Education in a small fishing village in Ghana

China's Exchange Rate Policy

China's Exchange Rate Policy- Peterson Institute,

Explainers of the Day

Monetary Policy Reaction Function

Central Banks to the Rescue

Remittances and Global Poverty

Asset Price Bubbles


Bubble, bubble, toil and trouble

Why is oil above $90?

Have Net Exports Ever Prevented the U.S. from Going into Recession?

Tax-Code Overhaul: Good or Bad Economics?

Do We Have an Inventory Problem?

How do you read the WEO?

Changes in Income Inequality across the U.S.

Are Global Prices Converging or Diverging?

Relative Comparisons and Economics: Empirical Evidence

What should you do if you're surrounded by angry macaques?

How Colbert '08 could run afoul of the FEC.

A Sex Toy a Day Keeps the Doctor Away?

Yes, Soccer is a window on globalization

Dani Rodrik asks;

Do you want to understand how globalization reshapes wealth and opportunity in the world? Look no further than soccer--the sport that everyone in the world (besides the U.S.) calls football. I know, this is not an original idea. There is at least one best seller on the topic, but while it is a readable one it barely scratches the surface of the interesting issues.

Or read Milanovic, GLOBALIZATION AND GOALS: Does soccer show the way?

Or watch the World Bank event; Globalization and Goals: Does Soccer Show the Way?;

Football, or soccer, is the most globalized sport in the world due in part to modern communication technologies and the removal of limits on the number of foreign players in soccer leagues. As players have begun to circulate freely among teams, these sports clubs have become more commercially-minded and focused on gathering the most talented or skilled players in hopes of winning games, boosting attendance, and increasing revenue. This free circulation of labor leads to an overall increase in output as the best players are paired with other top players on well-funded teams. However, as this improves quality of the game on the whole, it is accompanied by an increase in overall inequality.

During this event, Branko Milanovic, Lead Economist, World Bank, and Senior Associate, Carnegie Endowment for International Peace, presented his research which argued that free circulation of labor, increasing returns, and endogenous skills, under conditions of unequal initial distribution of resources, have produced an increasing concentration of outcomes in soccer results. He then argued that the same case can be made for incomes when labor is allowed to move freely. According to Milanovic, the results illustrate the need for global institutions, the Federation Internationale de Football Association (FIFA) in the case of soccer, to improve the outcomes of efficiency and inequality that have been unleashed by globalization.

Or watch the following Pepsi Ad;

To be Exploited by Multinationals is Glorious

An old, but very interesting article from NYT- Coke's Great Romanian Adventure;

The Coca-Cola Company has gone from having no presence here until the end of 1991 to becoming the biggest soft drink maker, rolling past archrival Pepsi-Cola. Long the dominant player in the Soviet bloc, Pepsi has given way to Coke not only in Romania but throughout most of Eastern Europe and the rest of the former Communist world.

From Poland to Albania to the Georgia Republic,Coke is now outselling Pepsi by more than 2 to 1, roughly reversing the lead that Pepsi held before the Communist bloc began to splinter in 1989. In Romania, the company keeps six bottling plants humming (two more are set to open this year) and employs 2,500, posting sales last year of about $120 million.

To be sure, the cola wars are far from over here or in the rest of the region, an area that is still very much a growth market. Pepsi says it remains No. 1 in, among other places, Hungary and Ukraine (where Coke has yet to invest) and in Russia itself. And it is fighting back where it is now No. 2, with new technology for the local bottlers that it has traditionally relied upon as well as money for new plants. In Romania, Pepsi has become a more aggressive marketer. Taking Coke's lead, it has been adding more of its own colors (with new red, white and blue signs and blue trucks) to Bucharest's pallid palette. The 'Multiplier Effect'

Still, Coke's advances in the region offer lessons for other Western companies struggling to make inroads in the tantalizing markets of the former Soviet bloc. Starting with the fall of the Berlin Wall in October 1989, Coke severed most of its relations with state bottlers and invested quickly and heavily to import its own manufacturing, distribution and marketing techniques. Pepsi, by contrast, remained tied for some time to the creaky operations of the state bottlers and has never come close to Coke's investment levels. So far, Coke has poured $1.5 billion into Eastern Europe, $150 million into Romania alone.

The surge in Coke sales here has other implications as well. Before Coke's arrival, there had been essentially no foreign investment in Romania, a nation of 23 million that has long been the poorest, most repressed and deeply isolated of the major countries in central Eastern Europe. That makes Romania an almost ideal setting to track the "multiplier effect" of foreign investment in a developing country -- tracing job and wealth creation as well as the transfer of modern management and production methods.

A new study by economists at the University of South Carolina College of Business Administration shows just how much of an engine of growth Coke has become. Since Coke sells its soft drinks primarily through small retailers and kiosk owners, it has helped to recreate a class of micro-entrepreneurs -- the "petty bourgeoisie" that Marxism tried to eliminate -- and to establish a spreading base for free-market activity.

"By 1994, as many as 20,000 to 25,000 kiosks and other small retail shops started or maintained their business because of Coca-Cola," said the report, to be released on Wednesday. "Many also sold soap, cigarettes and other high turnover products, but would have gone bankrupt without Coca-Cola."

Over all, at least 11 jobs were created elsewhere in the economy for each job that Coke created directly, the study found, more than double the rate for the soft-drink industry in the United States. The study, which also examined the effect of Coke's investments in Poland, was sponsored by the Society of International Business Fellows in Atlanta, Coke's home city.

