26
I think you misunderstand what "electronic money" is - moving electronic money around isn't simply a matter of sending the right "codes" - it is ultimately about asking the central bank of that currency to move money around.
Sure you can open up excel and write in it "I have \$100" but that isn't USD, much as writing \$100 on a piece of paper doesn't make ...
13
To measure the costs of different people speaking different languages, researchers use a "linguistic distance" metric, see for example this paper. However, measuring the cost of linguistic diversity appears to be challenging. Some effects are shown along the following lines.
Impact of linguistic distance on international trade
In this paper, they construct ...
12
Only sufficiently credit worthy countries are able to borrow money internationally in their own currency. In principle you are right that such a country could effectively default by expanding the money supply until the currency is practically worthless and repaying in the debased currency.
However if this happens
(1) the reputation of the country for credit ...
11
The classic answer here would be Libya and Brunei, but I think Libya now has debt.
Brunei is a strange case in that it uses a joint currency with Singapore dollar, controlled by the monetary authority of Singapore, so in effect you can use Singapore debt as a substitute for Brunei dollar investment.
Not having any debt, and having a free currency is ...
10
"Foreign Direct Investment" is to be understood as bringing in an economy productive capital, and not just purchasing power.
When an economy is seriously below full employment (of capital and labor), then a case can be made that "printing money" (i.e. creating purchasing power out of thin air) may not result in just inflation, but it may ...
9
What do you mean? A country per se cannot be bought. The wealthiest man, Gates, has a net worth of around 67 billion USD (forbes). What could he buy?
GDP
Whatever it the country produces. The poorest country by GDP per capita is Burundi, with a total GDP per capita of around 267 USD, and a population of 10 million. That gives then a total GDP per year of 2....
9
Your first quote seems to be given as an explanation of how they constructed Figure 1 (however I cannot be sure since you did not state pagenumber for the quote). Anyway, Figure 1 compares a treatment group with a control group on outcome variable. The descriptive content of these figures are not rigorously related to the main estimation equation
$$(1) \ \ ...
8
Countries do not just stop recognizing foreign wealth because there are two kinds of wealth: real assets, and claims on the production of others; the values of both of these types of wealth are not determined by consensus, but rather by the use or pleasure one can derive from them.
To the first type— real assets are stuff like machines and cars and homes ...
8
It depends on what you mean by "sustained growth" and "flourishing markets".
Clearly the Earth as a whole is a big market. If you do not look at human made borders: the global economy is currently growing and some would say it is flourishing. There is no physical reason why this could not be done without the borders.
There are areas where the current ...
8
The Nobel Prize website is a good source of information. On the economics prize page they have a link to a page for each laureate. From there you can find, in particular, a biography for each prize winner where the laureates often talk about the genesis of their interest in economics.
For example, Eric Maskin writes
I became a math major at Harvard College, ...
8
When you control for not just year fixed effects but instead year-region or year-industry it adds flexibility.
The year fixed effects controls in a flexible manner for the time-trend and is more flexible - less restrictive - than for example assuming that the time trend is for example linear $a \cdot t$, second order polynomial $at + bt^2$, exponential $exp(...
8
I'd interact the regressor you are interested in with a dummy for the country being developed and see what happens. Its entirely possible that the mechanisms at play in developed contries are different from those in the rest of the world. Depending on what your goal is you might satisfy yourself with the observation that the effects are different for the two ...
8
tldr: As the other two answers also indicated, there is not necessarily a problem with your results. It might be the case that the two subgroups have different distributions of the covariates. Alternatively, it might be the case that the within group effects of the law are different from the between group effect.
Joint and separate regressions
Consider two ...
8
Climate change in itself, its measurement and the fact that it is happening, and modeling its speed or trying to discover its causes (e.g., carbon emissions, methane emissions and so on) is not an economics question/problem. The process itself at the core is physical/biological and that is not what economics studies.
However, question of what policy we can ...
7
The Russian default was an extraordinarily insignificant event compared with a current-day US default on all treasury securities. There are no remotely similar events to compare it to. This makes it hard to make guesses about all the ramifications. Still, speculating is fun.
My guesses, based on a complete default (no money recovered) on all treasury ...
7
This sounds like a case of Simpson's Paradox. Did you control for fixed effects?
