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Russia’s Economy and Deathonomics - Conversable Economist
Back in 1939, Winston Churchill famously said in a radio broadcast: "I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma ..." One might say something similar today about the state of Russia's economy. Since Russia's renewed invasion of Ukraine in 2022, international economic sanctions have
An Economic Policy Tradeoff between Speed and Fraud During the Pandemic - Conversable Economist
The eruption of the COVID-19 pandemic in March 2020 is less than five years ago: still, it has become hard (for me, at least) to recapture in my own head the fears and uncertainties of those first few months. The unemployment rate spiked from 3.5% in February 2020 to 14.8% just two months later in
Interview with Laura Alfaro: Globalization and the Great Reallocation - Conversable Economist
David A. Price of the Richmond Fed serves as interlocutor in an interview with "Laura Alfaro: On global supply chains, sentiment about trade, and what to learn from Latin America" (Econ Focus, Fourth Quarter 2024, pp. 22-25). Here are a couple of comments from Alfaro that stuck with me: On lessons for the United States
Nordhaus Reflects on Technology and Climate Change - Conversable Economist
William Nordhaus (Nobel '18) reflects on his pathway into and through economics in "Looking Backward, Looking Forward" (Annual Review of Resource Economics, 2024, 16: 1–20). He writes: "I first saw light in Albuquerque, New Mexico, at the dawn of World War II, in the lush Rio Grande River floodplain, with an irrigated alfalfa field outside
Are Theme Park Rides a Giffen Good? - Conversable Economist
It is canonical among economists that as the price of a good rises, the quantity demanded of that good falls (other factors held equal). The underlying logic is that a higher price for a certain good has two effects. The "substitution effect" is that a higher price for a certain good causes potential buyers to
Fall 2024 Journal of Economic Perspectives Free Online - Conversable Economist
I have been the Managing Editor of the Journal of Economic Perspectives since the first issue in Summer 1987. The JEP is published by the American Economic Association, which decided back in 2011–to my delight–that the journal would be freely available online, from the current issue all the way back to the first issue. You can download individual
Housing: Supply Chasing Demand - Conversable Economist
To explain the high and rising price of housing, the standard economic intuition is that growth in supply isn't keeping up with growth in demand. One piece of evidence supporting this intuition is the "vacancy rate"--that is, what share of owner-occupied housing or rental housing is empty? Here are a couple of figures from the
How Much Money from a Confiscatory Tax on the Uber-Wealthy? - Conversable Economist
Every now and then, I hear proposals to fund some program by taxing the wealthy--or even just confiscating wealth above a certain level. For the purposes of this post, I'm not interested in the question of whether this tax would be a good idea. (Shocking disclosure: I don't think it's a good idea.) I just
A Benefits Cliff in Washington, DC - Conversable Economist
Government attempts to assist household with low incomes face an inevitable practical problem. As income for a household rises, it will be necessary to phase out the government assistance. But what happens if--at least over a certain range of incomes--a previously low-income household that increases its earnings discovers that its government benefits are being decreased
The Fourth Industrial Revolution and the Future of Work - Conversable Economist
I occasionally pause for a moment to remember that just a few years ago, before we were concerned that AI would take all the jobs, we were worried that new robotics technologies would take all the jobs. And before that, we were worried that automation would take all the jobs. Can we learn something from
A Federal Guarantee of Paid Vacation? - Conversable Economist
The rules governing the US labor market are just different from other high-income countries in some way. One difference involves paid time off. Here's a figure from Betsey Stevenson, "A federal guarantee for earned paid time off" (Hamilton Project at the Brookings Institution, October 2024). You will notice that in this comparison across various high-income
The National Childcare Program During World War II - Conversable Economist
The United States has has a nationwide childcare program at one time in its history: a temporary program during World War II. Tim Sablik of the Federal Reserve Bank of Richmond tells the story and summarizes some economic research on the topic in "When Uncle Sam Watched Rosie's Kids: To support women working on the
Larry Summers on the Economics of AI - Conversable Economist
Joe Walker serves as interlocutor in "Larry Summers — AGI and the Next Industrial Revolution" (The Joe Walker Podcast, October 22, 2024). Here are a couple of points that caught my eye, but there is much more in the interview itself. Here's Summers on the long-term increase in economic output over time and the interrelationship
A Prescription for Fixing the US Healthcare System - Conversable Economist
Among the major issues not being discussed in the US presidential campaign are those facing the US healthcare system. The two main concerns are well-known. One is high cost. The US economy spends about $12,500 per person on health care in 2022, according to the OECD. The second- and third-highest countries, Switzerland and Germany, spend
