Ing-Haw Cheng, Sahil Raina and Wei Xiong have a new paper in the AER, here is the abstract:
We analyze whether mid-level managers in securitized finance were aware of a large-scale housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. We find that the average person in our sample neither timed the market nor were cautious in their home transactions, and did not exhibit awareness of problems in overall housing markets. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs.
There are other versions of the paper here.
It is very charming here, but no one can tell me exactly what they export. Grain is a thing of the past. There are many universities in town. Trees, birds, and flowers are all first-rate.
I feel like I had never tasted a green pepper before. For silpancho, go to Palacio del Silpancho. The only item on the menu is…silpancho. I also recommend the street tamales with corn and cheese and the street food more generally, most of all at the comedores at the market 25 de Mayo. The “nice” restaurants are good and cheap, but not materially better than the Bolivian food you get in Falls Church, Virginia. Viva Vinto, about forty minutes out of town, served the best meal of my trip, the taxi will wait for very little money. Cochabamba provides one of the world’s best culinary micro-tours, although it requires a working knowledge of Spanish.
You can buy a quality Andean sweater for $12. The potatoes are the best I have eaten, ever, both purple and otherwise.
Quechua hats are not like Aymara hats.
People smile much more in Santa Cruz. The hotel electrical sockets use a different form here, and it would not be hard to convince somebody they were two different countries.
Here is a new paper by Steve Brito, Ana Corbacho, and Rene Osorio Rivas, it seems the answer is yes:
This working paper studies the effect of remittances from the United States on crime rates in Mexico. The topic is examined using municipal-level data on the percent of household receiving remittances and homicides per 100,000 inhabitants. Remittances are found to be associated with a decrease in homicide rates. Every 1 percent increase in the number of households receiving remittances reduces the homicide rate by 0.05 percent. Other types of crimes are analyzed, revealing a reduction in street robbery of 0.19 percent for every 1 percent increase in households receiving remittances. This decrease is also observed using a state-level panel in another specification. The mechanisms of transmission could be related to an income effect or an incapacitation effect of remittances increasing education, opening job opportunities, and/or reducing the amount of time available to engage in criminal activities.
For the pointer I thank Axayacatl Maqueda. Here is a Spanish-language discussion of the work.
It seems to be economic policy orientation toward Europe or Russia, and not either language or ethnicity. Here is a new paper by Timothy Frye:
Language, ethnicity, and policy orientation toward Europe are key cleavages in Ukrainian politics, but there is much debate about their relative importance. To isolate the impact of candidate ethnicity, candidate native language, and candidate policy orientation on a hypothetical vote choice, I conducted a survey experiment of 1000 residents of Ukraine in June 2014 that manipulated three features of a fictional candidate running for parliament: 1) ethnicity as revealed by either a Russian or Ukrainian name 2) native language of Russian or Ukrainian and 3) support for closer economic ties with Russia or with Europe. The results reveal little difference in the average response to these 8 fictitious candidates despite the candidate’s different ethnicities, native language, and economic policy orientations. This seeming homogeneity masks vast differences in the responses of self-reported native speakers of Russian and Ukrainian. Analyzing the responses among Ukrainian and among Russian speakers yields considerable differences in the responses to the different candidates. Perhaps most striking is that among both native speakers of Russian and native speakers of Ukrainian a candidate’s economic policy orientation toward Europe or Russia appears to be a more important determinant of vote choice than a candidate’s language or ethnicity. That policy retains its importance for voters despite the intense politicization of both ethnicity and language and ongoing violence in eastern Ukraine suggests that vote choice in Ukraine has not been reduced to an ethnic or linguistic census.
Hat tip goes to www.bookforum.com.
One major advance in knowledge over the last twenty-five years of research in industrial organization is just how important — and how possible — market segmentation agreements and institutions may be. Is this another example?:
…this summer the service provider T-Mobile began offering its customers an alternative. Under a free feature on some plans, T-Mobile users can now stream music services like Pandora, iTunes Radio, Rhapsody, and Spotify all day long without having to worry about sapping their data caches.
T-Mobile calls it “Music Freedom,” and it’s part of a quiet but powerful global trend.
Apps and Web sites that don’t count against the users’ data plan are popping up both in the United States and abroad, often under names like Wikipedia Zero or Facebook Zero. “[W]e hope that even more people will discover the mobile Internet with Facebook,” the company blogged in announcing Facebook Zero in 2010. (The names are a riff on “zero-rated,” an economics term for products exempt from taxation.) But set against the ongoing dispute over so-called net neutrality, those apps are beginning to spark a debate about the future of an open, equal, and vibrant Internet in the United States and abroad.
And there is a trade off for consumers. In return for low-cost service, users are, in some cases, being corralled into a limited view of the Internet. Rather than wandering freely from site to site, they have gained gatekeepers who have power over what they see.
That is from Nancy Scola.
Exports are 16 per cent below the peak reached in 2008 in real terms, according to data from CLSA.
