El New Deal alude a los programas de empleo y de estímulo económico llevados a cabo en Estados Unidos para lidiar con la Gran Depresión sobrevenida tras el crack de la bolsa de Nueva York de 1929. El aparente paralelismo entre aquella coyuntura devastadora y la reciente recesión de comienzos del siglo XXI, sobrevenida tras la crisis financiera iniciada en 2007, ha precipitado la mirada hacia atrás de muchos expertos e instituciones en un intento de construir, a partir de aquella experiencia histórica, una estrategia económica válida para sacar a la economía del agujero negro en que cayó, y de pasó contribuir a la estabilidad macroeconómica futura y a la superación de los grandes retos sociales y medioambientales que encara el planeta en el medio y largo plazo. De acuerdo con lo anterior, la ONU planteó ya hace unos años, de forma estratégica y con un horizonte de realización de más de una década, una serie de objetivos de desarrollo sostenible que van en esta línea y que exigen la intervención activa de los agentes económicos, especialmente de los estados, en su consecución. Además, la cronificación de la crisis económica y la aparición de síntomas cada vez más preocupantes de un medio ambiente que agoniza, tal y como alerta la comunidad científica, han puesto aun más en el centro del debate económico y de la estrategia política el denominado Green New Deal, una visión retrospectiva y más verde del programa de estímulo económico estadounidense antes referido. Se trata ahora de un plan más global, compuesto por toda una variedad de propuestas pintadas de verde y empaquetadas bajo el mismo término, y que, además de adoptar una retórica de salvar el planeta, incide en la coincidencia actual de las condiciones necesarias para acometer un impulso fiscal decidido, siendo este un consenso cada vez más generalizado, no solo por la situación en la que la política monetaria se ha instalado (en el denominado Límite Inferior Cero), sino por las exigencias fiscales que se han derivado de la atención a la pandemia COVID en prácticamente todo el mundo. En esta línea, el libro Elementos para un Green New Deal: finanzas, cuidados y educación para una Economía social, editado por los profesores de la Universidad de Extremadura Esteban Cruz Hidalgo, Francisco Manuel Parejo Moruno y José Francisco Rangel Preciado, recoge una quincena de ensayos que, con un enfoque internacional y desde perspectivas y disciplinas diferentes, plantean propuestas analíticas originales y útiles en el marco de este nuevo acuerdo verde. Esta diversidad disciplinar y la originalidad analítica de los trabajos que componen el libro es apreciable con solo mirar el índice de la obra, que combina trabajos eminentemente económicos sobre la estrategia y la táctica de la política monetaria y fiscal en la coyuntura actual, la naturaleza del dinero como institución económica, o la pluralidad en la enseñanza de la economía, con ensayos históricos sobre fiscalidad y moneda, o con desarrollos institucionales novedosos como el trabajo garantizado, sin olvidarnos de las aportaciones de naturaleza más social, sanitaria y artística, que forman una parte importante también del paquete de acciones que deben de definir el citado Green New Deal. En definitiva, el libro puede entenderse como un compendio original y plural que, además de realizar nuevas aportaciones al debate sobre la utilidad de las políticas monetaria y fiscal, ofrece líneas de trabajo a tener en cuenta de cara a alcanzar los objetivos macroeconómicos de estabilidad de precios y pleno empleo en un entorno de conciliación de estos con los retos medioambientales, sociales y de realización personal a que se enfrenta el planeta y las personas que lo habitamos. ; The New Deal refers to the employment and economic stimulus programmes implemented in the United States to deal with the Great Depression that followed the New York stock market crash of 1929. The apparent parallel between that devastating situation and the recent recession at the beginning of the 21st century, following the financial crisis that began in 2007, has prompted many experts and institutions to look back in an attempt to build on that historical experience in order to construct a valid economic strategy to pull the economy out of the black hole into which it fell, and thus contribute to future macroeconomic stability and to overcoming the major social and environmental challenges facing the planet in the medium and long term. In line with the above, a few years ago the UN strategically set out a series of sustainable development objectives, with a time horizon of more than a decade, which are along these lines and which require the active intervention of economic agents, especially states, in their achievement. Moreover, the chronification of the economic crisis and the appearance of increasingly worrying symptoms of a dying environment, as warned by the scientific community, have placed the so-called Green New Deal, a retrospective and greener vision of the US economic stimulus programme referred to above, even more at the centre of the economic debate and political strategy. It is now a more global plan, made up of a whole variety of proposals painted green and packaged under the same term, and which, in addition to adopting a rhetoric of saving the planet, stresses the current coincidence of the conditions necessary to undertake a decisive fiscal impulse, this being an increasingly widespread consensus, not only because of the situation in which monetary policy has been installed (at the so-called Zero Lower Limit), but because of the fiscal demands that have resulted from the attention to the COVID pandemic in practically the whole world. Along these lines, the book Elementos para un Green New Deal: finanzas, cuidados y educación para una Economía social, edited by the University of Extremadura professors Esteban Cruz Hidalgo, Francisco Manuel Parejo Moruno and José Francisco Rangel Preciado, brings together some fifteen essays which, with an international focus and from different perspectives and disciplines, put forward original and useful analytical proposals in the framework of this new green deal. This disciplinary diversity and the analytical originality of the works in the book can be appreciated just by looking at the book's table of contents, which combines eminently economic works on the strategy and tactics of monetary and fiscal policy in the current situation, the nature of money as an economic institution, or plurality in the teaching of economics, with historical essays on taxation and currency, or with novel institutional developments such as guaranteed work, without forgetting the contributions of a more social, health and artistic nature, which also form an important part of the package of actions that should define the aforementioned Green New Deal. In short, the book can be seen as an original and plural compendium which, in addition to making new contributions to the debate on the usefulness of monetary and fiscal policies, offers lines of work to be taken into account with a view to achieving the macroeconomic objectives of price stability and full employment in a context of reconciling these with the environmental, social and personal fulfilment challenges facing the planet and the people who inhabit it. ; peerReviewed
Tourism, as the third largest export sector in the world, is of great importance to global communities (UNWTO, 2018). Global Wellness Institute (2018) until 2022 predicted for the medical tourism industry an average of ≈8% of annual growth; however, with one of the highest risks, i.e. disease risk (in this case COVID-19), since April 6 2020, 96% of the world's countries have travel restrictions: About 43 percent of states have closed all or part of their borders. About 21 percent of states have introduced travel bans for passengers from certain countries affected by COVID-19. About 27 percent of states have suspended all or part of their international flights to their The remaining 9% of states have applied the following travel restrictions: (i) the requirement to immediately dissociate or quarantine, normally within 14 days since the arrival at destination; (ii) annulment or revocation of the visa upon arrival; (iii) travel bans for passengers arriving from certain regions (UNWTO, 2020). As a result, the tourism industry, alongside with medical tourism, is experiencing a major recession and the GWI (2018) forecast for 2022 loses its meaning. As a new form of tourism, medical tourism has become one of the fastest growing sectors of the tourism industry. Medical tourism can be defined as a "purposeful trip abroad to receive medical care" (Keckley and Underwood, 2008). Medical tourism can be viewed from two perspectives (Plianbangchang, 2018): Reactive means medical care that pays special attention to the treatment or elimination of existing diseases; Rehabilitation of the disabled is a conventional medicine that is sometimes called the sickness Proactive approach to health ensures/preserves the well-being, these services are focused on health promotion and disease Heung et al. (2011), Ganguli and Ebrahim (2017), Tham (2018), Nilashia et al. (2019) found that the development of medical tourism in Australia, Hong Kong and Singapore is mainly influenced by the following factors: competence/human capital, infrastructure andsuperstructure, government approach/policy/regulation, the range of developed services, communication between different market segments, investment opportunities, lack of strategic planning, underdeveloped public-private partnerships and international cooperation, shortcomings in marketing and branding strategies, lack of a unified accreditation and certification system. However, the authors did not single out and assess one of the most important phenomena hindering development – the consequences caused by risk factors. Lithuanian researchers studied the risk in various aspects: patient safety, adverse event management, risk factor management and assessment (Kaleininkaitė and Trumpaitė, 2007; Buškevičiūtė and Leškevičiūtė, 2008; Kanapeckienė and Jurkuvėnas, 2009; Staliūnienė, 2009; Mekšriūnaitė and Rudaitis, 2013; Paškevičius, 2014; Stasytytė and Aleksienė, 2016; Jankauskienė and Kostereva, 2019; Babinskas and Kanapeckienė, 2019, etc.), however, the management of tourism risk factors has not been sufficiently studied yet. The following authors have examined the risk management of medical tourism in foreign literature: Wybo, 2004; Camillo, 2015; Mutalib et al., 2016; Winsena et al., 2016; Hasan et al., 2017; Plianbangchang, 2018; Ravulakollu et al., 2018; Nilashia et al., 2019; Lubowiecki-Vikuk and Dryglas, 2019; Hyder et al., 2019. The problem of the research is how to effectivelymanage the risk factors of medical tourism. The aim of the research is to develop a management model after analysing the risk factors of medical tourism. Objectives of the study: (1) to define medical tourism risk factors; (2) to analyse risk managementalgorithms. Research methods: comparative logical analysis ofscientific literature, modelling, generalization. Medical tourism organizations can be called complex socio-technical organizations that operate in a complex dynamic environment. As a result, these organizations are exposed to external and internal risk factors that need to be identified, analysed, assessed, prioritized, and managed. In this work, the author solved the problem: how to effectively manage the risk factors of medical tourism. During the analysis of the performed scientific literature, it was found that we can ensure a successful risk cleaning process by keeping with the following consistency: risk analysis, anticipation of possible accidents/factors, strategic planning, ensuring control and feedback, risk profiling, during which all possible risk factors are classified and prioritized. The risk of medical tourism involves two stages: first, when patients are abroad and second, when patients leave the hospital and return to their place of residence. Lack of information and insufficient communication between the doctor abroad and in the home country is another negative effect of medical tourism as the continuity of patient care is interrupted. Health information is not transferred from foreign hospitals to the home country, which can lead to several consequences, such as the inability to identify potential complications in a timely manner and the toxicity caused by the drugs used (Carrera and Lunt, 2010). Cammillo (2015) has attributed the emergence of medical tourism risk to the lack or scarcity of strategic managementskillsatthedestination.Strategicmanagement is a dynamic process in which the current situation is constantly assessed and each step is planned/forecasted. This requires a strong understanding of the organization as well as an understanding of the global environment in which the organization operates. This includes situation analysis SWOT. In this context, strategic management is forced to include risk assessment, risk management, crisis management and prevention strategies, and effective interdepartmental communication. The above-mentioned author singles out the following risk factors that have to be assessed during strategic risk management:1. Human error; 2. Office error; 3. Trust in the wrong person; 4. Unauthorized procedures; 5. Unlimited access to electronic data; 6. Unrestricted access for third parties; 7. Improper maintenance; 8. Insufficient control; 9. Misuse of confidential information; 10. Errors of court; 11. Improper standard operating procedures. Conclusions After examining the risk factors of medical tourism, they can be divided into two categories: external and internal risk Based on the research of tourism risk aspects conducted by researchers in recent years, tourist/patient risk perceptions are often summarized from five to seven aspects. Five aspects of risk covered financial/economic risk, psychological risk, operational risk, equipment or technical risk, health risk, accident/physical risk and social risk. In addition to these dimensions, six dimensions of risk included one more risk, i.e. time risk, and seven aspects of risk included loss of opportunity. After analysing risk management systems/algorithms/ models, it was determined that the most significant preconditions for a successful medical tourism risk management process are the following: risk analysis/ forecasting; identification of accidents/factors; strategic planning; ensuring control and feedback; risk profiling, during which all possible risk factors are classified and ; Medicinos turizmo organizacijas galima vadinti kompleksinėmis sociotechninėmis organizacijomis, kurios veikia sudėtingoje dinaminėje aplinkoje. Todėl šios organizacijos yra veikiamos išorinių ir vidinių rizikos veiksnių, kuriuos reikia identifikuoti / analizuoti / vertinti / prioretizuoti ir valdyti. Šiame straipsnyje autorius sprendė problemą – kaip veiksmingai valdyti medicinos turizmo rizikos veiksnius. Analizuodamas mokslinę literatūrą autorius nustatė, kad užtikrinti sėkmingą rizikos valdymo procesą galima laikantis šio nuoseklumo: rizikos analizė; galimų nelaimingų įvykių / veiksnių numatymas; strateginis planavimas; kontrolės ir grįžtamojo ryšio užtikrinimas; rizikos profilio sudarymas, kurio metu visi galimi rizikos veiksniai yra klasifikuojami ir prioretizuojami.
