Celebrating humanity's flourishing through the spread of capitalism and the rule of law
07 Jul 2015 Leave a comment
in currency unions, economic history, Euro crisis, Public Choice Tags: Greece, Greek elections
The Coalition of the Radical Left[(Syriza) was founded in 2004 as a coalition of left-wing and radical left Greek parties.
Figure 1: Syriza vote percentages and Parliamentary seats won in Greek national elections
250 seats will be distributed on the basis of proportional representation, with a threshold of 3% required for entry into the Greek parliament. 50 additional seats are awarded as a majority bonus to the party that wins the largest number of votes.
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.
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.
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
05 Jul 2015 Leave a comment
in energy economics, macroeconomics Tags: forecasting errors, Oil prices, peak oil
Oil forecasting is hard, EIA edition bloombergview.com/articles/2015-… http://t.co/J2mvpKYrsc—
Justin Fox (@foxjust) April 16, 2015
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.
01 Jul 2015 Leave a comment
Percentage of people around the world who own smartphones, via @conradhackett. Note #China. http://t.co/wAOmIklVbW—
Legatum Institute (@LegatumInst) May 30, 2015
30 Jun 2015 Leave a comment
in currency unions, Euro crisis, fiscal policy Tags: Euroland, Greece, sovereign defaults
30 Jun 2015 Leave a comment
in economic growth, fiscal policy, international economic law, politics - USA, population economics Tags: ageing society, economics of immigration, Puerto Rica, sovereign defaults
Puerto Rico's debt is nearly half that of California for a population one-tenth the size on.wsj.com/1Kj5XPZ http://t.co/nM2aM8kWtP—
Nick Timiraos (@NickTimiraos) June 29, 2015
29 Jun 2015 Leave a comment
in business cycles, currency unions, economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), international economic law, international economics, macroeconomics Tags: game theory, Greece, Patrick Kehoe, sovereign default
28 Jun 2015 Leave a comment
in Euro crisis, poverty and inequality Tags: child poverty, EU, Eurosclerosis, family poverty
Spain's lost decade: one in three Spanish kids live in poverty or at risk of social exclusion: gu.com/p/42yx7/tw http://t.co/qg8PDla19z—
Guardian Data (@GuardianData) October 28, 2014
28 Jun 2015 Leave a comment
in currency unions, Euro crisis Tags: bank panics, bank runs, Greece, sovereign defaults
ATM line inside the Greek Parliament –> Περισσότεροι βουλευτές στο ΑΤΜ παρά στη συνεδρίαση protothema.gr/politics/artic… http://t.co/JeusE2pgUu—
Fabrizio Goria (@FGoria) June 27, 2015
26 Jun 2015 Leave a comment
in comparative institutional analysis, constitutional political economy, currency unions, Euro crisis, fiscal policy, macroeconomics, monetary economics Tags: EU, Euroland, Greece, sovereign borrowing, sovereign defaults, Thomas Sargent
23 Jun 2015 Leave a comment
in fiscal policy, macroeconomics, politics - Australia, politics - New Zealand, politics - USA, population economics, public economics Tags: Australia, British economy, New Zealand, taxation and the labour supply
Figure 1: Direct taxes on the average worker in Australia, New Zealand, USA and UK, 2001 – 2012
Source: OECD Factbook 2014
Taxes on the average worker measure the ratio between the amount of taxes paid by the worker and the employer on the country average wage and the corresponding total labour cost for the employer. This tax wedge measures the extent to which the tax system on labour income discourages employment.
The taxes included in the measure are personal income taxes, employees’ social security contributions and employers’ social security contributions. For the few countries that have them, it also includes payroll taxes. The amount of these taxes paid in relation to the employment of one average worker is expressed as a percentage of their labour cost (gross wage plus employers’ social security contributions and payroll tax).
An average worker is defined as somebody who earns the average income of full-time workers of the country concerned in Sectors B-N of the International Standard Industrial Classification (ISIC Rev. 4). The average worker is considered single without children, meaning that he or she does not receive any tax relief in respect of a spouse, unmarried partner or child.
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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