N. Gregory Mankiw, NYT: Bernanke and the Beast. Investors snapping up 30-year Treasury bonds paying less than 5 percent are betting that the Fed will keep these inflation risks in check. They are probably right. But because current monetary and fiscal policy is so far outside the bounds of historical norms, it’s hard for anyone to be sure. A decade from now, we may look back at today’s bond market as the irrational exuberance of this era.
Zheng Liu, Glenn Rudebusch, San Francisco Fed: Inflation: Mind the Gap. Monetary policymakers have long debated the usefulness of the Phillips curve, which relates inflation to measures of economic slack. Since the recession started in late 2007, evidence suggests that, consistent with the Phillips curve, a high level of unemployment has contributed to a decline in inflation.
Mathias Dolls, Clemens Fuest, Andreas Peichl, CESIFO: Automatic Stabilizers and Economic Crisis: US vs. Europe. We find that automatic stabilizers absorb 38 per cent of a proportional income shock in the EU, compared to 32 per cent in the US. In the case of an unemployment shock 48 per cent of the shock are absorbed in the EU, compared to 34 per cent in the US. This cushioning of disposable income leads to a demand stabilization of 26 to 35 per cent in the EU and 19 per cent in the US. There is large heterogeneity within the EU. We also investigate whether countries with weak automatic stabilizers have enacted larger fiscal stimulus programs. We find no evidence supporting this view. However, we find that active fiscal policy is lower in more open economies.
Martin Feldstein, WSJ: Missing the Target. Unlike previous recessions, the current downturn was not caused by Federal Reserve tightening and therefore couldn't be reversed by lowering interest rates. President Obama was correct to conclude that boosting economic activity required a fiscal stimulus. Unfortunately, despite the talented team of economists in the administration, most of the president's economic policies have done little to help the problem. And indeed, many of these policies have created even more problems than they solved.
Susan Yang, CBO: Policies for Increasing Economic Growth and Employment in 2010 and 2011. Further policy action, if properly designed, would promote economic growth and increase employment in 2010 and 2011. The policies analyzed vary in cost-effectiveness as measured by the cumulative effects on GDP and employment per dollar of budgetary cost and in the time patterns of those effects. Policies that could be implemented relatively quickly or targeted toward people whose consumption tends to be restricted by their income, such as reducing payroll taxes for firms that increase payroll or increasing aid to the unemployed, would have the largest effects on output and employment per dollar of budgetary cost in 2010 and 2011. By contrast, policies that would temporarily increase the aftertax income of people with relatively high income, such as an across-the-board reduction in income taxes or an increase in the exemption amount for the AMT, would have smaller effects because such tax cuts would probably not affect the recipients’ spending significantly.
Gerard Lyons, McKinsey: The ticking time bomb and the dollar. There is a ticking time bomb under the dollar. It could explode at any time. Although it is not in anyone’s interest for this to happen, that may not be enough to prevent it. One lesson of recent years is that just because something does not happen immediately does not mean it will not happen at all. The message is that economic fundamentals matter and if something appears unsustainable or out of line with reality, then it probably is.
Nouriel Roubini, Project Syndicate: The Risky Rich. Rating-agency downgrades, a widening of sovereign spreads, and failed public-debt auctions in countries like the United Kingdom, Greece, Ireland, and Spain provided a stark reminder last year that unless advanced economies begin to put their fiscal houses in order, investors, bond-market vigilantes, and rating agencies may turn from friend to foe. If the US does use the inflation tax as a way to reduce the real value of its public debt, the risk of a disorderly collapse of the US dollar would rise significantly. America’s foreign creditors would not accept a sharp reduction in their dollar assets’ real value that debasement of the dollar via inflation and devaluation would entail. A disorderly rush to the exit could lead to a dollar collapse, a spike in long-term interest rates, and a severe double dip recession.
John Cassidy, New Yorker: Interview with James Heckman. The Chicago School incorporates many different ideas. I think the part of the Chicago School that has been justified is the claim that people react to incentives, and that incentives are important. Nothing in what has happened invalidates that idea. People did react to incentives—clearly they did. It turned out that the incentives they were reacting to weren’t socially beneficial, but they definitely reacted to them. The other part of the Chicago School, which Stiglitz and Krugman have criticized, is the efficient-market hypothesis. That is something completely different.
