Thursday , September 19 2019
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Links (7/9/19)

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Thumbs Down to Facebook’s Cryptocurrency - Joseph E. StiglitzOnly a fool would trust Facebook with his or her financial wellbeing. But maybe that’s the point: with so much personal data on some 2.4 billion monthly active users, who knows better than Facebook just how many suckers are born every minute? Trump Is Losing His Trade Wars - Paul KrugmanDonald Trump’s declaration that “trade wars are good, and easy to win” will surely go down in the history books as a classic utterance — but not in a good way. Instead it will go alongside Dick Cheney’s prediction, on the eve of the Iraq war, that “we will, in fact, be welcomed as liberators.” That is, it will be used to illustrate the arrogance and ignorance that so often drives crucial policy decisions. For the reality is that Trump isn’t

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  • Thumbs Down to Facebook’s Cryptocurrency - Joseph E. Stiglitz
    Only a fool would trust Facebook with his or her financial wellbeing. But maybe that’s the point: with so much personal data on some 2.4 billion monthly active users, who knows better than Facebook just how many suckers are born every minute?
  • Trump Is Losing His Trade Wars - Paul Krugman
    Donald Trump’s declaration that “trade wars are good, and easy to win” will surely go down in the history books as a classic utterance — but not in a good way. Instead it will go alongside Dick Cheney’s prediction, on the eve of the Iraq war, that “we will, in fact, be welcomed as liberators.” That is, it will be used to illustrate the arrogance and ignorance that so often drives crucial policy decisions. For the reality is that Trump isn’t winning his trade wars.
  • Mysteries of Monetary Policy - Robert J. Barro
    Since the federal funds rate peaked at 22% in the early 1980s, inflation in the United States has remained low and stable, leading many to believe that the mere threat of renewed interest-rate hikes has kept it in check. But no one really knows why inflation has been subdued for so long.
  • The gender promotion gap: Evidence from the ECB - VoxEU
    The underrepresentation of women in economics is perhaps nowhere as visible as in central banks. This column uses anonymised personnel data to analyse the career progression of men and women at the ECB. A wage gap in favour of men emerges within a few years of hiring, with one important driver being the presence of children. Women were also less likely to be promoted to a higher salary band up until 2010, when the ECB issued a statement supporting diversity and took measures to support gender balance. Following this change, the promotion gap disappears.
  • Age of the expert as policymaker is coming to an end - Financial Times
    One of the phenomena of the latter period of western capitalism has been the expert as policymaker: the academic economist as a central bank governor or the scientist as a minister. It did not use to be this way. Now that period is ending, with some profound consequences. ...
  • Economic policies can reduce deaths of despair - VoxEU
    Policymakers and researchers have sought to understand the causes of and effective policy responses to recent increases in mortality due to alcohol, drugs, and suicide in the US. This column examines the role of the minimum wage and the earned income tax credit – the two most important policy levers for raising incomes for low-wage workers – as tools to combat these trends. It finds that both policies significantly reduce non-drug suicides among adults without a college degree, and that the effect is stronger among women. The findings point to the role of economic policies as important determinants of health.
  • Intergenerational mobility in Africa - VoxEU
    Over the last few decades, education in Africa has been rising and living standards have been improving. Yet certain countries and regions face rampant conflict and persistent poverty. This column we uses individual-level data covering more than 20 million people spanning 26 African countries since the late 1960s to study intergenerational mobility in education across the continent. It uncovers large variation in upward and downward mobility both across and within countries.
  • Redefining money in a digital age ~ Antonio Fatas
    Economic textbooks use a definition of money as an asset that can be used as a means of payment, that constitutes a unit of account and serves as a store of value. This definition is being used often in debates about new forms of digital money and payments (including cryptocurrencies). I would like to argue that this characterization of money is a) not a definition b) not a very useful one to compare alternative forms of payment c) fails to understand how digital payments and new technologies have changed the nature of money Let's deconstruct the "definition" to see what is wrong with it. ...
  • US Multinationals Expand their Foreign-based Research and Development - Tim Taylor
    "For decades, US multinational corporations (MNCs) conducted nearly all their research and development (R&D) within the United States. Their focus on R&D at home helped establish the United States as the unrivaled leader of innovation and technology advances in the world economy. Since the late 1990s, however, the amount of R&D conducted overseas by US MNCs has grown nearly fourfold and its geographic distribution has expanded from a few advanced industrial countries (such as Germany, Japan, and Canada) to many parts of the developing world ..."
  • The long-run effects of uncertainty shocks – Bank Underground
    Is uncertainty a significant drag for investment and consumption? Since the global financial crisis heightened uncertainty has been considered to be one of the main factors behind the depth of the great recession and the subdued recovery. Understanding the channels through which uncertainty affects economic activity is therefore of primary interest for policymakers in order to design appropriate policy responses. In our recent working paper, we show that shocks increasing macroeconomic uncertainty can lead to very persistent negative effects on economic activity that last well beyond the business cycle frequency. In a theoretical framework, we argue that the presence of long-term risks about the economic outlook can exacerbate the households’ precautionary savings motive and the overall effects of uncertainty shock.
