Results for “paul romer”

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David Warsh reports that Romer has resigned from Stanford and he has a plan to change the world:

…[he has] a scheme to persuade nations around the world to adopt “special administrative zones,” managed in many cases by foreign governments, based on the model of Hong Kong, which, for 150 years, was administered from afar by Britain. “Hong Kong was the most successful economic development in history,” says Romer. The rules developed there over time were codified, copied and installed by the Chinese government in four special zones along the coast in the 1980s; the experiment worked so well that the system was adopted country wide.

Romer presented a rehearsal version of his ideas at a seminar in May at San Francisco’s Long Now Foundation. You can watch Romer’s A Theory of History, With an Application online (or just this five-minute snippet), or read Long Now co-founder Stewart Brand’s summary of the talk. It costs $995 to watch in real-time, along with all the rest of the proceedings, the 18-minute version that Romer plans to deliver this week in England.  But presumably the talk will be available online soon enough; the TED forum bills itself as offering “riveting talks by remarkable people, free to the world.” And, according to Brand, Romer plans to open an Institute with a website this summer.

I'm all for this idea (how would the Swiss do in Nigeria?), but I fear that Hong Kong is a cautionary tale in the other direction.  Due mostly to the pressures of nationalism, the world's most successful development experiment was ended without a second thought.  And its initiation was backed by brute colonial force.  Which country is most likely to allow another country to manage part of its territory in a new experiment?  

Via Mark Thoma, here is an interview with Paul Romer about growth in Mauritius.  One question is how much Romer’s growth theory was needed to generate this advice.  Second, I am surprised how little attention he gives to Mauritius being a small country.  I don’t think that country size makes the advice much different, but perhaps expectations should be adjusted.  Most small countries aren’t well-diversified and their growth rates depend heavily on real shocks.  Singapore is an exception, most of all because its citizenry is obsessed with accumulating human capital and thus it depends upon a general flow of foreign capital rather than specific sectors.  I don’t see harm in Mauritius trying to follow this same path but I wouldn’t expect them to succeed to a comparable degree.

Speaking of small countries, Fred Sautet has an interesting blog post on what happened to the New Zealand reforms.  Since the reforms starting in the 1980s, New Zealand has had excellent economic policies, probably better than Mauritius can expect to implement.  But New Zealand has not had stunning rates of economic growth.  A big part of the answer is simply that New Zealand still depends on the demands for dairy and agriculture.  Yes, many parts of the country are booming but the worldwide demand for commodities is a big part of the reason why.  The deregulation of agriculture helped but without rising food prices growth would be lower yet.  Earlier, it was Britain’s removal of imperial preference in 1972 that sent the country tumbling over the edge in the first place.  Yes freedom is still better but in general small countries are less of an "economic laboratory" than we might think.  Conversely, while there are some good explanations for "the Irish miracle," a small country with a few million people can with good luck grow quite rapidly. 

Just think about the determinants of your own family income; probably for most years policy changes are not #1 on the list.  A country of 1.2 million people, such as Mauritius, is more diversifed than your family, but not as much more diversified as you might think.  When it comes to real factors, Say’s Law does hold.  Demand for your labor depends on the production decisions of 300 million mostly wealthy and often quite diversified Americans.  That offers your income a great deal of protection, relative to what suppliers on Mauritius can expect.

EconTalk podcast, with Russ Roberts.  I’ve yet to hear it, but the interviewer and interviewee make it self-recommending.

Here’s one bit from an excellent interview of Paul Romer on urban development:

Q. How are economics and planning and development of cities related each other?

Urban Expansion is an exception to the usual rule that an economy does not need a plan. Creating new built urban area requires a plan for the public space that will be used for mobility (sidewalks, bus lanes, bike lanes, auto lanes …) and for parks. At a minimum, this plan should provide for a network of arteries big enough to allow bus travel and dense enough that no location is more than 0.5 km from such an artery. This is the only thing that needs to be planned up front for land that is not yet developed. Everything else can wait. But if informal development comes first, it is too late. The area will never have enough public space to allow successful urban development.

I think Romer is correct. What surprised me most when studying Gurgaon in India was that despite strong demand, there wasn’t a lot of common infrastructure being built. The transaction costs of ex-post planning were simply too high.

In addition to transport arteries, I would also mention the importance of setting aside space and access points for sewage, electricity, and information arteries. It’s not even necessary that government provide these services or even the plan itself (private planning of large urban areas is also possible) but a plan has to be made. By reserving space for services in advance of development, developers and residents can greatly improve coordination and maximize the value of a city.

A simple, minimal urban plan is analogous to the rules of the game.

That’s Ron Paul vs. Paul Krugman, the video and transcript is here, here are a few comments under the fold…

1. RP: I don’t understand RP’s claim “I want a natural rate of interest.”  Even gold standards allow for monetary influences (distortions? …depends on your point of view) on interest rates.  RP has not fully absorbed Myrdal (1930) and Sraffa (1932).

