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2026-10-30

• On ambiguity
  by Chris Dillow in Chris Dillow, 2026-10-30 09:42:27 UTC

  The debate about AI highlights a paradox - that our attitudes to ambiguity or uncertainty* are, well, ambiguous. I’m prompted to say this by a great essay from Will Davies. He describes how, long before the use of AI, literacy became an exercise in decoding and pattern recognition, which are “precisely the techniques that machines can execute on a larger scale and at greater speed than human brains.” What this approach leaves out is the centrality of ambiguity. Great writing often has multiple, conflicting meanings leaving us uncertain about what the author meant. And a great work is not mere [...]

2026-10-28

• Why is Jakarta Pursuing a More Aggressive Electric Bus Purchase Strategy than Singapore?
  by Matthew E. Kahn in Environmental and Urban Economics, 2026-10-28 01:19:46 UTC

  I have been in Jakarta and Singapore for the last two weeks. Siqi Zheng and I are here doing research for our book manuscript that is under contract with Harvard University Press. Our book is a type of sequel to Ed Glaeser’s “Triumph of the City”. Our book focuses on the urban economics of Asia’s developed and developing cities. As I walk around, I am noting puzzles. One puzzle is that relatively poor and less educated Jakarta is electrifying its bus fleet at a faster rate than rich and educated Singapore. Here is a photo of a natural gas bus in Singapore. Here is a photo of an EV bus in J [...]

2026-10-26

• The Budget should not price young people out of work
  by Alexis Papazoglou in British Politics and Policy at LSE, 2026-10-26 10:53:13 UTC

  As part of the Budget the Chancellor usually announces any changes to the minimum wage. As AI is eating into entry level jobs, Grace Lordan makes the case for why the Government should refrain from further increasing the youth minimum wage relative to the adult rate. Enjoying this post? Then sign up to our  newsletter  and receive a weekly roundup of all our articles. John Healey is about to deliver his first Budget , and the first fiscal event of Andy Burnham’s premiership. The figures from the Office for National Statistics , put vacancies at 691,000, below pre-pandemic levels [...]

• Quiet Singapore
  by Matthew E. Kahn in Environmental and Urban Economics, 2026-10-26 06:53:36 UTC

  Last night we flew from Jakarta to Singapore. It is interesting to contrast these two cities. While the flight time was only 75 minutes and the weather is basically the same, there are clear differences between “the feel” of the two cities. I am struck by how quiet and clean is Singapore relative to Jakarta. Jakarta’s non-stop motorbikes makes you feel like you are living in a Jason Bourne Action Movie. Every car on the road faces a non-stop stream of motorbikes zooming past you on both sides of the car. This processes is both orderly and chaotic. Lower income people in Jakarta have to be a [...]

• Gary Becker and the Economics of Brushing Teeth
  by Carlos Chavez in Carlos Chavez, 2026-10-26 02:42:59 UTC

  In 1974 the Journal of Political Economy published a five-page paper with an answer. The author was Alan Blinder, three years out of his PhD and teaching at Princeton. “The Economics of Brushing Teeth” starts from the assumption it attributes to all of human capital theory, that people act to maximize their income. It follows that each person does the amount of brushing that maximizes income. Full professors earn more per hour, so brushing costs them more and they do less of it. Assistant professors are waiting on promotion and cannot afford bad breath, so they do more. The evidence is a surve [...]

2026-10-25

• Why Tonga’s Chinese debt won’t be forgiven, and who pays instead
  by Jack Salmon in Development Policy Blog, 2026-10-25 19:00:38 UTC

  The Kingdom of Tonga ( Tonga Tourism ) Over the last decade, Chinese lending behaviour in the Pacific has shifted considerably. Increasingly, its financial assistance to the region is in the form of grants rather than the loans it had previously provided, with new lending now being concentrated in Melanesian countries. However, for countries such as Tonga, loans taken out in the late 2000s are now entering the steepest phase of their repayment cycle, putting fiscal pressure on recipient governments. While China has cancelled a significant amount of developing-country debt, this has almost enti [...]

