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- MMT is just plain old bad economics â Part 1
by bill in Bill Mitchell - billy blog, 2018-08-09 08:48:15 UTC
On August 6, 2018, British tax expert Richard Murphy who is becoming increasingly sympathetic to the principles of Modern Monetary Theory (MMT) published a blog post , which recorded an exchange with one James Meadway, who is the economics advisor to the Shadow Chancellor John McDonnell in Britain. The exchange took place on the social media page of a Labour Party insider who has long advocated a Land Tax, which McDonnell is on the public record as saying will “raise the funds we need” to help local government. He called it a “radical solution” ( Source ). An aside, but not an irrelevant one. [...]
- Labourâs fiscal rule is progressive
by Mainly Macro in Mainly Macro, 2018-08-09 08:43:00 UTC
I have seen a lot of things said about Labour’s fiscal credibility rule in the last few days which are simply wrong. I think the heart of the problem is that many heterodox economists do not believe in what I call the conventional or consensus assignment outwith the lower bound for interest rates. That conventional or consensus assignment  is that interest rates should be used to stabilise the economy rather than fiscal policy. The whole idea of independent central banks setting interest rates is predicated on this assignment. The assignment will not work when interest rates hit a lower bou [...]
- Jane Jacobs: Libertarian?
by Jason Barr in Building the skyline, 2018-08-08 12:43:24 UTC
Jason M. Barr August 9, 2018
[Author’s note: This is the first of at least two blog posts on Jane Jacobs and her book, The Death and Life of Great American Cities , published in 1961.]
With the resurgence of large cities like New York, San Francisco, Boston, and Chicago, it’s hard to imagine that not too long ago America’s cities were falling apart at the seams. In 1961, Jane Jacobs published her book, The Death and Life of Great American Cities , as an attempt to diagnose the problems and offer solutions.
Today, Jacobs is revered among urbanists. She was a visionary—able to see—what o [...]
- Ownership in question
by chris in Stumbling and Mumbling, 2018-08-07 12:39:06 UTC
What is the right form of ownership of a company? This is the question raised by Stan Kroenke’s proposal to buy all the remaining shares in Arsenal – a move described by the Arsenal Supporters Trust as “dreadful”.
Viewed through the lens of some conventional economics, the AST’s objections seem misplaced because there are big pitfalls with dispersed ownership which can be solved by concentrating ownership into fewer hands.
One of these is a lack of incentives. If a firm has many shareholders, it accounts for only a small fraction of the wealth of each owner. No owner therefore has a strong inc [...]
- Is there a skills gap in the South? : Mapping education and unemployment across the U.S.
by ? in FRED blog, 2018-08-06 13:00:08 UTC
View on GeoFRED ®
Much research has been published on the labor market transition from low-skill and routine jobs to high-skill and non-routine jobs at both a national and a local level. But is this job polarization occurring to the same degree across the country? A recent report co-sponsored by the St. Louis Fed looks at the issue of workforce development in light of this changing economy, especially in southern regions of the U.S. that typically rely more on a low-skilled and low-wage labor force. These GeoFRED maps show that the southern states typically have lower levels of educational att [...]
- Trump v. Fed
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-08-06 11:39:43 UTC
“ Well, it's staying at zero because she's [former Fed Chair Janet Yellen] obviously political and doing what Obama wants her to do. […] I used to hope the Fed was independent. And the Fed is obviously not independent. It’s obviously not even close to being independent." Candidate Donald Trump, CNBC , September 12, 2016. “I put a very good man in the Fed. I don’t necessarily agree with it because he’s raising interest rates [...] I don't like all this work that we are putting in to the economy and then I see rates going up…. President Donald Trump, CNBC , July 19, 2018. “China, the European Un [...]
- Simon McNamaraâs journal round-up for 6th August 2018
by sjmcnamara1 in The Academic Health Economists' Blog, 2018-08-06 11:00:29 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 .
