Posts from — March 2007

Here are the lecture notes for next Monday’s lecture, along with slides and the programs I’ll use. Problems will be handed out in class.

Lecture Notes: here

Slides: here (updated, cheers Jason)

Program: PC, PCEX and PCEX2

The Review of Polictical Economy, 2006

[Download this version of the paper]

Abstract

We describe the dependence of web services on the pre and  post conditions that trigger their use in on-line B2B and B2C transactions. We build a model that highlights these dependencies probabilistically and illustrate the use of the model with an example. We place this model in the context of the development of the nascent Semantic Web.  Our result is that, once many web services are chained together, this dependence on different and increasingly complex triggers will produce a decay in the number of successful uses of the web service. This result lays a general theoretical foundation for a game-theoretic examination of web service interaction. We conclude the paper with a program for further work in this area.

Presented at XII International Conference on Computing (CIC, 2004). Mexico City, Mexico. October 13-15, 2004, with Juan Gomez, published as a

book chapter.

[Download this version of the paper]

Published in the Student Economic Review waaay back in 2001. It won best original essay.

[Download this version of the paper]

Abstract

Previous approaches to Digital Enterprises are surveyed, and their relevance to current approaches to modeling the Law of One Price, which holds that for identical goods in frictionless markets, the price for those goods should be the same. We find evidence based on a large new dataset of prices for homogeneous goods that this is not so. We also compare the data gathered here with data from other sources to obtain a more reliable indicator. A model is built to explain the variation in the prices of different goods in terms of information flows. This study is carried out within the context of the nascent Semantic Web.

[Download this version of the paper]

with Nick Young, Annals of Emergency Medicine, 2007

[Download this version of the paper]

Abstract

Beyond the rhetoric, how has widespread adoption of B2B and B2C ecommerce actually impacted large bricks and mortar businesses? In this paper we review some of the economic  approaches to the analysis of efficiency as well as preliminary work establishing hypotheses to be  tested on a sample set, the answers we expect to see, and the implications for the Semantic Web, should all the rhetoric turn out to be just that.

[Download this version of the paper]

European Journal of Political Economy, 2005, pgs 797-799.

[Download the Paper here], [Sciencedirect link here]

Abstract

What is are logarithms (logs) and why should doctors need to know about them? The answer lies in the history of computation and the first steps towards making medicine scientific. Before digital computation, logs provided a quick way of computing the multiplication of complicated products, by transforming these complicated products into simple sums. Logs were computational shortcuts when the user required ratios to effect the computation. Logs also allowed different measurements to be compared, especially across large scales. These scales persist in medicine today, especially in nuclear medicine and internal medicine. This article defines the concepts used in developing the logarithm rigorously. It places the development of the logarithm in historical context and shows an example of why they were useful in pre-computer eras. I finish the article showing a large series of examples of the use of logarithms in medical situations.

This Version: 0.4, March 26, 2007.

[Download this version of the paper]

This week we looked into solving the SIM model by hand, and looking at the Keynesian Multiplier in the Process. The handouts from today are available for download below:

EC6012 Lecture 5_sildes_handout.pdf

EC6012_L5_numerical_example.jpg

For next week: we’ll finish off Dynamics in the SIM model, and move onto chapter 4 of GL. You should read chapter 4 before the lecture. I’ll also be handing out sample exams.

Charles Larkin from Trinity College Dublin, will be presenting a paper entitled “Ius Naturale, Ius Gentium and the IMF Quota-Voting System” to the UL economics department. Slides of his talk are available here [512kb], as well as a handout . Just right click these links and choose ’save target as’.