Coke is also getting credit here for something less quantifiable but no less important: a growing sense of hope and of belonging to the outside world.
"Our system always guaranteed that we got second-rate products, so there was no pride in what we sold," said Eugen Trifulescu, who runs a general store in downtown Bucharest. "Then Coke comes in with its new trucks and new bottles and its drivers in new uniforms. Everything is high quality. That makes us feel better about ourselves."
So important has Coke become that the normal fears in emerging countries of being overrun commercially and culturally by the West -- or by Coke alone, for that matter, in a process that has come to be called Coca-colonization -- are largely absent here.
Indeed, given Romania's history of poverty and repression, and the public's eagerness to embrace capitalism, these concerns seem almost irrelevant.

"There is not the feeling in Romania of being exploited by multinationals," said Misu Negritoiu, the chief economic adviser to Romania's President, Ion Iliescu. "Rather, people see multinationals as a vehicle for transferring organizational and managerial skills." ...

Coke's business in Eastern Europe as a whole is expanding at twice the rate of its other foreign operations, according to analysts, up 23 percent in 1994, 28 percent in 1993 and 37 percent in 1992. The company now sells close to 425 million cases in all of the former Communist countries, out of total worldwide sales of 11.8 billion.
FOR its part, Pepsi does not concede defeat. "One of the things that Coke is very good at is declaring victory at one fixed point in time," said F. David Jones, president of Pepsi's Eastern Europe and Central Asia division. "It is tempting to draw the line and say the race is over, but that is completely the wrong impression."

Andrew Conway, beverage analyst for Salomon Brothers in New York, agreed that "the cola battles are continuing to rage in Eastern Europe."

He added, however, that "other than in Hungary, where the race is very tight, Coca-Cola has taken share leadership away from Pepsi in every country where it has competed." Analysts say Coke is also close to overtaking Pepsi even in Russia, which is generally not considered part of Eastern Europe.

Mr. Conway said Coke has simply overwhelmed Pepsi in Eastern Europe by its spending, pointing out that Coke's 1995 budget for international investment is $700 million, compared with $300 million for Pepsi.

Because of its size, "Coke can outspend competitors by more than 2 to 1," Mr. Conway said. "So Pepsi is being forced to run a lot harder now to catch up."...

Coke's helping hand is also felt by service companies, which have used Coke as a stepping stone to business with other foreign investors.

Bogdan Enoiu ran a small advertising agency in Bucharest until he linked up with Coke in 1993. He is now also doing promotions for Xerox, Gillette, Nestle, Samsung and Texaco, all of which have begun to do business here, though hardly on the scale of Coke.

"If you're accepted by Coke, it's like a blank check," he said.

Controversial Working Paper of the Day

Are Muslim Immigrants Different in Terms of Cultural Integration?
by Alberto Bisin, Eleonora Patacchini, Thierry Verdier, Yves Zenou

Abstract:
Using the UK Fourth National Survey of Ethnic Minorities, we explore the determinants of religious identity for Muslims and non-Muslims. We find that Muslims integrate less and more slowly than non-Muslims. A Muslim born in the UK and having spent there more than 50 years shows a comparable level of probability of having a strong religious identity than a non-Muslim just arrived in the country. Furthermore, Muslims seem to follow a different integration pattern than other ethnic and religious minorities. Specifically, high levels of income as well as high on-the-job qualifications increase the Muslims’ sense of identity. We also find no evidence that segregated neighborhoods breed intense religious and cultural identities for ethnic minorities, especially for Muslims. This result casts doubts on the foundations of the integration policies in Europe

Via Stumbling and Mumbling

For Discussion: Muslim readers, what variables would you consider to define the intensity of your religious identity?

The Economics of Virginity Loss

Tim Harford advises;

The economist Alan Collins, in a paper titled Surrender Value of Capital Assets: The Economics of Strategic Virginity Loss, assesses whether men and women lose their virginity in different circumstances. The key conclusion is that almost 60 per cent of women say they lost their virginity because they were in love; just over 35 per cent of men offered this reason. Collins believes this supports the socio-biological view that women are making an investment when they lose their virginity, and so need to choose their partners with care. Men are simply engaging in consumption – that is, having fun.

Collins also discovers that people who found out about sex by talking with friends (rather than, for instance, from books) were more likely to lose their virginity for non-romantic reasons. Perhaps they wanted something to talk about. I suggest that you get some friends over for a girly chat about the facts of life. All investments should begin with research

Related;
Excerpts from the paper;

The result of estimating logit equations, for the probability of giving `being in love' as a reason for virginity loss, are shown in Tables 2 and 3. Results for other model specifications were also examined including gender specific adjusted models with an AGE squared term plus some interaction terms to capture the possible effects of particular religious upbringing and development (FAITH*GOD16 interaction terms and EDUCATION* GOD16 interactions). The results of these alternative models were not generally dissimilar and so the simplest full model with a full set of shift variables to discern gender specific differences is presented.

Females are significantly more likely to offer romantic reasoning for virginity loss. No clear evidence is found for the direct impact of religious denomination on asset value, since none of the denomination dummies exhibits the expected sign. The negative significance of the MUSLIM variable, however, suggests that romantic considerations are less likely to account for virginity loss amongst those within this religious denomination. Arguably this religion tends to discourage romantic notions and encourage bride wealth payments and other non-romantic objectives. Religious beliefs at age 16 (GOD16) is, however, significant reinforcing the general role of religion in preserving virgin capital value as a strategic asset. That said though the relevant shift variable (GOD16XSEX) is significantly negative and indicative of a real but arguably counterintuitive gender difference.

