The Economist on the Future of MBA Education:
Attention Economy
Thursday, October 31, 2019
Quality of Education Matters
What’s behind Rising Returns to High-Quality
College Education?
“We showed that the effects of high-quality colleges
are exaggerated if one fails to adjust for student composition differences.
When making the adjustment, the effects appear smaller and work mainly through
increasing one’s graduation chances—where one’s degree comes from matters less
for post-college earnings.
However, we also demonstrated that returns to college
quality increased over time and argued that a large part of this increase is
explained by the widening learning ability gap between students attending
low-quality schools and students attending high-quality schools.”
Wednesday, October 30, 2019
Knowledge Workers and the Clustering Effect
Big Cities Lure Smart People. Don’t Fight It, Fed
Economists Say
https://www.bloomberg.com/news/articles/2019-10-30/big-cities-lure-smart-people-don-t-fight-it-fed-economists-say
Meanwhile some states are struggling to overcome
population decline:
Maine will help you pay off your student loans if
you move there
Tuesday, October 29, 2019
Banking Woes in Europe
As profits dwindle, HSBC plans a radical overhaul
European banks need to slash costs to improve
profitability. Accelerating job cuts is a good way to do it.
5 Years into Negative Rates, Europe’s Banks Feel
the Pain
https://www.barrons.com/articles/5-years-into-negative-rates-europes-banks-feel-the-pain-51570831182
The 2020 Election
ANDREW YANG - PROFILE
Walking away from wealth and prestige dismayed his
immigrant parents. But it made Yang into the entrepreneur running for president.
Related:
Noted Economist Greg Mankiw: I am no longer a
Republican
“I just came back from city hall, where I switched my
voter registration from Republican to unenrolled (aka independent). Two
reasons:
First, the Republican Party has largely become the
Party of Trump. Too many Republicans in Congress are willing, in the interest
of protecting their jobs, to overlook Trump's misdeeds (just as too many
Democrats were for Clinton during his impeachment). I have no interest in
associating myself with that behavior. Maybe someday, the party will return to
having honorable leaders like Bush, McCain, and Romney. Until then, count me
out.
Second, in Massachusetts, unenrolled voters can vote
in either primary. The Democratic Party is at a crossroads, where it has to
choose either a center-left candidate (Biden, Buttigieg, Klobuchar, Yang) or a
far-left populist (Warren, Sanders) as their nominee for president. I intend to
help them choose the former. The latter propose to move the country too far in
the direction of heavy-handed state control. And in doing so, they tempt those
in the center and center-right to hold their noses and vote for Trump's
reelection.”
Monday, October 28, 2019
US Consumer Behavior
Consumer Cracks Emerge as Banks Say Everything
Looks Fine
Burned in 2008, Americans Are Refusing to Tap Their
Home Equity
Even in Strong Economy, Most Families Don’t Have
Enough Emergency Savings
Saturday, October 26, 2019
Rise of Populist Anger - Economic Causes
Chile's Violence Has a Worrisome Message for the World
https://www.bloomberg.com/opinion/articles/2019-10-22/chile-s-violent-protests-have-a-worrisome-message-for-the-world
Why Rich Cities Rebel
https://www.project-syndicate.org/commentary/explaining-social-protest-in-paris-hong-kong-santiago-by-jeffrey-d-sachs-2019-10
Why Rich Cities Rebel
https://www.project-syndicate.org/commentary/explaining-social-protest-in-paris-hong-kong-santiago-by-jeffrey-d-sachs-2019-10
Lebanon Battles to Be Born at Last
Asset Bubbles and Financial Markets
Stock Market Crash Near? Nobel Laureate Sees
'Bubbles Everywhere'
C.E.O.s Are Anxious About the Economy. That’s Bad
for Stocks.
Big VIX Options Trade Braces for a 2008-Like Volatility
Surge
Friday, October 25, 2019
Argentina's Latest Crisis - UPDATED
Argentina's 2019 Election Results
Argentina’s History of
Defaults
https://www.bloomberg.com/news/photo-essays/2019-09-11/one-country-eight-defaults-the-argentine-debacles
https://www.bloomberg.com/news/photo-essays/2019-09-11/one-country-eight-defaults-the-argentine-debacles
Argentina’s Recurring Nightmare
https://www.project-syndicate.org/commentary/argentina-recurring-nightmare-by-andres-velasco-2019-09
Related:
What Will It Take to Rescue Argentina’s Economy?
Related:
What Will It Take to Rescue Argentina’s Economy?
