Off-line

I am going to be off-line until Dec 29. Happy Holidays!
(I left a few scheduled posts)

Science, Financial Crisis, and Paul Romer

Paul Romer:

"...after Citibank made some bets that turned out badly in the Latin American debt crisis of the 1980s, its CEO John Reed helped mid-wife the Economics Program at the Santa Fe Institute. He wanted the new theoretical insights about financial crises that the new complexity scientists promised. Ever since, the complexity scientists have been telling us that markets are self-organizing systems. For the life of me, I can't see how this puts us way ahead. Didn't seem to help Citibank either, which I've noticed is back in the headlines.
(...)
I agree with the closing suggestion, that air transport is a good place to look for lessons about avoiding crashes. No matter what we do, we will still have financial crises, just as we still have plane crashes. But judging from our success in making air travel safer, it seems reasonable to bet on an institutionalized commitment to systematic data collection as a way to reduce their frequency and severity. As a traveler and an investor, I feel much safer in the hands of experts with good data than tourists from other scientific disciplines bearing new models.

Here.

Talkin' about science, there is a bonus.

Ideapad S10 e Ubuntu Netbook Remix

One month ago I bought a Lenovo Ideapad S10. Beautiful, light, small, and fast. I am a very happy owner. The obvious limitations are the size of the screen and keyboard. They are perfect for smurfs, but normal human beings suffer a lot after 3 hours of use.
It came with Windows XP so I was not in a hurry to run Ubuntu. Yesterday, I took a break and installed Ubuntu Netbook Remix, ie, Ubuntu for tiny notebooks. It is perfect and almost solves the screen issue.

You know that you have reached k* when

... this happens:

Via boingboing.

Every flight on Earth

24 hours in 72 seconds. (Imagine the size of the W matrix!)
Suggestion: plot Eltis' data on trans-Atlantic slave write. I'll write to Prof Rege right now!

Bayesian econometrics

O Introduction to Modern Bayesian Econometrics by Tony Lancaster is a great book . It provides the first steps on the subject, and it comes with the S-Plus (or R) and BUGS code to follow the book. HT to Márcio Laurini, the über-econometrician.

Long-run spatial inequality in France: Evolution and determinants

Guess what? The regional inegalité is inverted-U shaped. Readhere.

Industrialization in Latin America

Or..."Was It Prices, Productivity or Policy? The Timing and Pace of Latin American Industrialization after 1870" by Jeffrey Williamson and Aurora Gómez Galvarriato.

Brazil, Mexico and a few other Latin American republics enjoyed faster industrialization after 1870 than did the rest of Latin America and even faster than the rest of the poor periphery (except East Asia). How much of this economic performance was due to more accommodating institutions and greater political stability, changes that would have facilitated greater technology transfer and accumulation? That is, how much to changing fundamentals? How much instead to a cessation in the secular rise in the net barter terms of trade which reversed de-industrialization forces, thus favoring manufacturing? How much instead to cheaper foodstuffs coming from more open commercial policies ('grain invasions'), and from railroad-induced integration of domestic grain markets, serving to keep urban grain prices and thus nominal wages in industry low, helping to maintain competitiveness? How much instead to more pro-industrial real exchange rate and tariff policy? Which of these forces contributed most to industrialization among the Latin American leaders, long before their mid 20th century adoption of ISI policies? Changing fundamentals, changing market conditions, or changing policies?

http://papers.nber.org/papers/w13990

More or Less

Tim Harford, my favorite writer of "economics for the masses" books, presents a new series on statistics and math on BBC radio 4.

Mary Poppins and the financial crisis

Nothing new under the sun...

Fidelity Fiduciary Bank
Mr. Dawes Sr, Mr. Banks and Bankers:
If you invest your tuppence
Wisely in the bank
Safe and sound
Soon that tuppence,
Safely invested in the bank,
Will compound
And you'll achieve that sense of conquest
As your affluence expands
In the hands of the directors
Who invest as propriety demands
You see, Michael, you'll be part of
Railways through Africa
Dams across the Nile
Fleets of ocean greyhounds
Majestic, self-amortizing canals
Plantations of ripening tea
All from tuppence, prudently
Fruitfully, frugally invested
In the, to be specific,
In the Dawes, Tomes
Mousely, Grubbs
Fidelity Fiduciary Bank!
Now, Michael,
When you deposit tuppence in a bank account
Soon you'll see
That it blooms into credit of a generous amount
Semiannually
And you'll achieve that sense of stature
As your influence expands
To the high financial strata
That established credit now commands
You can purchase first and second trust deeds
Think of the foreclosures!
Bonds! Chattels! Dividends! Shares!
Bankruptcies! Debtor sales!
Opportunities!
All manner of private enterprise!
Shipyards! The mercantile!
Collieries! Tanneries!
Incorporations! Amalgamations! Banks!
You see, Michael
Tuppence, patiently, cautiously trustingly invested
In the, to be specific,
In the Dawes, Tomes
Mousely, Grubbs
Fidelity Fiduciary Bank!

The bank run scene is here (around 1:25).
HT to Niall Fergunson. BTW, his new book (The Ascent of Money: a Financial History of the World) seems pretty interesting.

Obama

Tomorrow I will go back to my normal personality: cynical and pessimist. But today I just can't...

