No. From Thomas J. Miles and Adam B. Cox in the JLE:
Prior research investigates whether immigrants commit more crimes than native-born people. Yet the central policy used to regulate immigration — detention and deportation — has received little empirical evaluation. This article studies a recent policy innovation called Secure Communities. This program permits the federal government to check the immigration status of every person arrested by local police and to take the arrestee into federal custody promptly for deportation proceedings. Since its launch, the program has led to a quarter of a million detentions. We utilize the staggered rollout of the program across the country to obtain differences-in-differences estimates of its impact on crime rates. We also use unique counts of the detainees from each county and month to estimate the elasticity of crime with respect to confined immigrants. The results show that the Secure Communities program has had no observable effect on the overall crime rate.
That is once again via the excellent Kevin Lewis.
That is the next NBER macro session, the authors are Acemoglu, Akcigit, and Kerr, the pdf is here, and here is the abstract:
The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input supplying industries) and supply-side shocks propagate downstream (to customer industries) and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks, sometimes by severalfold. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various different types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.
As I am doing today, my live-blogging will be in the comments of this post…
That is the next NBER macro paper at these sessions, by Fang, Gu, Xiong, and Zhou, here is the pdf. The abstract is this:
We construct housing price indices for 120 major cities in China in 2003-2013 based on sequential sales of new homes with the same housing developments. By using these indices and detailed information on mortgage borrowers across these cities, we find enormous housing price appreciation during the decade, which was accompanied by equally impressive growth in household income,e xcept in a few first tier cities. Housing market participation by households from the low-income fraction of the urban population remained steady. Nevertheless bottom-income mortgage borrowers endured several financial burdens by using price to‐income ratios over eight to buy homes, which reflected their expectations of persistently high income growth into the future. Such future income expectations could contract substantially in the event of a sudden stop in the Chinese economy and present an important source of risk to the housing market.
That sounds a bit ordinary, and I didn’t have much time to read through this one in advance, so let’s see from the presentation what is new in there, my live-blogging will be in the comments section of this post…
That is the NBER paper by Chang, Chen, Waggoner, and Zha, pdf here. Here is the abstract:
We make three contributions in this paper. First, we provide a core of macroeconomic time series usable for systematic research on China. Second, we document, through various empirical methods, the robust findings about striking patterns of trend and cycle. Third, we build a theoretical model that accounts for these facts. The model’s mechanism and assumptions are corroborated by institutional details, disaggregated data, and banking time series, all of which are distinctive of Chinese characteristics. The departure of our theoretical model from standard ones offers a constructive framework for studying China’s macroeconomy.
Not a very illuminating abstract, but I thought this was an important piece. There is now real and apparently reliable time series information for China! And with the accompanying model, the authors find there is low consumption growth and overcapacity of heavy industry with rising debt risks, both problems stemming from the preferential credit access given to large Chinese firms. That is hardly news, but it is nice to see it confirmed and measured, I call that Austro-Chinese business cycle theory
I’ll again be live-blogging the presentation and discussion once it is up and running, in the MR comments section to this post, feel free to add your own comments.
That is the Gennaioli, Ma, and Shleifer paper being presented at the NBER macro conference, pdf here. There are two key points to this paper. First, actual data on the expectations of corporate CFOs have predictive power for investment, even when Tobin’s Q is measured. Second, expectations about future earnings are not rational in the Lucasian sense. I’ll update with remarks in the comments section of this post as the discussion proceeds (feel free to leave comments on my comments), again note that I am not allowed to attribute specific comments to individuals other than the presentation itself.
Today I am at the NBER annual macroeconomics conference as an observer. The program and papers are here, and they look very interesting. You may be hearing more about this later; I am allowed to blog the presentations but not attribute specific comments to individuals. The Bernanke talk I cannot cover at all.
A conglomerate on the order of the old Gulf + Western, China National runs more than 160 cigarette brands, manufactured in about 100 factories across the country, and uses its earnings to invest in banks, luxury hotels, a hydroelectric plant, a golf course, and even drugmakers. Most of its money goes to its owner, the Chinese government; the tobacco industry accounts for about 7 percent of the state’s revenue each year [emphasis added], and China National controls as much as 98 percent of the market. All told, the industry in China employs more than 500,000 Chinese. They are among roughly 20 million people who get some income from tobacco, including members of 1.3 million farming households and workers at 5 million retailers, according to government figures. The extent to which the government is interlocked with the fortunes of China National might best be described by the company’s presence in schools. Slogans over the entrances to sponsored elementary schools read, “Genius comes from hard work. Tobacco helps you become talented.”
From Andrew Martin, there is more here. Of course this helps explain why the Chinese government has such mixed feelings about conducting a successful anti-tobacco campaign. By the way, do any of you know of a source on the 7 percent figure?
1. Dead Wake: The Last Crossing of the Lusitania, by Erik Larson. My favorite of his books, fun and readable as you would expect, many interesting details including what happens to you in water at 55 degrees Fahrenheit.
2. Philip Glass, Words Without Music. “A lot of Einstein on the Beach was written at night after driving a cab.” An excellent memoir of both Glass’s early life and the New York creative world up through 1976 or so.
3. Colm Tóibín, On Elizabeth Bishop. A good example of a book I wish was longer than it was, it is shorter than its 199 pp. might indicate. As a poet I much prefer Bishop to her correspondent Robert Lowell; their letters collection by the way makes for superb reading and drama.