SÍNTESISLa capital política de la CAV es Vitoria, y Bilbao es la capital económicafinanciera, con una población de 400.000 habitantes,donde se enmarca la actuación de BILBAO Ría 2000.La recesión económica internacional de finales de los añossetenta, como resultado de la crisis del petróleo, provocó eldesmoronamiento de la gran industria pesada asentada en lasmárgenes de la Ría de Bilbao. La crisis de los 90, transformóbrutalmente las riberas en ruinas industriales.El conjunto deactuaciones en el entorno de la Ría de Bilbao, tal vez ha sidoel resultado de hacer de la necesidad virtud, y de convertir losproblemas en verdaderas oportunidades.Hasta el año 1800 la humanidad trabajó fundamentalmenteen la agricultura. El sector primario-agropecuario,dio trabajo ala humanidad durante 4.000 años, y el secundario-fabril, diotrabajo durante los últimos 200 años (entre 30% o 35% de lospuestos de trabajo necesarios),hoy el 70% del empleo restantelo proporciona sectores como el comercio, el turismo, los servicios,el ocio, la cultura, la información y otras actividades. Laapuesta estratégica consiste en comprender que la cultura no esnecesariamente sólo un coste sino una inversión de futuro.La mayoría de los oponentes opinaba que en tiempos de crisishabía que concentrar todos los recursos públicos en accionesa favor del empleo y de la industria. Un segundo grupo deoponentes, luchó ferozmente contra un proyecto que consumíasus fuentes de financiación y fue visto como "colonialismo ala americana" .Un tercer movimiento, alzó su voz contra unaconstrucción que iba a ocultar la silueta del monte.Las zonas industriales, ferroviarias y portuarias que quedaronlibres al cesar la actividad que sobre ellas se realizaba. Las actuaciones concretas a través de la sociedad BILBAO Ría 2000,una experiencia piloto en España, incluyeron la depuración susaguas y el traslado de las actividades portuarias hacia la desembocadura,incluyendo:El Metro de Bilbao ,1995.Dos nuevos puentes sobre la Ría, 1997.La terminal del aeropuerto de Bilbao, 2000.La ampliación del Puerto exterior, 1998.El Plan Integral de Saneamiento de la Ría.El nuevo puerto deportivo de Getxo.El Museo Guggenheim Bilbao, y el Palacio de Congresos y dela Música de Euskalduna.Las actuaciones ferroviarias.El tipo de actuaciones, debía favorecer la sostenibilidad. Paraello se abordaron conjuntamente y con un enfoque integradorlos problemas de transporte, urbanismo y medio ambiente. Asímismo, se trabajó con la ciudad existente, sin ocupar suelos vírgenes,y se trató de sacar el máximo partido a las infraestructurasexistentes, transformando los problemas en oportunidades.El ámbito de actuación abarcó los municipios situados a lo largode la Ría y su misión consistió en re-ordenar el territorio de lamano de la planificación de los distintos municipio afectados.La construcción del Museo Gugenheim, se volvió emblemático.El estudio de su viabilidad ,justificaba esta inversión a condiciónde que el museo recibiera 400.000 visitantes al año, cifra quese triplicó en el primer año, sin tener en cuenta efectos menostangibles, como el orgullo recuperado de una sociedad postradaque vuelve a tener fe en el futuro. Se trató, pues, claramente,de una inversión y no de un gasto. El museo suscitó el despertarcultural de Bilbao: su Museo de Bellas Artes se ha renovado yha doblado el número de visitantes; la vida nocturna se ha enriquecido,así como la programación de sus salas de espectáculos;sus tiendas se han renovado para acoger a más grandes marcas;la calidad del diseño y de la arquitectura ha dejado su improntaen toda la ciudad .La cultura crea ciudad y la ciudad hace cultura. Como dice RobertParker, "La ciudad es sobre todo una especie de estado deánimo, un conjunto de hábitos, de costumbres, de tradiciones,no sólo un mecanismo físico y una construcción artificial. Formaparte de los procesos vitales de los habitantes que la componen.Es un producto de la naturaleza, sobre todo, de la naturaleza humana".ABSTRACTThe political capital city of the Basque Autonomy Community isVitoria, being Bilbao its financial capital city with a populationof 400,000 inhabitants and where the projects of BILBAO Ría2000 are carried out.The international economic recession of the late 70's, resultingfrom the oil crisis, caused the collapse of the big heavy industryset up on the bank of Ría de Bilbao. The 90's crisis brutallytransformed the banks into industrial ruins. The activities takingplace on Ría de Bilbao may have been the result of turningneeds into virtue, and problems into real opportunities.Up to 1800, humankind fundamentally developed agriculture.The primary agricultural sector generated jobs for humankind for4,000 years, and the secondary manufacturing sector providedhumankind with jobs for the last 200 years (between 30% and35% of the necessary jobs). Nowadays, the rest 70% of jobsis provided by sectors such as trade, tourism, services, entertainment,culture, information and other activities. The strategicgamble lies in understanding that culture does not necessarilyinvolve costs, but also a future investment.Most detractors though that, in time of crisis, all public resourceshad to be focused on actions favoring employment and industry.A second group of detractors fiercely fought against a projectthat consumed their financing sources and that was seen as"American colonialism." A third movement raised its voiceagainst a construction that was going to hide the landscape.The industrial, railway and port areas were freed after the activitiesundertaken there were stopped. The activities undertakenby BILBAO Ría 2000, a pilot experience in Spain, included thetreatment of water and the relocation of port activities to theEstuary of Ría de Bilbao, including:Bilbao Subway ,1995.Two new bridges over Ría, 1997.The Bilbao's airport terminal, 2000.The enlargement of the Exterior Port, 1998.The Comprehensive Plan for Treating Ría.The new Getxo Port.The Guggenheim Museum of Bilbao, and the Palace of Congressesand Music of Euskalduna.Railway activities.The activities had to favor sustainability. Thus, the transportation,city-planning and environmental problems were tackled togetherby using an integrating approach. Likewise, they workedon the existing city, without occupying virgin lands, and tried tomake the most of the existing infrastructure by transformingproblems into opportunities. The activities covered the municipalitieslocated along Ría, and their goal was to rearrange theterritory according to the planning of the different municipalitiesinvolved.The construction of the Guggenheim Museum became emblematic.Feasibility studies justified this investment under thecondition that the museum received 400,000 visitors per year,a number that tripled in the first year, without considering lesstangible effects such as the restoration of pride in a bedriddensociety that regained its faith in the future. It was clearly an investmentand not an expense. The Museum caused the culturalawakening of Bilbao: the Bilbao Fine Arts Museum has beenrenewed and its number of visitors has doubled; night-life andthe programming of its halls have been enriched; its stores havebeen renewed to receive greater brand products; and the citybears the imprint of the quality of design and architecture.Culture creates city, and city creates culture. As Robert Parkersaid: "The city is, above all, some kind of frame of mind, anumber of habits, customs, and traditions. It is not just a physicalmechanism and an artificial construction. It is part of thevital processes of the inhabitants comprising it. It is a product ofnature, especially of human nature.
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(This post continues part 1 which just looked at the data. Part 3 on theory is here) When the Fed raises interest rates, how does inflation respond? Are there "long and variable lags" to inflation and output? There is a standard story: The Fed raises interest rates; inflation is sticky so real interest rates (interest rate - inflation) rise; higher real interest rates lower output and employment; the softer economy pushes inflation down. Each of these is a lagged effect. But despite 40 years of effort, theory struggles to substantiate that story (next post), it's had to see in the data (last post), and the empirical work is ephemeral -- this post. The vector autoregression and related local projection are today the standard empirical tools to address how monetary policy affects the economy, and have been since Chris Sims' great work in the 1970s. (See Larry Christiano's review.) I am losing faith in the method and results. We need to find new ways to learn about the effects of monetary policy. This post expands on some thoughts on this topic in "Expectations and the Neutrality of Interest Rates," several of my papers from the 1990s* and excellent recent reviews from Valerie Ramey and Emi Nakamura and Jón Steinsson, who eloquently summarize the hard identification and computation troubles of contemporary empirical work.Maybe popular wisdom is right, and economics just has to catch up. Perhaps we will. But a popular belief that does not have solid scientific theory and empirical backing, despite a 40 year effort for models and data that will provide the desired answer, must be a bit less trustworthy than one that does have such foundations. Practical people should consider that the Fed may be less powerful than traditionally thought, and that its interest rate policy has different effects than commonly thought. Whether and under what conditions high interest rates lower inflation, whether they do so with long and variable but nonetheless predictable and exploitable lags, is much less certain than you think. Here is a replication of one of the most famous monetary VARs, Christiano Eichenbaum and Evans 1999, from Valerie Ramey's 2016 review: Fig. 1 Christiano et al. (1999) identification. 1965m1–1995m6 full specification: solid black lines; 1983m1–2007m12 full specification: short dashed blue (dark gray in the print version) lines; 1983m1–2007m12, omits money and reserves: long-dashed red (gray in the print version) lines. Light gray bands are 90% confidence bands. Source: Ramey 2016. Months on x axis. The black lines plot the original specification. The top left panel plots the path of the Federal Funds rate after the Fed unexpectedly raises the interest rate. The funds rate goes up, but only for 6 months or so. Industrial production goes down and unemployment goes up, peaking at month 20. The figure plots the level of the CPI, so inflation is the slope of the lower right hand panel. You see inflation goes the "wrong" way, up, for about 6 months, and then gently declines. Interest rates indeed seem to affect the economy with long lags. This was the broad outline of consensus empirical estimates for many years. It is common to many other studies, and it is consistent with the beliefs of policy makers and analysts. It's pretty much what Friedman (1968) told us to expect. Getting contemporary models to produce something like this is much harder, but that's the next blog post. What's a VAR?I try to keep this blog accessible to nonspecialists, so I'll step back momentarily to explain how we produce graphs like these. Economists who know what a VAR is should skip to the next section heading. How do we measure the effect of monetary policy on other variables? Milton Friedman and Anna Schwartz kicked it off in the Monetary History by pointing to the historical correlation of money growth with inflation and output. They knew as we do that correlation is not causation, so they pointed to the fact that money growth preceeded inflation and output growth. But as James Tobin pointed out, the cock's crow comes before, but does not cause, the sun to rise. So too people may go get out some money ahead of time when they see more future business activity on the horizon. Even correlation with a lead is not causation. What to do? Clive Granger's causality and Chris Sims' VAR, especially "Macroeconomics and Reality" gave today's answer. (And there is a reason that everybody mentioned so far has a Nobel prize.) First, we find a monetary policy "shock," a movement in the interest rate (these days; money, then) that is plausibly not a response to economic events and especially to expected future economic events. We think of the Fed setting interest rates by a response to economic data plus deviations from that response, such as interest rate = (#) output + (#) inflation + (#) other variables + disturbance. We want to isolate the "disturbance," movements in the interest rate not taken in response to economic events. (I use "shock" to mean an unpredictable variable, and "disturbance" to mean deviation from an equation like the above, but one that can persist for a while. A monetary policy "shock" is an unexpected movement in the disturbance.) The "rule" part here can be but need not be the Taylor rule, and can include other variables than output and inflation. It is what the Fed usually does given other variables, and therefore (hopefully) controls for reverse causality from expected future economic events to interest rates. Now, in any individual episode, output and inflation and inflation following a shock will be influenced by subsequent shocks to the economy, monetary and other. But those average out. So, the average value of inflation, output, employment, etc. following a monetary policy shock is a measure of how the shock affects the economy all on its own. That is what has been plotted above. VARs were one of the first big advances in the modern empirical quest to find "exogenous" variation and (somewhat) credibly find causal relationships. Mostly the huge literature varies on how one finds the "shocks." Traditional VARs use regressions of the above equations and the residual is the shock, with a big question just how many and which contemporaneous variables one adds in the regression. Romer and Romer pioneered the "narrative approach," reading the Fed minutes to isolate shocks. Some technical details at the bottom and much more discussion below. The key is finding shocks. One can just regress output and inflation on the shocks to produce the response function, which is a "local projection" not a "VAR," but I'll use "VAR" for both techniques for lack of a better encompassing word. Losing faithShocks, what shocks?What's a "shock" anyway? The concept is that the Fed considers its forecast of inflation, output and other variables it is trying to control, gauges the usual and appropriate response, and then adds 25 or 50 basis points, at random, just for the heck of it. The