By Philip LaneSaturday, February 21st, 2015
Ashoka Mody writes here.
By Philip LaneFriday, February 20th, 2015
This report is the primary ‘academic’ publication of the US administration – tons of interesting material here.
The ESRI has recently posted an advertisement for post-docs in Economics in a range of areas. Detailed information is available here.
We would be grateful if you could forward the link to any potentially suitable candidates you may know of.
ECB President Mario Draghi wrote to MEP Matt Carthy on ”several aspects of the Irish adjustment programme”. Available here.
By Philip LaneMonday, February 16th, 2015
I have posted the underlying data used in my recent SSISI paper here.
By Liam DelaneySaturday, February 14th, 2015
Famines are becoming smaller and rarer, but optimism about the possibility of a famine-free future must be tempered by the threat of global warming. That is just one of the arguments that Cormac Ó Gráda, one of the world’s leading authorities on the history and economics of famine, develops in this wide-ranging book, which provides crucial new perspectives on key questions raised by famines around the globe between the seventeenth and twenty-first centuries.
The book begins with a taboo topic. Ó Gráda argues that cannibalism, while by no means a universal feature of famines and never responsible for more than a tiny proportion of famine deaths, has probably been more common during very severe famines than previously thought. The book goes on to offer new interpretations of two of the twentieth century’s most notorious and controversial famines, the Great Bengal Famine and the Chinese Great Leap Forward Famine. Ó Gráda questions the standard view of the Bengal Famine as a perfect example of market failure, arguing instead that the primary cause was the unwillingness of colonial rulers to divert food from their war effort. The book also addresses the role played by traders and speculators during famines more generally, invoking evidence from famines in France, Ireland, Finland, Malawi, Niger, and Somalia since the 1600s, and overturning Adam Smith’s claim that government attempts to solve food shortages always cause famines.
Thought-provoking and important, this is essential reading for historians, economists, demographers, and anyone else who is interested in the history and possible future of famine.
Cormac Ó Gráda is professor emeritus of economics at University College Dublin. His books include Famine: A Short History and Black ’47 and Beyond: The Great Irish Famine in History, Economy, and Memory (both Princeton).
By Philip LaneFriday, February 6th, 2015
By Philip LaneThursday, February 5th, 2015
The latest report on global debt levels and deleveraging from McKinsey Global Institute: here.
The ECB has tonight withdrawn the eligibility as collateral for ‘normal’ liquidity provision of self-issued Greek bank paper guaranteed by the Greek government, effective February 11th. The banks must henceforth rely on ELA from the Greek central bank, permission for which is reviewed fortnightly by the ECB, next meeting February 18th. The ECB statement contains this sentence:
‘The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.’
Note that the decision is based on a fact! The opinion formed, presumably today, that the programme review may not be successfully completed, was reasonable yesterday and the day before, but has miraculously assumed the status of a fact this evening.
Surely the ECB would not deliberately encourage a run on the banks (presumed solvent, rightly or wrongly, if they are to be ELA-eligible) in a member state? Whaddya mean they did it before?
By Philip LaneWednesday, February 4th, 2015
Scott Sumner provides a valuable discussion of the shifting ideological biases of American economists in this piece.
By Philip LaneMonday, February 2nd, 2015
Patrick Honohan provides an accounting of the gains and losses from the property boom-bust cycle here.
By Philip LaneMonday, February 2nd, 2015
Speech by Benoit Coeure here.
Released by the IMF:
There is lots of detail in both reports but it is likely most attention will focus on paragraphs 48-52 of the ex-post evaluation (though it’s all pretty much been said before).
The 29th Annual Irish Economic Association Conference will be held at the Institute of Banking, IFSC, 1 North Wall Quay, Dublin 1 on Thursday May 7th and Friday May 8th, 2015. Edgar Morgenroth (Economic and Social Research Institute) is the local organizer.
The Association invites submissions of papers to be considered for the conference programme. Papers may be on any area in Economics, Finance and Econometrics.
The deadline for submitted articles is the 8th of February 2015 and submissions can be made through this site.
Please note that the Irish Economic Association awards two prizes for conference papers, the Denis Conniffe prize and the Novartis prize.
The Denis Conniffe prize of €500 is awarded for the best paper by a young author-presenter at the Irish Economic Association annual conference. To be eligible the author must be either (a) aged < 30 or (b) within 3 years of finishing a PhD. For co-authored papers, all co-authors must meet these criteria. If you are eligible for this award and would like to be considered for the prize, please let the conference organiser know, when submitting your paper. The prize award will be decided by the IEA council and will be announced at the annual conference.
The Novartis prize of €500, is sponsored by Novartis Ireland, is awarded to the best Health Economics paper presented at the Irish Economic Association annual conference. If you consider your paper to be in the “health economics” field and would like to be considered for the prize, please let the conference organiser know, when submitting your paper. Members of the IEA council or individuals affiliated to Novartis are not eligible for the prize. The prize award will be decided by the IEA council and will be announced at the annual conference.
By Philip LaneWednesday, January 21st, 2015
On January 15th, the one-day return to holding Swiss Francs from a Euro perspective was 16.9%. This is a high one-day return for any currency pair, but appears cataclysmic given the extremely low return volatility of the Swiss Franc from a Euro perspective in recent months. This one-day jump was a “239-sigma event” meaning that the magnitude of this return was 239 times the recent return volatility (using a 90-day historical estimate of volatility). In fact, in the period just before the sudden jump, the sample volatility of this exchange rate was even lower. Using a shorter 20-day volatility estimate, the sudden jump was a 400-sigma event.
