Ben Muse

10 Economic Principles, and 20 Market Myths

Over at "Greg Mankiw's Blog": Ten Principles of Economics (Feb 28), and over at "The Knowledge Problem": Debunking Myths About Markets (Feb 26).

New IMF chief economist

And Jonathan Dingel is on it: Simon Johnson to join IMF (Trade Diversion, Feb 28).  Replaces Raghuram Rajan .

Market power in shipping as an impediment to developing country trade

David Hummels, Volodymyr Lugovskyy, and Alexandre Skiba examine: The Trade Reducing Effects of Market Power in International Shipping (NBER Working Paper 12914, February 2007):

Developing countries pay substantially higher transportation costs than developed nations, which leads to less trade and perhaps lower incomes. This paper investigates price discrimination in the shipping industry and the role it plays in determining transportation costs.

In the presence of market power, shipping prices depend on the demand characteristics of goods being traded. We show theoretically and estimate empirically that shipping firms charge higher prices when transporting goods with higher product prices, lower import demand elasticities, and higher tariffs, and when facing fewer competitors on a trade route.

These characteristics explain more variation in shipping prices than do conventional proxies such as distance, and significantly contribute to the higher shipping prices facing the developing world. Markups increase shipping prices by at least 83 percent for the mean shipment in Latin American imports.

Our findings are also important for evaluating the impact of tariff liberalization. Shipping firms decrease prices by 1-2 percent for every 1 percent reduction in tariffs.

Climate change means more days for golf

Impact of Climate Change on Golf Playable Days in the United States  (WeatherBill, Inc., Feb 22, 2007).

WeatherBill, Inc. published a study today at the National Golf Course Owners Association annual conference analyzing historical weather data to determine changes and trends in annual Golf Playable Days* (GPD). The study concludes that U.S. GPD are increasing in 95 cities, primarily due to higher average temperatures. The study also identifies increasingly rainy trends in the Northeast and Southeast, a drier Southwest and West and increasingly uncertain weather in 33 cities….

“The average number of Golf Playable Days across the U.S. is 268 a year,” says David Friedberg, CEO of WeatherBill. “In the West and South, given the extended season, the average golf course can expect 297 playable days a year vs. the 226 days in the Northeast and Midwest.” The study includes a reference table showing the range of GPD in 195 cities as well as the 30 year trend in both GPD and weather certainty. The guide should be a useful financial planning tool for golf course owners and managers.

Source: Docuticker .

Problems for ringed seals

The U.S. Fish and Wildlife Service (FWS) wants to list the Polar Bear as threatened under the Endangered Species Act: U.S. Wants Polar Bears Listed as Threatened (Washington Post, Juliet Eilperin, Dec 26, 2006). 

The FWS proposed rule makes it clear that global warming and the shrinking Arctic ice cap plays a big role in this: Polar Bear listing proposed rule (January 9, 2007).  Here is the FWS web page on polar bear issues: Polar Bear Conservation Issues.

A couple of days ago I posted on related problems faced by walrus: Bad news for walruses (February 25).  That post was based on a story by Dan Joling in the Anchorage Daily News.

Joling had a new article today, on the problems global warming poses for ringed seals - an important polar bear prey: Melting snow lairs put seal pups in peril (Feb 26, 2007)

What should the U.S. do about the Renminbi?

What should the U.S. do about the Chinese currency?

New Economist is a romantic - who knew?

New Economist turns out to be a romantic, beginning a series on economist couples shortly after St. Valentine's Day. 

Here's the introductory post: Economics: a family business?  and here is the first couple: Economist couple of the week: George Akerlof & Janet Yellen (Feb 19).

FarmPolicy.com

The blog  FarmPolicy.com will be useful if you are interested in the Doha Round, the upcoming Farm Bill, or other agriculture and trade-related issues:

Maths gone wild

Michael Stastny posts on "A First Lesson in Econometrics,"  and provides some culturally relevant math problems:  Econometrics (Mahalanobis, Feb 25).

John Palmer posts some student responses to math problems: EclectEcon Exam Answers - these kids knew they were going down, but they went down with style (and a certain amount of gallows humor) - (EclectEcon, Feb 24).

Becoming Brad DeLong

At least in part, and how to read Adam Smith: "Two Months Before the Mast of Post-Modernism" Recycled.  (Grasping Reality with Both Hands: Brad DeLong's Semi-Daily Journal, Feb 21).

