Saturday September 8th 2012

‘Economics’ Archives

Pigovian taxes save lives

n January 1, 1991, the federal excise tax on beer doubled, and the tax rates on wine and liquor increased as well. These changes are larger than the typical state-level changes that have been used to study the effect of price on alcohol abuse and its consequences. In this paper, we develop a method to estimate some important effects of those large [...]

The Increased Role of the Minimum Wage

The Increased Role of the Minimum Wage

I am in the process of revising my intermediate macro book.  As I was updating the section on the minimum wage, I was struck by how much the data has changed over three years.  The minimum wage has a much larger role now than it did three years ago, in large part because of the legislated increase in the minimum wage from $5.15 to $7.25 [...]

Left-Digit Bias

Left-Digit Bias

Chapter 22 of my favorite textbook discusses various ways in which individual decisionmaking deviates from standard notions of rationality.  Here is a new one to me (from the NBER Digest):In Heuristic Thinking and Limited Attention in the Car Market (NBER Working Paper No. 17030), authors Nicola Lacetera, Devin Pope, and Justin Sydnor focus [...]

Fred Bergsten on Net Exports

Fred Bergsten on Net Exports

In today's NY Times, Fred says government policy should focus more on increasing net exports.  He says a lot of wise things, especially regarding the need for better intellectual property protection abroad.  One part of the article, however, puzzles me.  He writes:The artificially low value of the renminbi — it is 20 to 30 percent [...]

Why I am not very worried about inflation just now

Why I am not very worried about inflation just now

Click on graphic to enlarge.Several people have asked me in recent days if the Fed's aggressive attempts to get the economy going will lead to galloping inflation to go along with our weak economic growth.  It is possible that this might occur down the road, of course, but I don't see it happening just now.  The slack labor market has [...]

18. Impact of Trade Deficit on crisis and drop of Industrial production in the USA and 5 European major countries: France, Germany Italy, Spain and UK

18. Impact of Trade Deficit on crisis and drop of Industrial production in the USA and 5 European major countries: France, Germany Italy, Spain and UK

Graph 1. Real Value-Added of Industry per capita in France, Germany, Italy, Spain, the United Kingdom and the United States. Source: Elaborated by Guisan(2011) from OECD statistics.     Graph 2. Trade Balance of EU27 and industrial real value-added of EU5. Source: Elaborated by Guisan(2011) from Eurostat Statistics. Left axis for [...]

Krugman on Barro

Krugman on Barro

Paul's comment on Robert's latest column confuses me.  Paul shows a graph establishing that the investment share of GDP is procyclical, as if that refutes Robert's viewpoint about what ails the economy.  But that fact is hardly a surprise.  As I put it recently, "the most volatile component of G.D.P. over the business cycle is spending on [...]

17 Crisis, Development, Voice of Good Economists in Greece, Portugal and Spain, and comparison with other OECD countries. Euro-American Association Development Report 2011.

17 Crisis, Development, Voice of Good Economists in Greece, Portugal and Spain, and comparison with other OECD countries. Euro-American Association Development Report 2011.

Source: Guisan(2011) based on OECD National Accounts Statistics Greece: beautiful Egina The graph shows real value-added per capital in industrial sectors. One of the main causes of economic crisis in Greece, Portugal and Spain is their low level of industrial development in comparison with more advanced OECD countries. Countries with low levels [...]

A Question About Tax Incidence

A Question About Tax Incidence

A reader alerts me to this story:The expiration of the FAA reauthorization on Friday means some aviation taxes are no longer being collected. These include a 7.5 percent sales tax on U.S. air transportation and a 7.5 percent sales tax on the purchase of air miles, said fare watcher FareCompare.com. Additionally, taxes on jet fuel are also [...]

A Good Exam Question

A Good Exam Question

Dean Baker endorses and expands upon an idea of Ron Paul's.  I think the idea is crazy, but at least it is crazy in an interesting way.  Here it is, in a nutshell:According to Congressman Paul, to deal with the debt-ceiling impasse, we should tell the Federal Reserve to destroy its vast holding of government bonds.Because the Fed [...]

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