Historical Tax Rates of Top 0.01% (15,000 returns reporting more than $8 million in 2010) visualizingeconomics.com/blog/2013/8/14… http://t.co/XygW0t0npu—
Catherine Mulbrandon (@VisualEcon) August 15, 2013
The tax rates of the top 1%
04 Aug 2015 Leave a comment
in applied welfare economics, entrepreneurship, fisheries economics, income redistribution, politics - USA, rentseeking Tags: entrepreneurial alertness, envy, taxation and entrepreneurship, taxation and investment, taxation and the labour supply, top 1%
Why Greece joined the Euro
06 Jul 2015 Leave a comment
in applied price theory, applied welfare economics, budget deficits, business cycles, comparative institutional analysis, constitutional political economy, currency unions, economic growth, economic history, Euro crisis, fiscal policy, fisheries economics, global financial crisis (GFC), international economics, macroeconomics, Public Choice, rentseeking Tags: Euro sclerosis, Greece, insurance attacks, sovereign defaults, speculative attacks
The roots of Greece’s crisis are simple. Before Greece joined the Eurozone, investors treated it as a middle-income country with poor governance — which is to say, a credit risk.
After Greece joined the Eurozone, investors thought that Greece was no longer a credit risk — they figured, if push came to shove, other Eurozone members like Germany would bail Greece out. They were wrong.
Michael Dooley put forward a theory of speculative attacks on currencies as insurance attacks on currencies for emerging markets after the East Asian financial crisis:
First generation models of speculative attacks show that apparently random speculative attacks on policy regimes can be fully consistent with rational and well-informed speculative behaviour.
Unfortunately, models driven by a conflict between exchange rate policy and other macroeconomic objectives do not seem consistent with important empirical regularities surrounding recent crises in emerging markets. This has generated considerable interest in models that associate crises with self-fulfilling shifts in private expectations.
In this paper we develop a first generation model based on an alternative policy conflict. Credit constrained governments accumulate reserve assets in order to self-insure against shocks to national consumption. Governments also insure poorly regulated domestic financial markets.
Given this policy regime, a variety of internal and external shocks generate capital inflows to emerging markets followed by successful and anticipated speculative attacks.
We argue that a common external shock generated capital inflows to emerging markets in Asia and Latin America after 1989. Country specific factors determined the timing of speculative attacks. Lending policies of industrial country governments and international organizations account for contagion, that is, a bunching of attacks over time.
His model was not within the context of a currency union but his basic theory is correct.
There are speculative attacks on a currency or a bank run after foreign markets revises their estimates of the available central bank reserves and international lines of credit to bail out the banking systems and/or foreign debt.
Michael Dooley was dealing with the emerging economies of Southeast Asia and their official lines of credit that insure their foreign exchange liabilities and domestic banking system. Greece is about lines of credit for similar purposes to other European union member states.
via 12 charts and maps that explain the Greek crisis – Vox and The Most Important Graphs of 2011 – The Atlantic.
Déjà vu all over again: Sovereign Funds, a History of Bad Timing Version
20 Feb 2015 Leave a comment
in economics of bureaucracy, fisheries economics, rentseeking Tags: New Zealand superannuation fund, sovereign wealth funds, state owned enterprises
Josh Lerner analysed about 2,600 sovereign fund investments over the last 25 years, to find that:
these funds are “trend chasers” rather than good market timers — they are likely to invest at home when domestic equity prices are higher, and invest abroad when foreign prices are higher. This tendency to shun assets when their prices are low has taken its toll on the returns at these funds…
sovereign fund investments made in a fund’s home country tend to do worse than foreign investments, at least in the short term. Industry price-to-earnings ratios of domestic investments tend to drop in the first year, while international investments have a positive change in the first year. Moreover, when politicians are involved in sovereign funds’ decision-making, more money is funnelled to poorly performing domestic deals
Exclusive economic zones around the world – New Zealand’s exclusive economic zone is rather large
08 Jan 2015 Leave a comment
in fisheries economics, international economic law, international economics, International law, resource economics Tags: exclusive economic zones, Law of the Sea, maps, national sovereignty
Sustainable resource management leads to the over-depletion of renewable resources
15 Oct 2014 Leave a comment
in fisheries economics, resource economics Tags: maximum economic yield, maximum sustainable yield
A common call among environmental movements is sustainable management. The the first thing I learnt in my honours course in natural resources economics is that sustainable management of a renewable resource leads to over-depletion of the renewable resource.
The example was given in regard to the economics of fisheries. Overfishing of fish stock from a sustainable development perspective results in a much larger harvest of fish than the maximum economic yield. The reason is simple. You don’t hunt down every last fish.
It is possible to keep catching fish and other biological resources well past the time it is profitable to do so without jeopardising the future of this stock or the forest.
Maximum sustainable yield or MSY is theoretically, the largest yield (or catch) that can be taken from a species’ stock over an indefinite period.
The diagram above this a very standard fisheries economics analysis dating from the 1950s. It compares the cost of fisheries effort with the revenue from the harvest.
The maximum economic profit is the usual system of comparing marginal revenue with marginal cost. After the point of maximum economic yield (MEY), any further fishing is simply unprofitable.
Sustainable management of the stock pays no regard to the cost of catching every last fish before you start depleting the biomass by not leaving enough spawning stock for the next season.
By not paying attention to the cost of catching fish, the sustainable management of fisheries catches too many fish, fish that is simply not profitable to catch in light of the effort needed in boats and days at sea to catch them.
Utopia, you are standing in it! 
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