From Henny Sender at The FT, there is more here.
I find this paper (pdf), by Anna Cieslak, Adair Morse, and Annette Vissing-Jorgensen, quite scary. Do you?:
We document that since 1994 the US equity premium follows an alternating weekly pattern measured in FOMC cycle time, i.e. in time since the last Federal Open Market Committee meeting. The equity premium is earned entirely in weeks 0, 2, 4 and 6 in FOMC cycle time (with week 0 starting the day before a scheduled FOMC announcement day). We show that this pattern is likely to reflect a risk premium for news (about monetary policy or the macro economy) coming from the Federal Reserve: (1) The FOMC calendar is quite irregular and changes across sub-periods over which our finding is robust. (2) Even weeks in FOMC cycle time do not line up with other macro releases. (3) Volatility in the fed funds futures market and the federal funds market (but not to the same extent in other markets) peaks during even weeks in FOMC cycle time. (4) Information processing/decision making within the Fed tends to happen bi-weekly in FOMC cycle time: Before 1994, when changes to the Fed funds target in between meetings were common, they disproportionately took place during even weeks in FOMC cycle time. In addition, after 2001 Board of Governors discount rate meetings (at which the board aggregates policy requests from regional federal reserve banks and receives staff briefings) tend to take place bi-weekly in FOMC cycle time. As for how the information gets from the Federal Reserve to the market, we rule out the Federal Reserve signaling policy via open market operations post-1994. Furthermore, the high return weeks do not systematically line up with official information releases from the Federal Reserve or with the frequency of speeches by Fed officials. We end with a discussion of quiet policy communications and unofficial information flows.
Say it ain’t so!
The pointer is from BH, a loyal MR commentator.
The list is here, I wonder how young is young, in any case overall a very good set of names. Other than Piketty and Rey, they all teach in the United States. John List is one person I would have added, Jesse Shapiro is another, plus I dare them to try out their judgment on someone who is not at a top ten school and then track how that person does over time.
Who else is missing?
Addendum: the original IMF link is here.
In 1997, the response rate to a typical telephone poll was a healthy 36 percent, according to Pew. By 2012, it had fallen to 9 percent. Fortunately, many surveys appear to be doing a good job of weighting the answers of people who do respond, to make up for those who don’t. Still, the long-term reasons for concern are clear: People who are more likely to avoid polls, such as anyone born after, say, 1980, are different from those who answer them.
The response rate of the Labor Department’s monthly jobs survey is far higher (about 89 percent) than that of a political poll, but it has also fallen (from 96 percent in the 1980s). Not surprisingly, the people who do not respond have different experiences in the job market than those who do.
That is from David Leonhardt. One implication is that actual unemployment may be higher than we are measuring.
1. The benefits of early work experience are declining, especially for men.
2. Interview with Pete Best, who is happy and still alive.
3. 38 maps of the global economy.
4. How the Japanese messed up Pearl Harbor.
5. Very good (and complex) FT Alphaville post on long-term unemployment this time around; “…about 10 per cent of men who are laid off en masse are never employed again. Intriguingly, the overall health of the economy at the time of getting laid off does not seem to play much of a role, although age does.”
6. Carrying costs > liquidity premia, unsheared sheep edition. And can a panda fake pregnancy for better treatment?
The town square is lovely, even though they removed the sloth for fear he would electrocute himself. The population is friendly, the weather is perfect, and there are few sights. Unlike in much of South America, danger is not a concern. The small children who hang out in the central square seem to think that a full embrace of a pigeon is a good idea.
The food is excellent and yet you never hear about it. Try El Aljibe for local specialties (peanut soup, or duck and corn risotto, with egg on top), and Jardin de Asia for Amazonian Andean Peruvian Japanese Bolivian fusion. It is hard to find the Cochabamba version of Bolivian food that has made it over to the U.S. The steak here is decent but not as good as Argentina or Brazil.
The taxi equilibrium is that you do not ask in advance what the fare is, because that indicates you do not know. Be confident, and you will be surprised how little money they ask for.
If you had to pick one city to represent South America as a whole, Santa Cruz might be it. You can feel elements of Brazil, Argentina, Venezuela, and yes even Bolivia here, all rolled into one. The proportions of fair-skinned, mestizo, and indigenous people mirrors the Continent as a whole more than the Altiplano. The secession movement here seems to have failed. Amazonian indigenous peoples and Guarani are common here.
Arriving at the airport at 3:30 a.m. involves a nightmarish wait. There is not much air pollution. I didn’t meet a single person in the service sector who spoke English. People in Santa Cruz seemed fairly happy relative to their per capita income.
You can study the economic development of China by visiting Bolivia.
In the new NBER paper on this topic by Daron Acemoglu, David Autor, David Dorn, Gordon H. Hanson, and Brendan Price, we see the evidence for this proposition piling up:
Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment “sag” of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition.
There are more details in this version of the paper than in an earlier version cited on this blog. Here is my related column on economic contraction, from a few days back.