question VARS try to answer is the same: What happens to the economy if the Fed raises interest rates unexpectedly, for no particular reason at all? But the Fed never does this. Ask them. Read the minutes. The Fed does not roll dice. They always raise or lower interest rates for a reason, that reason is always a response to something going on in the economy, and most of the time how it affects forecasts of inflation and employment. There are no shocks as defined.I speculated here that we might get around this problem: If we knew the Fed was responding to something that had no correlation with future output, then even though that is an endogenous response, then it is a valid movement for estimating the effect of interest rates on output. My example was, what if the Fed "responds" to the weather. Well, though endogenous, it's still valid for estimating the effect on output. The Fed does respond to lots of things, including foreign exchange, financial stability issues, equity, terrorist attacks, and so forth. But I can't think of any of these in which the Fed is not thinking of these events for their effect on output and inflation, which is why I never took the idea far. Maybe you can. Shock isolation also depends on complete controls for the Fed's information. If the Fed uses any information about future output and inflation that is not captured in our regression, then information about future output and inflation remains in the "shock" series. The famous "price puzzle" is a good example. For the first few decades of VARs, interest rate shocks seemed to lead to higher inflation. It took a long specification search to get rid of this undesired result. The story was, that the Fed saw inflation coming in ways not completely controlled for by the regression. The Fed raised interest rates to try to forestall the inflation, but was a bit hesitant about it so did not cure the inflation that was coming. We see higher interest rates followed by higher inflation, though the true causal effect of interest rates goes the other way. This problem was "cured" by adding commodity prices to the interest rate rule, on the idea that fast-moving commodity prices would capture the information the Fed was using to forecast inflation. (Interestingly these days we seem to see core inflation as the best forecaster, and throw out commodity prices!) With those and some careful orthogonalization choices, the "price puzzle" was tamped down to the one year or so delay you see above. (Neo-Fisherians might object that maybe the price puzzle was trying to tell us something all these years!) Nakamura and Steinsson write of this problem: "What is being assumed is that controlling for a few lags of a few variables captures all endogenous variation in policy... This seems highly unlikely to be true in practice. The Fed bases its policy decisions on a huge amount of data. Different considerations (in some cases highly idiosyncratic) affect policy at different times. These include stress in the banking system, sharp changes in commodity prices, a recent stock market crash, a financial crisis in emerging markets, terrorist attacks, temporary investment tax credits, and the Y2K computer glitch. The list goes on and on. Each of these considerations may only affect policy in a meaningful way on a small number of dates, and the number of such influences is so large that it is not feasible to include them all in a regression. But leaving any one of them out will result in a monetary policy "shock" that the researcher views as exogenous but is in fact endogenous." Nakamura and Steinsson offer 9/11 as another example summarizing my "high frequency identification" paper with Monika Piazzesi: The Fed lowered interest rates after the terrorist attack, likely reacting to its consequences for output and inflation. But VARs register the event as an exogenous shock.Romer and Romer suggested that we use Fed Greenbook forecasts of inflation and output as controls, as those should represent the Fed's complete information set. They provide narrative evidence that Fed members trust Greenback forecasts more than you might suspect. This issue is a general Achilles heel of empirical macro and finance: Does your procedure assume agents see no more information than you have included in the model or estimate? If yes, you have a problem. Similarly, "Granger causality" answers the cock's crow-sunrise problem by saying that if unexpected x leads unexpected y then x causes y. But it's only real causality if the "expected" includes all information, as the price puzzle counterexample shows. Just what properties do we need of a shock in order to measure the response to the question, "what if the Fed raised rates for no reason?" This strikes me as a bit of an unsolved question -- or rather, one that everyone thinks is so obvious that we don't really look at it. My suggestion that the shock only need be orthogonal to the variable whose response we're estimating is informal, and I don't know of formal literature that's picked it up. Must "shocks" be unexpected, i.e. not forecastable from anything in the previous time information set? Must they surprise people? I don't think so -- it is neither necessary nor sufficient for shock to be unforecastable for it to identify the inflation and output responses. Not responding to expected values of the variable whose response you want to measure should be enough. If bond markets found out about a random funds rate rise one day ahead, it would then be an "expected" shock, but clearly just as good for macro. Romer and Romer have been criticized that their shocks are predictable, but this may not matter. The above Nakamura and Steinsson quote says leaving out any information leads to a shock that is not strictly exogenous. But strictly exogenous may not be necessary for estimating, say, the effect of interest rates on inflation. It is enough to rule out reverse causality and third effects. Either I'm missing a well known econometric literature, as is everyone else writing the VARs I've read who don't cite it, or there is a good theory paper to be written.Romer and Romer, thinking deeply about how to read "shocks" from the Fed minutes, define shocks thus to circumvent the "there are no shocks" problem:we look for times when monetary policymakers felt the economy was roughly at potential (or normal) output, but decided that the prevailing rate of inflation was too high. Policymakers then chose to cut money growth and raise interest rates, realizing that there would be (or at least could be) substantial negative consequences for aggregate output and unemployment. These criteria are designed to pick out times when policymakers essentially changed their tastes about the acceptable level of inflation. They weren't just responding to anticipated movements in the real economy and inflation. [My emphasis.] You can see the issue. This is not an "exogenous" movement in the funds rate. It is a response to inflation, and to expected inflation, with a clear eye on expected output as well. It really is a nonlinear rule, ignore inflation for a while until it gets really bad then finally get serious about it. Or, as they say, it is a change in rule, an increase in the sensitivity of the short run interest rate response to inflation, taken in response to inflation seeming to get out of control in a longer run sense. Does this identify the response to an "exogenous" interest rate increase? Not really. But maybe it doesn't matter. Are we even asking an interesting question? The whole question, what would happen if the Fed raised interest rates for no reason, is arguably besides the point. At a minimum, we should be clearer about what question we are asking, and whether the policies we analyze are implementations of that question. The question presumes a stable "rule," (e.g. \(i_t = \rho i_{t-1} + \phi_\pi \pi_t + \phi_x x_t + u_t\)) and asks what happens in response to a deviation \( +u_t \) from the rule. Is that an interesting question? The standard story for 1980-1982 is exactly not such an event. Inflation was not conquered by a big "shock," a big deviation from 1970s practice, while keeping that practice intact. Inflation was conquered (so the story goes) by a change in the rule, by a big increase in $\phi_\pi$. That change raised interest rates, but arguably without any deviation from the new rule \(u_t\) at all. Thinking in terms of the Phillips curve \( \pi_t = E_t \pi_{t+1} + \kappa x_t\), it was not a big negative \(x_t\) that brought down inflation, but the credibility of the new rule that brought down \(E_t \pi_{t+1}\). If the art of reducing inflation is to convince people that a new regime has arrived, then the response to any monetary policy "shock" orthogonal to a stable "rule" completely misses that policy. Romer and Romer are almost talking about a rule-change event. For 2022, they might be looking at the Fed's abandonment of flexible average inflation targeting and its return to a Taylor rule. However, they don't recognize the importance of the distinction, treating changes in rule as equivalent to a residual. Changing the rule changes expectations in quite different ways from a residual of a stable rule. Changes with a bigger commitment should have bigger effects, and one should standardize somehow by the size and permanence of the rule change, not necessarily the size of the interest rate rise. And, having asked "what if the Fed changes rule to be more serious about inflation," we really cannot use the analysis to estimate what happens if the Fed shocks interest rates and does not change the rule. It takes some mighty invariance result from an economic theory that a change in rule has the same effect as a shock to a given rule. There is no right and wrong, really. We just need to be more careful about what question the empirical procedure asks, if we want to ask that question, and if our policy analysis actually asks the same question. Estimating rules, Clarida Galí and Gertler. Clarida, Galí, and Gertler (2000) is a justly famous paper, and in this context for doing something totally different to evaluate monetary policy. They estimate rules, fancy versions of \(i_t = \rho i_{t-1} +\phi_\pi \pi_t + \phi_x x_t + u_t\), and they estimate how the \(\phi\) parameters change over time. They attribute the end of 1970s inflation to a change in the rule, a rise in \(\phi_\pi\) from the 1970s to the 1980s. In their model, a higher \( \phi_\pi\) results in less volatile inflation. They do not estimate any response functions. The rest of us were watching the wrong thing all along. Responses to shocks weren't the interesting quantity. Changes in the rule were the interesting quantity. Yes, I criticized the paper, but for issues that are irrelevant here. (In the new Keynesian model, the parameter that reduces inflation isn't the one they estimate.) The important point here is that they are doing something completely different, and offer us a roadmap for how else we might evaluate monetary policy if not by impulse-response functions to monetary policy shocks. Fiscal theoryThe interesting question for fiscal theory is, "What is the effect of an interest rate rise not accompanied by a change in fiscal policy?" What can the Fed do by itself? By contrast, standard models (both new and old Keynesian) include concurrent fiscal policy changes when interest rates rise. Governments tighten in present value terms, at least to pay higher interest costs on the debt and the windfall to bondholders that flows from unexpected disinflation. Experience and estimates surely include fiscal changes along with monetary tightening. Both fiscal and monetary authorities react to inflation with policy actions and reforms. Growth-oriented microeconomic reforms with fiscal consequences often follow as well -- rampant inflation may have had something to do with Carter era trucking, airline, and telecommunications reform. Yet no current estimate tries to look for a monetary shock orthogonal to fiscal policy change. The estimates we have are at best the effects of monetary policy together with whatever induced or coincident fiscal and microeconomic policy tends to happen at the same time as central banks get serious about fighting inflation. Identifying the component of a monetary policy shock orthogonal to fiscal policy, and measuring its effects is a first order question for fiscal theory of monetary policy. That's why I wrote this blog post. I set out to do it, and then started to confront how VARs are already falling apart in our hands. Just what "no change in fiscal policy" means is an important question that varies by application. (Lots more in "fiscal roots" here, fiscal theory of monetary policy here and in FTPL.) For simple calculations, I just ask what happens if interest rates change with no change in primary surplus. One might also define "no change" as no change in tax rates, automatic stabilizers, or even habitual discretionary stimulus and bailout, no disturbance \(u_t\) in a fiscal rule \(s_t = a + \theta_\pi \pi_t + \theta_x x_t + ... + u_t\). There is no right and wrong here either, there is just making sure you ask an interesting question. Long and variable lags, and persistent interest rate movementsThe first plot shows a mighty long lag between the monitor policy shock and its effect on inflation and output. That does not mean that the economy has long and variable lags. This plot is actually not representative, because in the black lines the interest rate itself quickly reverts to zero. It is common to find a more protracted interest rate response to the shock, as shown in the red and blue lines. That mirrors common sense: When the Fed starts tightening, it sets off a year or so of stair-step further increases, and then a plateau, before similar stair-step reversion. That raises the question, does the long-delayed response of output and inflation represent a delayed response to the initial monetary policy shock, or does it represent a nearly instantaneous response to the higher subsequent interest rates that the shock sets off? Another way of putting the question, is the response of inflation and output invariant to changes in the response of the funds rate itself? Do persistent and transitory funds rate changes have the same responses? If you think of the inflation and output responses as economic responses to the initial shock only, then it does not matter if interest rates revert immediately to zero, or go on a 10 year binge following the initial shock. That seems like a pretty strong assumption. If you think that a more persistent interest