Apr 29, 2011

No more double-blind refereeing process

From the American Economic Review's website:
Upon a joint recommendation of the editors of the American Economic Review and the four American Economic Journals, the Executive Committee has voted to drop the "double-blind" refereeing process for all journals of the American Economic Association. The change to "single-blind" refereeing will become effective on July 1, 2011. Easy access to search engines increasingly limits the effectiveness of the double-blind process in maintaining anonymity. Further, it increases the administrative cost of the journals and makes it harder for referees to identify an author's potential conflicts of interest arising, for example, from consulting. 

Moral of the story: when you can't apply a rule, drop it. 

Apr 27, 2011

The world is lumpy: Interesting statistics

Do we truly live in a globalised world?
  • only 2% of students are at universities outside their home countries
  • only 3% of people live outside their country of birth
  • only 7% of rice is traded across borders
  • only 7% of directors of S&P 500 companies are foreigners
  • less than 1% of all American companies have any foreign operations
  • exports are equivalent to only 20% of global GDP
  • FDI accounts for only 9% of all fixed investment
  • less than 20% of venture capital is deployed outside the fund’s home country
  • only 20% of shares traded on stockmarkets are owned by foreign investors
  • less than 20% of internet traffic crosses national borders
These interesting stats are from Pankaj Ghemawat “World 3.0”, cited in The Economist.

Apr 22, 2011

Learning about human behavior using data from the Titanic disaster

In a super sweet piece in the Journal of Economic Perspectives Bruno Frey and co-authors study how people behave under extreme conditions of life and death using archive data from the Titanic disaster.

They collected individual-level data on the passengers and crew on the Titanic and identified those who survived by a dummy. Regressing that dummy on a bunch of individual characteristics they found that while people in their prime were more likely to be saved, it was women—rather than men—who had a better chance of being saved. Children also had a higher chance of surviving. At the time of the disaster, the unwritten social norm of “saving women and children first” seems to have been enforced. However, they do find evidence suggesting that effects predicted using the standard homo economicus model are also important. People in their prime age drowned less often than older people. Passengers with high financial means, traveling in first class, were better able to save themselves. Crew members who had access to better informational and relational resources managed to survive more often than others aboard.

They conclude that the behavior of human beings is not random or inexplicable, but can be explored and, at least in part, explained by economic analysis. What a great use of data!

Apr 20, 2011

Has the WTO reached the level of UNCTAD?

The damage done to the credibility of the WTO of this ongoing impasse should not be discounted... The impasse is undermining the perception that the WTO is a place where governments can do serious business. Whether the WTO has sunk yet to the level of UNCTAD is, for me, an open question.
This is Simon Evenett blogging on VoxEU.org about the WTO's failure to conlcude the Doha Round.

Apr 19, 2011

Industrial policy: Swiss watches

The Sydney Morning Herald reports (via Camarone):

Mondaine, the maker of Official Swiss Railways watches, may have to shut a two-year-old factory because its timepieces are not Swiss enough... The future of the $10.6 million plant in Solothurn and its 110 workers would be jeopardised should larger rivals such as Swatch Group succeed in calls for fewer non-Swiss components to be allowed in Swiss-made timepieces...  Since 1971, watchmakers have been allowed to use non-Swiss components for less than 50 per cent of the value of the watch's movement, or motor... To keep its lead as other manufacturers shift to countries such as China in search of cheaper labour, the industry is trying to erect higher barriers to entry, which would make Swiss watches a scarcer luxury.
Barriers to entry give more monopolistic power to current watchmakers, allowing them to sell and export at higher prices and indeed makes them a scarcer luxury. But it doesn't keep watchmaking in Switzerland. What if Mondaine decides to move?  Can Switzerland be forever rich with this anti-business attitude that touches all sectors?

Apr 7, 2011


Via Tyler Cowen:
Six Lufthansa employees, including four flight attendants, have been arrested after sneaking in more than 63,000 pounds of out-of-circulation, €1 and €2 coins from China back to Germany over the last four years. ... when the German Central Bank takes the coins out of circulation, the two colors  are separated then sent to China to be melted down into scrap metal. A wily group in China reassembled the coins rather melting them, then sent them back to Germany with four LH flight attendants serving as “mules.”…The FAs would then take the coins to the Bundesbank (only the central bank in Germany accepts damaged coins) and turn them in for bills.

Apr 4, 2011

The great stagnation

The Great Stagnation, the ebook recently released by Tyler Cowen and much debated in the blogosphere, states that the "economic engines in the rich world are running ever slower as countries exhaust easy sources of rapid growth".  His most talked-about example is how a kitchen from 1973, complete with refrigerator, microwave oven and dishwasher, would strike a person living in 1900 as a marvel. A time-traveller from 1973, on the other hand, would find a modern kitchen fairly ordinary.

Not many people, including The Economist, are 100% convinced. "The evidence of improvement is all around. Communication is dramatically cheaper, easier and better than it was just a decade ago. Kitchens may look much as they did 30 years ago but living rooms and desktops look remarkably different."

But the total-factor productivity (TFP) timeline, provided by David Beckworth, makes you think about it. In a previous post he argued that Cowen failed to appreciate how dramatically our lives have changed since the advent of the internet and faster computing.  Now he is thinking these gains are but a faint shadow of what they could have been had TFP continued to grow at its 1947-1973 trend.

But do TFP data really capture the imporvements of this time and age? Not so sure.Still, I should probably read the book before claiming TC is wrong.