Blame Argentina’s Economic Crisis on Repeated Mistakes
Argentina’s beleaguered government imposes capital controls
Blame populists, not reformers, for Argentina’s latest fiasco
Argentina’s crisis shows the limits of technocracy
A stunning reversal for Argentina’s President Mauricio Macri
The IMF’s Latest Victims
A populist is a liberal mugged by inflation
https://www.economist.com/finance-and-economics/2019/04/27/mauricio-macri-emulates-his-rival-cristina-fernandez-de-kirchner Thursday, October 24, 2019
Is Facebook's Libra doomed?
Is Libra doomed?
https://www.economist.com/finance-and-economics/2019/10/24/is-libra-doomedWednesday, October 23, 2019
US Dollar and the International Monetary System
How a Weaponized Dollar Could Backfire
Locking China Out of the Dollar System
https://www.project-syndicate.org/commentary/trump-china-trade-war-financial-flows-dollar-by-paola-subacchi-2019-10
The Dollar Is Still King. How (in the World) Did That Happen?
The Tyranny of the U.S. Dollar
The Dollar and its Discontents
Ray Dalio Spells Out America’s Worst Nightmare
Labels:
Economics,
Finance,
Global Economy,
International Affairs,
Politics,
US Economy
Big Data and Economics – Tipping Uber Drivers
Who tips best on Uber? Economists analyzed 40
million trips. Here’s what they found.
Wealth - US and International Trends
The Economist on the number of millionaires (by
country):
“… wealth is a confused topic. It has grown a lot
because low interest rates have increased asset prices. Moreover, it is tied up
in retirement savings as well as varying degrees of social insurance. …
Credit Suisse reckons that the share of wealth owned
by the richest 1% of adults declined slightly in the years before the crisis,
but has grown since then. They now own 45% of the world’s wealth, the bank says;
the wealthiest 10% have 82%. The bottom 50% account for less than 1%.”
The richest 10% of households now represent 70% of
all U.S. wealth
The top 1% income earners by state: Here's how much
you need to make to qualify
Sunday, October 20, 2019
Profiles of French Economist Gabriel Zucman
Profile of French Economist Gabriel Zucman
https://www.newyorker.com/news/the-political-scene/the-french-economist-who-helped-invent-elizabeth-warrens-wealth-tax
https://www.bloomberg.com/news/features/2019-05-23/the-wealth-detective-who-finds-the-hidden-money-of-the-super-rich
Related:
The New Economics: Data, Inequality, and Politics
International Comparison of GDP Data and Long-Term Trends
Graphic from the World Bank - Tracking GDP in
PPP terms shows rapid rise of China and India
These 20 Countries Will Dominate Global Growth in
2024
INTERNATIONAL GDP COMPARISON:
In order to compare the GDP figures of two countries it is
first necessary to convert them to a common unit of account (say, the US dollar).
A fundamentally important question that arises when one tries to convert local currency GDP values into their
US dollar equivalent values is the following:
What exchange rate do we use to make the conversion – market exchange rates or purchasing power parity (PPP) based exchange rates?
What exchange rate do we use to make the conversion – market exchange rates or purchasing power parity (PPP) based exchange rates?
Using market exchange rates is problematic for several
reasons:
- Under floating exchange rates, currency values fluctuate considerably, even over a short period of time.
- Using market exchange rates will result in a failure to account for the vast differences in the prices of many services and non-traded goods between rich and poor countries.
“GDP is measured in the currency of the country in
question. That requires adjustment when trying to compare the value of output
in two countries using different currencies. The usual method is to convert the
value of GDP of each country into U.S. dollars and then compare them.
Conversion to dollars can be done either using market exchange rates—those that
prevail in the foreign exchange market—or purchasing-power-parity (PPP)
exchange rates. The PPP exchange rate is the rate at which the currency of one
country would have to be converted into that of another to purchase the same
amount of goods and services in each country (see "Back to Basics" in
the March 2007 issue of Finance & Development). There is a large gap
between market and PPP-based exchange rates in emerging market and developing
countries. For most emerging market and developing countries, the ratio of the
market and PPP U.S. dollar exchange rates is between 2 and 4. This is because
nontraded goods and services tend to be cheaper in low-income than in
high-income countries—for example, a haircut in New York is more expensive than
in Bishkek—even when the cost of making tradable goods, such as machinery,
across two countries is the same. For advanced countries, market and PPP
exchange rates tend to be much closer. These differences mean that emerging
market and developing countries have a higher estimated dollar GDP when the PPP
exchange rate is used”.