rate response would lead to a larger or more persistent output and inflation response, then you think some of what we see in the VARs is a quick structural response to the later higher interest rates, when they come. Back in 1988, I posed this question in "what do the VARs mean?" and showed you can read it either way. The persistent output and inflation response can represent either long economic lags to the initial shock, or much less laggy responses to interest rates when they come. I showed how to deconvolute the response function to the structural effect of interest rates on inflation and output and how persistently interest rates rise. The inflation and output responses might be the same with shorter funds rate responses, or they might be much different. Obviously (though often forgotten), whether the inflation and output responses are invariant to changes in the funds rate response needs a model. If in the economic model only unexpected interest rate movements affect output and inflation, though with lags, then the responses are as conventionally read structural responses and invariant to the interest rate path. There is no such economic model. Lucas (1972) says only unexpected money affects output, but with no lags, and expected money affects inflation. New Keynesian models have very different responses to permanent vs. transitory interest rate shocks. Interestingly, Romer and Romer do not see it this way, and regard their responses as structural long and variable lags, invariant to the interest rate response. They opine that given their reading of a positive shock in 2022, a long and variable lag to inflation reduction is baked in, no matter what the Fed does next. They argue that the Fed should stop raising interest rates. (In fairness, it doesn't look like they thought about the issue much, so this is an implicit rather than explicit assumption.) The alternative view is that effects of a shock on inflation are really effects of the subsequent rate rises on inflation, that the impulse response function to inflation is not invariant to the funds rate response, so stopping the standard tightening cycle would undo the inflation response. Argue either way, but at least recognize the important assumption behind the conclusions. Was the success of inflation reduction in the early 1980s just a long delayed response to the first few shocks? Or was the early 1980s the result of persistent large real interest rates following the initial shock? (Or, something else entirely, a coordinated fiscal-monetary reform... But I'm staying away from that and just discussing conventional narratives, not necessarily the right answer.) If the latter, which is the conventional narrative, then you think it does matter if the funds rate shock is followed by more funds rate rises (or positive deviations from a rule), that the output and inflation response functions do not directly measure long lags from the initial shock. De-convoluting the structural funds rate to inflation response and the persistent funds rate response, you would estimate much shorter structural lags. Nakamura and Steinsson are of this view: While the Volcker episode is consistent with a large amount of monetary nonneutrality, it seems less consistent with the commonly held view that monetary policy affects output with "long and variable lags." To the contrary, what makes the Volcker episode potentially compelling is that output fell and rose largely in sync with the actions [interest rates, not shocks] of the Fed. And that's a good thing too. We've done a lot of dynamic economics since Friedman's 1968 address. There is really nothing in dynamic economic theory that produces a structural long-delayed response to shocks, without the continued pressure of high interest rates. (A correspondent objects to "largely in sync" pointing out several clear months long lags between policy actions and results in 1980. It's here for the methodological point, not the historical one.) However, if the output and inflation responses are not invariant to the interest rate response, then the VAR directly measures an incredibly narrow experiment: What happens in response to a surprise interest rate rise, followed by the plotted path of interest rates? And that plotted path is usually pretty temporary, as in the above graph. What would happen if the Fed raised rates and kept them up, a la 1980? The VAR is silent on that question. You need to calibrate some model to the responses we have to infer that answer. VARs and shock responses are often misread as generic theory-free estimates of "the effects of monetary policy." They are not. At best, they tell you the effect of one specific experiment: A random increase in funds rate, on top of a stable rule, followed by the usual following path of funds rate. Any other implication requires a model, explicit or implicit. More specifically, without that clearly false invariance assumption, VARs cannot directly answer a host of important questions. Two on my mind: 1) What happens if the Fed raises interest rates permanently? Does inflation eventually rise? Does it rise in the short run? This is the "Fisherian" and "neo-Fisherian" questions, and the answer "yes" pops unexpectedly out of the standard new-Keynesian model. 2) Is the short-run negative response of inflation to interest rates stronger for more persistent rate rises? The long-term debt fiscal theory mechanism for a short-term inflation decline is tied to the persistence of the shock and the maturity structure of the debt. The responses to short-lived interest rate movements (top left panel) are silent on these questions. Directly is an important qualifier. It is not impossible to answer these questions, but you have to work harder to identify persistent interest rate shocks. For example, Martín Uribe identifies permanent vs. transitory interest rate shocks, and finds a positive response of inflation to permanent interest rate rises. How? You can't just pick out the interest rate rises that turned out to be permanent. You have to find shocks or components of the shock that are ex-ante predictably going to be permanent, based on other forecasting variables and the correlation of the shock with other shocks. For example, a short-term rate shock that also moves long-term rates might be more permanent than one which does not do so. (That requires the expectations hypothesis, which doesn't work, and long term interest rates move too much anyway in response to transitory funds rate shocks. So, this is not directly a suggestion, just an example of the kind of thing one must do. Uribe's model is more complex than I can summarize in a blog.) Given how small and ephemeral the shocks are already, subdividing them into those that are expected to have permanent vs. transitory effects on the federal funds rate is obviously a challenge. But it's not impossible. Monetary policy shocks account for small fractions of inflation, output and funds rate variation. Friedman thought that most recessions and inflations were due to monetary mistakes. The VARs pretty uniformly deny that result. The effects of monetary policy shocks on output and inflation add up to less than 10 percent of the variation of output and inflation. In part the shocks are small, and in part the responses to the shocks are small. Most recessions come from other shocks, not monetary mistakes. Worse, both in data and in models, most inflation variation comes from inflation shocks, most output variation comes from output shocks, etc. The cross-effects of one variable on another are small. And "inflation shock" (or "marginal cost shock"), "output shock" and so forth are just labels for our ignorance -- error terms in regressions, unforecasted movements -- not independently measured quantities. (This and old point, for example in my 1994 paper with the great title "Shocks." Technically, the variance of output is the sum of the squares of the impulse-response functions -- the plots -- times the variance of the shocks. Thus small shocks and small responses mean not much variance explained.)This is a deep point. The exquisite attention put to the effects of monetary policy in new-Keynesian models, while interesting to the Fed, are then largely beside the point if your question is what causes recessions. Comprehensive models work hard to match all of the responses, not just to monetary policy shocks. But it's not clear that the nominal rigidities that are important for the effects of monetary policy are deeply important to other (supply) shocks, and vice versa. This is not a criticism. Economics always works better if we can use small models that focus on one thing -- growth, recessions, distorting effect of taxes, effect of monetary policy -- without having to have a model of everything in which all effects interact. But, be clear we no longer have a model of everything. "Explaining recessions" and "understanding the effects of monetary policy" are somewhat separate questions. Monetary policy shocks also account for small fractions of the movement in the federal funds rate itself. Most of the funds rate movement is in the rule, the reaction to the economy term. Like much empirical economics, the quest for causal identification leads us to look at a tiny causes with tiny effects, that do little to explain much variation in the variable of interest (inflation). Well, cause is cause, and the needle is the sharpest item in the haystack. But one worries about the robustness of such tiny effects, and to what extent they summarize historical experience. To be concrete, here is a typical shock regression, 1960:1-2023:6 monthly data, standard errors in parentheses: ff(t) = a + b ff(t-1) + c[ff(t-1)-ff(t-2)] + d CPI(t) + e unemployment(t) + monetary policy shock, Where "CPI" is the percent change in the CPI (CPIAUCSL) from a year earlier. ff(t-1)ff(t-1)-ff(t-2)CPIUnempR20.970.390.032-0.0170.985(0.009)(0.07)(0.013)(0.009)The funds rate is persistent -- the lag term (0.97) is large. Recent changes matter too: Once the Fed starts a tightening cycle, it's likely to keep raising rates. And the Fed responds to CPI and unemployment. The plot shows the actual federal funds rate (blue), the model or predicted federal funds rate (red), the shock which is the difference between the two (orange) and the Romer and Romer dates (vertical lines). You can't see the difference between actual and predicted funds rate, which is the point. They are very similar and the shocks are small. They are closer horizontally than vertically, so the vertical difference plotted as shock is still visible. The shocks are much smaller than the funds rate, and smaller than the rise and fall in the funds rate in a typical tightening or loosening cycle. The shocks are bunched, with by far the biggest ones in the early 1980s. The shocks have been tiny since the 1980s. (Romer and Romer don't find any shocks!) Now, our estimates of the effect of monetary policy look at the average values of inflation, output, and employment in the 4-5 years after a shock. Really, you say, looking at the graph? That's going to be dominated by the experience of the early 1980s. And with so many positive and negative shocks close together, the average value 4 years later is going to be driven by subtle timing of when the positive or negative shocks line up with later events. Put another way, here is a plot of inflation 30 months after a shock regressed on the shock. Shock on the x axis, subsequent inflation on the y axis. The slope of the line is our estimate of the effect of the shock on inflation 30 months out (source, with details). Hmm. One more graph (I'm having fun here):This is a plot of inflation for the 4 years after each shock, times that shock. The right hand side is the same graph with an expanded y scale. The average of these histories is our impulse response function. (The big lines are the episodes which multiply the big shocks of the early 1980s. They mostly converge because, either multiplied by positive or negative shocks, inflation wend down in the 1980s.) Impulse response functions are just quantitative summaries of the lessons of history. You may be underwhelmed that history is sending a clear story. Again, welcome to causal economics -- tiny average responses to tiny but identified movements is what we estimate, not broad lessons of history. We do not estimate "what is the effect of the sustained high real interest rates of the early 1980s," for example, or "what accounts for the sharp decline of inflation in the early 1980s?" Perhaps we should, though confronting endogeneity of the interest rate responses some other way. That's my main point today. Estimates disappear after 1982Ramey's first variation in the first plot is to use data from 1983 to 2007. Her second variation is to also omit the monetary variables. Christiano Eichenbaum and Evans were still thinking in terms of money supply control, but our Fed does not control money supply. The evidence that higher interest rates lower inflation disappears after 1983, with or without money. This too is a common finding. It might be because there simply aren't any monetary policy shocks. Still, we're driving a car with a yellowed AAA road map dated 1982 on it. Monetary policy shocks still seem to affect output and employment, just not inflation. That poses a deeper problem. If there just aren't any monetary policy shocks, we would just get big standard errors on everything. That only inflation disappears points to the vanishing Phillips curve, which will be the weak point in the theory to come. It is the Phillips curve by which lower output and employment push down inflation. But without the Phillips curve, the whole standard story for interest rates to affect inflation goes away. Computing long-run responsesThe long lags of the above plot are already pretty long horizons, with interesting economics still going on at 48 months. As we get interested in long run neutrality, identification via long run sign restrictions (monetary policy should not permanently affect output), and the effect of persistent interest rate shocks, we are interested in even longer run responses. The "long run risks" literature in asset pricing is similarly crucially interested in long run properties. Intuitively, we should know this will be troublesome. There aren't all that many nonoverlapping 4 year periods after interest rate shocks to measure effects, let alone 10 year periods.VARs estimate long run responses with a parametric structure. Organize the data (output, inflation, interest rate, etc) into a vector \(x_t = [y_t \; \pi_t \; i_t \; ...]'