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January 27th, 2018

↳ Welfare

A Ha?



A flurry of articles in December and January assess the state of artificial intelligence

From Erik Brynjolfsson et al, optimism about productivity growth:

“Economic value lags technological advances.

“To be clear, we are optimistic about the ultimate productivity growth fueled by AI and complementary technologies. The real issue is that it takes time to implement changes in processes, skills and organizational structure to fully harness AI’s potential as a general-purpose technology (GPT). Previous GPTs include the steam engine, electricity, the internal combustion engine and computers.

“In other words, as important as specific applications of AI may be, the broader economic effects of AI, machine learning and associated new technologies stem from their characteristics as GPTs: They are pervasive, improved over time and able to spawn complementary innovations.”

Full post at The Hill here.

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July 28th, 2018




On the history of economists in central banks 

A recent paper by FRANÇOIS CLAVEAU and JÉRÉMIE DION applies quantitative methods to the historical study of central banks, demonstrating the transition of central banking from an "esoteric art" to a science, the growth of economics research within central banking institutions, and the corresponding rise in the dominance of central banks in the field of monetary economics. From the paper: 

"We study one type of organization, central banks, and its changing relationship with economic science. Our results point unambiguously toward a growing dominance of central banks in the specialized field of monetary economics. Central banks have swelling research armies, they publish a growing share of the articles in specialized scholarly journals, and these articles tend to have more impact today than the articles produced outside central banks."

Link to the paper, which contains a vivid 1929 dialogue between Keynes and Sir Ernest Musgrave Harvey of the Bank of England, who asserts, "It is a dangerous thing to start giving reasons." 

h/t to the always-excellent Beatrice Cherrier who highlighted this work in a brief thread and included some visualizations, including this one showing the publishing rate of central banking researchers: 

  • Via both Cherrier and the paper, a brief Economist article on the crucial significance of the central banking conference in Jackson Hole, hosted by the Federal Reserve Bank of Kansas City: "Davos for central bankers." Link. (And link to an official history of the conference.) 
  • Another paper co-authored by Claveau looks at the history of specialties in economics, using quantitative methods to map the importance of sets of ideas through time. "Among our results, especially noteworthy are (1) the clear-cut existence of ten families of specialties, (2) the disappearance in the late 1970s of a specialty focused on general economic theory, (3) the dispersal of the econometrics-centered specialty in the early 1990s and the ensuing importance of specific econometric methods for the identity of many specialties since the 1990s, and (4) the low level of specialization of individual economists throughout the period in contrast to physicists as early as the late 1960s." Link
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August 18th, 2018

House Fronts



In Iran, cash transfers don't reduce labor supply

A new study examines the effects of Iran's changeover from energy subsidies to cash transfers. From the abstract, by DJAVAD SALEHI-ISFAHANI and MOHAMMED H. MOSTAFAVI-DEHZOOEI of the ECONOMIC RESEARCH FORUM:

“This paper examines the impact of a national cash transfer program on labor supply in Iran. [...] We find no evidence that cash transfers reduced labor supply, in terms of hours worked or labor force participation. To the contrary, we find positive effects on the labor supply of women and self-employed men.”

Most recent version here. The ungated working paper is available here.

  • Another paper co-authored by Salehi-Isfahani further details the energy subsidies program and the role that cash transfers played in the reforms, with a specific focus on differences in take-up. Link.
  • We’ve previously shared work from Damon Jones and Ioana Marinescu on the Alaska Permanent Fund dividend, which found that “a universal and permanent cash transfer does not significantly decrease aggregate employment.” Link.
  • In other Basic Income news, petitions and protests are being organized in response to the cancellation of the Ontario pilot.
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October 6th, 2018

Earth Men



Economic growth vs. natural resources

A recent Foreign Policy op-ed by JASON HICKEL examines “green growth,” a policy that calls for the absolute decoupling of GDP from the total use of natural resources. Hickel synthesizes three studies and explains that even in high-efficiency scenarios, economic growth makes it impossible to avoid unsustainably using up natural resources (including fossil fuels, minerals, livestock, forests, etc).

“Study after study shows the same thing. Scientists are beginning to realize that there are physical limits to how efficiently we can use resources. Sure, we might be able to produce cars and iPhones and skyscrapers more efficiently, but we can’t produce them out of thin air. We might shift the economy to services such as education and yoga, but even universities and workout studios require material inputs. Once we reach the limits of efficiency, pursuing any degree of economic growth drives resource use back up.”

The op-ed sparked debate about the state of capitalism in the current climate crisis, most notably in an Bloomberg op-ed by NOAH SMITH, who claims that Hickel is a member of “a small but vocal group of environmentalists telling us that growth is no longer possible—that unless growth ends, climate change and other environmental impacts will destroy civilization.” Though Smith’s op-ed doesn’t directly engage with many of Hickel’s points, his general position prompted a clarifying (and heated)response from Hickel:

“Noah is concerned that if we were to stop global growth, poor countries would be ‘stuck’ at their present level of poverty. But I have never said that poor countries shouldn’t grow—nor has anyone in this field of study (which Noah would know had he read any of the relevant literature). I have simply said that we can’t continue with aggregate global growth.

While poor countries may need some GDP growth, that should never—for any nation, rich or poor—be the objective as such. The objective should be to improve human well-being: better health, better education, better housing, happiness, etc. The strategy should be to target these things directly. To the extent that achieving these goals entails some growth, so be it. But that’s quite different from saying that GDP needs to grow forever.”

  • From a study on the limits of green growth: “GDP cannot be decoupled from growth in material and energy use. It is therefore misleading to develop growth-oriented policy around the expectation that decoupling is possible. GDP is increasingly seen as a poor proxy for societal wellbeing. Society can sustainably improve wellbeing, including the wellbeing of its natural assets, but only by discarding GDP growth as the goal in favor of more comprehensive measures of societal wellbeing.” Link.
  • In a recent article, Juan Moreno-Cruz, Katharine L. Ricke, and Gernot Wagner discuss ways to approach the climate crisis and argue that “mitigation (the reduction of carbon dioxide and other greenhouse gas emissions at the source) is the only prudent response.” Link.
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