on WIID but with all observations multiply-imputed. WIID and SWIID are convenient and accessible sources for researchers seeking cross-national data with global coverage for relatively long time periods. Against these undoubted benefits must be set costs arising from lack of data comparability and quality and also, in the case of SWIID, questions about it [...]

• Income Inequality and Well-Being in the U.S.: Evidence of Geographic-Scale- and Measure-Dependence
  by maximorossi in NEP-LTV blog, 2016-09-07 17:02:07 UTC

  � By: Ifcher, John (Santa Clara University) ; Zarghamee, Homa (Barnard College) ; Graham, Carol Lee (Brookings Institution) U.S. income inequality has risen dramatically in recent decades. Researchers consistently find that greater income inequality measured at the state or national level is associated with diminished subjective well-being (SWB) in the U.S. We conduct the first multi-scale analysis (i.e., at the ZIP-code, MSA, and state levels) of the inequality-SWB relationship using SWB data from the U.S. Gallup Healthways Well-Being Index and income inequality data from the America [...]

• A new paper on predatory journals in economics #RePEc
  by John Whitehead in Environmental Economics, 2016-09-07 12:32:31 UTC

  Here is the abstract: Economists Behaving Badly: Publications in Predatory Journals Frederick H. Wallace and Tim Perri No 16-08 , Working Papers from Department of Economics, Appalachian State University Abstract: The extent of publishing in predatory journals in economics is examined in this paper. A simple model of researcher behavior is presented to explore those factors motivating an economist or other academic to publish in predatory journals as defined by Beall (2015). Beall’s lists are used to identify predatory journals and publishers included in the Research Papers in Economics archi [...]

• Dating the Indian business cycle
  by Ajay Shah in Ajay Shah's blog, 2016-09-07 10:06:00 UTC

  by Radhika Pandey , Ila Patnaik, Ajay Shah. Most macroeconomics is about business cycle fluctuations. The ultimate dream of macroeconomic policy is to use monetary policy and fiscal policy to reduce the amplitude of business cycle fluctuations, without contaminating the process of trend GDP growth. From an Indian policy perspective, this agenda is sketched in Shah and Patnaik (2010). The starting point of all these glamorous things, however, is measurement. The major barrier to doing Indian macroeconomics is the lack of the foundations of business cycle measurement. The first milestone in th [...]

2016-09-06

• Sobre los costos del conflicto
  by Blogoeconomia in La Silla Vacía, 2016-09-06 16:28:02 UTC

  La semana pasada circuló en la Facultad de Economía de la Universidad de Los Andes, en la que somos profesores quienes escribimos este blog, un listado de preguntas que varios estudiantes formularon con respecto al acuerdo Farc-gobierno. Son preguntas lúcidas e importantes que compartimos muchos colombianos. En este post recopilamos evidencia surgida de investigaciones conducidas en la Facultad durante años, que ayuda a responder algunas de esas preguntas: las que se refieren a los beneficios esperados de lo acordado. Esperamos aportar así al proceso de reflexión en que estamos, o deberíamos e [...]

2016-09-05

• Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking
  by maximorossi in NEP-LTV blog, 2016-09-05 20:27:38 UTC

  � By: James J. Heckman (The University of Chicago) ; John Eric Humphries (University of Chicago, Department of Economics) ; Gregory Veramendi (W.P. Carey School of Business, Arizona State University) This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature. It is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effe [...]

• Job Creation in a Multi-Sector Labor Market Model for Developing Economies
  by maximorossi in NEP-LTV blog, 2016-09-05 20:26:28 UTC

    By: Arnab K. Basu (Cornell University) ; Nancy H. Chau (Cornell University and Centro Studi Luca d’Agliano) ; Gary S. Fields (Cornell University) ; Ravi Kanbur (Cornell University) This paper proposes an overlapping generations multi†sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self†employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multi†sector labor market models in which the creation of high†age employment exacerbates unemployment. Our richer setting [...]

• Heads or Tails: The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness
  by maximorossi in NEP-LTV blog, 2016-09-05 20:23:46 UTC

  � By: Steven D. Levitt Little is known about whether people make good choices when facing important decisions. This paper reports on a large-scale randomized field experiment in which research subjects having difficulty making a decision flipped a coin to help determine their choice. For important decisions (e.g. quitting a job or ending a relationship), those who make a change (regardless of the outcome of the coin toss) report being substantially happier two months and six months later. This correlation, however, need not reflect a causal impact. To assess causality, I use the outco [...]