\), then the VAR can be written \(x_{t+1} = Ax_t + u_t\). We start from zero, move \(x_1 = u_1\) in an interesting way, and then the response function just simulates forward, with \(x_j = A^j x_1\). But here an oft-forgotten lesson of 1980s econometrics pops up: It is dangerous to estimate long-run dynamics by fitting a short run model and then finding its long-run implications. Raising matrices to the 48th power \(A^{48}\) can do weird things, the 120th power (10 years) weirder things. OLS and maximum likelihood prize one step ahead \(R^2\), and will happily accept small one step ahead mis specifications that add up to big misspecification 10 years out. (I learned this lesson in the "Random walk in GNP.") Long run implications are driven by the maximum eigenvalue of the \(A\) transition matrix, and its associated eigenvector. \(A^j = Q \Lambda^j Q^{-1}\). This is a benefit and a danger. Specify and estimate the dynamics of the combination of variables with the largest eigenvector right, and lots of details can be wrong. But standard estimates aren't trying hard to get these right. The "local projection" alternative directly estimates long run responses: Run regressions of inflation in 10 years on the shock today. You can see the tradeoff: there aren't many non-overlapping 10 year intervals, so this will be imprecisely estimated. The VAR makes a strong parametric assumption about long-run dynamics. When it's right, you get better estimates. When it's wrong, you get misspecification. My experience running lots of VARs is that monthly VARs raised to large powers often give unreliable responses. Run at least a one-year VAR before you start looking at long run responses. Cointegrating vectors are the most reliable variables to include. They are typically the state variable that most reliably carries long - run responses. But pay attention to getting them right. Imposing integrating and cointegrating structure by just looking at units is a good idea. The regression of long-run returns on dividend yields is a good example. The dividend yield is a cointegrating vector, and is the slow-moving state variable. A one period VAR \[\left[ \begin{array}{c} r_{t+1} \\ dp_{t+1} \end{array} \right] = \left[ \begin{array}{cc} 0 & b_r \\ 0 & \rho \end{array}\right] \left[ \begin{array}{c} r_{t} \\ dp_{t} \end{array}\right]+ \varepsilon_{t+1}\] implies a long horizon regression \(r_{t+j} = b_r \rho^j dp_{t} +\) error. Direct regressions ("local projections") \(r_{t+j} = b_{r,j} dp_t + \) error give about the same answers, though the downward bias in \(\rho\) estimates is a bit of an issue, but with much larger standard errors. The constraint \(b_{r,j} = b_r \rho^j\) isn't bad. But it can easily go wrong. If you don't impose that dividends and price are cointegrated, or with vector other than 1 -1, if you allow a small sample to estimate \(\rho>1\), if you don't put in dividend yields at all and just a lot of short-run forecasters, it can all go badly. Forecasting bond returns was for me a good counterexample. A VAR forecasting one-year bond returns from today's yields gives very different results from taking a monthly VAR, even with several lags, and using \(A^{12}\) to infer the one-year return forecast. Small pricing errors or microstructure dominate the monthly data, which produces junk when raised to the twelfth power. (Climate regressions are having fun with the same issue. Small estimated effects of temperature on growth, raised to the 100th power, can produce nicely calamitous results. But use basic theory to think about units.) Nakamura and Steinsson (appendix) show how sensitive some standard estimates of impulse response functions are to these questions. Weak evidenceFor the current policy question, I hope you get a sense of how weak the evidence is for the "standard view" that higher interest rates reliably lower inflation, though with a long and variable lag, and the Fed has a good deal of control over inflation. Yes, many estimates look the same, but there is a pretty strong prior going in to that. Most people don't publish papers that don't conform to something like the standard view. Look how long it took from Sims (1980) to Christiano Eichenbaum and Evans (1999) to produce a response function that does conform to the standard view, what Friedman told us to expect in (1968). That took a lot of playing with different orthogonalization, variable inclusion, and other specification assumptions. This is not criticism: when you have a strong prior, it makes sense to see if the data can be squeezed in to the prior. Once authors like Ramey and Nakamura and Steinsson started to look with a critical eye, it became clearer just how weak the evidence is. Standard errors are also wide, but the variability in results due to changes in sample and specification are much larger than formal standard errors. That's why I don't stress that statistical aspect. You play with 100 models, try one variable after another to tamp down the price puzzle, and then compute standard errors as if the 100th model were written in stone. This post is already too long, but showing how results change with different specifications would have been a good addition. For example, here are a few more Ramey plots of inflation responses, replicating various previous estimatesTake your pick. What should we do instead? Well, how else should we measure the effects of monetary policy? One natural approach turns to the analysis of historical episodes and changes in regime, with specific models in mind. Romer and Romer pass on thoughts on this approach: ...some macroeconomic behavior may be fundamentally episodic in nature. Financial crises, recessions, disinflations, are all events that seem to play out in an identifiable pattern. There may be long periods where things are basically fine, that are then interrupted by short periods when they are not. If this is true, the best way to understand them may be to focus on episodes—not a cross-section proxy or a tiny sub-period. In addition, it is valuable to know when the episodes were and what happened during them. And, the identification and understanding of episodes may require using sources other than conventional data.A lot of my and others' fiscal theory writing has taken a similar view. The long quiet zero bound is a test of theories: old-Keynesian models predict a delation spiral, new-Keynesian models predicts sunspot volatility, fiscal theory is consistent with stable quiet inflation. The emergence of inflation in 2021 and its easing despite interest rates below inflation likewise validates fiscal vs. standard theories. The fiscal implications of abandoning the gold standard in 1933 plus Roosevelt's "emergency" budget make sense of that episode. The new-Keynesian reaction parameter \(\phi_\pi\) in \(i_t - \phi_\pi \pi_t\), which leads to unstable dynamics for ](\phi_\pi>1\) is not identified by time series data. So use "other sources," like plain statements on the Fed website about how they react to inflation. I already cited Clarida Galí and Gertler, for measuring the rule not the response to the shock, and explaining the implications of that rule for their model. Nakamura and Steinsson likewise summarize Mussa's (1986) classic study of what happens when countries switch from fixed to floating exchange rates: "The switch from a fixed to a flexible exchange rate is a purely monetary action. In a world where monetary policy has no real effects, such a policy change would not affect real variables like the real exchange rate. Figure 3 demonstrates dramatically that the world we live in is not such a world."Also, analysis of particular historical episodes is enlightening. But each episode has other things going on and so invites alternative explanations. 90 years later, we're still fighting about what caused the Great Depression. 1980 is the poster child for monetary disinflation, yet as Nakamura and Steinsson write, Many economists find the narrative account above and the accompanying evidence about output to be compelling evidence of large monetary nonneutrality. However, there are other possible explanations for these movements in output. There were oil shocks both in September 1979 and in February 1981.... Credit controls were instituted between March and July of 1980. Anticipation effects associated with the phased-in tax cuts of the Reagan administration may also have played a role in the 1981–1982 recession ....Studying changes in regime, such as fixed to floating or the zero bound era, help somewhat relative to studying a particular episode, in that they have some of the averaging of other shocks. But the attraction of VARs will remain. None of these produces what VARs seemed to produce, a theory-free qualitative estimate of the effects of monetary policy. Many tell you that prices are sticky, but not how prices are sticky. Are they old-Keynesian backward looking sticky or new-Keynesian rational expectations sticky? What is the dynamic response of relative inflation to a change in a pegged exchange rate? What is the dynamic response of real relative prices to productivity shocks? Observations such as Mussa's graph can help to calibrate models, but does not answer those questions directly. My observations about the zero bound or the recent inflation similarly seem (to me) decisive about one class of model vs. another, at least subject to Occam's razor about epicycles, but likewise do not provide a theory-free impulse response function. Nakamura and Steinsson write at length about other approaches; model-based moment matching and use of micro data in particular. This post is going on too long; read their paper. Of course, as we have seen, VARs only seem to offer a model-free quantitative measurement of "the effects of monetary policy," but it's hard to give up on the appearance of such an answer. VARs and impulse responses also remain very useful ways of summarizing the correlations and cross correlations of data, even without cause and effect interpretation. In the end, many ideas are successful in economics when they tell researchers what to do, when they offer a relatively clear recipe for writing papers. "Look at episodes and think hard is not such recipe." "Run a VAR is." So, as you think about how we can evaluate monetary policy, think about a better recipe as well as a good answer. (Stay tuned. This post is likely to be updated a few times!) VAR technical appendixTechnically, running VARs is very easy, at least until you start trying to smooth out responses with Bayesian and other techniques. Line up the data in a vector, i.e. \(x_t = [i_t \; \pi_t\; y_t]'\). Then run a regression of each variable on lags of the others, \[x_t = Ax_{t-1} + u_t.\] If you want more than one lag of the right hand variables, just make a bigger \(x\) vector, \(x_t = [i_t\; \pi_t \; y_t \; i_{t-1}\; \pi_{t-1} \;y_{t-1}]'.\) The residuals of such regressions \(u_t\) will be correlated, so you have to decide whether, say, the correlation between interest rate and inflation shocks means the Fed responds in the period to inflation, or inflation responds within the period to interest rates, or some combination of the two. That's the "identification" assumption issue. You can write it as a matrix \(C\) so that \(u_t = C \varepsilon_t\) and cov\((\varepsilon_t \varepsilon_t')=I\) or you can include some contemporaneous values into the right hand sides. Now, with \(x_t = Ax_{t-1} + C\varepsilon_t\), you start with \(x_0=0\), choose one series to shock, e.g. \(\varepsilon_{i,1}=1\) leaving the others alone, and just simulate forward. The resulting path of the other variables is the above plot, the "impulse response function." Alternatively you can run a regression \(x_t = \sum_{j=0}^\infty \theta_j \varepsilon_{t-j}\) and the \(\theta_j\) are (different, in sample) estimates of the same thing. That's "local projection". Since the right hand variables are all orthogonal, you can run single or multiple regressions. (See here for equations.) Either way, you have found the moving average representation, \(x_t = \theta(L)\varepsilon_t\), in the first case with \(\theta(L)=(I-AL)^{-1}C\) in the second case directly. Since the right hand variables are all orthogonal, the variance of the series is the sum of its loading on all of the shocks, \(cov(x_t) = \sum_{j=0}^\infty \theta_j \theta_j'\). This "forecast error variance decomposition" is behind my statement that small amounts of inflation variance are due to monetary policy shocks rather than shocks to other variables, and mostly inflation shocks. Update:Luis Garicano has a great tweet thread explaining the ideas with a medical analogy. Kamil Kovar has a nice follow up blog post, with emphasis on Europe. He makes a good point that I should have thought of: A monetary policy "shock" is a deviation from a "rule." So, the Fed's and ECB's failure to respond to inflation as they "usually" do in 2021-2022 counts exactly the same as a 3-5% deliberate lowering of the interest rate. Lowering interest rates for no reason, and leaving interest rates alone when the regression rule says raise rates are the same in this methodology. That "loosening" of policy was quickly followed by inflation easing, so an updated VAR should exhibit a strong "price puzzle" -- a negative shock is followed by less, not more inflation. Of course historians and practical people might object that failure to act as usual has exactly the same effects as acting. * Some Papers: Comment on Romer and Romer What ends recessions? Some "what's a shock?"Comment on Romer and Romer A new measure of monetary policy. The greenbook forecasts, and beginning thoughts that strict exogeneity is not necessary. Shocks monetary shocks explain small fractions of output variance.Comments on Hamilton, more thoughts on what a shock is.What do the VARs mean? cited above, is the response to the shock or to persistent interest rates?The Fed and Interest Rates, with Monika Piazzesi. Daily data and interest rates to identify shocks. Decomposing the yield curve with Monika Piazzesi. Starts with a great example of how small changes in specification lead to big differences in long run forecasts. Time seriesA critique of the application of unit root tests pretesting for unit roots and cointegration is a bad ideaHow big is the random walk in GNP? lessons in not using short run dynamics to infer long run properties. Permanent and transitory components of GNP and stock prices a favorite of cointegration really helps on long run propertiesTime series for macroeconomics and finance notes that never quite became a book. Explains VARs and responses.