You might also have heterogeneity - there may be different results in developing vs developed countries.
Generally, it's not wise to ignore something interesting in your data, but I defer to the advisor who's familiar with the area. It may be a known phenomenon that isn't ...
6
Why do so many people die in hospitals? Aren't doctors there supoosed to save lives?
The IMF is the trauma surgeon of government finances. When a country asks the IMF for help, it is because its finances are in very bad shape. They no longer have enough money to pay for public services, infrastructure, pensions, salaries. Without some kind of external help, ...
6
Maybe Lives of the Laureates?
Lives of the Laureates offers readers an informal history of modern economic thought as told through autobiographical essays by twenty-three winners of the Nobel Prize in Economics. The essays not only provide unique insights into major economic ideas of our time but also shed light on the processes of intellectual discovery ...
6
To maintain the currency peg, the Hong Kong Monetary Authority (HKMA) has to buy HKD and sell USD when the currency comes under depreciation pressure and sell HKD and buy USD when the currency comes under appreciation pressure.
Depreciation pressure: The HKMA operates a currency board, which means that more than 100% of outstanding HKD is backed by USD ...
5
The solution concept used in Ricardo's modell is the competitive equilibrium. Let the set of countries $N$ be defined as $N = \left\{E,P\right\}.$ (England, Portugal) Then the competitive equilibrium is a vector
$$
\left(p,\left(q_{x,i},q_{y,i}\right)_{i\in N},\left(c_{x,i},c_{y,i}\right)_{i\in N}\right),
$$
where $p$ is the equilibrium price ratio of the ...
5
An interest rate is the return that a lender earns on money lent to someone else. If the interest rate is higher then it makes lending money more attractive because the return is higher.
In particular, if the interest rate in, say, Russia increases relative to that in the USA then American lenders will switch from lending their money in America to lending ...
5
As Jason Nichols says, these terms are often used interchangeably.
The general theme is that pretty much anything can be called a "peg" (except perhaps the case where two countries are literally using the same currency), while "fixed" tends to refer to institutional arrangements that are more automatic, where changes in the exchange rate are perceived to ...
5
The recent development of many "developing countries" and "emerging markets" does not mean that Western colonial powers did not exploit them in the past.
Emerging economies owe their modern GDP growth to cheap labor, as (former) Western colonial powers switched their (expensive) manufacturing bases to countries like China, India, etc. In the past, they were ...
5
The omitted variable bias in gravity model is an important issue given that some factors are unobserved or difficult to quantity. To solve this issue trade economists tend to rely on various fixed effect estimators. But, the question is what is your variable of interest?
Exporter-by-year and importer-by-year fixed effects
For instance, if you are ...
5
Short answer
Airbus is a particular case of decentralised supply chain which came from historical and political reasons. Airbus is a consortium with several European states having a stake on it, which means that each state wants a part of the production in their country.
Long answer: Why is Airbus' supply chain disperse
The aviation industry for commercial ...
5
Like all entities except the US government: they trade for it on the currency exchange market.
There are special cases when the US government gives aid without asking anything in return.
A government could also get a dollar loan, but would eventually have to repay it with dollars, so this merely delays the problem.
4
When you go to spend the proceeds of the bank loan you do one of three things:
Transfer money to another account at the same bank
Withdraw cash
Transfer the money another institution
We'll ignore case 1 because eventually someone you transfer money to will want access to two or three, so we can just consider those eventualities directly.
If you go to ...
4
The intuition for this result is pretty straightforward, and I think one can think about it in terms of saddlepoint stability in a phase diagram, although you don't need any serious technical apparatus - it's all conceptual.
Krugman and Obstfeld posit a model in which government expenditure does not affect the "full employment" level of output $Y^f$ (to ...
4
It was also really strange for me at first. I asked from many people who might happen to know the answer. However, they were all not 100% satisfactory. I think, Kenny LJ's answer is 99.5% correct but i feel that it's still missing something. My explanation is to add to his/her answer something i think very very subtle, but hopefully important, one.
Think ...
4
To complement @rocinante answer the argument described in the question silently assumes that growth can happen only if you steal from somebody. So if the past colonies cannot steal from anybody, they are bound not to ameliorate their material welfare.
Assume two persons, $A$ and $B$, that currently have the same unexploited resources. It so happens that in ...
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