"Rosa Parks sat so Martin Luther King could walk. Martin Luther King walked so Obama could run. Obama's running so we all can fly."

Jay-Z

Wealth of the Nations in the Long-run

Before 1500...
Was the Wealth of Nations Determined in 1000 B.C.?
Diego Comin, William Easterly, Erick Gong

We assemble a dataset on technology adoption in 1000 B.C., 0 A.D., and 1500 A.D. for the predecessors to today’s nation states. We find that this very old history of technology adoption is surprisingly significant for today’s national development outcomes. Our strong and robust results are for 1500 A.D.determining per capita income today. We find technological persistence across long epochs: from 1000 BC to 0 AD, from 0 AD to 1500 AD, and from 1500 AD to the present. Although the data allow only some suggestive tests of rival hypotheses to explain long‐run technological persistence, we find the evidence to be most consistent with a model of endogenous technology adoption where the cost of adopting new technologies declines sufficiently with the current level of adoption. The evidence is less consistent with a dominant role for
population as predicted by the semi‐endogenous growth models or for countrylevel
factors like culture, genes or institutions.

(dica do Shikida).

After 1500...
Post-1500 Population Flows and the Long Run Determinants of Economic Growth and Inequality
Louis Putterman, David N. Weil

We construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500. Using this matrix, we analyze how post-1500 migration has influenced the level of GDP per capita and within-country income inequality in the world today. Indicators of early development such as early state history and the timing of transition to agriculture have much better predictive power for current GDP when one looks at the ancestors of the people who currently live in a country than when one considers the history on that country's territory, without adjusting for migration. Measures of the ethnic or linguistic heterogeneity of a country's current population do not predict income inequality as well as measures of the ethnic or linguistic heterogeneity of the current population's ancestors. An even better predictor of current inequality in a country is the variance of early development history of the country's inhabitants, with ethnic groups originating in regions having longer histories of agriculture and organized states tending to be at the upper end of a country's income distribution. However, high within-country variance of early development also predicts higher income per capita, holding constant the average level of early development.

I can not say that the papers deal with the veeery long-run because the brilliant Michael Kremer set a new standard.

8th Spatial Econometrics and Statistics workshop

Dear colleagues,

We are very pleased to invite you to Besançon, France, to participate to
the 8th edition of the Spatial Econometrics and Statistics Workshop,
which will be held on June 1-2, 2009. This workshop aims at reinforcing
and stimulating the interactions between well established and young
researchers involved in spatial statistics and econometrics.
Both theoretical and empirical contributions are welcome.

You are invited to submit your paper or long abstract (6 pages)
electronically to the following email address:
spatial2009@univ-fcomte.fr. The deadline for submission of
abstracts/papers is February 15th, 2009. Notification of acceptance will
be sent by March 20, 2009. The call for papers is enclosed.

More information concerning the workshop is available at :
http://sew2009.univ-fcomte.fr/index.htm or
http://sew2009.univ-fcomte.fr/english/home.htm

We are looking forward to meeting you in Besançon.

Best regards,
Julie Le Gallo

(for the scientific and organizing committees)

Landes versus Crafts

They have a long history of arguments. The tone is quite rude sometimes, but I was not expecting this.
Landes on Crafts:

I am struck by the fact that I have no place in his bibliography. (I know he reads me, if only to disagree.)

Here.

Money on the Brain by Tim Harford

Tim Harford on Neuroeconomics at BBC Radio 4. You have only 2 days to listen to it! (Or you can download (ou então baixe the podcast)

Beta software that I recommend

A few suggestions:
QGis- GIS software that opens shape files. Almost an ArcView replacement;
PSPP- SPSS for the poor. Still very far from the real-thing, but it works;
Ubiquity- fantastic firefox extension.
All are cross-platform and free. BTW, why don't you install Ubuntu? This Thursday a new version (8.10) is going to be released.

The causes of the Great Depression

Mankiw summarizes the research on the causes of the Great Depression. Eichengreen, Romer and Temim among others have shown that there is a lot to do in the field. As Bernanke said: “To understand the Great Depression is the Holy Grail of macroeconomics”. I must add: ",especially in interesting times".

Resource curse and the current crisis

Recent international experience supports the resource curse hyphotesis : resource rich countries, mainly when the resources are extracted from a narrow geographic or economic base, tend to have bad institutions and slow growth in the long run. Dube & Vargas have shown the relationship between coffee and oil prices and civil conflict in Colombia (HT Dani Rodrik).
Commodity prices are tumbling, so what will happen? Now there will be no money for useless stuff and the economic reasons for a coup have weakened. I am afraid however that there is a ratchet effect: dictators will stay in power, playing the nationalist card.

Why Krugman got the Nobel?

Dixit dixit.

Always look on the bright side of life

An inconvenient recession

In fact the only upside of all this is that the massive slow-down in economic growth will rapidly cut the growth rates of CO2 emissions. Pollution is tightly linked to the level of economic activity, so that a few years of negative growth would lead to reductions in pollution levels not seen since the 1970s. It seems ironic that the greed of Wall Street may have inadvertently achieved what millions of well intentioned scientists, activists and politicians have failed to achieve – a slowdown in global warming.