• New Evidence on Trust and Well-being
  by maximorossi in NEP-LTV blog, 2016-09-05 20:21:12 UTC

    By: John F. Helliwell ; Haifang Huang ; Shun Wang This paper first uses data from three large international surveys – the Gallup World Poll, the World Values Survey and the European Social Survey – to estimate income-equivalent values for social trust, with a likely lower bound equivalent to a doubling of household income. Second, the more detailed and precisely measured trust data in the European Social Survey (ESS) show that social trust is only a part of the overall climate of trust. While social trust and trust in police are the most important elements, there are significant add [...]

• The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the U.S.
  by maximorossi in NEP-LTV blog, 2016-09-05 20:19:29 UTC

    By: Rasmus Landersø ; James J. Heckman This paper examines the sources of differences in social mobility between the U.S. and Denmark. Measured by income mobility, Denmark is a more mobile society, but not when measured by educational mobility. There are pronounced nonlinearities in income and educational mobility in both countries. Greater Danish income mobility is largely a consequence of redistributional tax, transfer, and wage compression policies. While Danish social policies for children produce more favorable cognitive test scores for disadvantaged children, these do not tran [...]

• Augmenting the Human Capital Earnings Equation with Measures of Where People Work
  by maximorossi in NEP-LTV blog, 2016-09-05 20:17:09 UTC

  � By: Erling Barth ; James Davis ; Richard B. Freeman We augment standard ln earnings equations with variables reflecting unmeasured attributes of workers and measured and unmeasured attributes of their employer. Using panel employee-establishment data for US manufacturing we find that the observable employer characteristics that most impact earnings are: number of workers, education of co-workers, capital equipment per worker, industry in which the establishment produces, and R&D intensity of the firm. Employer fixed effects also contribute to the variance of ln earnings, though subs [...]

• Aspirations and the Political Economy of Inequality
  by maximorossi in NEP-LTV blog, 2016-09-05 20:15:34 UTC

  � By: Timothy Besley In standard approaches to the political economy of inequality, the income distribution and the preferences of households are taken as fixed when studying how incomes are determined within and between nations. This paper makes the income distribution endogenous by supposing that aspirational parents can socialize children into having aspirational preferences which are modeled as a reference point in income space. The model looks at the endogenous determination of the level of income, income inequality and income redistribution where the proportion of aspirational i [...]

• Life-Cycle Consumption Patterns at Older Ages in the US and the UK: Can Medical Expenditures Explain the Difference?
  by maximorossi in NEP-LTV blog, 2016-09-05 20:14:41 UTC

    By: James Banks ; Richard Blundell ; Peter Levell ; James P. Smith In this paper we document significantly steeper declines in nondurable expenditures in the UK compared to the US, in spite of income paths being similar. We explore several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, number of household members, and out-of -pocket medical expenditures. Among all the potential explanations considered, we find that those to do with healthcare—differences in levels and age paths in medical expenses—can fully a [...]

• Saving for retirement
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-09-05 12:38:50 UTC

  Saving for retirement The biggest question facing anyone considering retirement is financial: are my savings sufficient to provide for my lifestyle for the rest of my life? For the fortunate among us, the answer is yes. But for a large fraction of the population, the answer is likely no. The typical U.S. household has few retirement savings. The National Institute on Retirement Security reports that the median for near-retirement households is $12,000, while that for all households is only $3,000. Most people are relying on government social security to meet their retirement needs. There are m [...]

2016-09-04

• Intimate Partner Violence
  by sanukriti in Gender Matters, 2016-09-04 16:31:49 UTC

  By some estimates , the total global cost of intimate partner violence (IPV) is $4.4 trillion, or 5.2% of global GDP, which is significantly higher than the combined costs of civil wars, terrorism, and homicides. Yet, we don’t quite understand IPV. By Carrie Mae Weems , from the Kitchen Table Series While most types of violence generally affect both women and men, the victims of IPV tend to be female; in fact, IPV is the most common form of violence experienced by women. The WHO estimates that the global lifetime prevalence of IPV among ever-partnered women is 30%, i.e., one-third of ever-par [...]