In: Nikoloski, Dimitar (2018) Project "The nature and consequences of low wages in post-transition: Empirical evidence from Macedonia". Civil Society Scholar Award. (Unpublished)
Poverty and social exclusion are often associated with long-term unemployment, but being employed is not always sufficient to provide decent living conditions for workers and their families. The 'low-wage workers' are often associated with an image of men and women struggling to support their families and living at risk of poverty and social exclusion. With an average net monthly wage of around 350 Euro in 2015 Macedonia was positioned among European countries with lowest level of workers compensation. As a consequence, Macedonia on average scores much worse regarding the indicators of poverty and social exclusion vis-à-vis more developed EU countries. In these circumstances, it is a challenging task to reveal the nature and potential consequences of low pay employment, which in the case of Macedonia is even more appealing due to the fact that wages on average are already low by international standards. Apart from creating hardship for workers and their families, low-paid work imposes a financial burden for countries' welfare systems. The costs for improving the living conditions of vulnerable segments encompass unemployment benefits as well as costs of activation programmes, social assistance and other cash transfers. In addition, the administration of all these programs requires a complex system of social assistance and it is associated with sizeable government spending. For instance, the current social assistance system in Macedonia is fragmented consisting of many types of programmes rather than having a single comprehensive program, while the total spending on social assistance in 2016 was about one percent of GDP. Although most of the former socialist countries have substantially reduced the initially high unemployment, during the post-transitional development they still struggle in attaining satisfactory wage levels. Since wages represent the most prominent determinant of the households' wellbeing, the relatively stagnant real wages compared to more developed European countries have been considered as an important factor for high and sustainable rates of poverty and social exclusion in these countries. Therefore, the sub-optimal labour market outcomes in post-transition are generally result of the initially high unemployment followed by sharp decline of real wages which, remained stagnant despite subsequent unemployment reduction. In other words, the post-transition can be distinguished as a specific development period where transitional recession has had long lasting economic and social effects even after its formal termination. In this context, policy measures intended to improve the wellbeing of the population have to be based upon previous comprehensive analyses of the labour market characteristics and have to be implemented by credible governments. The aggregate compensation received by employees from their employers represents the most significant part of total household income. Namely, this income category in almost all economies is higher than other forms of personal income such as: income from investment, self employment, pensions and various government welfare programmes. In addition, the importance of wages arises from the fact that pension schemes are often based on wage levels and their dynamics. By contrast, the self-employed do not receive wages, but sell directly their labour in the market. The property and enterprise owners obtain income from rents, dividends and other financial instruments' gains. The unemployed in certain countries and under constraints receive public financial support. For instance, the income from wages and salaries in Macedonia in 2015 represented 56.5 percent of total disposable household income. This is even more pronounced among urban population where wages and salaries represent more than 61 percent of total disposable household income. Although income from self-employment plays important role among rural population, the income from wages and salaries for this category still accounts for almost one half of total disposable household income. In this context, it is worth mentioning that we apply term wages to payments received by workers who are paid on a salaried basis, for example monthly rather than an hourly basis. The term is used this way merely for convenience and is of no consequence for most purposes. However, it is important to distinguish among wages, earnings and income. The term wages often refers to the payment for a unit of time, whereas earnings refer to wages multiplied by the number of time units. Thus earnings depend on both wages and the length of time the employee works. Both wages and earnings are normally defined and measured in terms of direct monetary payments to employees. Finally, total income represents the most encompassing category over resources of a person or household during a given time period, usually a year. The income includes earnings, benefits and unearned income, which consists of dividends or interest received on investments and transfer payments received from the government in the form of welfare payments, unemployment benefits etc. Personal earnings from work are important category in the economy since higher earnings mean higher consumption as well. If total consumption grows, this will boost sales throughout the industries, increasing productivity which, in turn is conducive to a further growth in earnings. According to the Keynesian multiplier assumption, income increase will be followed again by growth in consumption, giving rise to a positive feedback loop. Having in mind the importance of the wage share in total household income, we can assume that the wage level to great extent determines the level of living standard, poverty and social exclusion in the society. The aim of this research is twofold. First, to determine the nature of the low pay phenomenon in Macedonia, i.e. to what extent it is a result of differences in the productivity of workers or it reflects the job-related peculiarities; and second, we are interested to identify the consequences of low earnings for persistent labour market segmentation and poverty. With respect to this, we will address the following research questions: What is the post-transitional context for exploring the phenomenon of low-pay and its consequences upon the wellbeing of workers and their families? How we can determine the profile of low-wage workers in Macedonia and whether they can be considered as being temporarily or permanently affected by low pay phenomenon? Is the low pay work characteristic among certain population segments contributing to higher risk of poverty and social exclusion? What are the implications for labour market and social policies aiming to improve the well-being of the low-paid employees? Despite the existence of a large body of works on wage determination, income inequality, various aspects of employment structure and labour market segmentation, no studies have so far specifically addressed the issue of low pay in Macedonia. Having in mind the above considerations, this paper is structured as follows. In Part 1, we provide the background of research by defining the context of post-transition. Moreover, we pay attention to the case of Macedonian transitional restructuring and we review the general labour market trends, labour market dynamics and the dynamics of wages and income inequality in Macedonia. In Part 2 we analyse the nature of low pay employment in Macedonia by paying attention to earning function and determinants of low pay from comparative static point of view. In addition, in this part we present the earning profiles and we analyse the gender pay gap. The core subject of this part is the identification of the low pay determinants and dynamics of low pay. In Part 3 we analyse the consequences of low earnings on poverty and social exclusion. In this context, we first introduce the AROPE indicators as most widely used measures for risk of poverty and social exclusion in Europe. Moreover, we empirically explore the factors affecting the in-work poverty and social exclusion in Macedonia by paying attention to the role of various social transfers. Finally, in Part 4 we convey the main findings from research and formulate the policy recommendations that will target the low pay segments in the Macedonian society. More precisely, as potential field for policy intervention we consider education and training, active labour market policies, unionisation and collective bargaining, wage subsidies and taxation and statutory minimum wage. In addition, we propose a set of complementary policy measures that will help in preventing the in-work poverty and social exclusion.
España ha sido uno de los principales destinos elegidos en los proyectos migratorios internacionales de los ciudadanos que han partido de Ecuador. Las similitudes culturales y las perspectivas de empleo han permitido contrarrestar la distancia geográfica que separa ambos países. El éxito de unos atrajo a otros, entrando en funcionamiento los postulados de la teoría de redes. De esta forma, especialmente a partir de la década de 1990, los ecuatorianos se han convertido en uno de los colectivos de mayor peso en España, ocupando puestos en la construcción, las actividades agrícolas y el sector servicios, entre ellos en el servicio doméstico. Con el paso del tiempo se han ido consolidando en el país. Los procesos extraordinarios de regularización aprobados por los distintos Gobiernos españoles han contribuido a promocionar su seguridad jurídica en España, aunque en algunos casos solo ha sido de manera temporal. También han aprovechado y contribuido al dinamismo mostrado por la economía española, que se traducía en una importante creación de empleo. En base a esta estabilidad han adquirido viviendas y se han acogido en muchos casos a la reagrupación familiar, trayendo a sus parejas, descendientes y ascendientes. Estos procesos dotaron al colectivo de una mayor vocación de permanencia en España, reforzado aún más si cabe por el hecho de que en muchos casos se han nacionalizado español. No obstante lo suelen hacer sin renunciar a su nacionalidad de origen y con el objeto de aprovechar los beneficios, la seguridad jurídica, que les reporta el ser considerado ciudadano de la Unión Europea. La situación descrita de consolidación y crecimiento de la colonia ecuatoriana ha encontrado un punto de inflexión en los últimos años. La crisis económica que atraviesa España ha provocado que parte de la población ecuatoriana haya perdido su empleo. Los propios españoles vuelven a tomar el camino de la emigración ante el deterioro de la situación sociolaboral y la falta de perspectivas profesionales. En esta línea el Gobierno de España ha puesto en marcha diversos programas de retorno voluntario dirigidos a los extranjeros que se encuentran en el país, al objeto de relajar la presión sobre el mercado de trabajo y reducir la competencia laboral. En un primer momento estos programas de retorno han tenido poco eco entre sus destinatarios. Sin embargo, la prolongación en el tiempo de la recesión, e incluso la acentuación la misma, ha llevado a que muchos hayan agotado las prestaciones por desempleo a que tenían derecho por el tiempo trabajado. Como resultado carecen de recursos económicos para hacer frente a las hipotecas que suscribieron para adquirir sus viviendas, son desahuciados y las perspectivas laborales no son nada halagüeñas a corto plazo. Ante esta situación el regreso al país de origen comienza a ganar adeptos. A ello hay que sumar que al contrario de lo que sucede en España, la economía de Ecuador se muestra dinámica, crece, y el Gobierno del país adopta también medidas para hacer atractivo el regreso de sus nacionales. Entre las citadas medidas se encuentra el Plan Tierra, dirigido a realizar una reforma agraria y dotar de tierras a la población para su puesta en valor. La presente comunicación se centrará en analizar la incidencia de este Plan entre los ecuatorianos que se encuentran en España. Este documento recoge parte del trabajo realizado por los autores en la ejecución del proyecto I+D+i Gestión colectiva de contrataciones agrícolas en origen y sus soportes territoriales en España y Marruecos: propuesta de concatenación de campañas e implicaciones en el codesarrollo. Dicho proyecto es financiado por el Ministerio de Ciencia e Innovación (Ref. CSO2010-18764, 2011-2013) y está siendo llevado a cabo por investigadores de distintas universidades españolas. El "Instituto de Desarrollo Local" (IDL), grupo de investigación de la Universidad de Huelva, actúa como jefe de filas del mismo. ; Spain has been one of the top tourist destinations in international migration projects of citizens who have left Ecuador. Cultural similarities and employment prospects have offset the geographical distance separating the two countries. The success of some attracted others to come on stream the tenets of network theories. In this way, especially since the 1990s, Ecuatorians have become one of the groups with more weight in Spain, holding positions in construction, farming and the service sector, including domestic servants. With the pass of time they have been consolidated in the country. The extraordinary regularization process approved by the various Spanish governments have helped to promote legal security in Spain, although in some cases has only been temporary. They have also benefited and contributed to the dynamism of the Spanish economy, which resulted in significant job creation. Based on this stability they have acquired properties and have been welcomed in many cases of family reunion, bringing their partners, descendants and ascendants. These processes endowed the collective greater degree of permanence in Spain, enhanced even further by the fact that in many cases have been nationalized as Spanish. Notwithstanding usually they do not renounce their nationality of origin in order to reap the benefits, legal security, reporting them to be considered a citizen of the European Union. The described situation of consolidation and growth of the Ecuadorian colony has found a turning point in recent years. The economic crisis in Spain has caused part of the Ecuadorian population to lose their jobs. The Spaniards themselves retake the path of emigration to the deterioration of social and working conditions and lack of career prospects. In this vein the Government of Spain has implemented various voluntary return programs targeting foreigners in the country, in order to ease the pressure on the labor market and reduce labor competition underway. At first these return programs have had little echo among the recipients. However, the extension in time of recession, and even stress it, it has led many to have exhausted unemployment benefits they were entitled for the time worked. As a result, they lack the financial resources to meet the mortgages signed to acquire their homes, they are hopeless and job prospects are not bright in the short term. In this situation they return to the home country begins to gain followers. To this must be added that, contrary to what happens in Spain, Ecuador's economy is dynamic, is growing, and the government of the country also takes steps to appeal the return of their nationals. Among those measures is the Land Plan, aimed at making land reform and give land to the population for its value. This communication will focus on analyzing the impact of this plan among Ecuadorians who are in Spain. This document contains part of the work done by the authors in the project implementation R & D + i collective management of agricultural contracts in origin and territorial supports Spain and Morocco: concatenation proposed campaigns and co-development implications. This project is funded by the Ministry of Science and Innovation (Ref CSO2010-18764, 2011-2013) and is being conducted by researchers from different Spanish universities. The "Institute for Local Development" (IDL), a research group at the University of Huelva, acts as team leader. ; Este documento recoge parte del trabajo realizado en la ejecución del Proyecto I+D+i (2010-2014): "Gestión colectiva de contrataciones agrícolas en origen y sus soportes territoriales en España y Marruecos: propuesta de concatenación de campañas e implicaciones en el codesarrollo". Dicho Proyecto es financiado por el Ministerio de Ciencia e Innovación (Ref. CSO2010-18764, 2011-2014).
