Africa’s largest economy and its most populous country votes
for change (sort of):
Tuesday, March 31, 2015
Monday, March 30, 2015
Core-Periphery Relationship and Economic Development
Noted development economist Lant Pritchett’s interesting new
essay – “Can Rich Countries Be Reliable
Partners for National Development?”
Saturday, March 28, 2015
The New Normal in Monetary Policy
Janet Yellen on near term US monetary policy:
In her speech, Yellen notes:
“… we need to
keep in mind the well-established fact that the full effects of monetary policy
are felt only after long lags. This means that policymakers cannot wait until
they have achieved their objectives to begin adjusting policy. I would not consider
it prudent to postpone the onset of normalization until we have reached, or are
on the verge of reaching, our inflation objective. Doing so would create too
great a risk of significantly overshooting both our objectives of maximum sustainable employment and 2
percent inflation, potentially undermining economic growth and employment if
the FOMC is subsequently forced to tighten policy markedly or abruptly. In
addition, holding rates too low for too long could encourage inappropriate
risk-taking by investors, potentially undermining the stability of financial
markets. That said, we must be reasonably confident at the time of the first
rate increase that inflation will move up over time to our 2 percent objective,
and that such an action will not impede continued solid growth in employment
and output.”Update:
Bernanke on low interest rates:
http://www.brookings.edu/blogs/ben-bernanke/posts/2015/03/30-why-interest-rates-so-low
Geopolitics and International Economics
World’s proven oil reserves:
Venezuela, despite its political mess, still matters because
it home to the world’s largest reserves of oil.
Accommodating China’s rise
http://www.telegraph.co.uk/finance/economics/11500759/Its-time-for-the-world-to-adjust-to-Chinas-global-ambition.htmlFriday, March 27, 2015
Is the Spanish Economy Back on Track?
An illuminating piece from Der Spiegel:
http://www.spiegel.de/international/europe/how-spain-recovered-from-the-economic-crisis-a-1025327.html
http://www.spiegel.de/international/europe/how-spain-recovered-from-the-economic-crisis-a-1025327.html
Higher Education - Rise of Global Competition
Interesting Special Report on Higher Education from The Economist
US Model of Higher Education
NYU Abu Dhabi – A Model for the Future?
http://www.economist.com/news/special-report/21646983-controversial-middle-eastern-outpost-american-educational-empire-pearl
Related:
http://vivekjayakumar.blogspot.com/2013/08/truly-global-universities.htmlLabor Mobility – Globalization’s Last Frontier
An interesting piece from the Federal Reserve Bank of
Dallas:
Pacific Alliance – Latin America’s Bright Spot
In contrast to Mercosur members, Mexico, Columbia, Peru,
Chile and Costa Rica are in decent economic shape:
http://www.cnbc.com/id/102537826China Update
Aging Population and One-Child Policy - Demographic
Challenges for China
An astonishing piece on China’s cement consumption:
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/Monday, March 23, 2015
Lee Kuan Yew - Singapore's Founding Father
The Straits Times (Singapore's national newspaper) has created an interesting tribute to Lee Kuan Yew following his death at the age of 91:
http://www.straitstimes.com/sites/straitstimes.com/files/20150323/ST%20Special%20Edition%20150323.pdf
http://www.straitstimes.com/sites/straitstimes.com/files/20150323/ST%20Special%20Edition%20150323.pdf
One of Lee Kuan Yew's most impressive achievements:
From a recent piece in The New Yorker:
“New leaders often
condemn the venality of their predecessors, only to exceed it when they assume
office. From Duvalier, in Haiti, to Fujimori, in Peru, to Erdoğan, in Turkey,
it’s a predictable twist in the drama of political transition. But Lee
delivered on the rhetoric, enacting new anticorruption legislation and
bestowing real power on the anticorruption bureau. He raised salaries for civil
servants, to minimize any temptation to sell their influence, and instituted
harsh jail terms for those caught taking bribes. In 1986, Lee’s minister of
national development, an architect named Teh Cheang Wan, was investigated for
accepting kickbacks from two real-estate developers. He killed himself with a
fatal dose of barbiturates, maintaining, in a suicide note addressed to Lee
Kuan Yew, “It is only right that I should pay the highest penalty for my
mistake.”
By the time Lee
stepped down as Prime Minister, in 1990, Singapore had gone from being one of
the more corrupt countries on the planet to one of the least. According to
Transparency International’s most recent Corruption Perceptions Index,
Singapore now ranks seventh in the world for transparent government—less
corrupt than Australia, Iceland, or (by a good margin) the United States. The
story is heartening but anomalous. It is almost unheard of for a nation to
expunge a culture of corruption so thoroughly. Some countries get slightly
better, some get slightly worse, but, the world over, corruption tends to
endure.”
Sunday, March 22, 2015
David Frum on American Exceptionalism
A surprisingly thoughtful piece from David Frum on US exceptionalism:
My favorite bit from the piece:
“You might think
that the last developed country to adopt universal health coverage would
closely examine the systems developed elsewhere. You might think the designers
of a new healthcare system for America would identify international best
practices, while carefully assessing what might be applicable in American
conditions and what would not. If so, you’d think wrong. The debate over
healthcare reform unfurled with an almost surreal indifference to the rest of
the world. Ditto for the debate over financial reform after the crisis of 2008.
Ditto the debate over social mobility, over school performance, or over policing
of disadvantaged communities.”