Autumn 2007

26 September, Prof. Stephen Roper, Aston University, “Innovation, Ownership and Profitability ”

5 October, Prof. Deirdre McCloskey, U. Illinois at Chicago, “The Cult of Statistical Significance”

24 October Dr. Alan Ahearne, NUIG, “Internal and External Current Account Balances in the Euro Area.”

14 November Dr. Liam Delaney, UCD & ESRI, “Neuroeconomics and decision making in different life domains”

21 November Prof. Miriam Wiley, ESRI, “TBA”

28 November Dr. Arnold Polanski, QUB, “TBA”



Spring 2007



16th February 12h00-13h00

Ronan Lyons, Forfas

National Competitiveness & Export-Led Growth: Why Policymakers Should Still Care’

23rd February 12h00-13h00

Brendan Kenelly & Eoghan Garvey, Department of Economics, NUI, Galway

‘The Socio-Economic Determinants of Suicide in the OECD’

2nd March 12h00-13h00

Fergal O’Brien, Department of Accounting and Finance, UL

‘Index Options: Forward Looking Systematic Moments’

9th March 12h00-13h00

Vanni Borooah, Department of Economics, University of Ulster

‘Love Thy Neighbour: How Much Bigotry Is There In Western Countries?

16th March 12h00-13h00

Dermot McCarthy and Donal Palcic, Department of Economics, University of Limerick

‘Employee Share Ownership Plans and Privatisation in Ireland’

23rd March 12h00-13h00

Todd Watkins, Lehigh University, USA

‘Absorptive Capacity and R&D Tax Policy: Are In-house and External Contract R&D Substitutes or Complements?’

30th March 12h00-13h00

Charles Larkin, Trinity College, Dublin

‘Ius Naturale, Ius Gentium and the IMF Quota-Voting System’

13th April 12h00-13h00

John Hill, Department of Economics, University of Limerick

‘Evaluating the Income and Employment Effects of Labour Market Programmes in Ireland’

20th April 12h00-13h00

Ajit Singh, Queens College, Cambridge

‘Globalisation, Industrial Revolutions in China and Labour Markets in Advanced Countries: Implications for National and International Economic Policy.’

27th April 12h00-13h00

Aidan Kane, Department of Economics, National University of Ireland, Galway

‘Public Revenue and Expenditure for Ireland, 1922-64’

4rth May 12h00-13h00

Eoin Reeves, Department of Economics, UL

‘The Practice of Contracting in Public Private Partnerships: Transaction Costs and Relational Contracting in the Irish Schools Sector’

If you are a US Professor, and you’d like to come and work at UL for a semester or two, have a look at this award notice. Full terms and conditions are here.

Or, if you want to know more about the type of Prof. we’d like to have, email me.

No lecture today: see you all next week. Looking forward to reading your blogs.

4 copies of Monetary economics : an integrated approach to credit, money, income, production and wealth have been received. They have put 1 copy for this semester on a 3 day loan.

Prof Todd Watkins will come to UL on March 23rd to give a talk based on his paper, Absorptive Capacity and R&D Tax Policy: Are In-house and External Contract R&D Substitutes or Complements?

A Draft Version can be downloaded by clicking here

Abstract

Firms fund research and development (R&D) to generate commercializable innovations and to increase their ability to understand and absorb knowledge from elsewhere. This dual role and opposed incentive structure of internal R&D creates a significant question for both theory and R&D policy:  Is internal R&D a complement or substitute for external R&D?  We develop a model and novel technique for empirically estimating R&D substitution elasticities.  We focus on bio-pharmaceutical and software industries in California and Massachusetts, where tax credit rates changed differently over time for the two types of R&D, creating a natural experiment.  The effective tax prices for the two R&D types differ from type to type, firm to firm, state to state, and year to year.  This allows us to examine changes in the composition of firms’ R&D budgets between in-house R&D and external basic research when the relative tax prices of each category of research changes.  For a sample comprised largely of small and medium-sized firms, we find evidence of a substitute relationship.

EC6012: Extra Readings on Monetary Theory and Policy

Here are a load of links to different articles on monetary theory and policy. Students may find them interesting, especially if their thesis is in applied monetary economics.

Here are the problems and lecture notes for today.

problem34_student.pdf

Homework:

Homework: Summarise Chapter 3 of Godley-Lavoie, 600-700 words or less. Post to your blogs by 12.00, Sunday 18th, &  Finish problem set 4 part 2, again posting summaries to your blogs.