Within the model the significant negative impact of the FRIENDS dummy supports the marketization argument since it implies significant open discussion and learning took place prior to virginity loss. Further, it is notable that learning from friends has a marketizing effect for males but apparently not for females. This represents the stereotypical dichotomy of asset value of virginity by gender. In economic terms, this dichotomy can be reduced to the statement that sex is for males more of a consumption good, whilst for females it pertains more to the nature of a capital good. Turning to the age coefficients, the significant variable is the relevant shift term (AGEXSEX) which suggests that for women romantic considerations are more important when younger but with age more consumption-focused thinking in this context develops. This offers some support to the Shorter thesis outlined earlier. The embarrassment term is also significant and shows the expected sign. Subsequent work might explore the use of this term to adjust or at least qualify statistical results on sensitive sexual topics more systematically.

Can the War on Malaria be won?

The Economist writes;

Dr Alonso's paper, then, is a bit of good news in an area—global health—that is more usually associated with misery. It is not, however, the only optimistic note as far as malaria is concerned. A newish and very effective drug called artemesinin is now being deployed, and the campaign to distribute insecticide-laced bed nets through large parts of Africa is also showing signs of success. A few people are therefore daring to whisper a word that has not been heard much in malaria circles since the 1960s: eradication.

On October 17th, the day Dr Alonso's paper was published, someone dared do more than whisper the word. Bill Gates almost shouted it at a conference on the disease which was organised in Seattle by his foundation. The Gates Foundation helped to finance the trials in Mozambique and Mr Gates used their success to give a rousing speech to the gathered experts, challenging them to raise their sights. Rather than continue with today's strategy of merely controlling malaria, he argued that it is time for the world to aspire to exterminate it altogether.

This is not a new idea. The last attempt to eradicate malaria began in 1955 (coincidentally, the year Mr Gates was born) and relied on a new wonder chemical called DDT to kill the mosquitoes. For a time, it was successful, but then evolution struck back, as natural selection favoured the spread of insecticide-resistant genes. Shortly afterwards, politics struck back, too, as the environmental movement successfully demonised DDT because of the damage it does to many other animals.

Given this history, cynicism about the idea of eradication is understandable. Steven Phillips, chief medical officer of Exxon Mobil, a firm whose African operations are inevitably affected by malaria, argues that eradication is technically impossible and favours emphasis on “bread and butter” disease control. But Regina Rabinovich and Tachi Yamada, the scientists responsible for running the Gates Foundation's anti-malaria effort, argue that eradication was never seriously attempted in Africa in the past. They think that today's money, technologies and political will are strong enough to make eradication a realistic aspiration.

Dr Phillips is right, in the sense that even the finest vaccine cannot do much good if it does not reach villages in endemic areas. However, things change—even in Africa. A report released this week by Unicef, the United Nations Children's Fund, suggests several countries, including Ghana, Tanzania, Benin and Gambia, are making progress in spreading artemesinin and bed nets.

Eradication would not be cheap. A back-of-the-envelope estimate suggests it would cost about $9 billion a year for two or three decades to make and distribute the necessary vaccines, drugs and equipment. But that compares with $3 billion a year indefinitely, merely to contain the problem—not to mention the economic damage done by the disease. Big ideas have to await the right time to be realised. But for malaria that time may be now

For Discussion: A lot of Africans I know carry with them an assortment of 'malaria drugs' when they travel. Often use the drugs when they have some symptoms of fever (since the costs of getting Malaria infection is so high)without proper medical diagnosis. How prevalent is such misuse of 'malaria drugs'? What could be the broader immunology consequences of excessive use of such drugs?

Related;
Mosquitoes fighting Malaria
Malaria eradication: it's back

The Economics of Mosquitoes;

Hoyt Bleakley, a professor at the University of Chicago Graduate School of Business, documents the long-term benefits of malaria eradication in the American South in the 1920s, and then later (when DDT became available) in Mexico, Brazil, and Colombia. By comparing areas that did and did not have malaria problems before the eradication campaigns, Bleakley cleanly measures some of the benefits of abolishing malaria. Using individual-level census data, he finds that getting rid of malaria led to higher wages and literacy rates for children who grew up post-eradication. Wages rose 10 to 40 percent after eradication in the places that were worst affected by malaria. (He also has some surprising and powerful findings with respect to worms).

The Mosquito Killer

The Long-Term Economic Impact of In Utero and Postnatal Exposure to Malaria

Juan Cole on Ahmadinejad, Lee Bollinger and Iraq

Juan Cole interview;



AMY GOODMAN: That’s Columbia University President Lee Bollinger. Professor Cole, your response?

JUAN COLE: Well, my own analysis is that Bollinger solved a problem that he had, which was that his -- one of his deans had invited Ahmadinejad the previous year to speak at Columbia, and Bollinger had shot that down. His faculty were angry at him for suppressing this man’s freedom of speech in the United States. And so, I think he felt he had to extend the invitation this year.

On the other hand, he wants to rebuild the area around Columbia University. He wants to put a new theater district up there. He needs the help of the New York real estate community, many of whom are warm supporters of Israel and who would be offended by Ahmadinejad’s invitation. So I think he solved the problem by inviting Ahmadinejad, and so mollifying his faculty, and then attacking Ahmadinejad, and so mollifying his real estate backers.

