Posts from — September 2007

• European Commission - Enlargement
  Useful for the essay.
  (tags: EC4333)
• Regional Policies and EU Enlargement
  Useful for the essay
  (tags: EC4333)
• European Commission - External Trade - Trade Issues
  Useful for the essay.
  (tags: EC4333)

First, yes, that was a typo. It shoud read +(D+F) in the top cell of the 14th slide and on the handout. All apologies.

Second, here’s the story I was talking about in class, and the first part of it:

Farmers stormed an EU Commission event at the ploughing championships yesterday to protest against continued imports of Brazilian beef despite disease risks and lower standards.

Placard-wielding Irish Farmers Association members, with slogans such as “Give Brazil the Red Card”, demanded an equal playing field for Irish beef farmers.

Third, woops, it wasn’t Marshall but J.R. Hicks, his contemporary, that uttered this quote;

The best of all monopoly profits is a quiet life.

Fourth, links to Stiglitz’s last two books on Globalisation and trade are below:

“Globalization and Its Discontents” (Joseph E. Stiglitz)

“Making Globalization Work: The Next Steps to Global Justice” (Joseph Stiglitz)

Fifth, after this lecture you should be able to tell me

1. what similarities exist between import quotas and tariff impositions
2. what areas under a demand curve will go to what economic actors in the event of the formation of a customs union
3. what arguments there are for and against free trade, and finally
4. where Argentinina is on a map.

Sixth, there’s a podcast of the lecture available. Download it by clicking this button: here.

Or, watch it here

• Modelling of traffic flow
  (tags: FYP)
• AgentLink.org | European Co-ordination Action for Agent-Based Computing
  (tags: AI links Research software)
• The Journal to Stella, by Jonathan Swift
  Brilliant! Fulltext!
  (tags: newton NewtonPaper Swift)

Supply and Demand:

Loss aversion is so easy to understand - it can be explained using a coin flip in ten seconds - and yet it manages to explain so many anomalies of modern life*, from the 4th down habits of football coaches to the collapsing real estate market:

The professors gathered data on almost 6,000 Boston condominium listings from 1991 to 1997 and showed that for essentially identical condominiums, people who had bought at the peak and were facing a loss generally listed their properties for significantly more than those who had bought at a time when prices were lower.

Properties listed above the market price just sat there. In the Boston market over all, sellers listed their properties for an average of 35 percent above the expected sale price, and less than 30 percent of the properties sold in fewer than 180 days. In other words, much of the market went into a deep freeze as many people held out for market prices that no one would reasonably pay.

In classical economics, that’s not supposed to happen, but the episode did comport with the behavioral economics theory of loss aversion: people have a visceral — some might say “irrational” — hatred of losing money. They try to avoid doing so, even when it goes against their own best interests.

That’s Austan Goolsbee in the Times. But is the reticence of home sellers a bad thing? It seems to me that the alternative is an instant deflation stock-market style, where the value of the investment can drop 5 percent in a single day. Now that would be depressing. Can you imagine coming home to a pile of bricks that is plummeting in value? It’s one thing to lose paper money in a stock portfolio; it’s another thing to live inside your losses. I think the loss aversion of homeowners is particularly strong, if only because nobody wants to get depressed every time they see their driveway.

Lecture Plan - Trade Tariffs and Welfare

Estimated time - 1.30 minutes

Aims

To look at examples of the effects of trade creation/diversion

To explore the similarities of import quotas and restrictive licensing

to derive appropriate policy steps from this analysis

to show how the analysis in terms of macro institutions like the GATT and the WTO.

Learning objectives

Students should understand what a tariff and a deadweight loss is, be able to compute the ‘before and after’ effects of each type of tariff and quota imposition, and be able to argue for and against a policy on the grounds of free trade theory.

Introduction

Last week we saw the differences between trade creation, trade destruction, and the welfare effects of both. We finished the history of the EU, showed some data, and did some institutional analysis with our friend Beach.

This week we’ll look at the effects of tariffs, import quotas, and restrictive licensing, and derive some interesting and unexpected results from the analysis.

Further reading

• El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs 1-19 and 72-79,

337.142 AGR.

• McDonald, F. and Dearden, S. European Economic Integration, 3rd ed., pgs 34-53, 337.142 MCD

Watch the slideshow below, or click on the ’slideshare’ icon in the bottom left hand corner to download it.

Download the handout by right clicking the image below:

Long Tail author Chris Anderson on his new book:

(via)

Cheers, Ben.

• Mathematical Finance
  Interesting book
  (tags: Readings)
• EUROPA - The EU at a glance - The History of the European Union
  (tags: education History EC4333,)

You should be able to answer the following questions:

1. Define Trade Creation and Diversion

2. What are the arguments for increased and unhindered international trade?

3. Compute the consumer’s surplus for a simple trade creation example.

4. Discuss the dynamics of european integration, and what they mean for trade between EU nation states.

Wolfram Blog: Analyzing the Fed Rate Cut in Mathematica:

A great example of the power of the Mathematica program.

[Read more →]

I co-edit the New School Economic Review, and it’s new issue is here:

Click the picture below to download the whole issue.

The former Fed chairman walked through some of the basics of the economy, including Stewart’s straightforward question: “Why do we have a Fed? Why do we have someone adjusting the rates if we’re a free-market society?”

Greenspan: “You’re raising a very fundamental question.”

Stewart: “I am? Should I leave?”

Greenspan: “No. Stay for a while. Since you got your Emmy, you’re qualified.”

(via Greg Mankiw’s Blog)

Abstract

This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. Previous literature suggests that innovators are persistently more profitable than non-innovators, but little is known about how this link is moderated by external versus domestic ownership. We consider the link between innovation and profits separately for innovators and non-innovators, and for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – vary over the distribution from low to high profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that the profitability of externally-owned plants depends on very different factors to that of indigenously-owned enterprises.

[Right click the link below and choose 'save target as' to download the file]

Roper_UL_Sem_1_Autumn_2007.pdf

Watch the slideshow here:

Right click on the image below to download the handout:

• The ‘materials’ of experimental economics: technological versus behavioral experiments - Journal of Economic Methodology
  Might be interesting
  (tags: Readings exp_econ_book)

On Friday we’ll be looking at Trade Creation and Trade Diversion, concepts that define whether a trade agreement is, in a very specific sense, ‘good’ or ‘bad’. They were developed by Jacob Viner, a professor at U. Chicago and one of the foremost trade theorists of his generation.

Click here to browse his online works. For those interested, look in particular at Studies in the Theory of International Trade. 1937, and Free Trade and Customs Unions.

• EEPS Software
  Experimental Economics Software
  (tags: exp_econ_book)

An archive of a course I taught in NUI, Galway in 2004. Right click the .zip file to download it.

Sem1_2004_NUI.zip

An archive of a course I taught in NUI, Galway in 2004. Right click the link below to download th .zip file.

EC349.zip

An archive of course I taught at NUI, Galway on Experimental Economics. Right click the link below to download the files.

EC507.zip