Jul 31, 2009

Malaysian contraband

I was on the ASEAN website doing some serious research and looking at Malaysia’s trade policies, especially at the goods with prohibitions, controls and restrictions. Among the list of goods absolutely prohibited from import were turtle eggs, piranha fish, daggers etc… but also all goods from Haiti.

Then I also saw that all goods from Israel were prohibited from exportation unless accompanied by an export license (as are many random products). Why these two countries? As for Israel, Malaysia does not recognize it as a State…As for Haiti I have no idea! But now the question is: are these bans reflected in their trade data?

I looked at the trade statistics. While Haiti does not report any trade stats since 1997, I found that Malaysia reported imports from Haiti of $310,472 in 2007 and $8 in 2008! Too bad these goods were classified as HS 9999, i.e. commodities not elsewhere specified.

As for trade with Israel there is a major smuggling gap (Israel reported imports – Malaysia reported exports) of the order of $41 million in 2005 and $63 million in 2007 (see table). Looking at more detailed data I saw that these exports ranged from electronics to cocoa powder.

Obviously, there is here plenty of material for a great freakonomic gangsters paper.

Bail outs and bonuses

This is taken from this, courtesy of the bunkey.

Viva competition

There is much market disappointment with the recent Yahoo/Microsoft deal, reflected in the fall of the yahoo stock. But I think Google needs some competition, otherwise we will become screwed soon. I'm not sure if this alliance will be powerful enough to tame the Google beast but there is some hope. Recently I particularly appreciated Microsoft Bing Maps effort, especially the bird’s eye view, unparalleled by Google maps.

Jul 30, 2009

Utilitarian and Pigouvian taxes

Some economists want to increase taxes for tall people, some want to tax men more then women, others tax middle-aged people more, and now The Economist suggest taxing fat people more (as a Pigouvian tax on junk food won't do).

I agree with all these proposals.

French cuisine: the good part of it

It might appear odd that a German defends the French, but I definitely want to add an exception: tarte flambe! And C. Wyplosz would certainly consider this here to be an exception as well. Since I am still waiting for the free trial bottles I am not yet in the position of giving my judgment on it.

By the way, the topic is by no means new, check this or this by C. Wyplosz and here by R. Baldwin.
.....seems there is somewhat of a correlation between being Prof. at HEID and an interest for wine. Does that imply anything about HEID?

Why eating in France sucks

I have always been disappointed with food in France, not only because of the horrible experiences caused by arrogant waitors or bitchy waitresses, but also because of the low quality of the food itself (This is the exception that confirms the rule).

Now after having Tyler Cowen explaining part of the story, here's a whole book devoted to the french agony. In Au revoir to all that, Food, Wine, and the End of France , Michael Steinberger (Slate, Food & Wine, Saveur, the Financial Times, the Economist) explains the political, economic, and cultural factors behind the crisis in the country and food he loves.

From the FT review I read that the future belongs to Tokyo, London and the northern Spanish town of San Sebastián, which has more Michelin-starred restaurants per capita than any place in the world. World-class restaurants now flourish in deepest Wales, lost cheeses have found their artisans in the US, and ambitious wine is made nearly everywhere.

I also learned from the reviews that McDonald’s is the France’s largest private employer!

Jul 25, 2009

What is the appropriate role of government in the economy?

The Fraser Institute is giving away $10,000 in cash and electronics prizes in its 2009 Student Video Contest. The topic is: What is the appropriate role of government in the economy? Maybe we could film one at Berlusconi's house?!?

Economic history lesson from Eminem

Just saw Eminem's new video on MTV which starts with the following statistic:

"In 1950, Michigan was one of eight states in America that collectively produced 36% of world GNP...Detroit was the greatest manufacturing city in the world"

I was reading in the newspaper this other random fact that may explain part of the decline:

"En 1969, les Québécois commençaient timidement à acheter des voitures japonaises. Tout ce qui était made in Japan était considéré comme bas de gamme, et les rares acheteurs de Toyota et Datsun (l'ancêtre de Nissan) passaient pour quelque peu excentriques. À l'époque, ça ne se contestait pas?: le summum de la qualité et de la fiabilité, c'étaient les produits GM!"