Euthanasia, religiosity and the valuation of health states: results from an Irish EQ5D5L valuation study and their implications for anchor values . Health and Quality of Life Outcomes [ PubMed ] Published 31st [...]
- The Aggregate Consequences of Tax Evasion
by Christian Zimmermann in NEP-DGE blog, 2018-08-03 16:23:38 UTC
By Alessandro Di Nola, Georgi Kocharkov, Almuth Scholl and Anna-Mariia Tkhir
There is a sizable overall tax gap in the U.S., albeit tax non-compliance differs sharply across income types. While only small percentages of wages and salaries are underreported, the estimated misreporting rate of self-employment business income is substantial. This paper studies how tax evasion in the self-employment sector affects aggregate outcomes and welfare. We develop a dynamic general equilibrium model with incomplete markets in which heterogeneous agents [...]
- On the optimal design of a Financial Stability Fund
by Christian Zimmermann in NEP-DGE blog, 2018-08-01 15:58:27 UTC
By Arpad Abraham, Eva Carceles-Poveda, Yan Liu and Ramon Marimon
A Financial Stability Fund set by a union of sovereign countries can improve countries’ ability to share risks, borrow and lend, with respect to the standard instrument used to smooth fluctuations: sovereign debt financing. Efficiency gains arise from the ability of the fund to offer long-term contingent financial contracts, subject to limited enforcement (LE) and moral hazard (MH) constraints. In contrast, standard sovereign debt contracts are uncontingent and subject to untime [...]
- Nonlinear household earnings dynamics, self-insurance, and welfare
by Christian Zimmermann in NEP-DGE blog, 2018-07-31 13:51:19 UTC
By Mariacristina De Nardi, Giulio Fella and Gonzalo Paz-Pardo
Earnings dynamics are much richer than typically assumed in macro models with heterogeneous agents. This holds for individual-pre-tax and household-post-tax earnings and across administrative (Social Security Administration) and survey (Panel Study of Income Dynamics) data. We study the implications of two processes for household, post-tax earnings in a standard life-cycle model: a canonical earnings process (that includes a persistent and a transitory shock) and a rich earnings dyn [...]
- The Venality of Evil
by Ricardo Hausmann in Project Syndicate, 2018-07-31 11:04:39 UTC
CAMBRIDGE – On July 23, Alejandro Werner, the Director of the International Monetary Fund’s Western Hemisphere Department, announced that the Fund was expecting inflation in Venezuela to reach 1,000,000% by year’s end. In April, the IMF announced that Venezuela’s GDP was expected to be 45% below its 2013 level by the same time. These are mindboggling numbers. How and why could such a thing happen?
Science is better at answering “how” questions than “why” questions. Gravity explains how celestial bodies attract each other at a distance, but it does not tell us why. That is a question for metaph [...]
- Housing Taxation and Financial Intermediation
by Christian Zimmermann in NEP-DGE blog, 2018-07-30 15:56:45 UTC
BY Hamed Ghiaie and Jean-François Rouillard
Through the lens of a multi-agent dynamic general equilibrium model, we examine the effects of four permanent changes in housing taxes and deductions on macroeconomic aggregates and welfare. Our main result is that the presence of borrowing-constrained bankers dampen the negative consequences of housing taxation on output. The long-run tax multipliers found range from -1.02 to -0.6. The reduction in the deduction of mortgage interest payments delivers the lowest multiplier. We also implement reven [...]
- GDP: One size no longer fits all
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-07-30 12:33:44 UTC
Following Friday’s announcement that real gross domestic product (GDP) grew by 4.1 percent (at a seasonally adjusted annual rate) in the most recent quarter, the business news was filled with stories about how big the number was. Even the most casual reader of financial and economic news knows that the speed of economic growth matters. Businesses―manufacturers, service providers, and retailers, among others―need to know so that they can decide how much to invest in new production facilities, how many people to employ, and what to stock on their shelves. Fiscal policymakers need to know so that [...]