AMY GOODMAN: What about Ahmadinejad’s power in Iran?

JUAN COLE: Well, Ahmadinejad is a ceremonial president. He is a little bit more active, has stronger links to the Iranian Revolutionary Guards Corps than his predecessor, Mohammad Khatami, who, by the way -- the previous president of Iran -- has upbraided Ahmadinejad for his comments regarding Holocaust denial. So Ahmadinejad is -- he is not commander-in-chief of the armed forces. He can’t order anybody to kill anybody. He can’t launch a war. He can’t launch missiles. Those powers are vested in the Supreme Jurisprudent, the Ayatollah Ali Khamenei. Ahmadinejad can, you know, cut the ribbons and open bridges and things like that. So the American right’s fascination with him is entirely misplaced, and it’s because he’s a quirky character and he has objectionable views, and so it’s easy to use him to demonize Iran.

US Reading Habit Facts of the Day

Book Reading Statistics in the USA;

• 58% of the US adult population never reads another book after high school
• 42% of college graduates never read another book
• 80% of US families did not buy or read a book last year.
• 70% of US adults have not been in a bookstore in the last five years
• 57% of new books are not read to completion.
• Most readers do not get past page 18 in a book they have purchased.

Would love to hear from Tyler Cowen- for the last two years I've bought more books recommended by Marginal Revolution than by any other blog.

Landsburg on Al Gore

What Al Gore doesn't understand about climate change- By Steven E. Landsburg;

3. How much do we—or should we—care about future generations? Edmund Phelps, the 2006 Nobel laureate for economics, argued long ago that you (and I) should care exactly as much about a stranger born 1,000 years hence as we do about a stranger who's alive today. Phelps' view has been highly influential among economists, who now take it as more or less the default position. But even economists are sometimes wrong, and there are powerful arguments for "discounting" the welfare of future generations. First, many people (myself excluded, however) believe we should care more about our countrymen than about a bunch of foreigners—hence the sentiment for a border fence. If we are allowed to care less about people who happen to be born in the wrong country, why can't we care less about people who happen to be born in the wrong century? And second: Few of us feel morally bound to churn out as many children as we possibly can, which means we think nothing of denying future generations the gift of life. If it's OK to deny them their very lives, shouldn't it be OK to deny them a temperate climate?

There is a ton more to be said in response and counter-response, but in the end, you've got to take a stand. Does the next generation count 100 percent as much as our own, as Edmund Phelps demands? Or 99 percent? 95 percent? 90 percent? I'll show you later how much the answer matters.

My Name is Khan

Top Bollywood actor Shah Rukh Khan says his Muslim surname gets him put through extra security checks outside India, particularly at London's Heathrow airport, a newspaper reported Wednesday.

Khan said in the Mumbai-based DNA newspaper that in the past his name was recognized overseas, and he easily cleared his own and his movie crew's baggage.

However, due to tighter security his Hindu assistant is now able to clear his bags faster the Khan could, the newspaper said.

"These days I am the one who is stopped so ... he carries my bags," the actor was quoted as saying. "Internationally, if you have a Muslim surname you might be considered a terrorist."

Khan will soon be acting in well-known Indian filmmaker Karan Johar's film, "My name is Khan" — about how people with Muslim names are viewed with suspicion internationally after the terror attacks in the United States on Sept. 11, 2001.

-Indian Muslim actor Shah Rukh Khan faces extra airport security checks

The da Vinci Surgical System

Intuitive Surgical- the future of surgery

World Bank on Second Life

The Doing Business team will present its 2008 report - which ranks 178 economies on the ease of doing business - to the Second Life residents at the Activ8 Island Theater

Social, Technical and Economic Consequences of the Internet

Lecture of Vinton G. Cerf, Vice President and Chief Internet Evangelist for Google, Inc

Assorted Podcasts

The Best of the Podcasts;
Should American Workers Fear or Embrace Globalization?
Featuring Jagdish Bhagwati, Author, In Defense of Globalization (new edition) and Matthew Slaughter, Tuck School of Business, Dartmouth University (Cato event)

The Rest;
Ecohydrology, Derek Eamus

Libertarianism and the family
Does libertarianism bear a measure of responsibility for the current state of social disarry in America? Brian Doherty, a west coast libertarian, and Kay Hymowitz, a conservative Democrat from Manhattan, discuss family values with respect to what some would see as two competing political philosophies.

Cool it: Bjorn Lomborg
See errata for the book

The Stuff of Thought with Steven Pinker

Matt Ridley - science writer and banker
Matt Ridley has been a science writer for The Economist and The Daily Telegraph in England. As Chairman of The Northern Rock Bank, he's seen the bank give 5% of its profits to charity. But recently, with the US credit crisis, there's been a run on the bank and customers have queued to withdraw their money. Jane Hutcheon reports on Matt Ridley's move from science journalism to banking.

To End Another War: Richard Holbrooke


Thinking and judging with Hannah Arendt
Attending the trial of Adolph Eichmann, the war criminal, the philosopher Hannah Arendt was struck not by his satanic evil but by how unthinking he was. This week Max Deutscher, author of a recent book on Arendt's work, discusses her views on thought, thinking and judging

Immunology
October 2007 marks the 50th anniversary of the publication of Sir Frank Macfarlane Burnet's clonal selection theory. Dr Philip Hodgkin from the Walter and Eliza Hall Institute in Melbourne talks about past and present research in the field of immunology

Robert Novak on "the government we deserve"

Iraq: Vietnam in the sand?