How things have changed!

Jul 24, 2009

Migingo Island

I read on BBC that the Kenyan and Ugandan governments are fighting over an island on Lake Victoria. That place looks amazing; it has a population of about 500 mostly fishermen and fish traders, who are served by four pubs, a number of brothels and a pharmacy. I wonder what drove the entrepreneurs who started the pubs there...maybe the RDB can help further expand businesses there!

Is New Jersey a failed state?

From The Economist:

Mayors, a council president, two state assemblymen, numerous public officials and political operatives, and five rabbis are among 44 people that were just arrested in New Jersey, part of a ten-year federal investigation of public corruption and international money-laundering and, some organ selling!

This will make a good movie, but maybe people will find it too cliche: Clandestine meetings were held in parking lots and diners. Money, to the tune of $97,000, was stuffed in an Apple Jacks cereal box...a "broker" was even targeting vulnerable people, persuading them to give up their kidneys for $10,000 and then selling the organs for $160,000!

This is a not bad joke or something happening in Michoacan or Nairobi...Religious leaders in New York and New Jersey were heading money-laundering crews, acting as crime bosses!

So the question is why is the rule-of-law still significant in growth regresssions!

Jul 23, 2009

More evidence on height-related wage gap

Greg Mankiw would be happy to see this study, which appeared today on the Telegraph. New evidence finds that a wage gap between tall and short men exist not only in Britain and the US, but also in Australia. The study finds that if you are approximately 1.77 meters (5ft 10 inches), if you had been 1.82 m (or 6 ft) this would have increased your salary by 1.5 % per year.
There are several explanations for this result, but the one I prefer (de gustibus) relates to self confidence: if you are taller than your peers in your childhood, this boosts the perception of yourself in future life. When you are self confident, you gain more respect from other people, and thus you advance faster in your career (does anyone believe wages are really related to productivity?). The other interesting results are: the same does not hold for women; fat men do not earn less than slimmer colleagues.

Jul 22, 2009

Girl, your marginal benefits...

Girl Your Marginal Benefits... (Featuring Julia Zhang) by Mike Toomey

Listen to it here.
Now girl being with you has always been so tough (so tough)
With each passing minute your marginal cost goes up
But my love is inelastic and it all belongs to you (who me?)
I'm the only love producer and my good is for you to consume

Cause girl your marginal benefits far outweigh your marginal costs
Without our equilibrium baby well you know I'd be lost
Trapped inside this market I need you to buy my love
Girl without your complementing goods well I'm just not enough

Now you say that I'm producing below my ATC (so low)
But I'm optimizing quantity baby, why can't you see?
We could share this surplus each and every day
If you would just buy my love I'd make my fixed costs go away

Baby I want to keep you for the long run (Oh yeah) (mmmm)
I think our supply and demand will become one

Cause girl your marginal benefits far outweigh your marginal costs
Without our equilibrium baby well you know I'd be lost
Long run equilibrium is no place for me
I need the profits of our love to grow exponentially

ht: this post by Shanta

Economics and Poetry

Economists do not just find solace in poetry, but also use it for research proposes!!

In his most recent NBER working paper, the famous Chilean economist Sebastian Edwards (UCLA) quotes Pablo Neruda:

“When the trumpet sounded, everything
was ready on earth,
and Jehovah distributed the world
to Coca Cola Inc., Anaconda,
Ford Motors and other entities:
United Fruit Inc.
reserved for itself the juiciest part,
the central coast of my land,
the sweet waist of America.
And it rebaptized its lands
“Banana Republics” (…)”

Jul 21, 2009

Fake abstract series: "What determines American geographic curiosity"

Those of you who like myself see economics more as art than as science may be thrilled by the idea of a rigotnomics fake abstract series. I have written a bunch in the past. Here's one of them. Hope to see more coming!