4. Njal’s Saga. I just taught this in Law and Literature, and on the re-read I enjoyed it more than expected. The core model is that arbitration is binding, provided the expected outcome does not stray too far from what violence would bring. The best way to go through the book is first to master the internal story of sections 121-145, then read to the end, and finally go to the beginning. A recommended guide is William Ian Miller’s “Why is Your Axe So Bloody?”; yes that is the same Miller who wrote very good books on disgust and humiliation.
Just when it seemed the image of bankers couldn’t get any more battered or bizarre, the Dutch central bank has fired a 46-year-old female employee claimed to have been working after hours as a highly paid prostitute – specialising in sadomasochism.
The Dutch central bank forbids “indecent behavior,” she had failed to register with the local chamber of commerce or pay appropriate taxes, and she was in violation of zoning laws.
There is more at the link.
I will second the recommendation. Michael is a political scientist at UCLA, and this volume is one of the most important social books of the last fifteen years. He shows the importance of “common knowledge” in explaining social phenomena, namely we create rational rituals so that others can see we are acting in concert with them. It’s all about public ceremonies, parades, dances, and meetings. It’s also why good Super Bowl commercials can be so effective. The work dates from 2001, but it seems more relevant each year.
Business Insider puts it well:
Chwe’s concept is readily apparent in the dynamics of social media. When a media organization posts a link to an online article on Facebook, for example, and people begin “liking” it, others will begin to assign some level of importance to the story and some will be compelled to share it and discuss it. The idea of “common knowledge” may also lend itself to thinking about advertising strategies on social media.
In this regard, by the way, the openness of the internet may make us more rather than less conformist. Here is a good review of the book.
That is a new must-read post from Dani Rodrik. Here is a pieced-together excerpt:
…low domestic saving has been the perennial constraint on the Turkish economy…Under Erdogan, the constraint has become ever more binding, as the saving rate (and particularly, the private saving rate) has come down…
So how has Turkey overcome this constraint over the last 12 years? By applying the same recipe of macroeconomic populism it has always relied on to generate growth – by borrowing, especially short-term, to sustain domestic consumption and investment. This strategy typically bears fruit as long as finance is cheap and available. But it comes at the cost of accumulating fragility and increased vulnerability to reversals in financial market sentiment. It often ends up in crisis as the funds dry up.
The novelty under AKP is that the populist strategy was modified in two respects. First, there was much greater reliance on foreign capital inflows and less reliance on printing money. Second, there was a switch from public-sector to private-sector borrowing.
There are useful pictures at the link.
Joseph Heath’s Enlightenment 2.0 is one of the best books I have read in years. I offer an extensive review at the New Rambler. Here’s the opening:
Joseph Heath is a Canadian philosopher who is unusually conversant with economics and also unusually capable of writing sparkling prose for a popular audience. His earlier book Economics Without Illusions was split into 6 right-wing fallacies and 6 left-wing fallacies, and he did a commendable job on both sides. Heath has his own left-liberal point of view: the subtitle of Economics Without Illusions was Debunking the Myths of Modern Capitalism and in the original Canadian version, the book was subtitled Economics For People Who Hate Capitalism. However, I like capitalism and I still enjoyed it! Enlightenment 2.0 is Heath’s foray into political philosophy. Drawing on psychology, economics and political science, Enlightenment 2.0 is a brilliant defense of reason, an important call for a more rational politics, and a great read.
Heath is worried that the foundations of liberal society are being eroded by the cultural denigration of reason combined with ruthlessly competitive economic and political forces that exploit the biases and hooks of our unreasoning mind.
Although I admire Enlightenment 2.0, I answer the question of the post differently than does Heath and my review contains plenty of critical commentary. Ayn Rand, Idiocracy, mind viruses and other interesting characters make an appearance. Read the whole thing.
His comment is very good, here is his first major paragraph:
There is no disputing the premise that technological advances are resulting in better information. But better information doesn’t imply more symmetric information. This is true even if the information is available to all parties. Consider genetic testing. A test that is highly predictive of a future disease creates symmetric information about health outcomes but at the same time probably creates asymmetric information about what really matters for market outcomes: the patient’s future health care costs. Indeed, health insurance companies will have exclusive access to a wealth of data that predicts the future costs of an applicant with a given array of genetic markers. Thus what would appear at first glance to level the informational playing field in fact will likely only shift information rents from patients to providers. There is no telling if this will lead to better or worse market outcomes overall.
Do read the whole thing, interesting throughout. Here is my original essay with Alex.
Here is a David Auerbach Slate article criticizing us, we’re not just wrong, we are “so, so wrong.” Basically he responds to what his own rigid ideological categories imply what we must have meant, rather than what we actually wrote. Rather than “make regulation obsolete” we wrote: “The American regulatory apparatus is increasingly out of date. It is geared to problems that peaked in the previous generation or even earlier. We should revisit the topic of regulatory reform, with an eye toward making more regulations temporary, or having automatic sunset provisions, unless they are consciously and intentionally renewed for reasons of their continuing usefulness.”
The strangest part of his response comes on the health care issue, where we concede a major point to “the other side” (on policy, not on whether asymmetric information has significantly diminished), but he is simply unable to recognize this and thus he infers we must be saying something wildly wrong (“they seem to suggest that individuals should pay into a policy exactly what they will get out of it”).