EC6012 Lecture 4: The Simplest Model with Government Money

Today:

1. Finish off Conventional National Income and Expenditure Matrix

2. Problem: Calculation of GDP GL, (pg. 34–36)

3. Another accounting problem using the circular flow.

4. The Simplest Model with Government Money (GL, pgs 57–71 & Simulations using Eviews)

5. Problem: Interpretation of “steady states” and “shocks” in the light of SIM1.

Before the lecture:

Web Stuff to look at in revision, from Brad Delong’s excellent blog.

Steady State

The Circular Flow

Flows in the circular flow

The multiplier

Book Read Godley and Lavoie pgs 32–71.

MDU Macroeconomics Lecture 5: Inflation and Growth

Today:

0. Defining Inflation

1. Inflation and the Business Cycle

2. Cyclical v. Structural Inflation

3. The Unemployment Trade off

4. Costly Inflation

5. Inflation and Inequality

6. Money Wages and Real Wages

7. Purchasing Power in Ireland

8. Inflation Targeting and Central Banks

0. Defining Inflation

Inflation is defined as a general increase in prices, which we proxy by the Consumer Price Index. (CPI). Deflation is  corresponding fall in the price level.

Ireland’s baseline inflation index looks like this for the last 30 years:

We can see the influence of the “Celtic Tiger” years on Irish Inflation, especially if we look at changes in Inflation over the period 1992-2006:

Broadly speaking, inflation is a reduction in purchasing power over time. So, each euro one earns will be worth less as it purchases less than it did before. There are many factors which can cause inflation to increase: wars, industrial conflicts, supply constraints, trade blockades, and more.

There are six main points to consider when talking about inflation (elaborating on Bowles et al, pg. 479).

1. Inflation and the Business Cycle

The level of inflation varies over the business cycle and between business cycles. So if we plot  Irish GDP and Inflation, over 1992-2006, we see this:

2. Cyclical v. Structural Inflation



We typically see more rapid inflation as we approach the top of the business cycle. This is called cyclical inflation.

Structural Inflation occurs when the price level increases uniformly through the whole of a business cycle, boom and bust. We can see this in sub sections of the consumer price index, for example in construction. Note, the index construction changed during this period. I’ll talk about what that means in the lecture, but you should be aware of it. Details of the indexation methodology are here.

3. The Unemployment Trade off

The Unemployment Trade off describes a tendency we observe during a business cycle for inflation to rise when unemployment falls. If we graph Inflation as measured by the CPI against Unemployment over a ten year period for Ireland and fit a straight line to the cloud of points we assemble, we see the following relationship. This graph is telling us the wrong thing, as I’ll explain in the lecture, but have a look at it for the moment to get the general idea. All data is from here.

4. Costly Inflation

Inflation is very costly because it makes economic outcomes more unpredictable. Economists say that the windfall effects of inflation are uncertain, and you can think of many reasons why that might be. There is also a cost to controlling inflation. For lots of information on this set of costs and how inflation is actually controlled, look here.

5. Inflation and Inequality

Each country’s mix of inflation and unemployment is both a product of and a determinant of that country’s income distribution. Data is from Nolan et al, pg. 17. Ireland’s Income distribution looks like this. approximately. See the paper linked to for a more nuanced picture and a more in depth analysis.

6. Money Wages and Real Wages

What you are paid each month is not what you can buy with that money. Your earnings are always determined by what you can purchase with them. The difference between your real wage (your wage taking inflation into account) and your nominal wage (what you see on your pay-slip) can sometimes make a real difference to what you can buy at the end of the month.

7. Purchasing Power in Ireland



Look at the table on page 489 of Bowles at al. We see the difference between the nominal wage (valued at 1982 $) and the real wage. We can see in each case a drop in purchasing power over the period from 1982-2002. For Ireland, we can compute the cost in today’s euros of purchasing 1 euros worth of goods in 1940. The change in purchasing power is staggering.

8. Inflation Targeting and Central Banks

The ECB is committed to inflation targeting. In the lecture we’ll discuss why this is and what effects it might have on your mortgage.