Growth and Democracy

In grad school I was very interested in the relationship between economic growth and democracy. I think this post from Corner Solution, has an excellent quote from the WSJ article:

"In some countries, like China, it could be easier to make changes," Mr. Cover says. "But that's the cost of democracy."

But some of my views on growth need to apparently need to change. I often thought Islamic lending laws provided a major impediment to growth. But this Marginal Revolution post suggests that Islam itself is not associated with lower growth than other religions. Maybe the answer can be found in this post over on Mahalanobis.

Islam's Sharia law severely limits the practice of charging or paying interest. But a new generation of Islamic banks have found ways to make products mimic the Western originals, from floating-rate infrastructure loans to Islam-compliant credit cards issued by Visa. The paperwork, however, is Islamic. "Risk," Mr. Mishari (* CEO of Bank Aljazira *) says with a smile, "has no religion."

Keywords: Growth, Interest Rates, ECO301, ECO305

The Economics of Movies

Slate has a few good articles by Edward Jay Epstein on the economics of movies entitled The Hollywood Economist. (Via Newmark's Door).

Keywords: Hollywood, Movies, Entertainment.

Immigration policy

Open borders is the best anti-poverty program we could have. David Card (via Marginal Revolution) finds that the immigrants that have entered our country haven't depressed the wages of the native population. So what other reason would their be for limiting immigration?

Part of the abstract from the paper by Card is below:

This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1)Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated? Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level,the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps.

Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives.

Talk of The Nation on NPR just had a segment on this very issue, they spent most of the time discussing the economics of immigration on labor suppy. It would have been nice if they would have had a real economist like Card on, instead of the "think tank" hacks they had.

Keywords: ECO120, ECO305, immigration

Sticky Prices

How sticky are they? Via Mahalanobis:

Bils and Klenow got special permission to review the micro-data on prices and concluded that these prices actually change quite frequently, on average about every four months. That doesn't seem so sticky, Kehoe argues.

Here is the rest of the article from the Richmond Fed.

Keywords: ECO120, ECO301, ECO305, Sticky Prices

The Amazing Internet

This thing we call the internet continues to astound me. At this very moment I am proctoring my ECO120 final while watching a live feed of the Giro d'Italia courtesy of OLN. While I would have prefered to have watched it at home, without having to have paid extra, and with the commentary of Phil, Paul, and Bob Roll, this is still much better than nothing. Or even a little better than just reading it on cyclingnews.

Keywords: Technology, Cycling

An Interview with Mankiw

Russell Roberts conducts an interview with Mankiw laregly covering his time at the CEA, but they also touch on a few other topics.

Here is the money quote about our President:

Roberts: What is your perception of the President as a consumer of economic
analysis?

Mankiw: I think he's got a great intuition for economics—he doesn't think like an economist in the sense of thinking in terms of equations and graphs. He was an undergraduate history major and that's a pretty good description of how he thinks about things.

They also have an interesting exchange about the academic market for ideas.

Keywords: CEA, Mankiw

Bates Medal

As others have pointed out here (and here), Daron Acemoglu has won the John Bates Clark Medal, at least in part for his work on economic growth and the role of institutions.

Acemoglu has several papers that argue that institutions play a more
prominent role in development than was generally accepted. His 2002 QJE paper
with Johnson and Robinson argues that countries that were relatively rich in
1500 are now relatively poor, a point that is inconsistent with the view that
geography is destiny. The argument, supported by empirical evidence, is that
this is due to colonizing countries treating rich and densely populated
countries differently from poor and sparsely populated countries. In the former,
they followed policies of extracting wealth and in the latter they followed
policies that encouraged investment. Acemoglu’s 2001 AER paper, also with
Johnson and Robinson, uses differences in mortality rates faced by Europeans in
different countries to study further the degree to which different policies lead
to different institutions, which in turn lead to different development paths.
Some of the methods and the conclusions of this paper are still being debated,
but this line of Acemoglu’s work has already stimulated substantial research
that rethinks the development process. In related work on political economy, for
example with Robinson in APSR 2001, he has examined the dynamics of political
processes and the persistence of inefficient policies. This work has been
influential in political science.

Levitt points out that Acemoglu's work challenges conventional wisdom which believes that democracies produces the highest possible growth rates. From the little research I did in this area I recall that is was long believed that totalitarian regimes could produce higher growth rates. Well, it was believed up until the Soviet Union Collapsed. Even after that happened the view that democracy was the key to growth often came with caveats. Freedoms are important for growth, but some freedoms impose costs that can constrain grwoth as well. Its probably less about democracy per se so and more about free and stable institutions, which seldom occur in non-democracies, or democracies for that matter.

Keywords: Growth, ECO120, ECO305

Coulee Region Blogs

While reading the La Crosse Tribune online, I noticed in a story by Reid Magney that he has a blog called River Valley Blogs. He has a few interesting entries, I found this one on op-ed pieces pretty entertaining. More importantly I found a list of local bloggers. Seems to be missing this blog, I'll have to drop him a note.

Update: He even cites some of the data I've gathered here.

Keywords: La Crosse, Blogs