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This global public opinion poll asking respondents whether they have a favorable view of the USA has been bouncing around the interwebs. The topline finding — the US is pretty popular! — surprised many American cultural critics who remember the bad old days of the Iraq War when global criticism of US imperialism surged. I find the handful of countries where the opinion of the US remains more negative just as interesting. Hungary's worst‐in‐Europe result is amusing given how the far Right in the US fetishizes Viktor Orban's reactionary politics. American Hungary stans suffer from sublimated self‐hatred, wishing they could be as xenophobic and culturally chauvinist as team "Make Hungary Magyar Again." But the other outlier country on this list with a marked dislike of the US might be more of a surprise to Americans: Australia. We're almost underwater Down Under. This is in sharp contrast with how highly Americans think of Australia; if you combine all positive responses from this survey, Americans consider Australia their warmest ally. Which means the gulf between how Americans and Australians view each other would be one of the widest in the world! As it so happens, I spent eight summers as a teenager living in Australia. That certainly doesn't make me a country expert — and it's been two decades since I was last there — but it does mean that Australian antipathy towards the US doesn't take me by surprise. That dislike was very much on the surface when I was a 10 or 11 year old trying to make Aussie friends. The most popular country singer in Australia at the time was the man, the legend, John Williamson. I've written about Australian country music elsewhere, but I can still sing many of Williamson's top hits from memory, including his rip‐roaring nationalist anthem "A Flag of Our Own" (1991). Williamson was a republican, which meant that he believed Australia should leave the British Commonwealth, reject the monarchy, and take the British stripes off the Australian flag. Here's the song's chorus: 'Cause this is Australia and that's where we're from We're not Yankee side‐kicks or second class P.O.M.s And tell the Frogs what they can do with their bomb Oh we must have a flag of our own
Let me decipher that for you. P.O.M.s stands for "Prisoners of Her Majesty," or Brits, which is often amended with an adjective such as "whingeing POMs" to describe those who yearn for ye olde country and constantly complain about Australia's supposedly backward ways. This was a particularly popular complaint in Australia in the aftermath of Australia's 1975 constitutional crisis. The Australian Governor‐General — a crown appointee in a mostly symbolic role — had invoked a long neglected royal power and replaced the elected left‐wing prime minister with a conservative. (For comparison, imagine the hoopla if King Charles III were to kick British Prime Minister Rishi Sunak out of office and install a Labour prime minister!) "Frogs," of course, are the French, who were on the radar of Aussie nationalists in the 90s for conducting nuclear testing in their Polynesian colonies — which Australia considered its own backyard — and doing so without regard for the effects of nuclear fallout on surrounding islands and Australia itself. That leaves us with Yankees, commonly shorted to "Yanks," which quickly becomes, via Australia's penchant for rhyming puns, "Septic Tanks," or then shortened further to "seppos." (Aussies are world leaders in slang. It's like if Cockney wasn't just the lingo of one neighborhood in London but had been exported en masse via prison ships, transported to the other side of the globe, and then had taken over an entire continent. Oh wait…) Maybe you're wondering why America made that opprobrious list alongside the POMs and Frogs. We weren't testing any nukes in the Pacific (at least, we hadn't for a while) and we weren't meddling in their domestic politics (though blaming the CIA for the 1975 constitutional crisis remains popular among Aussie conspiracists). But when this song was released in 1991, the Australian military had just participated in the US‐led Gulf War. Although suffering no combat casualties, Australian nationalists saw this as yet another example of Australia blindly serving the interests of foreign superpowers, from dying at the command of callous British generals in the trenches at Gallipoli — the subject of a 1981 blockbuster starring a young Mel Gibson — to the failed fight alongside the Yanks in the jungles of Vietnam. Bear in mind that Australia's anti‐Vietnam War protests in 1970 were the *largest* protests in their history; by contrast, the much feted anti‐Vietnam war protests in the US don't even crack our top 27! Australia's involvement in the Iraq War did little to assuage critics who believed Australia should stop playing second fiddle to the US, especially after leaked documents showed that the Aussie government's primary purpose for sending troops was to cozy up to the US. All the talk about eradicating weapons of mass destruction and promoting democracy was merely "mandatory rhetoric." However, when I was a teenager in Australia in the late‐90s, especially while visiting rural communities in Northern Queensland, the complaint I heard the most often revolved around US trade policy, specifically US tariffs on the import of Australian lamb meat. I remember riding around the bush in a ute (flatbed pickup truck) with a local farmer who was spitting mad about US tariffs and who said that the Monica Lewinsky scandal was Bill Clinton getting his just desserts for harming Aussie sheep farmers. What a thought! Australian headlines from the time were simply scathing in their critique of Clinton's hypocrisy in signing a free trade deal with Canada and Mexico while slapping new tariffs on Australia. Yet other than the mad cow panic, meat import policies — let alone veal tariffs, lol — have never been a major political issue in recent US national politics. But they sure mattered a great deal to Australia, which is the second largest sheep exporting country in the world (Australia and New Zealand combine for an incredible 93% of the global market). In any case, US trade policy in the 1990s fit with Australian nationalists' broader critique of the US as a bully who simply expected Australia to meekly comply with its broader geopolitical agenda regardless of whether it was in Australia's own national interest. So Australians' mixed opinions regarding the US are grounded in real, pragmatic considerations. It's yet another situation in which our imperial entanglements and trade protectionism have provoked blowback. It's possible that in the future those feelings might revert towards the more US‐positive, Australasian mean given Chinese economic and military expansionism in the region. Up until now, Australia has been insulated from the downside risks of Chinese expansion — funnily enough, the intervening Indonesians have been a more significant target for Australian jingoism — while benefitting greatly as a supplier of raw materials for the post‐Mao Chinese economic miracle. Until the pandemic, Australia hadn't experienced a recession in nearly thirty years (!). On a more speculative note, if Noah Smith and other India boosters are correct, Australia's role as a potential trading partner with India could matter as much for that country's success as its trade with China has for the past three decades. Last year, Australia signed a new free trade deal with India and expects its exports to triple by 2035. And given the ongoing decoupling of global investment from the Chinese market, Australia could benefit from a major boost of foreign investment given its proximity and ties with India, Vietnam, and other high growth South and Southeast Asian markets (nicknamed "Altasia"). There's little in the way of Australia enjoying another thirty years of torrid economic growth. The US should forge a new, peer relationship with Australia, signaling that it takes Australia seriously as a vital regional ally rather than treating it as a junior partner in our foreign misadventures. We have a golden opportunity to do so right now. As Doug Bandow has noted, China has foolishly kicked off a trade war with Australia, and while Trump considered following suit with new tariffs on Australian exports, he was finally persuaded not to. We should take advantage of China's mistake by expanding our 2005 free trade agreement with Australia and lower rates on agricultural products that are feeling the pinch from Chinese tariffs. This is a crosspost from the author's Substack. Click through and subscribe for more content on the intersection of history and policy.
학위논문 (석사) -- 서울대학교 대학원 : 사범대학 협동과정 글로벌교육협력전공, 2020. 8. 김선영. ; Honduras has the second-highest rate of adolescent pregnancy (28%) in Latin America (WHO, UNFPA, UN, 2019) which has a lasting impact on not only physical and mental health risks on adolescent, but also on individual and family issues such as school dropouts, poverty, and stigma beyond community problems such as economic recession and gender discrimination (Hodgkinson, Colantuoni, Roberts, Berg-Cross, & Belcher, 2010; Morris & Rushwan, 2015; WHO, 2014). The aims of this thesis are three-fold. This first aim is to explore the social determinants of health for adolescent pregnancy by analyzing the qualitative data. Based on that, the second is to identify plausible educational efforts to decreases adolescent pregnancy as well as promote adolescent sexual and reproductive health. Specifically, the third is to identify what improvements and complements or new aspects to existing education programs should be introduced for developing an effective health education program for the prevention of adolescent pregnancy. It also highlights the necessity of the development of social services and intervention policy for the prevention of adolescent pregnancy. Based on the Analytical Dualism in Archer's Morphogenetic Approach, the theoretical framework was formed. In other words, the theoretical background is that social change is driven by social action caused by the reflexivity between social conditions and the agency given on the issue of adolescent pregnancy. This thesis adopts a qualitative methodology. The data utilized in this study is collected from the interviews, Focus Group interviews (FGI), and field documents (Textbooks). The thesis collected from 14 participants: two principals, four teachers, three parents, three students, and two community women who have experienced adolescent pregnancy. The main results are as follows: The social determinants of health of adolescent pregnancy which pre-exist in Honduras; 1) unstable economic situation, 2) social norm; reluctance toward sex, Machismo 3) broken family, 4) Insufficient support from government and 5) the lack of SRHR education. Unfortunately, the rate of adolescent pregnancy continues to increase. However, despite the poor social conditions, social changes to prevent adolescent pregnancy have been discovered in an agency who has their own learning experience and personal concerns; 1) critical opinions toward Honduras to improve social change 2) care for others (service) 3) continuous efforts for social action, 4) constructive attitude toward their life and Honduras and 5) clear sexual values (sex ethics). Furthermore, the educational contents that need be included in sexual and reproductive and health rights education based on the context of Honduras are 1) The consequence of adolescent pregnancy 2) the meaning of relationships, love, and family-based on the value of sex (sex ethics), and 3) counseling approach. In addition, policy support is essential to expand the reform of sexual and reproductive health rights education based on the concerns of these agencies to include non-formal and informal education. In addition, the community participation and policy support are essential to expanding the reformed SRHR education based on the personal concern of agency who has positive impacts on and the contents required in the context of Honduras to informal education and non-formal education. This study focuses on the role of sexual and reproductive and health rights education, which can be demonstrated as an indicator of education, health, and gender equality among sustainable development goals. It also contributes to suggest the implementation of improved health education considering local, social culture and political context in Honduras to solve the adolescent pregnancy. ; 온두라스는 라틴아메리카에서 두번째로 높은 청소년 임신률 (28%)을 기록하고 있다 (WHO, UNFPA, UN, 2019). 