"What determines American geographic curiosity"

Abstract: Americans are often blasted by Europeans because of their inability to put a certain country on a world map. As Americans do better in science and mathematics than Germans or Italians for example (OECD), this lack of knowledge certainly is not straight dumbness. In this paper we study the determinants of their geographic curiosity using data from Google trends, which allows us to measure the number of times a country, or a main city, has been googled over the last 12 months. We find that the top 10 tourist destinations are on average googled 15 times more than the average country. Gravity determinants such as being landlocked, economically remote or an island have no impact; and neither does GDP nor GDP per capita. Military or CIA involvement increases searches by 50%. Finally, we find that more important export markets are 20 more googled while major import partners are 50 more googled.

Jul 16, 2009

Fulfilling Expectations in Finance

This is were the Midwest Finance Association has its 2010 Annual Conference. No comment ....

Jul 15, 2009

Surviving the PhD

See more pics here.

See alternate version here.

John Stuart Mill and poetry

Just in case you feel represented:

"This intensive study however had injurious effects on Mill's mental health, and state of mind. At the age of twenty he suffered a nervous breakdown. As explained in chapter V of his Autobiography, this was caused by the great physical and mental arduousness of his studies which had suppressed any feelings he might have developed normally in childhood. Nevertheless, this depression eventually began to dissipate, as he began to find solace in the Mémoires of Jean-François Marmontel and the poetry of William Wordsworth."


Jul 13, 2009


Just came back from holiday in Greece where I was impressed by the wealth level... I just came across this graph and it's been doing well indeed:
The question is, after Spain, has Greece really overtaken Italy? The IMF thinks so!

Can SuperObama save Africa?

Obama's recent visit to Ghana added fresh woods to the bonfire of the discussion about "western" policies for Africa.

Obama is a superhero in most African countries. In Gambia the truck and bus drivers usually have three stickers in the front window: Bob Marley, Madonna and Obama. For many he is the new hope, so what he says and does toward Africa matters.

First, why did he decides to go to Ghana and not to another country?
some thoughts here and here

What did he say?

Reactions to the speech?
"Bill" The Watchdog couldn't be outside the discussion. He grades the speech, and gives one of the worse scores to the idea of support an African Green Revolution. But other people seems to be more optimistic about this.
UPDATE: The grades from a second reader.

Will Obama's superpowers be the definitive answer to failures of Western policies?

Return to profits for Goldman

The story is taken from the New York Times. It turns out that, while signs of economic recovery are weak, Goldman Sachs is already making profits. Not only the Bank has already repaid the bailout money received from the Treasury (approximately 10 Billion $), but it is also said to have registered a profit of around 2 Billion $ between March and June. Part of these revenues will probably be returned as bonuses to its employees. So people wonder, how do they do that?
As the article reports, Risk Management is the key. It means that, while people are scared to take risks, Goldmand does it, and it pays off very well. I heard once a London banker describing Goldman's approach to Risk management as "either they blow up, or they swim in cash". So far they did not blow up (with the Trasury's help), and now they swim again in cash. The question is then: are we back to the pre-crisis level in terms of risk taking? Are the lessons from the crisis un-learnt? People are waiting to see what the most successful bank is going to do next.

Jul 10, 2009

Tell me what I am eating, please

Apparently, according to this poll, people are becoming more concerned about what they are eating; or better, more concerned about what they buy. Being "environmentally" concerned in our decisions is becoming part of our everyday life. There are reasons to be cheerful about this, and reasons to be worried. The fact that there is a higher demand for goods which have lower carbon footprints may be in fact a welcome event, but the risk of a resurrection of protectionism becomes extremely likely. What people are asking for is information, so who' s gonna provide it? It is very likely that this taks is going to be performed by people with vested interests, able to convey their "right" information. As we reported here and here, there are common misperceptions about the environmental impact of what we eat and do. Information is a public good, and I think, even more in this case. Some form of intervention or cooperation here must happen if we want to be serious about climate change.