It is interesting how closely the time-series behaviour of this exchange rate matches the predictions of Krugman’s 1991 model of a government-implemented exchange rate limit, in which traders credibly believe that the authorities will prevent the exchange rate from piercing the exchange rate limit. As the fundamentals for the exchange rate made the Swiss Franc greatly undervalued, the traded exchange rate settled down just near the government-imposed limit, with very low volatility. And then suddenly the credible promise became a non-promise.
Chalk one up for Krugman, in terms of the elegant fit between his theoretical model and this recent market experience. Several forex trading firms went bust, but they should have had better risk management systems.
By Philip LaneTuesday, January 20th, 2015
Slides, audio and video from this talk at IIEA yesterday - here.
By Philip LaneTuesday, January 20th, 2015
Friday January 30th. Details here.
By Liam DelaneyMonday, January 19th, 2015
By Philip LaneMonday, January 19th, 2015
Papers by Schoenmaker, Fatas and Eichengreen now online at conference page here.
Reminder: live webfeed available during the event.
By Liam DelaneySunday, January 18th, 2015
I was asked to provide links and suggestions in terms of policies to respond to unemployment in Ireland. The broad fiscal and monetary causes of unemployment are discussed in many other places and it is clear that a combination of a property bubble, banking collapse and policies that have kept aggregate demand too low are all contributing factors. In considering unemployment, it is clear that more than just the short run shock to income and consumption should be considered. There is substantial evidence that unemployment has substantial negative psychological effects that are scarring over life and also potentially self-perpetuating. Therefore it should get greater weighting in policy contexts than for models that just examine narrow financial variables. Below are some ideas on potential policy development.
(i) Bell and Blanchflower have written several papers on responding to unemployment in particular to youth unemployment. In one of the most directly relevant to policy, they list 10 potential policies for the UK environment. These are listed below. It is clear that some of these are more feasible than others in the Irish context. For example, people might find a raising of the school leaving age infeasible but a proxy policy such as the introduction of an Education Maintenance allowance is surely worth debating. Similarly, people may not think a fiscal stimulus (at least at Irish-specific level) is feasible but that does not negate the potential for examining the employment consequences of existing current and in particular capital spending. Also some of the policies below have been features of the Irish environment in various ways including increasing the number of back-to-education places.
a. The government should undertake a substantial fiscal stimulus focused on jobs, as soon as possible
b. Provide large cuts in income taxes and National Insurance Contributions aimed at the low paid and the young. For the unemployed, mortgage interest payments could also be paid by the government in the form of a loan, with the proviso that it would have to be paid back eventually.
c. Increase the education leaving age to eighteen starting in June 1st 2009 or as soon thereafter as is feasible.
d. Provide further encouragement for those in the age range 18-24 to undertake further/higher education by increasing the number of places available
e. Provide further encouragement for those in the age range 18-24 to undertake further/higher education by providing financial inducements for them to do so
f. Expand the numbers of teacher training places as soon as possible with an emphasis on training in further education
g. Do direct job creation through increased investment in the infrastructure with particular emphasis on ‘shovel ready’ projects that could start quickly.
h. Allow public sector and non-profit organizations to fill available vacancies by providing increased funding for two years
i. Temporary, limited and targeted expansion of ALMPs
j. Provide incentives to encourage the use of short-time working and job sharing as alternatives to redundancy and unemployment. These might take the form of time limited tax incentives
(ii) See the session from the 2012 Irish economy conference last year for a range of coherent ideas. The session on early childhood development is also very useful.
(iii) The role of better designed welfare and activation policies drawing from developments in the economics of evaluation is something that should be discussed further. Very few if any of the current government employment programmes have been or can be evaluated formally due to the way they are rolled out. For example, the evaluation of Jobbridge does not contain a sufficiently well-constructed control group to allow us to know what would have happened had Jobbridge not been rolled out. This is a problem across most areas of government intervention in the labour market and it hampers the ability to learn from programmes that are rolled out. The best way to achieve this would be to have someone who knows how to construct a causal evaluation assist in the process of writing the tenders for these evaluations, something that does not appear to happen at present.
(iv) I have posted here on a number of occasions about the potential role of understanding psychology in designing welfare policies and job activation. Many activation policies are based on models of human behaviour that are not grounded in empirical evidence. Denise Hawkes from UCL Institute of Education and others have been conducting very interesting behavioural trials in UK job centres (see recent Stirling conference for summary). This is early stage work but is an obvious direction for figuring out how to make government supports for people who are unemployment more effective and supportive. The redevelopment of FAS/SOLAS and the design of communication about welfare policies, education incentives and so on should integrate this literature.
(v) The key missing aspect from traditional models of job activation is the mental health effect of job loss. I have posted on this here recently and here. The work of Professor Richard Layard in promoting development of policy around unemployment and mental health has been one of the key breakthroughs in this area over the last decade. From what I can see it has gotten not very much attention in Ireland and it would be worth debating this here a lot more with a view to assessing whether some of the ideas should be implemented.
(vi) More generally, a lot of knowledge gaps exist including basic profiles of the unemployed in Ireland such as their processes of job search. While basic profiling has been taking place, there is not a well-developed model of job search such as could be constructed from the DWP job search study. We also know very little about interlinkages between debt, housing and unemployment though the central bank research is improving the situation in this regard. In general, the data available to study job search in Ireland could be improved substantially with more engagement between policy and academics.
By Philip LaneFriday, January 16th, 2015
The revised version of the paper I presented at SSISI is here.