Iran's Nuclear Industry

Dawkins' God: Genes, Memes, and the Meaning of Life

History Podcast- 18th Century British Aesthetics

English Taste (BBC, In Our Time);

In the mid 18th century the social commentator, George Coleman, decried the great fashion of his time:

“Taste is at present the darling idol of the polite world…The fine ladies and gentlemen dress with Taste; the architects, whether Gothic or Chinese, build with Taste; the painters paint with Taste; critics read with Taste; and in short, fiddlers, players, singers, dancers, and mechanics themselves, are all the sons and daughters of Taste. Yet in this amazing super-abundancy of Taste, few can say what it really is, or what the word itself signifies.”

"Are you happy with FEMA's response so far?"

The U.S. government's main disaster-response agency apologized on Friday for having its employees pose as reporters in a hastily called news conference on California's wildfires that no news organizations attended.

The Federal Emergency Management Agency, still struggling to restore its image after the bungled handling of Hurricane Katrina in 2005, issued the apology after The Washington Post published details of the Tuesday briefing.

"We can and must do better, and apologize for this error in judgment," FEMA deputy administrator Harvey Johnson, who conducted the briefing, said in a statement. "Our intent was to provide useful information and be responsive to the many questions we have received."....

he agency had called the briefing with about 15 minutes notice as federal officials headed for southern California to oversee and assist in firefighting and rescue efforts. Reporters were also given a telephone number to listen in on but could not ask questions.

But with no reporters on hand and an agency video camera providing a feed carried live by some television networks, FEMA press employees posed the questions for Johnson that included: "Are you happy with FEMA's response so far?"

According to Friday's Post account, which Walker confirmed, Johnson replied that he was "very happy with FEMA's response so far."

-US agency apologizes for news conference on fires

Education, Education, Education

What single intervention would do the most to improve the health of people living on less than $1 a day?

Related
Education and Health: Evaluating theories and evidence,
A Surprising Secret to a Long Life: Stay in School

Explainer of the Day

Has Middle America Stagnated?

Lessons from recent financial turmoil

Ajay Shah gives a set of assorted links

South America in 21st Century

Daniel Alarcón with Fareed Zakaria

Was it nuclear?

New commercial satellite photos show that a Syrian site that Israel bombed last month no longer bears any obvious traces of what analysts said appeared to have been a partly built nuclear reactor.

Two photos, taken Wednesday from space by rival companies, show the site near the Euphrates River to have been wiped clean since August, when imagery showed a tall square building there measuring about 150 feet on a side.

-Photos Show Cleansing of Suspect Syrian Site

Innovation doesn't grow on trees

On a marshy peninsula 50 miles from this Red Sea port, King Abdullah of Saudi Arabia is staking $12.5 billion on a gargantuan bid to catch up with the West in science and technology.

Between an oil refinery and the sea, the monarch is building from scratch a graduate research institution that will have one of the 10 largest endowments in the world, worth more than $10 billion.

Its planners say men and women will study side by side in an enclave walled off from the rest of Saudi society, the country’s notorious religious police will be barred and all religious and ethnic groups will be welcome in a push for academic freedom and international collaboration sure to test the kingdom’s cultural and religious limits.

This undertaking is directly at odds with the kingdom’s religious establishment, which severely limits women’s rights and rejects coeducation and robust liberal inquiry as unthinkable.

For the new institution, the king has cut his own education ministry out the loop, hiring the state-owned oil giant Saudi Aramco to build the campus, create its curriculum and attract foreigners.

Supporters of what is to be called the King Abdullah University of Science and Technology, or Kaust, wonder whether the king is simply building another gated island to be dominated by foreigners, like the compounds for oil industry workers that have existed here for decades, or creating an institution that will have a real impact on Saudi society and the rest of the Arab world.

-Saudi King Tries to Grow Modern Ideas in Desert

The New Way to be Smart

Why Thinking-By-Numbers is the New Way to be Smart- Ian Ayers at LSE

Be careful with that growth regressions

Another interesting paper;
Jayant Ray and Francisco L. Rivera-Batiz, “An Analysis of Sample Selection Bias in Cross-Country Growth Regressions.”

Sample sizes in cross-country growth regressions vary greatly, depending on data availability. But if the selected samples are not representative of the underlying population of nations in the world, ordinary least squares coefficients (OLS) may be biased. This paper re-examines the determinants of economic growth in cross-sectional samples of countries utilizing econometric techniques that take into account the selective nature of the samples. The regression results of three major contributions to the empirical growth literature by Mankiw-Romer-Weil (1992), Barro (1991) and Mauro (1995), are considered and re-estimated using a bivariate selectivity model. Our analysis suggests that sample selection bias could significantly change the results of empirical growth analysis, depending on the specific sample utilized. In the case of the Mankiw- Romer-Weil paper, the value and statistical significance of some of the estimated coefficients change drastically when adjusted for sample selectivity. But the results obtained by Barro and Mauro are robust to sample selection bias...