  • The decline of US business dynamism - VoxEU
    The US economy has witnessed a number of striking trends that indicate rising market concentration and a slowdown in business dynamism in recent decades. This column uses a micro-founded model of endogenous firm dynamics to show that a decline in the intensity of knowledge diffusion from frontier firms to laggard ones plays a key role in the observed shifts. It presents new evidence on higher concentration of patenting in the hands of firms with the largest stock that corroborates declining knowledge diffusion in the economy.
  • The Trump Tax Reform, As Seen in the U.S. Balance of Payments Data - Brad Setser
    The international side of the Tax Cuts and Jobs Act was a real reform, not just a straight-forward cut in the rate. It ended deferral, and shifted to a (mostly) territorial tax system. Yet, judging from the balance of payments data, it didn't get rid of the incentive for firms to offshore profits to low-tax jurisdictions. The global minimum is too low—and there are too many incentives to shift tangible assets abroad.
  • Digital currency areas - VoxEU
    Thanks to digitalisation, we now can hold money on our mobile phones and transfer wealth in real time to almost every corner of the world. Currencies can be swapped within milliseconds on smart phones and people can hold many currencies simultaneously in digital wallets. This column considers how digitalisation will affect the international monetary system, arguing that a new kind of currency area will emerge, held together by digital interconnectedness. These digital currency areas will cut across borders, increase currency competition and, in the process, may redefine the international monetary system.
  • Lots of folks over 65 are spending a lot on housing - Richard Green
    The Census has a nice tool that allows one to map American Community Survey data by counties (at least counties with sufficient population to develop estimates based on samples). I drew two today. This first one is the share of those renters over the age of 65 who pay more than 30 percent of their income on rent.
  • Can 'Forward Guidance' Work for Fiscal Policy? - NBER Digest
    Announcing sales tax increases before they take effect substantially spurs auto purchases in the month before the tax increase kicks in.
  • Why Some Regions Rebounded Faster after the Great Recession - NBER Digest
    Frictions in financial intermediation in some regions may have slowed recovery by limiting consumer access to lower interest rates and refinancing opportunities.
  • Analyzing Efforts to Rein in Misinformation on Social Media - NBER Digest
    Interactions with fake news sites by users of both Facebook and Twitter rose steadily in 2015 and 2016, but have fallen more than 60% since then on Facebook.
  • Why Does the Debt-to-GDP Ratio Constrain Crisis Response? - NBER Digest
    When a financial crisis hits, countries with a high debt-to-GDP ratio are less likely to pursue expansionary policy. Debt-related limits on market access are only part of the story.
  • Labour market shocks and demand for trade protection - VoxEU
    Economists have traditionally emphasised the benefits of openness to trade, but populists resist it. How generalised is the demand for trade protection? And how does it compare with other disruptions in the labour market? This column suggests that people often react by demanding trade protection when faced with shocks that generate unemployment, with the largest effects observed when it is caused by imports arriving from a poor country.
  • Police-monitored cameras and crime - VoxEU
    An increasing number of cities worldwide use surveillance cameras to prevent crime, but little is known about whether these cameras reduce crime or simply move it to other locations. This column studies the impact of a large-scale introduction of police-monitored cameras in Montevideo, Uruguay. The findings indicate a 20% reduction in crime in areas of the city where the cameras are located, with no evidence of a displacement effect. The programme also appears to offer value for money compared with other security and crime prevention measures.
  • The Moochers of Middle America - Paul Krugman
    ... The point is that while you can criticize particular Democratic proposals, you can only portray progressives as radical or irresponsible, especially as compared with the modern G.O.P., by ignoring or suppressing a lot of facts. I guess facts really do have a liberal bias.
  • Robots and firms - VoxEU
    The rise of robots has sparked an intense debate about the labour market effects of their adoption. This column explores differences in robot adoption across firms and analyses the labour market effects of robot adoption at the firm level. It reveals a productivity-enhancing reallocation of labour and market shares across firms, with robot-adopting firms creating new job opportunities and expanding their scale of operations, while non-adopters experience negative output and employment effects in the face of tougher competition.
  • Seasonal Unit Roots - Background Information - Dave Giles
    A recent email query about the language that we use in the context of non-stationary seasonal data, and how we should respond to the presence of "seasonal nit roots", suggested to me that a short background post about some of this might be in order.
  • Alexander Hamilton: the Books - Economic Principals
    President Trump has appointed four of the five serving governors to the seven-member Board of the Federal Reserve System. Last week he bruited his plans to make another attempt to nominate two more, Judy Shelton and Christopher Waller. (Four previous proposals have gone nowhere this year:: Herman Cain and Steven Moore, and, before that, Marvin Goodfriend and Nellie Liang. So I spent the better part of the Fourth of July perusing the stack of books on the history of the Fed that have appeared since the financial crisis.
Mark Thoma
Mark Allen Thoma (born December 15, 1956) is a macroeconomist and econometrician and a Professor of Economics at the Department of Economics of the University of Oregon. Thoma is best known as a regular columnist for The Fiscal Times through his blog "Economist's View", which Paul Krugman called "the best place by far to keep up with the latest in economic discourse", and as an analyst at CBS MoneyWatch. He is also a regular contributor to EconoMonitor.

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