- Some General Interest Reading in Climate Change Economics
by Matthew Kahn in Environmental and Urban Economics, 2018-07-29 14:55:00 UTC
Here are some suggested readings for those who want to learn about climate change economics. I name 3 books and one free article of mine. Here is Nordhaus' book on greenhouse gas mitigation� https://www.amazon.com/dp/B00G2C1374/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 Here is my 2010 book on climate change adaptation https://www.amazon.com/gp/product/0465063837/ref=dbs_a_def_rwt_bibl_vppi_i4 Here is Wagner and Weitzman's book on climate change and risk. https://www.amazon.com/dp/B0175F6I8U/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 Here is a free paper of mine that offers some key intuit [...]
- Method of the month: Shared parameter models
by Sam Watson in The Academic Health Economists' Blog, 2018-07-26 06:00:40 UTC
Once a month we discuss a particular research method that may be of interest to people working in health economics. We’ll consider widely used key methodologies, as well as more novel approaches. Our reviews are not designed to be comprehensive but provide an introduction to the method, its underlying principles, some applied examples, and where to find out more. If you’d like to write a post for this series, get in touch . This month’s method is shared parameter models .
Missing data and data errors are an inevitability rather than a possibility. If these data were missing as a res [...]
- The âParaboxâ: Glass Skyscrapers and the City
by Jason Barr in Building the skyline, 2018-07-25 12:52:44 UTC
Jason M. Barr July 25, 2018
From my eighth-floor office in Newark, New Jersey, I have a view of the Manhattan skyline. On a clear day, I can see One World Trade Center and the Empire State Building. I can also see much of downtown Newark, which, in many respects, is a typical central business district in a mid-size city.
A few years ago, Prudential Insurance Company began building a new office building a few blocks from the Rutgers-Newark campus. Prudential has been a vital business to Newark since its founding in 1875. It remained in the city long after other companies fled in the 1960s [...]
- Migration and Business Cycle Dynamics
by Christian Zimmermann in NEP-DGE blog, 2018-07-24 12:54:28 UTC
By Christie Smith and Christoph Thoenissen
Shocks to net migration matter for the business cycles. Using an estimated dynamic stochastic general equilibrium (DSGE) model of a small open economy and a structural vector autoregression, we find that migration shocks account for a considerable proportion of the variability of per capita GDP. Migration shocks matter for the capital investment and consumption components of per capita GDP, but they are not the most important driver. Migration shocks are also important for residential investment [...]
- âEliminating Uncertainty in Market Access: The Impact of New Bridges in Rural Nicaragua,â W. Brooks & K. Donovan (2018)
by afinetheorem in A Fine Theorem, 2018-07-24 07:46:30 UTC
It’s NBER Summer Institute season, when every bar and restaurant in East Cambridge, from Helmand to Lord Hobo, is filled with our tribe. The air hums with discussions of Lagrangians and HANKs and robust estimators. And the number of great papers presented, discussed, or otherwise floating around inspires.
The paper we’re discussing today, by Wyatt Brooks at Notre Dame and Kevin Donovan at Yale SOM, uses a great combination of dynamic general equilibrium theory and a totally insane quasi-randomized experiment to help answer an old question: how beneficial is it for villages to be connected t [...]
- Bank Capital and Stress Tests: The Foundation of a Thriving Economy
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-07-23 11:26:07 UTC
We submitted this statement to the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services of the U.S. House of Representatives for its hearing on July 17, 2018. We appreciate the opportunity to submit the following statement on the occasion of the hearing entitled “Examining Capital Regimes for Financial Institutions.” We welcome the Subcommittee’s further examination of the existing regulatory approach for prudentially regulated financial institutions. We are academic experts in financial regulation with extensive knowledge of the financial industry. [...]
- Capitalism as a fetter
by chris in Stumbling and Mumbling, 2018-07-20 12:30:34 UTC
I was a little disappointed to see Tony Yates’ reaction to Aaron Bastani:
Can we ditch 6th form debates and have someone arguing for evidenced based improvements to our policy portfolio please?
