Wednesday, February 21, 2018

JANUARY 31 2017

Alberto F. Alesina, Carlo Favero, Francesco Giavazzi. NBER: What do we know about the effects of Austerity? This paper summarizes the results of a large recent literature on multi year fiscal plans for deficit reduction (austerity). The key results are that deficit reduction policies based upon spending cuts are much less costly in terms of short run output losses than tax based adjustments. On average fiscal adjustment based upon spending cuts have very small output costs and in some cases they are expansionary. We then discuss which possible models can explain these findings and discuss how the evidence can disentangle them.

Gene Amromin , Mariacristina De Nardi , Karl Schulze, Chicago FED: Inequality and Recessions. The increase in inequality over the past several decades has received widespread attention from both academics and the public at large. While much of this discourse centers on either the causes or normative implications of increasing inequality, it is important to ask whether the widening gap between the rich and poor has any direct effects on macroeconomic aggregates and, in particular, on the severity of the Great Recession, when output and consumption dropped precipitously and were slow to recover. Is it possible that the changing distribution of wealth intensified and lengthened the effects of this downturn? More broadly, should economists and policymakers concerned with macroeconomics be worried about wealth inequality?
Jutta Bolt, Robert Inklaar, Herman de Jong, Jan Luiten van Zanden, VOX: Rebasing 'Maddison': The shape of long-run economic development. Research on long-run economic development has relied heavily on the database compiled by Angus Maddison. This column presents a new version of the Maddison Project Database based on historical growth data, but also incorporating historical cross-country income comparisons. The revisions shed new light on patterns of long-term development and cross-country income convergence.
Edward N. Wolff, NBER: Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered? Asset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2016. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010. The inequality of net worth, after almost two decades of little movement, went up sharply from 2007 to 2010, and relative indebtedness for the middle class expanded. The sharp fall in median net worth and the rise in overall wealth inequality over these years are largely traceable to the high leverage of middle class families and the high share of homes in their portfolio. Mean and median wealth rebounded from 2010 to 2016, by 17 and 28 percent, respectively. While mean wealth surpassed its previous peak in 2007, median wealth was still down by 34 percent. More than 100 percent of the recovery in both was due to a high return on wealth but this factor was offset by negative savings. Relative indebtedness continued to fall for the middle class from 2010 to 2016, and wealth inequality increased somewhat. The racial and ethnic disparity in wealth holdings widened considerably between 2007 and 2016, and the wealth of households under age 45 declined in relative terms.
Going blind to see more clearly: unconscious bias in Australian, Behavioural Economics Team of The Australian Government: We found that the public servants engaged in positive (not negative) discrimination towards female and minority candidates: Participants were 2.9% more likely to shortlist female candidates and 3.2% less likely to shortlist male applicants when they were identifiable, compared with when they were de-identified. Minority males were 5.8% more likely to be shortlisted and minority females were 8.6%  more likely to be  shortlisted when identifiable compared to when applications were de-identified. The positive discrimination was strongest for Indigenous female candidates who were 22.2% more likely to be shortlisted when identifiable compared to when the applications were de-identified. Interestingly, male reviewers displayed markedly more positive discrimination in favour of minority candidates than did female counterparts, and reviewers aged 40+ displayed much stronger affirmative action in favour for both women and minorities than did younger ones.
Eduardo Porter, NYT: Is the Populist Revolt Over? Not if Robots Have Their Way. As the world’s oligarchy gathered last week in Davos, Switzerland, to worry about the troubles of the middle class, the real question on every plutocrat’s mind was whether the populist upheaval that delivered the presidency to the intemperate mogul might mercifully be over. If it was globalization — or, more precisely, the shock of imports from China — that moved voters to put Mr. Trump in the White House, could politicians get back to supporting the market-oriented order once the China shock played out? Economists studying the changes in the nature of work that produced such an angry political response suggest, however, that another wave of disruption is about to wash across the world economy, knocking out entire new classes of jobs: artificial intelligence. This could provide decades’ worth of fuel to the revolt against the global elites and their notions of market democracy.
Karen Weintraub, NYT: Elephants Are Very Scared of Bees. That Could Save Their Lives. Elephants are afraid of bees. Let that sink in for a second. The largest animal on land is so terrified of a tiny insect that it will flap its ears, stir up dust and make noises when it hears the buzz of a beehive. In recent years, researchers and advocates have persuaded farmers to use the elephant’s fear of bees as a potential fence line to protect crops. By stringing beehives every 20 meters — alternating with fake hives — a team of researchers in Africa has shown that they can keep 80 percent of elephants away from farmland.
Catherine Chapman, Dailymail: The self-parking slippers by Nissan: 'Smart' Japanese hotel offers guests footwear that moves back into position when not being worn using car sensor technology. Nissan has created smart slippers to drive onto the feet of hotel guests in Japan. The product is using the automaker's ProPilot Park technology to move around. The self-parking slippers are meant to raise awareness of autonomous vehicles.

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