Here is a brief introduction to PPP exchange rates from
the IMF:
https://www.imf.org/external/pubs/ft/fandd/basics/ppp.htm
--
--
Debate Surrounding the Accuracy of China’s GDP Data:
Visual Evidence: Shenzhen – Transformation of a fishing village in
to the skyscraper capital of China
China’s officially reported statistics appears to smooth out
volatility in the underlying data. The average reported growth rate has,
however, proven to be quite accurate:
Is China Fudging its GDP Figures? Evidence from
Trading Partner Data
Related:
http://www.nber.org/papers/w23323.pdfAbhijit Banerjee - 2019 Nobel Prize Winner in Economics
Abhijit Banerjee [2019 Nobel Prize Winner in
Economics] and the Bengali Renaissance Movement
Bibek Debroy notes:
“Amongst Bengalis with an intellectual bent of mind
(not just economists), there is (or was) a 19th century Bengali renaissance
kind of tinge. There is an interest in multiple things—philosophy, music,
sports, puzzles, mathematics, science, history. Dipak Banerjee was as much at
home with David Gale’s books on mathematics as he was with classical music or
solving cryptic crosswords. The son is of the same vintage, which is why I have
a problem with equating Abhijit Banerjee’s work with randomised control trials,
as a lot of reportage has done. There are people who plod away with the same
research issue their whole lives. The 19th century Bengal renaissance
stereotype will get bored with that. Amartya Sen moved on, shifting from one
topic to another, continuing with the learning process throughout his life.
Jhima has also done that, following the same intellectual tradition.”
Early Writings of Abhijit Banerjee
Envy, from Essays in Honour of Professor Dipak
Banerjee
A Simple Model of Herd Behavior
Saturday, October 19, 2019
Economic Misunderstandings and Trade Wars
Anti-Globalization Bias and Public Policy
https://www.project-syndicate.org/commentary/globalization-three-biases-public-policy-protectionism-by-shang-jin-wei-2019-10
The True Toll of the Trade War
https://www.project-syndicate.org/commentary/globalization-three-biases-public-policy-protectionism-by-shang-jin-wei-2019-10
Taming the Currency Hype
https://blogs.imf.org/2019/08/21/taming-the-currency-hype/
Stephen S. Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, notes:
“Despite years of denial, there can no longer be any doubt that the US is pursuing a bipartisan containment strategy vis-Ã -vis China. Whether justified or not, the real problem with this strategy is less the merits of the allegations leveled by US politicians than the incoherence of the Trump administration’s policies to address them.
https://blogs.imf.org/2019/08/21/taming-the-currency-hype/
Stephen S. Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, notes:
“Despite years of denial, there can no longer be any doubt that the US is pursuing a bipartisan containment strategy vis-Ã -vis China. Whether justified or not, the real problem with this strategy is less the merits of the allegations leveled by US politicians than the incoherence of the Trump administration’s policies to address them.
Friday, October 18, 2019
Banks Behaving Badly
A massive money-laundering scandal stains the image
of Nordic banks
Indian banks’ share prices are being hammered
Thursday, October 17, 2019
Trade Wars and Ultra-Loose Monetary Policy
How the U.S.-China Trade War Could Wallop the
Financial System
https://www.bloomberg.com/opinion/articles/2019-10-16/how-the-u-s-china-trade-war-could-hit-the-financial-system
https://www.bloomberg.com/opinion/articles/2019-10-16/how-the-u-s-china-trade-war-could-hit-the-financial-system
Wednesday, October 16, 2019
Wall Street Analysts - Persistently Overoptimistic?
Wall Street’s Sky-High Expectations Are About to
Collide with Reality
Tuesday, October 15, 2019
The MBA Bubble has Burst
Elite M.B.A. Programs Report Steep Drop in
Applications
Acceptance Rates are Up
https://poetsandquants.com/2019/10/07/acceptance-rates-at-the-top-25-u-s-mba-programs/
Is an M.B.A. Still Worth It?
Meanwhile, MBA programs in Asia are doing well
https://www.economist.com/business/2019/09/19/masters-of-business-in-asiaUS Banking System - Interesting Items
The Fed has lightened the load on America’s banks
Big Banks Were the Loudest Optimists. They’re
Getting Quieter.
Monday, October 14, 2019
2019 Nobel Prize in Economics
Economics Nobel Celebrates Asking the Right
Questions
https://www.bloomberg.com/opinion/articles/2019-10-14/economics-nobel-winners-banerjee-et-al-are-asking-right-questions
A Nobel economics prize goes to pioneers in
understanding poverty
Technical Summary - UNDERSTANDING DEVELOPMENT AND POVERTYALLEVIATION
Sunday, October 13, 2019
Stock and Bond Market Signals and Business Cycle Turning Points
Trump Has Real Reasons to Fixate Over the Stock
Market: Study finds a measurable tie between share returns and voting
“While no cycle is the same, past patterns in relation
to a widely followed recession signal -- a curve inversion where two-year
Treasury yields sit above 10-year, may point to a market peak and an economic
downturn close to next year’s election.
Since 1956, such bond market warnings preceded a
S&P 500 top by seven months and a recession by 15 months, on average, data
compiled by Bank of America showed. Yields inverted in August for the first
time in more than a decade. Should a similar path be followed, stocks may face
some trouble starting in March 2020 and a recession in November.”
