Apr 27, 2012

How poor is Japan?

The Economist has a Daily Chart about Japan being overtaken by Asian Tigers in terms of living standards. As it writes, "most economists reckon that the best way to compare living standards is to take GDP per person measured at purchasing-power parity (PPP)". In other words, the Japanese are now able to consume less stuff then the Tigers, including South Korea in a near future. That is indeed remarkable, when one thinks about where South Korea started in 1980.

But what is also remarkable is that when GDP per capita is measured at market exchange rates, Japan is still the richest (Taiwan is not in the graph below due to Chinese interference).

Is this because the yen is worth too much, boosting Japan's GDP per capita at market exchange rates? The yen has indeed been appreciating quite a lot against the dollar since 1980. Or is it because goods are too expensive in Japan, reducing people's purchasing power? Maybe goods are too expensive because Japan is too protectionist, not allowing cheap Chinese goods to flow in. Or maybe its goods are of higher quality, something PPP exchange rates capture rather imperfectly. 

So here's what's weird. When the Japanese travel to the US, there are much richer than the Koreans. But back home, they both live as comfortably. Do they really?

Apr 17, 2012

Heading the World Bank

The debate around who had to become the new head of the World Bank has been quite fierce, on blogs and on twitter. Now yesterday it was just revealed (surprise surprise) that Jim, the US's choice, was to become the new boss. Many are angry because this is a continuation of a political arrangement between Europe and the US, rather than a transparent selection process. But having Jim head the bank is certainly gonna be interesting, mostly because he comes as a complete outsider. The Economist had strongly backed the Nigerian candidate, stating that she was by far more qualified. Yet as I outlined in a letter to the editor, it wasn't so clear:

Your leader on who is to head the World Bank is somewhat contradictory. On one hand you say that development is not something rich countries do to poor ones. On the other you claim that an experienced economist should head the Bank because the Bank is about bringing development.
In any case it seems to me the mandate of the Bank goes against recent advances in development economics. One the one hand the randomistas argue that small and targeted aid projects in health and education do have a positive impact on the treated. On the other macroeconomists like Acemoglu and Robinson argue that growth cannot come through outside help. As Easterly reviews their recent book, "Why Nations Fail", he puts it simply: “experts cannot engineer prosperity with the right advice to rulers on policies and institutions. Rulers "get it wrong not by mistake or ignorance but on purpose."”
Has the World Bank helped poor countries by suggesting the right policies? Nope. Can it? Of course not. Why stick to a failed model? Better stick to assistance projects that can actually make a difference. And for that Jim Yong Kim may be the right candidate. For sure it makes no sense to have Obama decide who is to head the Bank. But this doesn’t mean this is an obvious choice. There is no doubt that Ngozi Okonjo-Iweala is one of the world’s best hopes for development. Yet the main advantage of having Jim head the Bank is that Ngozi avoids useless meetings in DC and remains where she can change the world, i.e. in Nigeria.

And a few days later Acemoglu and Robinson said the same thing on their blog:

Perhaps the Bank could focus on doing a few things such as investing in health infrastructure, hospitals, perhaps some educational facilities targeted for the most disadvantaged populations in only the parts of the world that are most in need... perhaps this year offers another historic opportunity: to change the vision and structure of the World Bank.

Apr 11, 2012


Rigotnomics is now on RePec:

The Federal Reserve Bank of St. Louis is lauching a blog aggregator,  EconomicAcademics.org, to highlight and promote the discussion of  economics research. Your blog is part of this effort. This email explains  why and how you can help promote the discussion of economic research in  the blogosphere. 
EconAcademics.org aggregates blog  posts that discuss economic research. The aggregator looks through blog  posts for a link to some research indexed on a RePEc service... IDEAS then also links back from the abstract  page to the blog posts... 
This blog aggregator is provided by the Federal Reserve Bank of St.  Louis, which also offers with FRED database and graphing tool as a useful  resources for bloggers. Feel free to use the graphs on your blog, best  done by embedding them so that readers can click on them to get more  details about the data....
Also, ... if you have a topical blog, you can have the  latest papers in your field featured in an RSS widget. See  http://nep.repec.org/. If you have suggestions, comments, or questions, do not hesitate to  contact me.
Christian Zimmermann

Apr 10, 2012

Rodrik on UNCTAD

Rich countries want to reduce UNCTAD's work on macro/finance. Pity since UNCTAD reports are far more value-for-money than World Bank WDRs. -- Dani Rodrik (@rodrikdani)

Apr 3, 2012

Accessing World Bank Data in Stata

Via Vox.LACEA via facebook:

In stata window type:

"ssc install wbopendata"


"db wbopendata"

 A box like this should appear:

And you're set! More here.