global financial crash yay!

Mr. Tea

Mr. Tea

Let's Talk About Ceps
vimothy said:
Cause or effect, Mr Tea?
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Well that's the $64,000 question, innit.

Jamaica is a major stopping-off point for South American cocaine en route to the US and Europe, so there's the obvious destabilising effects of that. Barbados might be used in that way too, I guess, but if it is, it's much less notorious for it than Jamaica.
 
vimothy

vimothy

yurp
Okay, look at it like this: Was Jamaica riddled with organised crime before and during independence? The reason Jamaica and Barbados were chosen for this study (and indeed, the reason why this study is worth reading, other than its brevity) is that the two countries were largely identical. It is a well known empirical fact (call it a regularity of you prefer) that the slope taking you out of a slump is a lot steeper than the slope taking you into it, in part because in the years of the slump, human capital will have deteriorated. Which is exactly what happened in the case of Jamaica. Of course society does not sit still – it develops networks and institutions in accordance with whatever equilibrium it reaches. So crime in Jamaica is a cause of some of its present malaise. But it does not stretch back into antiquity. It has a cause in turn.
 
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vimothy

vimothy

yurp
tox said:
Kind of a bizarre article! It reads like what would happen if Vice started covering finance.
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I guess he's been reading Matt Taibbi. Pointless article, but kind of fun. At least, I thought it was -- but I think most of what Lewis writes is funny as.
 
vimothy

vimothy

yurp
Cruel windfall: How wars, plagues, and urban disease propelled Europe’s rise to riches, by Nico Voigtländer and Hans-Joachim Voth, Vox EU:

In a pre-modern economy, incomes typically stagnate in the long run. Malthusian regimes are characterised by strongly declining marginal returns to labour. One-off improvements in technology can temporarily raise output per head. The additional income is spent on more (surviving) children, and population grows. As a result, output per head declines, and eventually labour productivity returns to its previous level. That is why, in HG Wells' phrase, earlier generations "spent the great gifts of science as rapidly as it got them in a mere insensate multiplication of the common life" (Wells, 1905).

How could an economy ever escape from this trap? To learn more about this question, we should look more closely at the continent that managed to overcome stagnation first. Long before growth accelerated for good in most countries, a first divergence occurred. European incomes by 1700 exceeded those in the rest of the world by a large margin. We explain the emergence of this income gap by a number of uniquely European features – an unusually high frequency of war, particularly unhealthy cities, and numerous deadly disease outbreaks....
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D

droid

Guest
vimothy said:
Also, this just in: Institutions Versus Policies: A Tale of Two Islands, Peter Blair Henry and Conrad Miller

Abstract
Recent work emphasizes the primacy of differences in countries’ colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados’ GDP per capita grew roughly three times as fast as Jamaica’s. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.​
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Interesting piece but deeply selective, blaming all of Jamaica's ills on the 'socialism' of Manley and the PNP from 72 -80, thus ignoring IMF blackmail, repeated US political and covert intervention, the JLP's fire sales of state institutions post -1980 etc... as well as ignoring significant social differences between the two countries, all of which makes the whole paper deeply suspect.
 
vimothy

vimothy

yurp
Probably a damned neolib!

Actually Henry emigrated from Jamaica in the late '70s, so you may well be right about his research being deeply suspect. Not sure that it would make sense to include exogenous shocks or variables in a (very short) study of the effects of policy on growth rates, however.
 
vimothy

vimothy

yurp
TED spread below 30bps:

chart
 
vimothy

vimothy

yurp
FOMC statement -- August 12th 2009:

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
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