Is the World Economy Sliding into First Recession
Since 2009?
https://www.bloomberg.com/news/articles/2019-10-12/is-the-world-economy-sliding-into-first-recession-since-2009
--
--
Implications for College Graduates:
Recession Graduates: The Long-lasting Effects of an
Unlucky Draw
Friday, October 11, 2019
Inflation Dynamics
Inflation is losing its meaning as an economic
indicator
Economists’ models of inflation are letting them
down
Tuesday, October 8, 2019
MMT in the News
Economists Worry That MMT Is Winning the Argument
in Washington
Repo Market Is Telling Washington That Deficits
Still Do Matter
Taxing the Super Rich: Economic and Political Considerations
For the first time in history, U.S. billionaires
paid a lower tax rate than the working class last year
“The average effective tax rate paid by the richest
400 families was 23 percent, a full percentage point lower than the 24.2
percent rate paid by the bottom half of American households, a new book-length
study found.”
The Rich Really Do Pay Lower Taxes Than You
https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html
How to Tax Our Way Back to Justice
The Case for Higher Taxes at the Very Top
Taxing the Rich – Pros and Cons
Sanders’s Wealth Tax Is Too Much of a Good Thing
https://www.bloomberg.com/opinion/articles/2019-09-26/sanders-wealth-tax-is-too-much-of-a-good-thing
Yang vs. Warren: Who Has the Better Tax Plan?
Monday, October 7, 2019
Export-Driven Economies in Trouble
The export-driven growth model of Germany, South
Korea and Singapore is quickly coming undone.
Saturday, October 5, 2019
US Equities, the Fed and the US Dollar
Surprise, Surprise. Stocks Say the Powell Put Lives
“The pattern seems clear, with the Fed prepared to
tighten only when stocks are outperforming, and feeling obliged to cut when
they do worse. Whether or not this is truly leading Powell and his colleagues,
the market assumes that it is. In market parlance, they believe there is a
“Powell Put.””Sick with Recession Fever, Investors Make Powell ‘Their Drug’
https://www.bloomberg.com/news/articles/2019-10-04/markets-caved-in-on-powell-last-year-today-he-is-their-drug
Politics - Interesting Items
The Invention of the Conspiracy Theory on Biden and Ukraine
China Masters Political Propaganda for the
Instagram Age
China’s Corrupt Meritocracy
https://www.project-syndicate.org/commentary/china-corrupt-meritocracy-by-yuen-yuen-ang-2019-10 Friday, October 4, 2019
Tail Risk and Climate Change: When Extreme Events Become More Likely
2°C: Beyond the Limit – Washington Post Series
Large parts of the globe already passed crucial climate threshold
--
The past, present and future of climate change
The Man Who Got Economists to Take Climate Nightmares Seriously
Choice of College Major and the Gender Pay Gap
A Cross-Cohort Analysis of Human Capital
Specialization and the College Gender Wage Gap
Related WSJ article:
Thursday, October 3, 2019
Chinese Consumers and the Global Economy
China’s Spenders Are Saving. That’s a Problem for
Everyone.
International Affairs - Interesting Items
The Asianized World Has Arrived
FRONTLINE documentary investigates the rise and
rule of Crown Prince Mohammed bin Salman of Saudi Arabia
Pakistan Gives a Pass to China’s Oppression of
Muslims
https://www.wsj.com/articles/pakistan-gives-a-pass-to-chinas-oppression-of-muslims-11570142866
Pakistan’s political and military leadership, and
business elite, have stopped investing their capital in CPEC.
https://medium.com/@farooqtirmizi/cpec-is-dead-somebody-tell-beijing-9e18a891ff0bGovernment’s Role in the Mortgage Market
Government has dramatically expanded exposure to
risky mortgages, echoing concerns before Great Recession
Wednesday, October 2, 2019
Cost of Informal Payments
Informal payments cost governments hundreds of billions in revenue each year
Gandhi's Insights
Modi on Mahatma Gandhi
“In 1925, Gandhi wrote in “Young India”: “It is impossible for one to be internationalist without being a nationalist. Internationalism is possible only when nationalism becomes a fact, i.e., when peoples belonging to different countries have organized themselves and are able to act as one man.” He envisioned Indian nationalism as one that was never narrow or exclusive but one that worked for the service of humanity.”
Tuesday, October 1, 2019
Are Low Interest Rates Actually Hurting the Economy?
Could Ultra-Low Interest Rates Be Contractionary?
Global Bonds Are Selling Off for All the Right
Reasons
https://www.bloomberg.com/opinion/articles/2019-10-01/global-bonds-are-selling-off-for-all-the-right-reasons
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