• Measuring global hunger: The importance of variances - CEPR (2016) 
  by ? in Alexander J. Stein, 2016-09-04 13:42:00 UTC

  See on Scoop.it - Food & Economics Different survey methodologies are typically employed to produce estimates of global hunger… Short reference periods for each household lead to overstated variances and the confounding of chronic and transie [...]

• More on Stock-Flow Consistent models
  by Mainly Macro in Mainly Macro, 2016-09-04 08:58:00 UTC

  This is a follow-up to this post , but which is prompted by this Bank of England paper , which builds a stock-flow consistent model for the UK. If you are not familiar with the term ‘stock-flow consistent’ (SFC) then read on, because in a sense this post is all about why I think the way the authors and others define this class of models is misleading. SFC models are popular with Post-Keynesians, and the definition you find on Wikipedia is “a family of macroeconomic models based on a rigorous accounting framework, which guarantees a correct and comprehensive integration of all the flows and the [...]

2016-09-03

• Summer’s End — and a reading list to catch up on what you may have missed
  by thebusinesscycleblog in The business cycle blog, 2016-09-03 13:41:38 UTC

  Labor Day weekend brings the end of summer.  Some papers you may have missed: Nakata and Schmidt : A description of how to adjust settings from simple Taylor rules to achieve an inflation target, on average, when interest rates are affected by the effective lower bound. Ajello, Laubach, Lopez-Salido, and Nakata  find that Bayesian and robust central banks will respond more aggressively to financial instability when the probability and severity of financial crises are uncertain. David Reifschneider  suggests that large-scale asset purchases and forward guidance about the future path of the fede [...]

2016-09-01

• Measuring global hunger: the importance of variances
  by noreply@blogger.com (Paul Walker) in Anti-Dismal, 2016-09-01 19:51:00 UTC

  is the title of a new column at VoxEU.org by some guy John Gibson, from some out fit called the University of Waikato. Gibson argues that different survey methodologies are typically employed to produce estimates of global hunger. His column considers some of the methodological issues that arise. Short reference periods for each household lead to overstated variances and the confounding of chronic and transient welfare components. The column goes on to present a new approach to measuring chronic hunger which tackles this sampling problem by employing an intra-year panel. About the new approach [...]

• Measuring global hunger: the importance of variances
  by ? in Anti-Dismal, 2016-09-01 19:51:00 UTC

  is the title of a new column at VoxEU.org by some guy John Gibson, from some out fit called the University of Waikato. Gibson argues that different survey methodologies are typically employed to produce estimates of global hunger. His column considers some [...]

2016-08-31

• Jackson Hole XXXV
  by John Taylor in Economics One, 2016-08-31 05:53:26 UTC

  Everyone keeps asking about this year’s Jackson Hole monetary conference and how it compared with the first. Well, I wrote about the first  on my way to this conference, and I have to say the thirty fifth lived up to its billing as “monetary policy frameworks for the future.” One speaker after another proposed new frameworks—some weird, some not so weird—while discussants critiqued and central bankers and economists debated from the floor, and later on the hiking trails. Steve Liesman’s scary but unsurprising CNBC pre-conference survey demonstrated the timeliness of the topic: 60% of Fed watch [...]

2016-08-30

• Marketmaking Middlemen
  by Christian Zimmermann in NEP-DGE blog, 2016-08-30 15:15:33 UTC

  By Pieter Gautier, Bo Hu and Makoto Watanabe http://d.repec.org/n?u=RePEc:iza:izadps:dp10152&r=dge This paper develops a model in which market structure is determined endogenously by the choice of intermediation mode. We consider two representative business modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary holds inventories which he stocks from sellers for the purpose of reselling to buyers; the other is a market-making mode where an intermediary offers a platform for buyers and sellers to trade with each other. In our model, buye [...]

• Gender Wage Gaps and Risky vs. Secure Employment: An Experimental Analysis
  by maximorossi in NEP-LTV blog, 2016-08-30 14:57:07 UTC

  � By: Jung, Seeun (Inha University) ; Choe, Chung (Hanyang University) ; Oaxaca, Ronald L. (University of Arizona) In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not [...]

• Wages and Labor Market Slack: Making the Dual Mandate Operational
  by maximorossi in NEP-LTV blog, 2016-08-30 14:54:52 UTC

    By: David G. Blanchflower (Peterson Institute for International Economics) ; Adam S. Posen (Peterson Institute for International Economics) In this paper we examine the impact of rises in inactivity on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the imp [...]

