Finland and Holland have grown less than Iceland since 2007. Iceland went bankrupt in 2008. washingtonpost.com/blogs/wonkblog… http://t.co/gBEbDUhgYS—
Matt O'Brien (@ObsoleteDogma) July 17, 2015
Iceland went bankrupt in 2008
23 Jul 2015 Leave a comment
in currency unions, economic growth, Euro crisis, fiscal policy, macroeconomics Tags: Euroland, Eurosclerosis, Finland, Iceland, sovereign default, The Netherlands
French, German, Italian, Irish and Spanish equilibrium unemployment rates, 1968 – 2016
19 Jul 2015 Leave a comment
in business cycles, economic growth, economic history, fiscal policy, job search and matching, labour economics, macroeconomics, unemployment Tags: Celtic Tiger, equilibrium unemployment rate, Eurosclerosis, Germany, Ireland, Italy, natural unemployment rate, Rance, Spain
Figure 1 shows large contrasts in time path of equilibrium unemployment rates. For example, French and Italian equilibrium unemployment rates haven’t changed much since about 1986.
Figure 1: equilibrium unemployment rates, France, Germany, Italy, Ireland and Spain, 1968 – 2016
Source: OECD Economic Outlook June 2015 via OECD StatExtract..
Figure 1 also shows some fortuitous ups and downs in the German equilibrium unemployment rate. This estimate was available only from after German unification.
The equilibrium German unemployment rate rose from 6% to above 8% on the eve of the global financial crisis. Fortunately for Germany, major labour market reforms brought the equilibrium unemployment rate down as Germany moved into the global financial crisis.
The Spanish equilibrium unemployment rate had been terrible since about 1980, started to fall in the 1990s, then skyrocketed even before the onset of the global financial crisis – see figure 1.
There have been ups and downs in the Irish equilibrium unemployment rate – see figure 1. It was as high as 14% at the end of the Irish great depression of the 1970s and 1980s. The equilibrium Irish unemployment rate was 8% at the heyday of the Celtic tiger then slowly rose in the lead up to the global financial crisis.
Greece debt crisis in 90 seconds
18 Jul 2015 Leave a comment
in economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), great recession, international economics, law and economics Tags: Greece, sovereign defaults
Maggie Thatcher on the Greek crisis
17 Jul 2015 Leave a comment
in applied welfare economics, budget deficits, comparative institutional analysis, constitutional political economy, currency unions, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy, income redistribution, macroeconomics, Marxist economics, Public Choice, rentseeking Tags: Greece, growth of government, Margaret Thatcher, size of government
How to argue for inequality and neoliberalism when arguing dead set against it
17 Jul 2015 Leave a comment
in economic growth, economic history, human capital, income redistribution, labour economics, labour supply, politics - New Zealand, poverty and inequality, Public Choice, rentseeking Tags: Leftover Left, neoliberalism, top 1%
On 12 August last, Closer Together New Zealand posted a chart showing average hourly wages had been stagnant for 20 years and then started growing again in 1993. Closer Together New Zealand then rounded up the usual suspects of the Left over Left.
Later that month in a comment on that post, a chart was posted showing that inequality had been increasing quite rapidly in the late 1980s and early 1990s in New Zealand. There were a range of economic reforms Closer Together New Zealand didn’t like in the late 1980s and early 1990s.
Closer Together New Zealand did not notice their second chart showed there had been a large increase in inequality, and their first chart showed that this was followed by the return of regular average hourly wages after 20 years of stagnation.
I am not so vulgar as to suggest correlation is causation, but it is amusing to watch that one day a chart is posted showing a resumption of wages growth after 20 years of wage stagnation and the next day a chart is posted showing that the major economic developments in the preceding years were a large increase in inequality and substantial economic liberalisation.
To add to my amusement, a companion site Inequality A New Zealand Conversation posted a chart showing the top 1% had not had much at all in income growth for the last 20 years while most everyone else had. This spike in the incomes of the top 1% prior to about 1994 was followed by the resumption in average wages growth after 1994.
If government “programmes have been doing very little to help children out of poverty”, what halved child poverty in the last 20 years? Economic growth?
16 Jul 2015 Leave a comment
in economic growth, labour economics, labour supply, minimum wage, politics - New Zealand, poverty and inequality, unemployment, welfare reform Tags: child poverty, family poverty, family tax credits, in-work tax credits, social insurance, welfare reform, welfare state
RNZ: Govt advised in 2013 "social mobility" approach won't materially address child poverty. rnz.to/1RwVWoj http://t.co/nfd2gY0qcH—
Alastair Thompson (@althecat) July 14, 2015
Figure 1: child poverty (%) in New Zealand (before and after housing costs), 1982 – 2013
Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), Tables F.6 and F.7.
Greek and US great depressions compared
14 Jul 2015 Leave a comment
in business cycles, currency unions, economic growth, economic history, Euro crisis, global financial crisis (GFC), great depression, great recession, job search and matching, labour economics, macroeconomics, unemployment Tags: Greece
https://twitter.com/ianbremmer/status/620570062538309632/photo/1
Greek Depression vs US Depression:
Unemployment http://t.co/81efYi5Ajy—
ian bremmer (@ianbremmer) July 13, 2015
Richer is greener: environmentalists are Environmental Kuznets Curve deniers
07 Jul 2015 Leave a comment
in applied price theory, applied welfare economics, development economics, economic growth, economic history, energy economics, environmental economics, growth disasters, growth miracles, health and safety, industrial organisation, international economics, labour economics, law and economics, liberalism, property rights, public economics Tags: healthier is wealthier, Japan, Kuznets environmental curve, richer is greener, richer is safer
The Kuznets environmental curve describes an empirical regularity between environmental quality and economic growth. Outdoor water, air and other pollution first worse and then improves as a country first experiences economic growth and development.
