Tyler Cowen's Blog, page 231
February 9, 2014
Wolfgang Münchau worries about OMT
The German court left no doubt that the Bundesbank and other German institutions were bound by the constitution. They also made clear they were not letting go of this case. The ruling gives the distinct impression that the judges are referring the case not up to a higher court but down to a lower court…
So what would happen if the ECB wanted to trigger the scheme? Following this ruling, I am not sure the Bundesbank could participate. That would be an inconvenience, no more. I would also expect, though with less certainty, that the German government would torpedo OMT through a technical lever. The scheme requires potential beneficiaries first to apply for a conditional credit line from the European Stability Mechanism. This is where the governments come in: they have to approve any ESM programme by unanimity.
What if the government and parliament voted in favour of a credit line? You could count on an immediate legal challenge at the constitutional court. This is the point when the ruling will matter. The court would then either eat its words or trigger a crisis. It will not refer another case to the ECJ.
The FT piece is here. Developing…
Addendum: Here is commentary from Hans-Werner Sinn.
Assorted links
Is soccer good for you?
Doerrenberg and Siegloch say maybe so, especially if you are unemployed:
We examine the effect of salient international soccer tournaments on the motivation of unemployed individuals to search for employment using the German Socio Economic Panel 1984–2010. Exploiting the random scheduling of survey interviews, we find significant effects on motivational variables such as the intention to work or the reservation wage. Furthermore, the sporting events increase perceived health as well as worries about the general economic situation.
An ungated version is here, and the pointer is via Kevin Lewis.
February 8, 2014
Why emerging markets should look within
That is the title of my latest New York Times column, here is one excerpt:
In recent weeks, Argentina, Turkey, Ukraine and Thailand have endured plunging currencies, capital flight and political disruptions in varying combinations. While they have all been affected by global economic tides, these nations are facing crises because of problems in their national governance. And if we look elsewhere around the world, we find that governance has been re-emerging as a major factor behind success or failure in many emerging nations.
It’s not that macroeconomic quandaries have gone away in all of those countries. There are still many such issues: how to deal with current account deficits, for example, or how to face the consequences of tighter monetary policy in the United States. But these concerns were foreseeable, and some countries have been meeting them, if imperfectly, while others are letting these problems push them over the precipice. In this context, good governance means directing political energies at strengthening the economy rather than trying to cement power and keep down the opposition.
This new world contrasts with two earlier waves of change. The first started in the 1990s, when a rising China bought and invested in raw materials at an unheard-of pace. That flow of purchasing power was so strong that it brought better times to other emerging nations, including many in South America and Africa, regardless of whether the individual countries had good governance in place.
The second major wave was the recent global recession, which damaged the commercial prospects of many nations. For instance, in the first quarter of 2009, the gross domestic product of Singapore fell at an annualized rate of 8.9 percent. That wasn’t because Singapore had bad economic policy, but because exports were hit by a global downturn beyond the country’s control.
The two waves have had such noticeable effects that we’ve become unaccustomed to evaluating political fundamentals in individual nations. But these waves, though not quite over, have slowed.
Some of the likely losers are Argentina, Thailand, Turkey, and Ukraine. Chile, Malaysia, and Mexico are likely to come out of the turmoil in OK shape, to cite some examples on the other side. As for China…?
Do read the whole thing.
Does generational membership matter for workplace behavior?
According to one new study (“Generational Differences in Workplace Behavior,” gated here), not so much:
John Bret Becton, Harvell Jack Walker & Allison Jones-Farmer
Journal of Applied Social Psychology, forthcoming
Abstract:
Popular stereotypes suggest that generational differences among workers present challenges for workplace managers. However, existing empirical research provides mixed evidence for generational differences in important values and attitudes. The current study extends generational effects research by examining differences in actual workplace behaviors. Drawing from commonly held generational stereotypes, the authors hypothesized that Baby Boomers would exhibit (Hypothesis 1) fewer job mobility behaviors and (Hypothesis 2) more instances of compliance-related behaviors in comparison with both GenXers and Millennials, while (Hypothesis 3) GenXers would be less likely to work overtime in comparison with Baby Boomers and Millennials. A sample of 8,040 applicants at two organizations was used to test these predictions. Results provided support for Hypothesis 1 and Hypothesis 3 and partial support for Hypothesis 2, but the effect sizes for these relationships were small. It appears the effects of generational membership on workplace behavior are not as strong as suggested by commonly held stereotypes. Implications for future research and practice are discussed.
The pointer is from the ever-excellent Kevin Lewis. Here is a Pacific Standard summary of the same.
Assorted links
1. Michael Boehm on job polarization.
2. The 2001 Benhabib paper on Taylor rules and multiple equilibria (pdf).
4. “Occupy Wall Street leader now works for Google, wants to crowdfund a private militia.”
5. The folk notion of personal identity isn’t very convincing.
6. Thomas Friedman has never quoted a taxi driver in a column.
Exonerations with not even a crime: how many more should there be?
The number of people exonerated after they were falsely convicted of crimes in the US has reached an historic high, with 87 walking free last year.
A new report from the National Registry of Exonerations finds that almost a third of the people in 2013’s unprecedented crop of exonerations were convicted in cases in which, in fact, no crime was committed – a record-breaking number in itself. Some 22 men and five women were given sentences ranging from probation to life, yet when their convictions were investigated, they were not only found to be innocent, but it was discovered that no offence had occurred in the first place.
There is further information here.
February 7, 2014
Are young Germans now spurning apprenticeships?
From the FT, Chris Bryant reports:
…in Germany, growing numbers of school leavers are choosing to go to university instead of starting an apprenticeship, triggering alarm that small businesses will struggle to fill skilled positions.
…The number of young Germans starting an apprenticeship declined 4 per cent last year to 530,700, the lowest level since German reunification in 1990. Some 33,500 apprenticeships went unfilled, the most since 1996.
…The reasons for the falling number of apprentices are hotly debated. Partly it reflects demographic trends: there are fewer young people around today than when the baby boomer generation came of age.
Studying for an undergraduate degree has become more attractive, in part because it no longer takes so long. German students can obtain a bachelor’s degree in just three years, instead of five years for the old-style diploma.
Almost 500,000 Germans began a university degree last year, compared with fewer than 360,000 a decade ago. Nevertheless, around one-quarter of German students break off their studies prematurely and do not graduate at all.
Meanwhile, trade unions accuse cost-conscious companies of offering an insufficient number of apprenticeships, and point to an increase last year in the number of young people who were unable to find one.
Jutta Rump, director of the Institute for Employment and Employability (IBE) in Ludwigshafen, said there had indeed been a “cannibalisation” of vocational training via increasing university attendance.
The Germans can’t quite seem to extend a model that everyone else is falling in love with and trying to copy…
For the pointer I thank Jim Olds.
Words of wisdom from Bryan Caplan
BC: Every economist who gives policy advise is implicitly relying on philosophy. Unfortunately, most economists want to rely on philosophy without really reflecting on it, so they’re usually just crude utilitarians (with a heavy bias toward the status quo and democratic fundamentalism).
And:
Question: With the drought in Southern California is it possible the state is over populated? Meaning we have to halt immigration into the south west?
BC: No. Just raise the price of water!
There is more here.
Assorted links
1. Doc shock comes to the masses. And health insurers banking on government $$.
2. Is there a secret German economic boom? (speculative)
3. Do social networks make us smarter?
4. FT piece on whether Norwegians have fallen out of love with work (yes).
5. Silly uses for robots show they are getting cheaper.
6. Who owns real-time sports data?
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