Employment Levels for Low-Income Women and Men Since the 1990s - Conversable Economist
There is a widespread sense, not just in the United States but in European countries like Denmark, that government assistance for low-income households should be linked to participation in the labor force. So what do employment patterns look like for low-income American--that is, those who are also eligible for various means-tested government assistance programs? Lisa
The Puzzle of Japan’s Economy: When Productivity Gains Are Outside National Borders - Conversable Economist
In total size, Japan's economy is fourth-largest in the world, just behind Germany for third-largest. In per capita GDP, Japan is ahead of Spain and South Korea, although well behind Italy and France. With a life expectancy at birth of 84 years, ,Japan has one of the highest levels in the world. Clearly, Japan has
A Surge in US R&D Spending - Conversable Economist
From a conceptual point of view, the economics of research and development is the opposite of pollution. When a private party carries out an economic activity that leads to pollution, the private party gets the economic benefit, but the broader society bears the costs (in the jargon, a "negative externality"). However, when a private party
A Nobel for Acemoglu, Johnson, and Robinson: Institutions and Prosperity - Conversable Economist
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 has been awarded to Daron Acemoglu, Simon Johnson and James Robinson “for studies of how institutions are formed and affect prosperity.” Each year, the Nobel Committee helpfully publishes both a "Popular information" overview of of the award and a "Scientific Background" essay that goes into greater depth.
Interview with Paul Krugman: Economic Geography and Mysteries of Productivity - Conversable Economist
Cardiff Garcia of the Economic Innovation Group interviews Paul Krugman at The New Bazaar website (October 9, 2024). The interview has a number of points of interest. Here are two themes that caught my eye. The study of "economic geography" focuses on why economics activity may tend to cluster, or to spread out, or to
Politically Homeless in the Land of Economics - Conversable Economist
There are of course a variety of reasons unrelated to economic policy to choose between Kamala Harris, Donald Trump, and other candidates running for President of the United States. But as an economist ... It would be nice to vote for someone who acknowledges that the US budgets and the accumulating US debt are a
Interview with Samuel Bowles: Inequality over the Millennia - Conversable Economist
Orley Ashenfelter interviews Samuel Bowles "on his deep interest in the causes of inequality & his work to transform economics" ("The Work Goes On" podcast, posted October 7, 2024). The entire interview is worthwhile: for example, I did not know that Bowles attended school in a tent in India when he was 11 years old
Globalization: Coming to Grips with the Record - Conversable Economist
Back in high school, the first book I read making the arguments against global corporations and globalization was Global Reach, which had been published a few years earlier back in 1974. Since then, anti-globalization arguments have been a consistent drumbeat in the background. I remember controversies over the "Tokyo round" of world trade talks in
Brookings Papers on Economic Activity: Fall 2024 - Conversable Economist
Each fall and spring, the Brookings Institutions holds a conference with a set of papers from prominent economists on leading policy topics, with comments and discussion. The Fall 2024 conference happened last Thursday and Friday. You can go to the website and spend hours watching the whole thing, or you can pick and choose through
The Physicality of Technology: The High Frequency Trading Example - Conversable Economist
Economists commonly think about technology as an idea, but in one way or another, the technology interacts with physical forms--and these physical forms affect how the technology is applied and its social effects. In his da Vinci Medal Address, Donald MacKenzie considers some implications of this idea in "Material Political Economy" (Technology and Culture, July
US Drug Prices: Higher for Brand Names, Lower for Generics - Conversable Economist
Brand-name drugs in the United States cost more than in other countries. The primary reason is that the US has a sort-of-constrained but pretty free market in setting drug prices, while in other countries it is common for the government or national health service to give pharmaceutical companies what amounts to a take-it-or-leave-it offer: charge
The Arrival of Field Experiments in Economics - Conversable Economist
When most people think of "experiments," they think of test tubes and telescopes, of Petri dishes and Bunsen burners. But the physical apparatus is not central to what an "experiment" means. Instead, what matters is the ability to specify different conditions--and then to observe how the differences in the underlying conditions alter the outcomes. When
How Can One Tell if Openness to Trade Helps Economic Growth? - Conversable Economist
The nature of globalization is clearly shifting, but it's not clear to me that the overall level is diminishing. It does seem true the level of goods moving across international borders is rising much more slowly--or even not at all. However, the level of services being performed across international borders is rising substantially, and movements