Saturday, March 21, 2015
India’s Economy – Challenges Ahead
The Telegraph
has an interesting piece on the Indian economy:
A note on recent GDP revisions:
http://www.livemint.com/Opinion/z2fC6grugR8CMY906kIkuK/In-defence-of-the-new-GDP-data.htmlCities and Economic Development – Paul Romer's Perspective
Russ Roberts interviews economic growth theorist Paul
Romer
Related:
http://vivekjayakumar.blogspot.com/2015/02/cities-economic-geography-and-human.htmlFriday, March 20, 2015
Automation, AI and Labor - Historical Perspectives
Sue Halpern’s piece (How
Robots and Algorithms Are Taking Over) in the New York Review of Books is
a great read:
John Lancaster has a related piece (The Robots Are Coming) in the London Review of Books:
Lancaster concludes:
“It’s also worth
noting what isn’t being said about this robotified future. The scenario we’re
given – the one being made to feel inevitable – is of a hyper-capitalist
dystopia. There’s capital, doing better than ever; the robots, doing all the
work; and the great mass of humanity, doing not much, but having fun playing
with its gadgets. (Though if there’s no work, there are going to be questions
about who can afford to buy the gadgets.) There is a possible alternative,
however, in which ownership and control of robots is disconnected from capital
in its current form. The robots liberate most of humanity from work, and
everybody benefits from the proceeds: we don’t have to work in factories or go
down mines or clean toilets or drive long-distance lorries, but we can
choreograph and weave and garden and tell stories and invent things and set
about creating a new universe of wants. This would be the world of unlimited
wants described by economics, but with a distinction between the wants
satisfied by humans and the work done by our machines. It seems to me that the
only way that world would work is with alternative forms of ownership. The
reason, the only reason, for thinking this better world is possible is that the
dystopian future of capitalism-plus-robots may prove just too grim to be
politically viable. This alternative future would be the kind of world dreamed of
by William Morris, full of humans engaged in meaningful and sanely remunerated
labour. Except with added robots. It says a lot about the current moment that
as we stand facing a future which might resemble either a hyper-capitalist
dystopia or a socialist paradise, the second option doesn’t get a mention.”Science Fiction and Reality
Apparently, science is catching up with Sci-Fi. According
to NYT piece:
“A group of leading
biologists on Thursday called for a worldwide moratorium on use of a new
genome-editing technique that would alter human DNA in a way that can be
inherited.
The biologists fear
that the new technique is so effective and easy to use that some physicians may
push ahead before its safety can be assessed. They also want the public to
understand the ethical issues surrounding the technique, which could be used to
cure genetic diseases, but also to enhance qualities like beauty or
intelligence. The latter is a path that many ethicists believe should never be
taken.”
Further Debate on Piketty's Thesis on Inequality
Matt Rognlie’s critique of Piketty’s “Capital in the 21st Century”:
Lot of press attention for Rognlie:
Piketty’s own commentary on his book can be found here:
Further Reading:
A key question –
Will adoption of labor-substituting capital likely increase
in the future?
Here are some relevant links:
Currency in Circulation Spikes in Greece
An interesting piece on the rising preference for cash
holdings amongst Greeks:
Population Growth and Economic Growth - A Complicated Relationship
Rising concern regarding slow population growth in the advanced world (and China) -
An interesting piece on declining population growth rates in major economies:
An interesting piece on declining population growth rates in major economies:
http://www.cbsnews.com/news/dropping-birth-rates-threaten-global-economic-growth/
Japan’s demographic shift – Impact on household saving rate
The NYT article notes:
“The country’s
savings rate, long one of the highest in the world, is now below zero. In
short, Japan’s citizens are spending more than they earn.…
Personal savings
were a main ingredient in Japan’s postwar economic miracle. Through the 1970s
and 1980s, the government encouraged people to save with tax breaks and other
incentives. The goal was to secure plentiful domestic funding for the country’s
expanding industries.…
The decline has
accelerated recently, as baby boomers have retired and begun to live off money
they set aside during their working lives. It’s a vast demographic group — a
quarter of the population is now over 65.”
Meanwhile, Adair Turner is relatively sanguine about the decline in
fertility rates:
--
Radically different concerns in the developing world:
Africa’s population: Can it survive such speedy growth? (The Economist)
Africa’s population: Miracle or Malthus? (The Economist)
http://www.economist.com/node/21541834Wednesday, March 18, 2015
Challenges Associated with Development Aid
An interesting piece from Der Spiegel - Congo Project Shows Pitfalls of Development
Aid
The article notes:
“The Democratic
Republic of Congo is rated number four on the list of "Fragile
States" published by Foreign Policy magazine. It is second to last on the
United Nations' Human Development Index of 187 countries. Indeed, if there's
any country in the world that needs help, it's Congo.
It's also a country
well worth visiting for those wanting to understand the impact global
development aid, a business worth $135 billion a year, can have on a country --
and where the limits of such aid are.”
Fed Updates Interest Rate Forecast
FOMC - March 2015 Meeting:
http://www.nytimes.com/2015/03/19/business/economy/fed-interest-rates-fomc-meeting.html
FOMC Forecast
http://www.nytimes.com/2015/03/19/business/economy/fed-interest-rates-fomc-meeting.html
FOMC Forecast
Forex Market Reaction:
Monday, March 16, 2015
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