Jul 9, 2009

Opportunity Cost

Apparently, according to this fundamental study "women spend nearly one year deciding what to wear". Is this because women do not optimize or because their partners are not convincing when they say "honey, you do look beautiful with that"?

Jul 8, 2009

Recession and Health: once again

In a previous post we surveyed some studies which claimed that the effects of recessions on health are positive. The logic behind these results is that people are induced to change their lifestyle during a recession, and this goes often in favour of healthier choices (walking or biking instead of driving their cars).

These results have been re-assessed in a comprehensive study on 26 European countries from 1970 to 2006 and are reported today on the FT and published online on the Lancet Medical Journal (although the version is available only to subscribers).
As the figure to the left reports, a 3% rise in unemployment leads to 28% rise in deaths from alcohol abuse, 6% from homicide and 4% from suicide; it does instead lead to a reduction in transport accidents by 4%. Overall, there is no effect of unemployment on all causes mortality rates.
An interesting picture that emerges from the study is, that the impact of unemployment on death rates vary substantially across countries. For example, suicides rates are substantially mitigated by government-sponsored programmes to keep people employed: if the amount spent on active-labour market participation exceeds 190$ per capita, suicides rates do not rise.
From my understanding, the use of death rates does not allow a full comparison with previous studies, which use more micro data looking at specific habits (like smoking) or health measure (like weight), but it's still informative with regards to the striking policy implications.

Jul 5, 2009

Latin America, the place to be

Another Index of Happiness was released this week, with potential to raise much controversy as developed nations score very badly. In this one, Costa Rica, and not Denmark, tops first.

"That the top 10 in the list of “greenest and happiest” nations is dominated by Latin America might raise a few eyebrows, as the region is better known in the western imagination for its slums, inequality and coups. But the Latin Americans score highly, the report suggests, due to non-material aspirations and strong social capital among friends and relatives. The grim performance of the developed world might also prompt some westerners to cast doubt over the value of the report. Among the rich nations, the highest placed country is the Netherlands – but it manages only 43rd... The challenge for the west, the report says, is not to keep increasing incomes but to aim for more meaningful lives and stronger social ties." (Switzerland, by the way, scores relatively well among developed nations, 52. Maybe because of la fete des voisins!)

Despite all problems with such Indexes, I find it valuable to add measures of social capital and ecological footprint to go beyond gpd pc. I can definetly see how some people may prefer Costa Rica over Denmark.

On the other hand, I believe violence indicators could enter such an Index more directly than trough Life expectancy only - having good true friends around, nature, some income, relatively high life expectancy etc mean much less when people have to face violence all the time - which is the case of Kingston, Rio de Janeiro, Bogota or San Salvador, whose countries all rank top 10 in this index. Most of them have drug trafficking as background.

Calculate your own score on the Happy Planet Index if you want to find out "how happy you are and at what price to the environment!"

Jul 3, 2009

Russia-Nigeria energy linkup

I'm sorry to double post Chris Blattman once again but this one is too funny:

It probably seemed a good idea at the time. But Russia's attempt to create a joint gas venture with Nigeria is set to become one of the classic branding disasters of all time -- after the new company was named Nigaz.

The new company Nigaz plans to invest at least $2.5bn (£1.5bn) in oil and gas exploration and aims to build refineries, pipelines and gas power stations across Nigeria.

The full Guardian article is here.

France in Africa - Quotes

Finally some fine comments from Chris:

Africa without France is a car without a driver,” he said. “France without Africa is a car without petrol.” (Bongo)

Elf is not just an oil company but a parallel diplomacy to control certain African states, above all at the key moment of decolonisation. Alongside exploration and production, opaque operations were organised, to keep certain countries stable.

"Critics of China's (dodgy) Africa resources ventures need not look long into the West's own past to see deeds much worse". (Blattman)

The frist 2 quotes are from Nicholas Shaxson's Poisoned Wells: The Dirty Politics of African Oil.

