Skip to main content

Posts

Showing posts from April, 2012

Why Nations Fail

I have just started reading Why Nations Fail byDaron Acemoglu and James Robinson.  The aim of the book is to explain why some nations are successful and why others fail.  The thesis of the book is that institutions  matter for economic development, whilst geography and culture play a somewhat limited role.  The book's website and associated blog can be found here.  The video below is a short talk given by Acemoglu at the Cato Institute about Why Nations Fail.


Do Universities Matter?

Chris Colvin has a nice post over at the NEP-HIS Blog on Cantoni and Yuchtman's recent NBER working paper entitled "Medieval Universities, Legal Institutions, and the Commercial Revolution".  In this paper, the authors basically argue that the establishment of universities after 1386 in Germany following the Papal Schism resulted in well-trained law students.  These graduates helped to develop the legal institutions which allowed trade and markets to flourish in Germany.  The authors find that market establishment was greater the closer the town/city was to one of the newly-established universities.  However, rather than providing evidence in support of a university-matters thesis, this paper maybe provides more evidence in support of a law-matters thesis.       
Here is the paper's abstract:
We present new data documenting medieval Europe's "Commercial Revolution'' using information on the establishment of markets in Germany. We use these data to te…

Which University Degrees Pay Best?

A recent study of US graduates by Altonji et al has found that Economics graduates have the highest average earnings of all university majors, closely followed by Finance (hat tip - Graham Brownlow)  A sortable chart of average wages by college degree can be found at the Wall Street Journal (click here).  Given the introduction of tuition fees in the UK, parents (and their offspring) will increasingly be paying attention to the findings of such studies.

Political Extremism and the Great Depression

A recent NBER working paper by Alan de Bromhead, Barry Eichengreen and Kevin O’Rourke finds a link between the severity of economic contraction during the Great Depression and the share of votes for extremist political parties.  They find that the link was strongest in economies with relatively short histories of democracy and where depressed economic conditions were permitted to persist. 
The findings of this paper are undoubtedly pertinent for the ongoing EU crisis.  Will the persistence of economic hard times result in the rise of anti-system extremist parties which attempt to undermine democracy?  Will countries such as Italy, Spain, and Greece, which experienced dictatorships in the last century, be more prone to the rise of extremist parties?  Notably, the first round of the French presidential election resulted in the largest ever vote for a National Front presidential candidate.  Furthermore, in Ireland, support for Sinn Fein, which has a history of extreme nationalism as well…

Exiting the Euro

The short-list for the Wolfson Economics Prize was announced yesterday.  The prize, sponsored by Lord Wolfson, challenges economists to come up with a contingency plan for a (or is it "the"?) break-up of the Eurozone.  You can learn about the ideas of the short-listed candidates over at the Policy Exchange website - click here.
Jurre Hermans, an 11-year-old Dutch boy, received a special mention for his contingency plan, which came with an explanatory diagram (see below).  You can read Jurre's proposal here.
I am taking a break from blogging over the next few weeks unless something major happens!


China: Triumph and Turmoil

I have just finished watchingProf. Niall Ferguson's three-part television series on China.  China's economic transformation over the past four decades has been remarkable.  Ferguson explores the origins of this transformation as well as the prospects for the future.  In terms of the future, Ferguson sees the overheated  Chinese property market, an ageing population, and growing wealth inequality as threats to China's continued prosperity. You can watch the entire series here.

The Lopsided Recovery

Robert Reich has a fascinating piece in today's FT (click here), where he argues that the gains from the economic recovery in the U.S. are mostly going to the top 1%.  Indeed, based on the tax returns for 2010, more than one third of the gains from the recovery have gone to the top 15,600 super-wealthy households! No one outside of the top 10% of the population has benefited from the recovery.  In contrast, during the post-1933 recovery, the average income of the bottom 90% went up 8.8%.  
It seems that recoveries have become more lopsided over the past two decades.  During the 1990s recovery, the top 1% captured 45% of the growth.  During the post-2000 recovery, the top 1% got 65% of the growth. During the recent recovery, the top 1% have got 93%!