2026-10-24

• An Economist’s Perspective on the Urban Water Pollution Challenge in Jakarta, Indonesia
  by Matthew E. Kahn in Environmental and Urban Economics, 2026-10-24 23:24:29 UTC

  Later today, I fly from Jakarta to Singapore. Yesterday, we rode the subway system. We were told that the Jakarta trains are old Japanese Subway trains. They have been repainted and they were nice and clean and the system was more comfortable and cleaner than the New York City Subway system. Outside of one of the Jakarta stations, I took this photo. You can see fancy buildings next to this canal. You can also see that there are no biking or jogging trails near this canal. I fed this photo to Chat GPT and the AI said the following. So, this a classic urban Tragedy of the Commons issue. U.S [...]

2026-10-23

• Did Tesla IP Fuel the Rise of China’s BYD?
  by Matthew E. Kahn in Environmental and Urban Economics, 2026-10-23 22:53:27 UTC

  Last night in Jakarta, I took my first ride in a BYD vehicle. As the owner of a Tesla Y, I noticed some similarities between my car and this car. Gemini reports the following facts: “In 2025, the geographic divergence between the world’s two clean-tech titans underscored how sharply industrial policy and trade barriers partition the global electric vehicle market. In the United States, Tesla delivered approximately 589,000 vehicles (representing over 35% of its roughly 1.64 million global deliveries), while BYD sold zero passenger cars, kept entirely out of the consumer market by 100% tariffs [...]

2026-10-20

• On legacy ideas
  by Chris Dillow in Chris Dillow, 2026-10-20 08:13:26 UTC

  A lot has been written about how the right has been radicalised in recent years. Among civilised people, however, there is the opposite problem - that their beliefs have not sufficiently changed with the times. Napoleon never actually said “to understand the man you have to know what was happening in the world when he was twenty”, but if he had he would have been right. Our formative years are, well, formative. People who grew up in hard times (pdf) are more risk-averse in later life and even more introverted and emotionally unstable. It’s plausible therefore that ideas we acquire in our forma [...]

2026-10-16

• No title
  by noreply@blogger.com (Urbanomics) in Urbanomics, 2026-10-16 03:26:37 UTC

  Much before the AI revolution threatened to disrupt India’s IT outsourcing firms, the proliferation of Global Capability Centres (GCCs) of global multinational corporations were already impacting them. For at first glance, GCCs involve in-sourcing and off-shoring of those activities previously performed by these IT firms.  This post will examine three questions. What is likely to be the impact of GCCs on the IT firms? What is the likely net impact of GCCs on the Indian economy? How would the GCCs be viewed politically in the era of protectionism and reshoring? A useful framework to think about [...]

2026-10-13

• The Economics Nobel
  by Arnold Kling in In My Tribe, 2026-10-13 11:04:35 UTC

  I’ve never seen Michael Woodford in person. His style of macroeconomics wins praise from the profession for being “microfounded,” which is high praise indeed. Personally, I think of that style as mathematical fellatio. Either way, Woodford is good at it, and he’s earned his Nobel. Robert Hall was on the faculty at MIT when I was in grad school there. My sense is that he loved the MIT econ department more than the department loved him back. I’ve always thought that he deserved higher status, and I’m happy for him. One MIT tradition was a graduate student skit party, to which professors wer [...]

2026-10-12

• The Wrong Way
  by Chris Dillow in Chris Dillow, 2026-10-12 09:48:14 UTC

  Kemi Badenoch has helped us identify some of the ways in which politicians have contributed to our economic malaise. Unfortunately for her, she has done so inadvertently. That’s my reading of her attempt to offer a coherent vision of conservatism in her paper, The Right Way . She writes: [Governments] have taxed, regulated and directed the economy without taking proper account of the unintended consequences of their decisions: the jobs that are never offered or the investment that goes abroad. Businesses decide not to expand, ideas never make it to market, and the result is an economy carryin [...]

2026-10-07

• Who needs thought?
  by Chris Dillow in Chris Dillow, 2026-10-07 08:59:09 UTC

  Will Jennings recently blooted : I’m increasingly disillusioned with the (policy) ideas ecosystem in the UK - it seems like underlying (social) scientific research is less and less influential and there’s increasing dominance of PR and pseudo-research. He’s bang right. But the problem is much worse than this. Politics actively rejects serious thinking. We see this not just in the main political parties being happy to see even top universities to decline but also in the main policies of recent years. Fiscal austerity, Brexit or tougher immigration controls all defied the intellectual consensus. [...]