In the Mankiw-Romer-Weil (1997) paper, we found that using their 75-country sample leads to the exclusion of a number of low-income and middle-income countries that results in a substantial sample selection bias. The value and statistical significance of the estimated growth equation coefficients reported by Mankiw-Romer-Weil for this sample of countries change drastically when adjusted for sample selectivity. But in re-examining these results using Mankiw-Romer-Weil’s 98-country sample, we found much smaller differences in estimated coefficients. The impact of sample selection bias on the Mankiw-Romer-Weil results is thus dependent on the choice of sample.

Related;
Growth Regressions and Policy Advising

I have long been skeptical about how much one can learn from cross-country growth regressions. In the early 1990s, I wrote one paper in that literature, coauthored with David Romer and David Weil, and to my surprise, it turned out to be my most cited paper by a very large margin. In a subsequent paper, The Growth of Nations, I tried to spell out the reasons for my skepticism. I emphasized three problems, which I called the simultaneity problem (it is hard to disentangle cause and effect), the multicollinearity problem (most of the potential determinants of growth are correlated with each other and imperfectly measured, making it hard to figure out which is the true determinant), and the degrees-of-freedom problem (there are more plausible hypotheses than data points). To some extent, the subsequent literature addresses some of my concerns. For example, there is more attention now to trying to find exogenous differences across countries, but the task is inherently difficult, so one should not expect to find definitive answers about the causes of growth from this literature.

Regressions: Why Are Economists Obessessed with Them?

Why are some countries richer than others? A skeptical view of mankiw-romer-weil's test of the neoclassical growth model

Externalities and Growth

"If ideas are the engine of growth and if an excess of social over private returns is an essential feature of the production of ideas, then we want to go out of our way to introduce external effects into growth theory, not try to do without them"- Lucas

Interesting working paper;
Externalities and Growth, Handbook of Economic Growth,
Peter J. Klenow and Andrés Rodríguez-Clare1

Externalities play a central role in most theories of economic growth. We argue that international externalities, in particular, are essential for explaining a number of empirical regularities about growth and development. Foremost among these is that many countries appear to share a common long run growth rate despite persistently different rates of investment in physical capital, human capital, and research. With this motivation, we construct a hybrid of some prominent growth models that have international knowledge externalities. When calibrated, the hybrid model does a surprisingly good job of generating realistic dispersion of income levels with modest barriers to technology adoption. Human capital and physical capital contribute to income differences both directly (as usual), and indirectly by boosting resources devoted to technology adoption. The model implies that most of income above subsistence is made possible by international diffusion of knowledge.

Countries with high R&D spending relative to GDP do not grow systematically faster

Male Circumcision and AIDS

Male Circumcision and AIDS: The Macroeconomic Impact of a Health Crisis
Eric D. Werker, Amrita Ahuja, and Brian Wendell

Theories abound on the potential macroeconomic impact of AIDS in Africa, yet there have been surprisingly few empirical studies to test the mixed theoretical predictions. In this paper, we examine the impact of the AIDS epidemic on African nations through 2002 using the male circumcision rate to identify plausibly exogenous variation in HIV prevalence. Medical researchers have found significant evidence that male circumcision can reduce the risk of contracting HIV. We find that national male circumcision rates for African countries are both a strong predictor of HIV/AIDS prevalence and uncorrelated with other determinants of economic outcomes. Two-stage least squares regressions do not support the hypotheses that AIDS has had any measurable impact on economic growth, savings, or fertility behavior in African nations. However we do find weak evidence that AIDS has led to a slow-down in education gains, as measured by youth literacy, and a rise in poverty, as measured by malnutrition.

Study Guide on Multivariate Analysis

Study Guide The Chicago Guide to Writing about Multivariate Analysis

Study Guide The Chicago Guide to Writing about Numbers

Both books by Jane Miller

Preparing and Presenting Effective Research Posters.
How to Communicate Statistical Findings: An Expository Writing Approach.
What Can 'CSI' Teach Us about Statistical Literacy

Development Economics Research Ideas

Dani Rodrik writes;

In my mind, the next big challenge is to integrate the work on macro (mostly growth, trade, and finance) with the work on micro (mostly health, education, and evaluation). A few people are working in that intersection, but not nearly enough in my view. The micro economists face the challenge of demonstrating that their work can say something about economy-wide growth patterns and differentials--the strongest determinant of poverty patterns in the world. Meanwhile, macro types have to develop evidence that passes the microeconomists' more demanding requirements.

See also the papers for Northeast Universities Development Consortium Conference to get a flavor.

When you go to the museum remember the following

Ramachandran's The eight laws of artistic experience

1 The ‘peak shift principle’ makes exaggerated elements attractive

2 Isolating a single cue helps to focus attention

3 Perceptual grouping makes objects stand out from background

4 Contrast is reinforcing

5 Perceptual ‘problem solving’ is also reinforcing

6 Unique vantage points are suspect

7 Visual ‘puns’ or metaphors enhance art

8 Symmetry is attractive

Related;
The Cognitive Science of Art: Ramachandran's 10 Principles of Art, Principles 4-10

The science of art: a neurological theory of aesthetic experience

Phantoms in the Brain

Vilayanur Ramachandran at TED- the best 25 minutes of my day.