Bad news for walruses

Global warming, and shrinking Arctic sea ice cover, may open up commerial opportunities (Over the top (of the world), Oct 10, 2005; North, to the Arctic, Nov 1, 2006)...

...but its bad news for walruses: Sea ice retreat dooms walruses (Dan Joling, Anchorage Daily News, Feb 25, 2007):

Three New Trade Related Reports from the CRS

The Congressional Research Service (CRS) released three trade- and FDI-related reports in early February:

• Exon-Florio Foreign Investment Provision: Overview of H.R. 556  (Feb 1)  James K. Jackson describes how modern U.S. procedures for security vetting foreign direct investments have evolved.  Follows with a description of the different elements of H.R. 556, a proposal to reform that process currently making its way in Congress.
• Trade Promotion Authority (TPA)/Fast-Track Renewal: Labor Issues  (Feb 2)  Mary Jane Bolle looks at the way labor issues have been addressed in U.S. trade promotion authority (TPA) legislation, and in negotiated free trade agreements (FTAs).  TPA renewal may be an important issue in 2007, and the best approach to labor-related negotiating objectives will be an important issue in any renewal debate.  Bolle describes different approaches, and  lays out the arguments for and against proposals  for a more demanding approach than in the 2002 TPA legislation.
• Tariff Modifications: Miscellaneous Duty Suspension Bills  (Feb 5)  Vivian C. Jones: "Companies often propose that Members of Congress introduce bills seeking to suspend or reduce tariffs on certain imports. The vast majority of these commodities are chemicals, raw materials, or other components used in the manufacturing process.  The rationale for these requests, in general, is that they help producers reduce costs, thus making their products more competitive. In turn, these cost reductions can be passed on to the consumer.  In recent congressional practice, House Ways and Means and Senate Finance Committees, the committees of jurisdiction over tariffs, have combined duty suspension bills and other technical trade provisions into larger pieces of legislation known as miscellaneous trade and technical corrections bills (MTBs)...."   Jones explains how the system has worked, and describes efforts to make procedural changes this year.

I learned about these at Docuticker.

The "Tariff Relief Assistance for Developing Economies Act"

It doesn't seem right that the average tariff on imports from the U.K. is 0.8%, while the average tariffs of imports from Bangladesh is 15.2%, and the average for Cambodia is 16.9%. 

The Progressive Policy Institute lays it out: America's Tariffs Hit Cambodia and Bangladesh Hardest  (Feb 21).

Is the cavalry on the way?

...Some help may be on the way, though. Last week, Senators Dianne Feinstein (D-California) and Gordon Smith (R-Oregon) introduced a proposal, known as the "Tariff Relief Assistance for Developing Economies Act," to grant 15 low-income countries in Asia, the Pacific, and the Muslim world exemptions from tariffs.... Rep. Joe Crowley is their House partner and founder of the Bangladesh caucus.

Why should you be skeptical about cross-country growth regressions?

Greg Mankiw explains.  And, as a bonus, answers the question, "...what are economic policy advisers paid for?": Growth Regressions and Policy Advising. (Feb 18). 

• See the comment to Mankiw's post by Ron Cronovich
• Also, follow the link suggested in the comment by Fundamentalist to: The Quest Continues by Lant Pritchett (March 2006).  Pritchett looks at empirical growth theory in this popular article, and discusses, "he tension between the logics of academic interest and the needs of the policy practitioner..." 

CFIUS Reform: We Might Get Lucky

The U.S. is better off because of foreign direct investment.  However, specific investments can raise security issues.  Moreover, they can lead to public anxiety about security, and political opposition to foreign investment.  Many security issues can be addressed through changes to the deals being negotiated; residual public anxiety can be addressed in part through a security-vetting process that inspires confidence.

New World Bank Report on Mauritius

"Marshall Jevons," over at the The Bayesian Heresy, reports that the World Bank has just released a country economic memorandum (CEM) on Mauritius: A New CEM on Mauritius (Feb 19, 2007).  You can access it through his post.

This report was apparently finalized in May 2006, but its preface notes that it may already be somewhat out of date.

Of course, nothing is the last word for long. The FY 2006/2007 budget announced bold and sweeping reforms. In light of these, parts o f the CEM may already be out of date.  Indeed, the budget measures curbing tax expenditures, reforming the pension system, simplifying business registration procedures and dismantling the EPZ went far beyond anything envisaged by the CEM. However, many o f the CEM’s ideas are still pertinent and in some areas such as education and science and technology policy, the agenda has not yet begun to be addressed.