John Micklewright, Gyula Nagy, IoE: The effect of monitoring unemployment insurance recipients on unemployment duration: evidence from a field experiment. Programme administration is a relatively neglected issue in the analysis of disincentive effects of unemployment benefit systems. We investigate this issue with a field experiment in Hungary involving random assignment of benefit claimants to treatment and control groups. Treatment increases the monitoring of claims - claimants make more frequent visits to the employment office and face questioning about their search behaviour. Treatment has quite a large effect on durations on benefit of women aged 30 and over, while we find no effect for younger women or men.
Jason Lindo,University of Oregon: Parental Job Loss and Infant Health. I use detailed work and fertility histories from the Panel Study of Income Dynamics to estimate the impact of parents' job displacements on children's birth weights. These data allow for an identification strategy that essentially compares the outcomes of children born after a displacement to the outcomes of their siblings born before using mother fixed effects. I find that husbands' job losses have significant negative effects on infant health. They reduce birth weights by approximately four percent with the impact concentrated on the lower half of the birth weight distribution.
Theodore H. Moran, Peterson Institute: Is China Using its Checkbook to Lock up Natural Resources Around the World? Backed by the Chinese government, Chinese companies have been acquiring equity stakes in natural resource companies, extending loans to mining and petroleum investors, and writing long-term procurement contracts for oil and minerals. These activities have aroused concern that China might be locking up natural resource supplies, gaining preferential access to available output, and extending control over the world’s extractive industries. My scorecard of China’s procurement arrangements shows a few instances (3 of the largest 16) in which Chinese natural resource companies take an equity stake to create a “special relationship” with a major producer. But the predominant pattern (13 of the largest 16) is to take equity stakes and/or write long-term procurement contracts with the competitive fringe.
Matthew E. Kahn, Siqi Zheng, VoxEU: The greenness of China: Household carbon dioxide emissions and urban development. China’s economic growth has profound environmental implications. This column estimates the household carbon emissions of China’s major cities. Even in China’s most polluting city, per household emissions are just one-fifth of those in San Diego, the greenest city in the US.
Justin Fox, Time: Jared Diamond's Haiti story. Haiti's despicable "Papa Doc" Duvalier was succeeded by his only slightly less despicable son. The result: The Dominican Republic, while still poor, is much richer than Haiti—and it still has trees. This is the tale Diamond tells, and he recounts it in compelling detail. It's a convincing case of what economists call "path dependence." There were several forks in the developmental road over the centuries, and the poor Haitians kept choosing or getting shoved down the wrong path.
Anna Dreber, Emma von Essen, Eva Ranehill, SIFR: Outrunning the Gender Gap – Boys and Girls Compete Equally. Recent studies find that women are less competitive than men. This gender difference in competitiveness has been suggested as a possible explanation for why men occupy the majority of top positions in many sectors. In this study we explore competitiveness in children. A related field experiment on Israeli children shows that only boys react to competition by running faster when competing in a race and that only girls react to the gender of their opponent. Here we test if these results carry over to 7-10 year old Swedish children. Sweden is typically ranked among the most gender equal countries in the world, thus culture could explain a potential difference in our results to those on Israeli children. We also introduce two more “female” sports: skipping rope and dancing, in order to study if reaction to competition is task dependent. Our results extend previous findings in two ways. First, we find no gender difference in reaction to competition in running. In our study, both boys and girls compete. We also find no gender differences in reaction to competition in skipping rope and dancing. Second, we find no clear effect on competitiveness of the opponent’s gender, neither on girls or boys, in any of the tasks. Our findings suggest that the existence of a gender gap in competitiveness among children may be partly cultural, and that the gap found in previous studies on adults may be caused by factors that emerge later in life. It remains to be explored whether these later factors are biological or cultural.,
Christopher S. Carpenter, Mark F. Stehr, NBER: Intended and Unintended Effects of Youth Bicycle Helmet Laws. Over 20 states have adopted laws requiring youths to wear a helmet when riding a bicycle. We confirm previous research indicating that these laws reduced fatalities and increased helmet use, but we also show that the laws significantly reduced youth bicycling. We find this result in standard two-way fixed effects models of parental reports of youth bicycling, as well as in triple difference models of self-reported bicycling among high school youths that explicitly account for bicycling by youths just above the helmet law age threshold.
No comments:
Post a Comment