# Tag Info

10

"But if any of these control variables are endogenous to some omitted variable, doesn't this contaminate the unbiasedness of ALL the independent variables?" I don't want to emphasize this too much, but it's worth mentioning that this is not true in general. The following derivation will hopefully provide some understanding of the "contamination" you mention....

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 ...

6

All is too strong, but probably some. This problem is called "smearing". Take a look at the proof in Greene's lecture notes on slide 5. Emily Oster has a nice working paper (and Stata command psacalc) that can help bound the bias.

6

That's interesting: the flavor of the frequentist approach to probability used for a socio-political fairness criterion: if my measure as a population group is $0<p<1$, and known, then my opinion should be accepted by the whole at the same measure, as number of issues goes to infinity. In other words, current observed acceptance rate should be a ...

6

SOE's don't have to perform worse that private enterprises, but they often do. The reasons are manifold: Some SOE's are not set up for profit motive, but rather to seed strategic industries for a nation (e.g. Port of Singapore, or Huawei Telecom). Frequently, state influence at market-oriented is counterproductive because politicians placed in leadership ...

5

This is an example of what statistician Andrew Gelman calls "the fallacy of controlling for an intermediate outcome". Here is his description of this fallacy popping up when researchers ask if having more daughters changes your politics. The decision to have a second child is necessarily conditional on the previous decision to have the first child, and so ...

5

In the context of Least-squares estimation, the way we have to (attempt to) deal with possible endogeneity of regressors is through Instrumental Variables estimation. This approach does not depend on having just one endogenous regressor -you may have many. In such a case of course you need to find more instruments which make things harder -but in principle, ...

5

One example of monetary policy is the Bank of Japan buying the Nikkei as part of its asset purchasing program. Typically, a substantial share of citizens' wealth is connected to returns of their national stock market. Hence, it is generally not a wise move for a fiscal authority to invest public funds (not tied to pension schemes) in broad baskets of ...

5

Because of the large number of roughly comparably sized private and public firms, the petroleum industry provides a laboratory for exploring differences between private and state owned enterprises in related businesses. Without passing judgement on if it has to be that way, it appears as though the private firms are vastly more efficient: Efficiency ...

5

Yes, you should look at the regression discontinuity literature in political economy that uses close elections as the identification strategy. For example, see http://sekhon.berkeley.edu/papers/CaugheySekhonRD.pdf and http://www.polmeth.wustl.edu/media/Paper/EggersetalRDD.pdf

5

Let's be clear--the concept of utility is both unfalsifiable (as a singular proposition) and useful. Joan Robinson is right, of course: Utility as a definition is circular. If you read a textbook that discusses the foundations of economic theory (such as the popular graduate text by Mas-Colell, Whinston, and Green), then you start not with utility, but with ...

4

Wikipedia has a comprehensive list of economic systems. If you want to start thinking about number major economic systems that exist I recomend looking at the section on an economy's allocation mechanism. In particular, Wikipedia lists the following kinds of system: The basic and general economic systems segmented by allocation are: Market ...

4

My app is acting odd and won't allow me to comment, but here's my follow up comment. Yeah, for sure! My list consists of this: Wealth of Nations - Adam Smith Capital - Karl Marx Principles of Economics - Alfred Marshall General Theory of Employment, Interest and Money - John Maynard Keynes. Those are just the most definitive works in the field that I'...

4

There is a very interesting paper by John Roemer, published in Econometrica in 1980, that presents a mathematical general equilibrium Marxian model. I am not sure someone have ever estimated it though. Find it here (subscription required). General equilibrium models (oftentimes idyosincratic) were also developed in the USSR. Check here for an account of them....

4

Monopoly and competition are one of the central topics in microeconomics, so there many theories on the source of monopoly, and they are not universally applicable. Government intervention is certainly one possible source of monopoly, but there are many others. I don't think I could give a general answer that does the question justice, so I will just give ...