While many pollutants exhibit this pattern in the Kuznets environmental curve, peak pollution levels occur at different income levels for different pollutants, countries and time periods. John Tierney explains:
In dozens of studies, researchers identified Kuznets curves for a variety of environmental problems.
There are exceptions to the trend, especially in countries with inept governments and poor systems of property rights, but in general, richer is eventually greener.
As incomes go up, people often focus first on cleaning up their drinking water, and then later on air pollutants like sulphur dioxide.
As their wealth grows, people consume more energy, but they move to more efficient and cleaner sources — from wood to coal and oil, and then to natural gas and nuclear power, progressively emitting less carbon per unit of energy.
When I was living in Japan in the mid 1990s, they just completed a period of rapid operation of the Kuznets environmental curve. I was told by my professors at Graduate School that in the 1960s, cities and prefectures welcomed polluting industries because of the better paid jobs they offered. At that time, shipping companies used like to go to Tokyo because the pollution in Tokyo Bay was so bad that it would clean all the barnacles off their ships. That made them sail faster.
Japanese incomes and wages doubled over the course of the 1960s. The Japanese voter was now prepared to support stricter pollution standards and environmental controls.
Life expectancy is at an all time high: buff.ly/1ICraAi http://t.co/jgRqKy8LfQ—
HumanProgress.org (@humanprogress) June 28, 2015
In the early 1970s, the ruling LDP stole the long-standing environmental policies of their opponents in a big crack down on pollution because the country could now afforded them.
Poverty has plummeted in East Asia and the world. buff.ly/1NtIDyY http://t.co/SsY3sf3kyH—
HumanProgress.org (@humanprogress) July 01, 2015
Plenty of developing countries are democracies now. Their people could demand through the ballot box higher environmental standards and clean tap water but they don’t because of its cost to economic development.
These 4 nations are 50% of mankind. That's 3.5 billion people who are living longer. buff.ly/1Kle6mU #health http://t.co/949oqisMsL—
HumanProgress.org (@humanprogress) June 30, 2015
The environmental movement lives in a state of denial regarding the relationship between economic growth and environmental quality.
OECD Better Life Index correlates with GDP
But US lower than poorer countries
& NZL higher than richer countries http://t.co/yrTCnO1B0l—
Max Roser (@MaxCRoser) June 26, 2015
Why does 1% of history have 99% of the wealth?
07 Jul 2015 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, economic growth, economic history, liberalism Tags: Deidre McCloskey, The Great Enrichment, The Great Escape, The Great Fact
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.
The reason why New Zealand should rule out helping Greece!
06 Jul 2015 Leave a comment
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, financial economics, fiscal policy, global financial crisis (GFC), macroeconomics Tags: bank runs, banking panics, Eurosclerosis, Germany, Greece, sovereign defaults
Greece is a tiny part of the European economies so it doesn’t matter that much to the rest of the European Union what happens to Greece. The only people will notice the sovereign default of Greece once the breathless journalism has died down are Greeks themselves as they rebuild their banking and monetary system against a background of a government run by coffee shop Marxists.
Greece in 7 charts
06 Jul 2015 3 Comments
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, fiscal policy, labour economics, labour supply, macroeconomics, unemployment Tags: Eurosclerosis, Greece
The extreme economic outlier that is Greece, in 7 charts: 53eig.ht/1GMgIFU http://t.co/gb3zkgUqqJ—
(@FiveThirtyEight) July 04, 2015
Doing business in the PIGS (Portugal, Italy, Greece and Spain) – World Bank rankings
03 Jul 2015 Leave a comment
in applied price theory, applied welfare economics, currency unions, economic growth, economics of bureaucracy, economics of regulation, Euro crisis, health and safety, income redistribution, industrial organisation, labour economics, law and economics, minimum wage, occupational regulation, property rights, Public Choice, rentseeking, survivor principle, unions, welfare reform Tags: cost of doing business, Eurosclerosis, Greece, Italy, PIGS, Portugal, Spain
Figure 1: Doing Business rankings, PIGS, 2014
Source: World Bank Doing Business 2015.
All in all, Italy and Greece are a dog of a place to enforce a contract. The long-suffering taxpayer is better off paying taxes in Greece than in Italy! Not surprisingly, trading across borders is the greatest strength in doing business in the PIGS. The European Union does have some benefits.
Figure 2: Doing Business rankings, Greece and Italy, 2014
Source: World Bank Doing Business 2015.
All in all, Italy and Greece are equally bad places to do business and Italy is much worse when it comes to taxes. About the only saving graces of Italy is the registration of property and the protection of minority interests in companies.
Figure 3: Doing Business rankings, Spain and Portugal, 2014
Source: World Bank Doing Business 2015.
Spain and in particular Portugal are much better places to do business than Italy and Greece.
Utopia, you are standing in it! 
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