Student Loans: Not Just About Attending College - Conversable Economist
Student loan debt took off around the year 2000. Adam Looney and Constantine Yanellis tell the story in "What Went Wrong with Federal Student Loans?" (Journal of Economic Perspectives, Summer 2024, pp. 209-236). They point out: "Between 2000 and 2020, the total number of Americans owing federal student loans more than doubled from 21 million
The Double Irish Dutch Sandwich: End of a Tax Evasion Strategy - Conversable Economist
I wrote a decade ago about the Double Irish Dutch Sandwich, a strategy for corporations to evade taxes that was widespread and large-scale enough to come to the attention of the International Monetary Fund. But due to various changes in national and international tax agreements, the strategy seems to have faded substantially. Ana Maria Santacreu
Foreign Students in US Higher Education - Conversable Economist
Total enrollment in degree-granting US institutions of higher education took a big jump in the first decade of the 21st century, but has levelled out or even declined a bit since then. According to the National Center for Education Statistics, total enrollment went from 15.3 million in 2000 to 21.0 million in 2010--an increase of
US Productivity Growth: Downside, Upside - Conversable Economist
Over time, a rising US standard of living is driven by productivity growth. Michael Peters succinctly describes the problem in "America Must Rediscover Its Dynamism" (Finance & Development, September 2024). He writes: The US economy has a multitrillion-dollar problem. It’s the dramatic slowdown in productivity growth over the past couple of decades. Between 1947 and
Lab-Grown Diamonds: An Origin Story - Conversable Economist
Technological progress in the production of lab-grown diamonds keeps improving, while technological progress in production of natural diamonds does not. Javid Lakha provides an overview of both the history of lab-grown diamonds and the implications for everything from jewelry to industrial cutting equipment in "Lab-Grown Diamonds" (Works in Progress, Issue 16, August 30, 2024). Here,
Going Cashless: Benefits and Costs - Conversable Economist
There was a time, not all that long ago, when the primary options for making everyday payments were cash and checks. Those times are past. Julian Morris and Ben Sperry discuss the tradeoffs and consequences in "The Cost of Payments: A Review," (International Center for Law & Economics Working Paper, August 28, 2024). They begin with
Everything You Want To Know about Inequality: The IFS Deaton Review - Conversable Economist
Five years ago, the Institute for Fiscal Studies, with support from the Nuffield Foundation, launched the IFS Deaton Review. It would be difficult to overstate the energy and scope of this effort. As a journal editor, I am frankly awed by it. Two big pieces of output are now available. First, there is an "Evidence
Interview with Greg Mankiw: New Keynesian Macro, Growth, and Economic Policy - Conversable Economist
Jon Hartley interviews Greg Mankiw on topics including New Keynesian macroeconomics, growth, and economic policy more broadly at his Capitalism and Freedom website (August 20, 2024, video and transcript available). Here are a few of the comments that caught my eye. On big models and small models in studying the macroeconomy: [O]n the issue of
Contributive Justice - Conversable Economist
Today is the Labor Day holiday in the United States. Our jobs are one of the ways in which we contribute to society as a whole. In this spirit, I pass along some thoughts from the 2020 book by Michael Sandel, The Tyranny of Merit. Toward the end of the book (pp. 206-213), he raises
Physical Realities of Moving to Cleaner Energy - Conversable Economist
I sometimes become exasperated when progress toward clean energy is measured by, say, the amount of a government tax credit for buying electric vehicles, or the the announced dates for when a state or city will reach zero carbon emissions, or whether an international agreement is signed or not. My annoyance is that while policy
Simon Newcomb on Public Opinions and Economic Insights - Conversable Economist
Simon Newcomb (1835-1909) is largely unknown today, but he was a highly prominent economist back in the day: as one example, he was active in the disputes that led to the founding of the American Economic Association back in 1885. In July 1893, he published an essay on "The Problem of Economic Education" for the
The US Decouples from China, While the EU Tightens Ties - Conversable Economist
Through the Trump and Biden administrations, it has been a policy goal to reduce imports from the US to China. While US imports China have declined, EU imports from China have been on the rise. Mary E. Lovely and Jing Yan tell the story in "While the US and China decouple, the EU and China deepen trade
Must Optimism Be Naive? Thoughts from Wynton Marsalis and His Definition of Jazz - Conversable Economist
There's a certain more-cynical-than-thou mindset, which sometimes passes for sophistication, in which optimism is derided as naive. I'm not a fan. As someone of the "radical moderate" persuasion, it seems to me possible to steer between a blind optimism that we live in the best of all possible worlds and a blistering cynicism that the