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- 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 [...]
- 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
Iâve 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 thereâs another mechanism which can have the same effect â 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 [...]
- 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 [...]
- 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 Sampsonâs 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 [...]
- 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
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 [...]
- NPRâs 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 [...]
- When bad arguments work
by chris in Stumbling and Mumbling, 2017-05-17 12:25:39 UTC
Many of the most common arguments against Labourâs policies are laughably bad â such as the claim that people earning a little over Â£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 â 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
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 [...]
- Top taxes & growth
by chris in Stumbling and Mumbling, 2017-05-16 12:47:45 UTC
Rich people donât like paying taxes. This is pretty much the only thing weâve learned from some of the hysterical reaction in the papers to Labourâs plan to raise taxes on the rich.
Letâs remember the historical facts here. Low tax rates arenât associated with faster growth â if anything the opposite. For example, in 1988 Nigellaâs 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 [...]
- 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 .
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 [...]
- 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
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 [...]
- 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 Mayâs repetition of her failed promise to reduce migration. The Migration Observatory says the target is ânot feasible in the short term and difficult to achieve in the long-term.â And Stephen Bush says that even if it could be achieved, the effects would be âpretty terribleâ.
This is true. And itâs irrelevant. It misses the point that the Tories need an immigration target, and they need it to fail. This is because itâs a deflection strategy.
The Tories want to blame immigration for poor public services and low wages. For the most part, howeve [...]
- 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 [...]
- 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 firstname.lastname@example.org (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 [...]
- Here's What I've Been Reading
by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2017-05-05 13:37:00 UTC
Here are some of the papers that I've been reading recently. Some of them may appeal to you, too: Bampinas, G., K. Ladopoulos, &T. Panagiotidis , 2017. A note on the estimated GARCH coefficients from the S&P1500 universe. WP 17-09, Rimini Centre for Economic Analysis. Heberle, J. & C. Sattarhoff , 2017. A fast algorithm for the computation of HAC covariance matrix estimators. Econometrics , 5 (1), 9; doi: 10.3390/econometrics5010009. Kristensen, D. & B. Salanié , 2017. Higher-order properties of approximate estimators. Journal of Econometrics , online. Lei, J., M. G'Sell, A. Rinaldo, R. J. T [...]
- 100 Years of Economics
by Diane Coyle in The Enlightened Economist, 2017-05-05 07:54:45 UTC
The wonderful Beatrice Cherrier ( @Undercoverhist ) has been tweeting about the articles in the J anuary 1991 special edition of The Economic Journal, a centenary issue which published articles by eminent economists looking forward to the next century of the subject. For more on the individual articles, go to Beatrice’s tweets (or read the articles!). But she sent me to my shelves to blow the dust of my copy & I thought the contents list was very striking: The first thing that strikes me now is that there are zero women contributors. Another is the poignancy of reaching for this the day after [...]
- William Baumol: Truly Productive Entrepreneurship
by afinetheorem in A Fine Theorem, 2017-05-05 06:55:18 UTC
It seems this weblog has become an obituary page rather than a simple research digest of late. I am not even done writing on the legacy of Ken Arrow (don’t worry – it will come!) when news arrives that yet another product of the World War 2 era in New York City, an of the CCNY system, has passed away: the great scholar of entrepreneurship and one of my absolute favorite economists, William Baumol.
But we oughtn’t draw the line on his research simply at entrepreneurship, though I will walk you through his best piece in the area, a staple of my own PhD syllabus , on “creative, unproductive, and [...]
- On extra-parliamentary action
by chris in Stumbling and Mumbling, 2017-05-04 15:05:44 UTC
What can parliamentary politics achieve? Not much, says Paul Mason:
Elected politicians have little power; Wall Street and a network of hedge funds, billionaires and media owners have the real power, and the art of being in politics is to recognise this as a fact of life and achieve what you can without disrupting the system.
On the other hand, though, Danny Finkelstein attacked John McDonnell yesterday for being “contemptuous” of the idea that we can achieve socialism through parliament alone.
Here, I side mostly with Mason and McDonnell against Finkelstein. In many of the main social chang [...]
- Commodity price risk management and fiscal policy in a sovereign default model
by Christian Zimmermann in NEP-DGE blog, 2017-05-02 20:33:22 UTC
By Bernabe Lopez-Martin ; Julio Leal ; Andre Martinez Fritscher
Commodity prices are an important driver of fiscal policy and the business cycle in many developing and emerging market economies. We analyze a dynamic stochastic small-open-economy model of sovereign default, featuring endogenous fiscal policy and stochastic commodity revenues. The model accounts for a positive correlation of commodity revenues with government expenditures and a negative correlation with tax rates. We quantitatively document the extent to which the utilization of [...]