4

A “full explanation” would be extremely long; depending on the situation, a great many things would happen. For developing countries, defaults are typically on debt in foreign currency, issued under foreign law. They will end up in legal fights with bondholders, and/or end up dealing with the IMF (or other body) to restructure their debt. Economic problems ...

4

Several articles use data sets on this issue but I am not sure that all the data sets are freely available. Valencia & Laeven (2012) use the IMF country reports to create their data set. It covers all IMF member countries since 1970. Reinhart and Rogoff (2009) have 70 countries since roughly 1900 based on a wide set of sources. Romer & Romer (...

3

According to the OECD: Israel's spending per-student is low relative to other OECD countries. Given that countries like the US have both higher spending per-student and higher enrolment rates, it is not clear what a switch to heavier state subsidisation (both the UK and US already heavily subsidise universities) would achieve. Bear in mind that most of the ...

3

I think in the literature of uncertainty I once read that increasing the number of laws increases the potential source of uncertainty. However, it was probably more related to investment than to working performance. However, if you are interested "Measuring economic policy uncertainty" by Baker, Bloom and David (2013) might be a good start.

3

One (perhaps flippant) answer is that Marxists have a lot of ideas about how prices "should" work or how the value of labor "should" be rewarded, that aren't in line with what we observe, because central planning and/or mass subsidies that Marxist economies like end up being grossly inefficient. :P Another (perhaps more interesting) answer is that there is ...

3

Although I disagree with von Mises, he was reacting to what he saw as a very real problem, which was the use of relatively primitive statistical methods to describe behavior. In fact, Leonard Jimmie Savage's work on probability and statistics should have been sufficient to meet his objections, although the computational speed would not have yet existed for ...

3

Being an economist, I'd say that carrying out a quantitative forecast ("the policy will create/cost x jobs") would require setting up a model, feeding appropriate data and applying appropriate estimations. You would require decent data on the firm level and a detailed model dealing with lots of production factors. In other words, lots of work and probably ...

2

Personally, I feel like Joseph Schumpeter's history of economic analysis does a great job at developing the scope of how economic methodology and analysis has changed with age. It's dense and will take time. I also have a few shorter books that help translate the history of the discipline with more ease: Worldly Philiosophers-Robert Heilbroner Teachings ...

2

As a first read in these fields I would recommend J K Galbraith's A History of Economics. It covers, in a concise and highly readable way, major developments in economic thought from ancient times until around 1980, making links with major economic and political events. A much more detailed book on the history of economic theory is Ekelund & Hebert's A ...

2

There is a movement in automotive and pedestrian traffic management called Shared Spaces. Under Shared Spaces the vast majority of formal and informal road signage is removed, such as stop signs, traffic lights, raised curbs, road lines. The idea is that these signs makes pedestrians and drivers run follow the signs instead of watching the road and the ...

2

This is a good example of "transactional costs" -and of the small "menu costs" as Mankiw has once called them. His paper Mankiw (1985) "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly" The Quarterly Journal of Economics, 100(2):529-537 contains a model where in his own words, shows that "sticky prices can be both privately ...

2

You are looking for the political economy literature on government expenditures. That is a massive literature. A starting point may be given here. A summary of all possible reasons for so-called white elephants is difficult without a more specific question. Are you interested in corruption, asymmetric information, institutional explanations, political ...

2

Really, when considering whether importing a good is beneficial to a country we need only look at comparative advantage. For this concept however, we need information on another good which could be produced in each country. Consider the following example: Suppose we have country A and country B. Both countries can produce only two goods (for simplicity). ...

2

Pre-Sarbanes-Oxley it was common for CEOs to nominate the members of the board of directors of their firms. A sub-committee of the board would determine the CEO's compensation, so a CEO could choose people loyal to him (even employees working under the CEO) for the board and those people could boost his compensation. And if they did not do so, he might also ...

2

If you enjoy ethical and philosophical aspects, you should look into international aid and intervention. Check out "Adaptive Preferences and Women's Empowerment" by Khader and work by Nussbaum in regards to social justice. These are some great texts coming off of reading Hayek. If you aren't familiar with the concept of adaptive preferences, it is the idea ...

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