Capgras delusion / Phantom limb /learned paralysis /Synesthesia

Related;
Phantoms in the Mind;

Ramachandran points out elsewhere that for sciences that are still in its infancy (like neuroscience and psychology) demonstration-style experiments play an especially important role. He notes for example, �in recent decades all medical students were taught that ulcers were caused by stress, which leads to excessive acid production that erodes the mucosal lining of the stomach and duodenum, producing the characteristic craters or wounds we call ulcers. And for decades doctors treated it with antacids, histamine receptor blockers, vagotomy (cutting the acid-secreting nerve that innervates the stomach) or even gastrectomy (removal of part of the stomach). But then a young resident physician in Australia, Dr. Bill Marshall, looked at a stained section of a human ulcer under a microscope and noticed that it was teeming with Helicobacter pylori- a common bacterium that is found in a certain proportion of healthy individuals. Since he regularly saw these bacteria in ulcers, he started wondering whether perhaps they actually caused ulcers.�

Neurology and the Passion for Art- another lecture on You Tube

The Emerging Mind

MIRROR NEURONS and imitation learning

How Do You Stop Agonizing Pain In an Arm That No Longer Exists? A Scientist Does It With Mirrors

Technology in the Global Economy- Free Book

Technology in the Global Economy by Jonathan Eaton and Samuel Kortum - draft chapters

Muslims in Netherlands drop significantly

There are significantly fewer Muslims in the Netherlands than previously believed, the country's Central Bureau for Statistics said Wednesday, after a review of its census techniques.

The CBS said it was cutting estimates to 850,000, or 5.2 percent of the country's 16.3 million population, from 1 million, or 6.1 percent.

The agency has switched to a survey-based technique in calculating how many Dutch Muslims there are, rather than counting them on the basis of their country of origin.

The main reason for the change is that the old technique underreported the number of non-Muslims immigrating from Muslim-majority countries. It also failed to take account of people who have converted to another religion or live secular lives and no longer identify themselves as Muslim.

There remain around 1 million first-generation non-Western immigrants in the country and 700,000 second-generation immigrants with one or more non-Western immigrant parent, according to CBS data.

The largest immigrant groups in the Netherlands are Turkish, Moroccan, and Surinamese — though immigration has been curtailed sharply since 2001 amid a crackdown. Poles are currently the largest source of new immigrants.

People who claim some Indonesian ancestry make up 2.4 percent of the Dutch population, but the bulk arrived during or shortly after the colonial period that ended after World War II and are no longer seen as immigrants.

-Dutch government statistics agency cuts estimate of Muslim population

The Mundell Movie

Do you know Robert Mundell's latest project?
It's a movie- a love story set in China.

Listen to the interview mentioned in the previous post. Tom Keene advices him to run the screenplay with Jonathan Spence at Yale.

China's Banking System Could Collapse

Robert Mundell, a Columbia University economics professor who won the Nobel Memorial Prize in economics in 1999, talks with Bloomberg's Tom Keene from New York about the 2007 Nobel Prize recipients, exchange rates, China's yuan policy and the U.S

Memo to Self

Read,
The General Theory of Second Best, by R. G. Lipsey; Kelvin Lancaster, The Review of Economic Studies, Vol. 24, No. 1. (1956 - 1957), pp. 11-32

The Minister of Information

Profile of Edward Tufte, NY Magazine

A Misleading Index?

-From The Economist, A.T. Kearney/FOREIGN POLICY Globalization Index™

Related;
Rethinking globalization: a modified globalization index
How Robust is the Kearney/Foreign Policy Globalisation Index?;

We argue that the Kearney/Foreign Policy (KFP) index of globalisation is constructed by making some problematic assumptions about the measurement, normalisation and weighting of the variables included in the index. We propose alternative measurement, normalisation and weighting rules, and using these rules, recalculate the ranking of the fifty countries, using the original KFP data. Specifically, we use, in various combinations: (i) variables 'adjusted' for geographical characteristics of countries; (ii) statistically optimal weights obtained by principal components analysis; (iii) a normalisation rule that treats different years of observations separately. We find that the country rankings change significantly when adjusted variables are used, indicating that the original KFP index is partially measuring geographical differences between countries.

Mr. Metaphor and the First Law of Petropolitics (another misleading chart that appeared in Foreign Policy)

Wisdom of the Crowd from World Bank

Via PSD Blog I learned;

Their dream might have just come true thanks to two highly innovative World Bank colleagues who recently launched iSimulate @ World Bank, a very "web 2.0" platform that allows users to organize collaborative economic forecasts (the platform is still in beta version, but interested users can pre-register to get an account).

iSimulate is a free platform for performing economic simulations. It allows individuals anywhere in the world to access some of The World Bank's macroeconomic models across the internet.

Some of the advantages of using iSimulate:
* Policy makers, students and others in developing countries are able to simulate domestic policies, analyze the impact of international developments and do cross-country analyses from remote locations.
* It is possible to organize collaborative forecasts and analyses of the world economy with teams of individuals spread across the globe.
* Provides a user-friendly and standardized interface to often complicated macroeconomic models.

Deabte for the Day

RAND Hits Back

Hot Working Papers

Mosquitoes: The Long-term Effects of Malaria Eradication in India
David Cutler, Winnie Fung, Michael Kremer, Monica Singhal

We examine the effects of malaria on educational attainment by exploiting geographic variation in malaria prevalence in India prior to a nationwide eradication program in the 1950s. Malaria eradication resulted in gains in literacy and primary school completion rates of approximately 12 percentage points. These estimates imply that the eradication of malaria can explain about half of the gains in these measures of educational attainment between the pre- and post-eradication periods in areas where malaria was prevalent. The effects are not present in urban areas, where malaria was not considered to be a problem in the pre-eradication period. The results cannot be explained by convergence across areas. We find gains for both men and women as well as for members of scheduled castes and tribes, a traditionally disadvantaged group.