2. K’s response to RP: Numerous good points, but Christie Romer (!) has shown that economic volatility was not higher before WWII.  (Somehow that’s one Romer paper which isn’t discussed so much anymore.)  That’s a major hole in K’s argument.  Relative to the evidence, he is overreaching when a more modest point would suffice.

3. RP: The transcript may be garbled here.  In any case, the Fisher effect is imperfect and so inflation does to some extent tax savings, also through interaction effects with the tax system.  That said, I don’t see that two to four percent inflation has unacceptable costs, especially when AD is otherwise weak.  On Diocletian, via Matt, here is a good recent paper.

4. K’s response: Modern liberals have a bad and selective case of 1950s nostalgia.  Krugman is significantly overrating the role of policy here.  More overreaching.  He should stick to analyzing the “no bailout in 2008-2009” scenario, and how much worse it would have been, including for RP’s preferred ends.  On earlier time periods, he should reread his own writings from around the time of The Age of Diminished Expectations.  There is very little in The Conscience of a Liberal which actually trumps or overturns the earlier book and its focus on productivity rather than politics.

5. RP: I don’t understand his discussion of the liquidation of debt.  Perhaps the transcript is garbled again.  He is correct that the massive spending cuts which followed WWII brought no depression but rather the economy boomed.  Keynesians have a hard time explaining that episode without recourse to Ptolemaic epicycles, etc., or without admitting the importance of real shocks.

6. K’s response: On Friedman, correct and on target.  That said, K’s blogged claim today — that Friedman misrepresented his own views — lacks a quotation or citation altogether; furthermore it is contradicted by this excerpt from Free to Choose, which was Milton at his most popular but still he represented the truth correctly (ignore the heading, which is not from Friedman).  K won’t address the WWII point, although he could if he revisited his earlier writings on changing rates of productivity growth.

7. RP’s response: The decline in the value of the dollar since 1913, or whenever, has not been a major economic cost.  No one has had such a long planning horizon, for one thing.  We don’t see much indexation, for another.

8. RP on the Fed: If we had “real monetary competition,” dollars still would reign supreme.  Who now is opening up U.S. bank accounts in other currencies?  Or using gold indexing?  It is allowed.

9. K’s response: Mostly I agree, though it is odd to think of shadow banking as “currency competition.”  It is more akin to “not explicitly regulated banking, with stochastic under-capitalization, and with bailouts in the background and largely driven by regulatory arbitrage.”  That makes it less of a counter to RP than PK is suggesting.

10. RP: Equating inflation with “fraud” is an excessive moralization of the issue.  The point remains that gentle inflation is usually a good thing, and that the money supply under free banking, or a gold standard, would be excessively pro-cyclical.  The best shot is to hope that a natural monopoly private clearinghouse would institute nominal gdp targeting in terms of levels and perhaps “targeting the forecast” too.

11. The exchange about Bernanke: I don’t know whether Krugman literally has “printing money” in mind, so this is hard to interpret.  They are stuck in the vernacular, when a more precise economic language would allow for more targeted commentary.

12. PK: Demographics, plus government gridlock and lower productivity growth, make a higher debt-gdp ratio more problematic than Krugman admits.

13. RP: Polemics from RP.

14. K’s response. Very short.  But if he likes the market so much, why does he so often seem to be pushing for much higher taxation and higher government revenue?  I understand why he wants single payer, but he also seems to favor direct government provision of health care itself.

15. RP: The discussion of debt doesn’t make sense, though it is correct to argue that eight percent measured unemployment underestimates the depth of our labor market problems.  I fear, though, that he may be holding an exaggerated version of this point.  U6 matters, but it should not be taken as the correct measure of unemployment.

16. RP: Seigniorage isn’t a major source of government revenue, and in general it is worth thinking about why corporate profits are so high and why the stock market, at least in recent times, has done OK.  Is it really all about policy uncertainty?  Lots of polemic here.  Still, RP raises the point that Fed purchases of T-Bills may be helping to keep rates artificially low.  This remains unproven, but it is also unrebutted.

17. RP (again): There is no credible alternative to the dollar as reserve currency today.  On Spain, it is nonetheless a good point that spending cuts in a dysfunctional economy don’t help very much if at all.

More RP: Doesn’t PK get to speak again? Did Austerians suddenly cut the funding for his part of the transcript?  (Had I watched the video, I wouldn’t have had time to write this post.)  In any case, pegging the dollar to gold in an era of commodity price inflation would be a disaster and lead to massive deflationary pressures or more likely a complete abandonment of the gold peg rather quickly.

In sum: There were too many times when RP simply piled polemic points on top of each other and stopped making a sequential argument.  He overrates the costs of inflation, including in the long term, and for a believer in the market finds it remarkably non-robust in response to bad monetary policy.  Still, given that Krugman is a Nobel Laureate in economics, and Paul a gynecologist, the score could have been more lopsided than in fact it was.