Fazeer Sheik Rahim gave this budget the "thumbs up" last June: The Budget for 2006-07  (An Economist in Paradise, June 12).

Never have economic ideas found such resonance in a Mauritian Budget as in the one presented on June 9 by Finance Minister, Mr Sithanen, for fiscal year 2006-2007. Good Economics offers the right incentives, recognises the importance and limits of the State, realises the constraints, threats and possibilities of modern times. Bad Economics yields the wrong incentives, delves into ideological debates, attempts to perpetuate the rents and privileges associated with bygone eras. Good Economics has finally arrived....

Rahim's post goes into the budget in some detail.

Note: post revised Feb 21.  Originally said "out of date" rather than "somewhat out of date."  I didn't mean to imply that this wasn't a useful report.

Good news for bon vivants!

Bridges Trade BioRes reports, "BELUGA CAVIAR BACK ON THE MARKET"

Previews of coming House Ways and Means trade attractions

House Ways and Means Committee leaders are developing legislation to (a) push the Administration to take a stronger line on Chinese subsidies, and (b) address allegations of currency manipulation for competitive advantage (Ways and Means is the key House committee dealing with trade).  Gregg Hitt reports (House Leaders to Push Tariffs on China Exports, Wall Street Journal, Feb 15):

Recent hearings on CFIUS reform legislation

On February 7, the House Financial Services Committee held hearings on the process the U.S. uses to review potential foreign direct investments (FDI) for security implications. 

Here is the web page with links to testimony and Congressional statements: House Financial Services Committee: Committee on Foreign Investment in the United States (CFIUS), One Year After Dubai Ports World.

Yesterday, Greg Ip pointed to recent Administration efforts to highlight the importance of FDI to the U.S. economy (U.S. May Be Losing Its Appeal To Foreign Investors, Report Warns, Wall Street Jounal, February 12 - subscription required).

Ip specifically points to Chapter 8 in this year's Economic Report of the President (International Trade and Investment), and a speech by Deputy Treasury Secretary Robert M. Kimmitt in Frankfurt: On Open Investment: The Foundation of the German-American Economic Relationship (Feb 12).

What does Alaska export, and where does it go?

Alaska's exports reached $4 billion last year, reports Bill White: Alaska 2006 exports could top $4 billion (Anchorage Daily News, Feb 6 - free registration required):

Seafood (~$2 billion), minerals, especially zinc (~$1 billion), energy a distant third, and fertilizer way behind.

Exports to China have quadrupled since 2001, topping $470 million last year through November, Wolf  [Greg Wolf, Executive Director of the World Trade Center Alaska - Ben] said.

"China's economic rise and its voracious appetite for natural resources have been the predominant force influencing Alaska's export growth over the past five or six years," he said...

Japan got about 25 percent of the exports, based on value, followed by South Korea at 18 percent, China at 12 percent and Canada at 11 percent...

European countries getting Alaska products include Germany, Spain, the Netherlands, Switzerland and Belgium.

What's the payoff from anti-dumping measures?

Doug Campbell examines anti-dumping for the Richmond Fed's Region Focus: Trade Wars (Spring, 2006).  Campbell's paper is a nice overview, and uses  an anti-dumping petition on wooden bedroom furniture for a case study.  This industry has been hammered by foreign competition, but dumping doesn't appear to have been central to its problems.

Anti-dumping measures have been costly:

Globalization and the market for models

Rachel Dodes has a story in this weekend's Wall Street Journal about the impact of globalization on modeling wages: Strike a Pose, Count Your Pennies (Feb 3 - subscription required).

The supply of models to European and American markets is shifting out:

Job Opening at Treasury

Tim Adams has resigned as Treasury Undersecretary for International Affairs  (here's the web site for the Office of International Affairs).   Elizabeth Price posts to the Wall Street Journal's Washington Wire:

House CFIUS Reform Bill

A bill to reform the process for security reviews of foreign investments has been introduced as HR 556 .   David Marchick points out that this is the same bill passed last year as HR 5337.  The House Committee on Financial Services Committee report on HR 5337 is here: HR 5337.

Doha Partners Underwhelmed by Administration Farm Bill Proposals

The Bush Administration released its proposals for the 2007 Farm Bill today: Bush Farm Proposal May Snag On Congressional Roadblocks (Greg Hitt, Wall Street Journal, Feb 1):