• Pareto models, top incomes, and recent trends in UK income inequality
  by maximorossi in NEP-LTV blog, 2016-08-30 14:53:11 UTC

    By: Jenkins, Stephen P. URL: http://d.repec.org/n?u=RePEc:ese:iserwp:2016-07&r= ltv Summary Statistical agencies and other researchers typically estimate income inequality levels and trends from either household survey data or tax return data, but rarely combine the information in the two types of data source. The result is that very different impressions about how inequality is changing over time may arise. Estimates from tax return data show a substantial rise in inequality over the last two decades in both the UK and USA, whereas survey-based estimates of inequality show much [...]

• Understanding the Dynamics of Labor Income Inequality in Latin America
  by maximorossi in NEP-LTV blog, 2016-08-30 14:49:28 UTC

    By: Carlos Rodríguez-Castelán (Poverty and Equity Global Practice, World Bank) ; Luis F. López-Calva (Poverty and Equity Global Practice, World Bank) ; Nora Lustig (Department of Economics, Tulane University) ; Daniel Valderrama (Poverty and Equity Global Practice, World Bank) Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main factor behind such a decline in income inequality across the reg [...]

• China's Water Pollution Regulation
  by Matthew Kahn in Environmental and Urban Economics, 2016-08-30 03:54:00 UTC

  Working with my friends at Fudan University, we have released a new paper on the unintended consequences of China's recent water pollution regulation. �You can read the paper here.� [...]

2016-08-29

• The Great (Monetary) Unraveling
  by Marcus Nunes in Historinhas, 2016-08-29 18:06:00 UTC

  In “ Years of Fed Missteps Fueled Disillusion with the Economy and Washington ”, Jon Hilsenrath gives his contribution to the “Great Unraveling” series. He starts off writing: In the past decade Federal Reserve officials have been flummoxed by a housing bubble that cratered the financial system, a long stretch of slow growth they failed to foresee and inflation persistently undershooting their goal. In response they engineered unpopular financial rescues, launched start-and-stop bond buying and delayed planned interest-rate boosts. “There are a lot of things that we thought we knew that haven’ [...]

• Opportunities in Finance
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-08-29 12:30:40 UTC

  “We’re really only at 1% of what is possible, and probably even less than that. […] We should be building great things that don’t exist.”     Larry Page , Google I/O 2013 Keynote With the summer coming to an end, professors everywhere are greeting a new group of students. So, our thoughts turn to the opportunities and challenges that those interested in finance will face over the course of their careers. Like many important activities, finance is constantly evolving, so the “facts” that students learn in classes today will almost certainly change rapidly. With that in mind, we always strive to [...]

• The pleasure of being nasty
  by Martin Gardiner in Improbable Research, 2016-08-29 11:45:55 UTC

  Dr. Klaus Abbink (pictured) of Monash Business School has (along with colleague Prof. Dr. Abdolkarim Sadrieh ) experimentally examined the question of pleasure derived from deliberate nastiness – specifically with regard to joy-of-destruction. “ In the joy-of-destruction game that we introduce, players can burn each other’s money, but we have removed all conventional reasons to do so. No material gain is achieved, no wrongdoing is punished, no inequality is reduced. Nevertheless, we observe a substantial incidence of nasty behavior in our hidden treatment, where spiteful actions could be cover [...]

• The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future
  by ? in The Big Picture, 2016-08-29 09:00:00 UTC

  The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future Chair Janet L. Yellen At “Designing Resilient Monetary Policy Frameworks for the Future,” a symposium sponsored by the Federal Reserve Bank of Kansas City, Jack [...]

2016-08-27

• My Advice for the NY Times as it Searches for a "Climate Change Editor"
  by Matthew Kahn in Environmental and Urban Economics, 2016-08-27 15:48:00 UTC

  The NY Times is creating a " green job" �as it will hire a new climate change editor. �Given that Dora and I have written a recent paper on how the NY Times covered the urban mortality transition from 1890 to 1930, I will offer this important newspaper some unsolicited advice. 1. Report on "good news" . � Yes, I understand that newspapers love "bad news" and this was a focus of my paper with Dora. We document that there was little coverage of the good news trend that deaths from infectious water borne disease fell sharply. Only where there upticks in the death rate, did the historical NY Times [...]

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