2026-10-04

• What is an electrostate?
  by Jan Rosenow in Bright Spots, 2026-10-04 08:20:43 UTC

  Bahrain runs more of its economy on electricity than the United States does. China still made almost sixty per cent of its electricity from fossil fuels in 2025. Norway’s wealth rests on exporting oil and gas. Pakistan electrified largely by accident. So which of them is an electrostate? From petrostate to electrostate To understand what an electrostate is it helps to go back to where the word originally came from. Electrostate comes from petrostate. A petrostate is a country whose public finances, politics and economy depend significantly on extracting oil and gas and selling them abroad. Pol [...]

2026-09-28

• Stop spending money on smaller classes
  by Noah Smith in Noahpinion, 2026-09-28 22:27:25 UTC

  I’m a little late to this story, but New York Times columnist Nikole Hannah-Jones wrote a very complex and interesting post about sending her daughter to a crappy New York City public school. She was motivated by egalitarian impulses, but it turned out to be bad for her daughter, and later she felt guilty about making her child pay the cost of her own social experiment. Now, I went to public schools myself, and I’m generally biased toward public schools. Not everyone has a negative experience like Hannah-Jones; Matt Yglesias sent his kid to a low-income public school in D.C. and had a good exp [...]

2026-09-24

• Estimating the risk of recession in the US
  by ? in FRED blog, 2026-09-24 13:00:00 UTC

  The takeaway A new dataset in FRED provides the monthly probability the US economy is in recession. The latest data, for August 2026, show that probability was 0.08%. The data FRED has added probability estimates of the US economy being in recession. The dataset comes from RecessionRisk.com and was developed by economists Francesco Furno and Domenico Giannone. Our FRED graph above shows these monthly median probabilities since January 1980. Probability values range from 0% to 100%, where values closer to 100 indicate higher probability of recession. Because the calculations incorporate timely [...]

2026-09-23

• AI means fewer graduate jobs – how to make sure they still exist in the future
  by Alexis Papazoglou in British Politics and Policy at LSE, 2026-09-23 10:17:24 UTC

  Graduate recruitment at Britain’s leading employers has fallen by almost a quarter in three years. As AI is making graduate trainee jobs an endangered species, Grace Lordan argues that a youth employment strategy has to be built around the bottom rung of the ladder by rewarding firms for sustaining graduate hiring. Enjoying this post? Then sign up to our  newsletter  and receive a weekly roundup of all our articles. The numbers are no longer in dispute. High Fliers Research reports that graduate recruitment at the UK’s hundred leading employers has fallen by almost a quarter sinc [...]

2026-09-17

• Using options prices to measure financial risk : The Kansas City Fed Policy Rate Skew
  by ? in FRED blog, 2026-09-17 13:00:00 UTC

  The takeaway The Kansas City Fed uses options prices to measure how financial markets perceive the balance of risks for future short-term interest rates: a.k.a., the KC Policy Rate Skew. The data Options are publicly traded financial instruments that reflect expectations about future economic conditions. The Kansas City Fed uses options prices to create their daily index of how financial markets perceive the balance of risks, or “skew,” to short-term U.S. interest rates one year in the future. Our FRED graph above shows the value of this “KC PRS” index over the past five years, although daily [...]

2026-09-10

• Economics Has No Lean
  by Carlos Chavez in Carlos Chavez, 2026-09-10 20:13:47 UTC

  On Tuesday I read Tristan Buckmaster’s statement before I read the OpenAI announcement it was responding to. It is four pages long and I read it twice. The second time I was no longer reading it as news about mathematics. I was reading it as a preview of something that will happen to my own field, and the question was only which part. Buckmaster is a mathematician at NYU. For close to a year he and Levent Alpöge, who works at Anthropic, had been using AI models to chase proofs that solutions to the Euler and Navier-Stokes equations can blow up in finite time. The Navier-Stokes version is one o [...]