"Many Children Left Behind? Textbooks and Test Scores in Kenya" (Michael Kremer, Paul Glewwe and Sylvie Moulin)

Macroeconomic Modeling for Monetary Policy Evaluation
Jordi Gali, Mark Gertler

We describe some of the main features of the recent vintage macroeconomic models used for monetary policy evaluation. We point to some of the key differences with respect to the earlier generation of macro models, and highlight the insights for policy that these new frameworks have to offer. Our discussion emphasizes two key aspects of the new models: the significant role of expectations of future policy actions in the monetary transmission mechanism, and the importance for the central bank of tracking of the flexible price equilibrium values of the natural levels of output and the real interest rate. We argue that both features have important implications for the conduct of monetary policy.

Do Political Parties Matter? Evidence from U.S. Cities
Fernando Ferreira, Joseph Gyourko

We examine whether partisan political differences have important effects on policy outcomes at the local level using a new panel data set of mayoral elections in the United States. Applying a regression discontinuity design to deal with the endogeneity of the mayor's party, we find that party labels do not affect the size of government, the allocation of spending or crime rates, even though there is a large political advantage to incumbency in terms of the probability of winning the next election. The absence of a strong partisan impact on policy in American cities, which is in stark contrast to results at the state and federal levels of government, appears due to certain features of the urban environment associated with Tiebout sorting. In particular, there is a relatively high degree of household homogeneity at the local level that appears to provide the proper incentives for local politicians to be able to credibly commit to moderation and discourages strategic extremism.

What Have We Learned From Market Design? Alvin E. Roth

This essay discusses some things we have learned about markets, in the process of designing marketplaces to fix market failures. To work well, marketplaces have to provide thickness, i.e. they need to attract a large enough proportion of the potential participants in the market; they have to overcome the congestion that thickness can bring, by making it possible to consider enough alternative transactions to arrive at good ones; and they need to make it safe and sufficiently simple to participate in the market, as opposed to transacting outside of the market, or having to engage in costly and risky strategic behavior. I'll draw on recent examples of market design ranging from labor markets for doctors and new economists, to kidney exchange, and school choice in New York City and Boston.

Diversity Visa Lottery- Get a permanent resident visa

The Congressionally mandated Diversity Immigrant Visa Program makes available 50,000 permanent resident visas annually, drawn from random selection among all entries to persons who meet strict eligibility requirements from countries with low rates of immigration to the United States.

Our State Department Web site for the 2009 Diversity Visa Program (DV-2009) is now open. The application submission period for DV-2009 is from 12:00PM EDT (GMT -4) on October 3, 2007 to 12:00PM EST (GMT -5) on December 2, 2007. The application form will only be available for submission during this period and this period only. Applications will not be accepted through the U.S. Postal Service.

Any advice on filling the forms appreciated.

Mother of All Corruption

The Sultan of Brunei, who is embroiled in the most expensive family feud in legal history, secretly transferred $US8 billion ($A9 billion) of state money into his personal bank account.

The money, which exceeds Brunei's entire annual gross domestic product, was paid in over four years.

It funded an extraordinarily lavish lifestyle, which included spending $100,000 on guards for the exotic bird cages at his palace.

The Sultan is suing his younger brother, Prince Jefri, whom he accuses of embezzling $8 billion during the 13 years that he was finance minister of the oil-and-gas-rich state...

The Sultan is an absolute monarch and controls every aspect of life there. The papers supplied by Freshfields, the London lawyers who act for the Brunei Investment Authority, which reports to the Sultan, include a 50-page list of monetary gifts to hundreds of those lucky enough to be the beneficiaries of the Sultan's largesse.

The total bill was $40 billion.

The gifts included $2,570,050 for masseuses and acupuncturists; $14,955,000 for a house supervisor in Singapore and $13,500,000 for a second house supervisor; $2,580,350 for a badminton coach; $12,000,000 for each of his five public relations officers listed as Yoya, Prall, Vicky, Shelly and Janet.

-Feuding sultan's secret billions exposed

Recommended Reading of the Day

James Watson, Black Intelligence, and New Research by Fryer and Levitt;

Roland Fryer and I have done some research on this topic which we think is potentially quite interesting and important — although we seem to be the only ones with this opinion at present. (The paper was rejected yesterday by the American Economic Review on the second round of review, and a search of Google Scholar reveals only two citations to the working paper version released in early 2006.)

In my work with Fryer, we analyzed a newly available nationally representative survey of children ages two and under, done by the Department of Education. Included in this study are tests of mental ability around a child’s first birthday. While you might think it would be impossible to capture anything meaningful at such a young age, it turns out that these measures of one-year-olds’ intelligence are somewhat highly correlated with IQ scores at later ages, as well as with parental IQ scores.

The striking result we find is that there are no racial differences in mental functioning at age one, although a racial gap begins to emerge over the next few years of life.

Is the US winning the war on drugs?

It depends on who you ask.

The Flow Approach to Labor Markets

The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links

How to Initiate a Growth Boom

Initiating a Growth Boom
By Ricardo Hausmann, Lant Pritchett, and Dani Rodrik

Accidental President of Brazil

Former President Cardosa talk at Columbia

Audio not very good-why don't everyone just use You-Tube.

2007 Annual Meetings, World Bank and IMF

2007 Annual Meetings, World Bank Group & International Monetary Fund Webcasts