Trade and Climate Change

Last week, the WTO and UNEP released a joint report entitled "Trade and Climate Change".

The Report provides an overview of the key linkages between trade and climate change based on a review of available literature and a survey of relevant national policies. It shows that trade intersects with climate change in a multitude of ways. For example, governments may introduce a variety of policies, such as regulatory measures and economic incentives, to address climate change. This complex web of measures may have an impact on international trade and the multilateral trading system.

While the Report is reminisant of the Stern Review or the IPCC Assessment Report, it's worth having a look at because of its specific focus on trade issues, its detailed examples of national and international policies being adopted, and its overview of the relevant WTO rules. And of course, I can't forget to mention that a couple of Graduate Institute students contributed significant parts of the report.

Corruption: Why fight the roots if addressing the symptoms is so much easier

Here is another example of silly policies to address corruption:
"Staff at Nepal's main international airport are to be issued with trousers without pockets, in an attempt to wipe out rampant bribe-taking"
The entire story is on BBC News

The need to listen

It seems like our school's administration finds it hard to listen to students' recommendations. I was reading the minutes of the Institute's comittee, only to be, once again, exasperated by some kind of stubborness:

- " M. Burrin explique que l'idée est de doter l'Institut d'un texte sur les principes et les valeurs qui devraient lier l'ensemble de ses collaborateurs et être appropriés par tous, comme cela se fait dans de nombreuses institutions universitaires."

- "M. Burrin explique que les professeurs sont payés principalement pour faire de la recherche et que l’Institut ambitionne de développer celle-ci, car c’est grâce à elle qu’une institution rayonne et que les professeurs nourrissent leur enseignement."

- "Mme Komar estime important de trouver un équilibre entre les deux, car l’Institut est également composé d’étudiants."

- "Mme Komar suggère d’ajouter sous « Mission » une référence à la « contribution pratique »
des alumni ayant une position importante dans la société."

- "M. Burrin souligne que le texte sur la mission de l’Institut a été élaboré il y a plus d’un an et qu’il serait probablement formulé en des termes légèrement différents aujourd’hui, mais qu'il ne s'agit pas de le réécrire, l'essentiel de la Charte portant sur les valeurs et principes."

Here's the deal, Komar is a student, and she highlights rightly that teaching is important. The administration seems to want to build a reputation by downgrading teaching. It is obviously completely insane. HEID will have a reputation only when its degress become serious ones, when students finish their degrees with a certain satisfaction and a lot of ambition acquired through influential and motivating professors. This is not the case at all now (with very few execptions) and I don't think the direction has the capacity to grasp this concept.

It's obvious from the minutes above that the director is not willing to take seriously any advice coming from the student body. With this attitude, the school is doomed, with good research output or not.

Jul 2, 2009

Corruption or sloppiness?

This past Saturday, an entire apartment building in Shanghai collapsed. Did this happen because of a) sloppy engineers, b) corruption, or c) god's will? Source here.

Jobs to Geneva

"The British-based Economist Group decides to move its headquarters for continental Europe, the Middle East and Africa to Geneva while closing offices in Vienna. In an interview with Swisster, the regional director of the famed financial publishing house, whose multi-faceted operations have expanded to include business intelligence gathering and conference organizing, says the Swiss city “ticks all the boxes.”"

Source here.

If Paul Krugman Were A Woman

'If Paul Krugman Were A Woman' is the title of this great piece on the blog Slate.com, which is a bio of Noriko Hama, a professor of Economics at Doshisha University in Kyoto.

Apparently Hama shares several of Krugman's attributes - as Slate writes, 'she [Hama] is a scholar and polemicist who doesn't shrink from speaking directly about politics. She's also got the columnist's [Krugman's] gift for phrasing and buzzwords'.

Jul 1, 2009

RDB Quarterly Report

The RDB just released its first quarterly report! You might be too busy to read the 1,5 pages of text, but still, have a look at it, it's full of nice charts and images!