2026-09-04

• Regulating the regulators: Assessing regulation-making frameworks in India's financial sector
  by Anurodh in Ajay Shah's blog, 2026-09-04 11:48:32 UTC

  by Natasha Aggarwal and Renuka Sane . Indian regulators, like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), routinely wield quasi-legislative powers. For example, Section 30 of the Securities and Exchange Board of India Act, 1992 empowers the SEBI Board to make regulations. According to its 2024-25 annual report, SEBI issued 104 consultation papers, 61 amendments to its regulations, one new set of regulations, 14 master circulars, and 154 "policy measures." Such regulatory interventions can significantly influence markets and affect economic outcomes. [...]

2026-09-02

• The curious case of definition and adjudication of front running in India
  by Anurodh in Ajay Shah's blog, 2026-09-02 08:09:11 UTC

  by Natasha Aggarwal , Amol Kulkarni and Bhavin Patel . One of the core legislative mandates of the Securities and Exchange Board of India (SEBI) is to prohibit fraudulent and unfair trade practices (FUTP) relating to securities markets. A practice commonly classified as FUTP is front running. It is generally understood as a set of two trades or positions: first, a trade or position taken in advance of a large order, and second, a squaring off of the initial trade or position after the large order, to benefit from the price movement it causes. SEBI issued the SEBI (Prohibition of Fraudulent a [...]

2026-08-27

• Has UK food inflation been under the weather?
  by BankUnderground in Bank Underground, 2026-08-27 13:00:00 UTC

  India Rimmer , Hannah Copeland and Boromeus Wanengkirtyo Global extreme weather events may feel far away, but they leave behind a trail of higher prices in our shopping baskets. As outlined in past Monetary Policy Reports, droughts, flooding and heatwaves occurring overseas often impact UK food inflation, which averaged 4.2% in 2025. But how much of the rise in food inflation last year can we blame on the weather? By constructing a new proxy for global weather shocks, we find that they increase UK food prices with a peak impact after one year. In the latest period, our model suggests t [...]

• Should Central Banks Be Independent?
  by Josh Hendrickson in Economic Forces, 2026-08-27 10:02:53 UTC

  One of the strengths of price theory is that it teaches you to think about problems in terms of constrained maximization, no matter the context. Yes, price theory often involves markets, but it can also be used to think about institutions, or the “rule of the game” in society. Price theory is fundamentally about costs and choices. Non-market activity isn’t immune from that. Neither is the design of institutions. With that in mind, I would like to address a topic that has received a lot of attention recently. That topic is central bank independence. We try not to write much about politics here, [...]

2026-08-24

• Forget the Population Bomb. The New Fear Is a Population Implosion.
  by Ronald Bailey in Hit & Run blog, 2026-08-24 16:05:02 UTC

  Nearly six decades ago the world was allegedly in the midst of an apocalyptic "population explosion." Today the fear among some economists is the opposite: that the world in this century is on track to experience a steep global population implosion. When the Stanford biologist Paul Ehrlich wrote The Population Bomb in 1968, world population stood at just over 3.5 billion and the global total fertility rate was just under 5 children per woman . As a dire consequence of these trends, he declared, "The battle to feed all of humanity is over. [...]

2026-08-20

• Is AI reducing employment for software coders?
  by ? in FRED blog, 2026-08-20 13:00:00 UTC

  The takeaway Employment of software coders has decelerated sharply since 2022. Recent research suggests this job-specific shock isn’t caused by a slowing industry but likely from the emergence of AI tools. What employment data show Our FRED graph above shows annual employment data for 1991-2025 reported by the US Bureau of Labor Statistics: The solid blue line shows the year-over-year percent change in total employment. The dashed green line shows the same measure but specifically for computer systems design and related services. Annual employment growth in the computer systems design industr [...]

• Foreign equity investment in India: A stall, not a reversal
  by Anurodh in Ajay Shah's blog, 2026-08-20 08:04:21 UTC

  by Sanjuktha Athreya. In 2026, many have expressed concern about the flight of foreign portfolio investors from India. Examples of this alarm are found here , here , here , here , here and here . Capital flow reversals are an important concern in the literature on international capital markets. However, to understand whether recent outflows represent a meaningful change in foreign investor participation, we need to look at both flows and stocks. The flow is the net investment by foreign investors in a given time period, and the stock is the size of their position in India on a certain dat [...]