My disappointment is the failure to see that there is, if you like, a third way between utopian communism on the one hand and technocratic tweaks on the other.
It begins from the idea that ten years of stagnant productivity might mean we are now at the phase of capitalism that Marx foresaw :
At a certain stage of development, the material productive forces of society come into conflict with the exist [...]
- Thesis Thursday: Thomas Hoe
by Chris Sampson in The Academic Health Economists' Blog, 2018-07-19 06:00:52 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 Thomas Hoe who has a PhD from University College London . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch .
Essays on the economics of health care provision
Richard Blundell , Orazio Attanasio
What data do you use in your analyses and what are your main analytical methods?
I use data from the English National Health Service (NHS). One of the great features [...]
- Nuances about Using the Supply and Demand Model in Urban Economics
by Matthew Kahn in Environmental and Urban Economics, 2018-07-18 16:10:00 UTC
The economist's model of supply and demand is pretty straightforward but in this brief post I would like to highlight a few twists that urban economics offers.� These twists make urban economics a really interesting (and challenging) field.� �Economists are a type of detective. We observe market prices and quantities and how they change over time.� Like a detective, we want to know why prices and quantities have changed. We have two "prime suspects" called supply and demand. In housing economics, the price is monthly rent and the quantity is the number of units of housing.� Building on the inf [...]
- On justifying policies
by chris in Stumbling and Mumbling, 2018-07-18 13:24:12 UTC
Much as I like Ash Sarker, I’m not happy with this recent thread of hers:
Lots of people have asked what I mean when I say I’m a communist. What I mean is that in the next 15 years, 1 in 5 jobs in the UK will be automated (1 in 3 in the North, and 40% in Hayes & Harlington). What does that mean for workers? it means that *either* 1 in 5 people are excluded from the means of survival, are consigned to the scrapheap and increasingly authoritarian and violent means are employed by the state to manage surplus populations. Or... we find a means to distribute the abundance generated by fixed capita [...]
- How to Protect Workers Without Trade Tariffs
by Robert J. Shiller in Project Syndicate, 2018-07-17 15:24:22 UTC
NEW HAVEN – According to a Washington Post/Schar School poll of Americans published on July 11, only 39% of respondents approved of US President Donald Trump’s imposition of tariffs on foreign countries, while 56% were opposed. But, while it’s good news that a majority of Americans oppose their president on this key issue, Trump is plunging ahead, apparently thinking the public will like the tariffs better when they are in place.
It is a puzzle why even 39% support these policies. Ever since the Great Depression and World War II, and the 1947 General Agreement on Tariffs and Trade, the United [...]
- Why Women Volunteer for Tasks That Donât Lead to Promotions
by Linda Babcock in HBR Blog Network, 2018-07-16 13:21:13 UTC
Helen King/Getty Images
Here’s a work scenario many of us know too well: You are in a meeting and your manager brings up a project that needs to be assigned. It’s not particularly challenging work, but it’s time-consuming, unlikely to drive revenue, and probably won’t be recognized or included in your performance evaluation. As your manager describes the project and asks for a volunteer, you and your colleagues become silent and uneasy, everyone hoping that someone else will raise their hand. The wait becomes increasingly uncomfortable. Then, finally, someone speaks up: “Okay, I’ll do it.” [...]
- Cyber Instability
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-07-16 12:36:25 UTC
“[W ]e should see the global payment system for what it really is: an essential global public good whose integrity is increasingly being challenged by malicious cyberattacks and fraud attempts....” Benoît Cœuré, Member of the Executive Board of the ECB, Speech , 26 June 2018 “I rob banks because that’s where the money is.” Attributed to Willie Sutton . When terrorists attacked the World Trade Center on September 11, 2001, they also attacked the U.S. financial system. In addition to destroying critical financial infrastructure, the collapse of the twin towers closed the New York Stock Exchange [...]