청소년 임신은 청소년의 신체적 정신적 건강상 위험요인으로 작용할 뿐만 아니라, 학교 중퇴, 빈곤의 악순환 및 사회적 스티그마와 같은 개인과 가족의 문제에서부터 경기침체, 양성차별과 같은 지역사회의 문제로까지 확대되어 지속적인 영향을 끼친다. (WHO, 2014; Hodgkinson SC et al., 2010; Morris, 2015). 본 연구는 온두라스의 높은 청소년 임신률에 영향을 미치는 요인들을 질적자료 분석을 통해 폭넓게 탐색하고, 이를 바탕으로 청소년 임신 예방과 청소년들의 성생식건강 증진을 위해 어떠한 교육적 노력이 필요한지를 파악하는 것을 목적으로 한다. 구체적으로, 효과적인 청소년 임신 예방 교육 프로그램을 개발 하기 위해서는 기존 교육 프로그램이 어떤 개선, 보완을 거쳐야 하는지 또는 어떤 새로운 측면이 도입되어야 하는지를 파악한다. 또한 청소년 임신 예방을 위한 사회적 서비스 개발 및 정책적 개입의 필요성을 강조하고자 한다. 본 연구에서는 Archer의 형태발생론 접근법(Morphogenetic Approach)의 분석적 이원론(Analytical dualism)을 바탕으로 이론적 틀을 구성하였다. 즉, 청소년 임신문제 관련해 주어진 사회적 조건들과 이에 대한 주체적 개인(Agency)의 성찰(reflexivity)로 야기된 사회적 행동(Social action)을 통해 사회변화가 이끌어 진다는 점을 이론적 근거로 삼았다. 본 연구는 질적연구 방법론을 채택하였으며, 연구에서 활용된 데이터는 인터뷰, 초점그룹 인터뷰(FGI) 및 현장문서(textbook)를 통해 수집하였다. 총 14명의 참여자들(교장 2명, 교사 4명, 학부모 3명, 학생 3명, 여성 2명)을 대상으로 수행되었다. 본 연구의 주요 결과는 다음과 같다. 온두라스에 이미 존재하고 있는 청소년 임신의 결정요인으로 1) 불안정한 경제 상황, 2) 사회규범_성에 대한 거부감, 남성우월주의 문화 3) 붕괴된 가정 4) 정부의 불충분한 지원, 5) 성과 생식 건강 권 교육의 부족이 꼽혔다. 이로 인해, 온두라스에서는 청소년 임신율이 계속해서 증가하고 있다. 하지만 열악한 사회적 조건에도 불구하고, 자신의 학습경험을 비롯하여 1) 온두라스의 사회변화를 위한 비판적 시각, 2) 봉사정신, 3) 사회적행동 실천력, 4) 온두라스와 자신의 삶에 대한 건설적인 태도 5) 분명한 성가치관(성윤리)를 가진 주체적 개체 로서의 인식에 기반하여 청소년 임신 예방을 위한 사회변화가 진행되고 있음도 발견할 수 있었다. 또한, 온두라스의 상황에 맞게 개편된 성교육에 포함되어야 할 요소로 1) 청소년임신의 신체적, 정신적, 사회적 어려움, 2) 성가치관(성윤리)에 바탕을 둔 관계, 사랑, 가족의 의미 3) 교육상담에 대한 요구가 있었다. 앞에서 다룬 내용들을 근거로 하는 개편된 성교육에는 비형식, 무형식 교육으로 까지 확대 시행하기 위해서, 지역사회 참여 및 정책적 지원 역시 수반 되어야 할 것이다. 본 연구는 지속가능한 개발목표 중 교육, 건강, 양성평등의 지표로 볼 수 있는 성교육의 역할에 주목했으며, 청소년 임신 문제를 개선된 성교육을 통해 해결하기 위해, 현지의 사회문화, 정치적 상황 및 기타 요인들을 포괄적으로 고려한 성생식보건 교육 프로그램의 이행을 제시하고 있다는데 중요한 의의를 갖는다. ; CHAPTER I. INTRODUCTION 1 1.1 Study Background 1 1.2 Statement of the Problem 5 1.2.1 The risk of Adolescent Pregnancy 5 1.2.2 The need for SRHR education that adopted the context of Honduras 8 1.3 Significance of the Study 9 1.4 Purpose of the Study and Research Questions 11 CHAPTER II. LITERATURE REVIEW 13 2.1 Education for Social change 14 2.1.1 Three approaches of educational sociology: functionalism, Marxist theory, and ermeneutic approach 14 2.1.2 The necessity of a hermeneutic approach in Global Education Development Cooperation 20 2.1.3 Morphogenetic Approach 23 2.2 Social Determinants of Global Health 29 2.3 Program Theory 34 2.4 Health Education 38 2.4.1 The definition of Health Education 38 2.4.2 Health literacy 40 2.5 Sexual and Reproductive Health and Rights Education 44 2.5.1 The attention of SRHR education for adolescents in the field of global health education. 44 2.5.2 SRHR education 47 2.5.3 SRHR education in Latin America 56 CHAPTER Ⅲ. RESEARCH METHOD 59 3.1 Research Methods 59 3.1.1 Methodological consideration: Qualitative Research 59 3.1.2 Study setting 60 3.1.3 Research Process; Field Research 61 3.2 Data collection & Participants 64 3.3 Data Analysis & Analytical Framework 70 3.4 Ethical Consideration 74 CHAPTER Ⅳ. FINDINGS 76 4.1 Structural Conditioning 76 4.1.1 Ongoing high level of Adolescents' Pregnancy in Honduras 76 4.1.2 Social determinants of health for Adolescent Pregnancy in Honduras 81 4.1.3 Analysis of structural conditioning of Adolescent Pregnancy in Honduras 104 4.2 Social Interaction 106 4.2.1 Personal concern; What we care about Sexual and Reproductive Health and Rights 106 4.2.2 Structural intervention; Quality Sexual and Reproductive Health and Rights Educational strategies 109 4.2.3 Analysis of Social Interaction of Adolescent Pregnancy in Honduras 117 4.3 Structural Elaboration 120 4.3.1 Changing Society through education 121 4.3.2 Analysis of Social Elaboration of Adolescent Pregnancy in Honduras 130 4.4 Analysis of Adolescent Pregnancy in Honduras using the Framework. 132 CHAPTER Ⅴ. DISCUSSION 136 5.1 The preexistence of great gulf fixed in structural conditioning 136 5.2 The importance of the agency to change society 138 5.3 The effective SRHR education as a positive intervention 143 5.4 The change of the agency through education for social change. 148 5.5 Limitation 152 CHAPTER Ⅵ. CONCLUSION 154 REFERENCES 157 APPENDIXS 167 Appendix 1. Textbooks in Honduras 167 Appendix 2. List of Example Questions used in the Interview 177 Appendix 3. IRB Documents 179 Appendix 4. Field Research Photos 184 Appendix 5. Spanish Abstract 186 국문 초록 190 ; Master
학위논문 (석사) -- 서울대학교 대학원 : 사범대학 협동과정 글로벌교육협력전공, 2020. 8. 김선영. ; Honduras has the second-highest rate of adolescent pregnancy (28%) in Latin America (WHO, UNFPA, UN, 2019) which has a lasting impact on not only physical and mental health risks on adolescent, but also on individual and family issues such as school dropouts, poverty, and stigma beyond community problems such as economic recession and gender discrimination (Hodgkinson, Colantuoni, Roberts, Berg-Cross, & Belcher, 2010; Morris & Rushwan, 2015; WHO, 2014). The aims of this thesis are three-fold. This first aim is to explore the social determinants of health for adolescent pregnancy by analyzing the qualitative data. Based on that, the second is to identify plausible educational efforts to decreases adolescent pregnancy as well as promote adolescent sexual and reproductive health. Specifically, the third is to identify what improvements and complements or new aspects to existing education programs should be introduced for developing an effective health education program for the prevention of adolescent pregnancy. It also highlights the necessity of the development of social services and intervention policy for the prevention of adolescent pregnancy. Based on the Analytical Dualism in Archer's Morphogenetic Approach, the theoretical framework was formed. In other words, the theoretical background is that social change is driven by social action caused by the reflexivity between social conditions and the agency given on the issue of adolescent pregnancy. This thesis adopts a qualitative methodology. The data utilized in this study is collected from the interviews, Focus Group interviews (FGI), and field documents (Textbooks). The thesis collected from 14 participants: two principals, four teachers, three parents, three students, and two community women who have experienced adolescent pregnancy. The main results are as follows: The social determinants of health of adolescent pregnancy which pre-exist in Honduras; 1) unstable economic situation, 2) social norm; reluctance toward sex, Machismo 3) broken family, 4) Insufficient support from government and 5) the lack of SRHR education. Unfortunately, the rate of adolescent pregnancy continues to increase. However, despite the poor social conditions, social changes to prevent adolescent pregnancy have been discovered in an agency who has their own learning experience and personal concerns; 1) critical opinions toward Honduras to improve social change 2) care for others (service) 3) continuous efforts for social action, 4) constructive attitude toward their life and Honduras and 5) clear sexual values (sex ethics). Furthermore, the educational contents that need be included in sexual and reproductive and health rights education based on the context of Honduras are 1) The consequence of adolescent pregnancy 2) the meaning of relationships, love, and family-based on the value of sex (sex ethics), and 3) counseling approach. In addition, policy support is essential to expand the reform of sexual and reproductive health rights education based on the concerns of these agencies to include non-formal and informal education. In addition, the community participation and policy support are essential to expanding the reformed SRHR education based on the personal concern of agency who has positive impacts on and the contents required in the context of Honduras to informal education and non-formal education. This study focuses on the role of sexual and reproductive and health rights education, which can be demonstrated as an indicator of education, health, and gender equality among sustainable development goals. It also contributes to suggest the implementation of improved health education considering local, social culture and political context in Honduras to solve the adolescent pregnancy. ; 온두라스는 라틴아메리카에서 두번째로 높은 청소년 임신률 (28%)을 기록하고 있다 (WHO, UNFPA, UN, 2019). 청소년 임신은 청소년의 신체적 정신적 건강상 위험요인으로 작용할 뿐만 아니라, 학교 중퇴, 빈곤의 악순환 및 사회적 스티그마와 같은 개인과 가족의 문제에서부터 경기침체, 양성차별과 같은 지역사회의 문제로까지 확대되어 지속적인 영향을 끼친다. (WHO, 2014; Hodgkinson SC et al., 2010; Morris, 2015). 본 연구는 온두라스의 높은 청소년 임신률에 영향을 미치는 요인들을 질적자료 분석을 통해 폭넓게 탐색하고, 이를 바탕으로 청소년 임신 예방과 청소년들의 성생식건강 증진을 위해 어떠한 교육적 노력이 필요한지를 파악하는 것을 목적으로 한다. 구체적으로, 효과적인 청소년 임신 예방 교육 프로그램을 개발 하기 위해서는 기존 교육 프로그램이 어떤 개선, 보완을 거쳐야 하는지 또는 어떤 새로운 측면이 도입되어야 하는지를 파악한다. 또한 청소년 임신 예방을 위한 사회적 서비스 개발 및 정책적 개입의 필요성을 강조하고자 한다. 본 연구에서는 Archer의 형태발생론 접근법(Morphogenetic Approach)의 분석적 이원론(Analytical dualism)을 바탕으로 이론적 틀을 구성하였다. 즉, 청소년 임신문제 관련해 주어진 사회적 조건들과 이에 대한 주체적 개인(Agency)의 성찰(reflexivity)로 야기된 사회적 행동(Social action)을 통해 사회변화가 이끌어 진다는 점을 이론적 근거로 삼았다. 본 연구는 질적연구 방법론을 채택하였으며, 연구에서 활용된 데이터는 인터뷰, 초점그룹 인터뷰(FGI) 및 현장문서(textbook)를 통해 수집하였다. 총 14명의 참여자들(교장 2명, 교사 4명, 학부모 3명, 학생 3명, 여성 2명)을 대상으로 수행되었다. 본 연구의 주요 결과는 다음과 같다. 온두라스에 이미 존재하고 있는 청소년 임신의 결정요인으로 1) 불안정한 경제 상황, 2) 사회규범_성에 대한 거부감, 남성우월주의 문화 3) 붕괴된 가정 4) 정부의 불충분한 지원, 5) 성과 생식 건강 권 교육의 부족이 꼽혔다. 이로 인해, 온두라스에서는 청소년 임신율이 계속해서 증가하고 있다. 하지만 열악한 사회적 조건에도 불구하고, 자신의 학습경험을 비롯하여 1) 온두라스의 사회변화를 위한 비판적 시각, 2) 봉사정신, 3) 사회적행동 실천력, 4) 온두라스와 자신의 삶에 대한 건설적인 태도 5) 분명한 성가치관(성윤리)를 가진 주체적 개체 로서의 인식에 기반하여 청소년 임신 예방을 위한 사회변화가 진행되고 있음도 발견할 수 있었다. 또한, 온두라스의 상황에 맞게 개편된 성교육에 포함되어야 할 요소로 1) 청소년임신의 신체적, 정신적, 사회적 어려움, 2) 성가치관(성윤리)에 바탕을 둔 관계, 사랑, 가족의 의미 3) 교육상담에 대한 요구가 있었다. 앞에서 다룬 내용들을 근거로 하는 개편된 성교육에는 비형식, 무형식 교육으로 까지 확대 시행하기 위해서, 지역사회 참여 및 정책적 지원 역시 수반 되어야 할 것이다. 본 연구는 지속가능한 개발목표 중 교육, 건강, 양성평등의 지표로 볼 수 있는 성교육의 역할에 주목했으며, 청소년 임신 문제를 개선된 성교육을 통해 해결하기 위해, 현지의 사회문화, 정치적 상황 및 기타 요인들을 포괄적으로 고려한 성생식보건 교육 프로그램의 이행을 제시하고 있다는데 중요한 의의를 갖는다. ; CHAPTER I. INTRODUCTION 1 1.1 Study Background 1 1.2 Statement of the Problem 5 1.2.1 The risk of Adolescent Pregnancy 5 1.2.2 The need for SRHR education that adopted the context of Honduras 8 1.3 Significance of the Study 9 1.4 Purpose of the Study and Research Questions 11 CHAPTER II. LITERATURE REVIEW 13 2.1 Education for Social change 14 2.1.1 Three approaches of educational sociology: functionalism, Marxist theory, and ermeneutic approach 14 2.1.2 The necessity of a hermeneutic approach in Global Education Development Cooperation 20 2.1.3 Morphogenetic Approach 23 2.2 Social Determinants of Global Health 29 2.3 Program Theory 34 2.4 Health Education 38 2.4.1 The definition of Health Education 38 2.4.2 Health literacy 40 2.5 Sexual and Reproductive Health and Rights Education 44 2.5.1 The attention of SRHR education for adolescents in the field of global health education. 44 2.5.2 SRHR education 47 2.5.3 SRHR education in Latin America 56 CHAPTER Ⅲ. RESEARCH METHOD 59 3.1 Research Methods 59 3.1.1 Methodological consideration: Qualitative Research 59 3.1.2 Study setting 60 3.1.3 Research Process; Field Research 61 3.2 Data collection & Participants 64 3.3 Data Analysis & Analytical Framework 70 3.4 Ethical Consideration 74 CHAPTER Ⅳ. FINDINGS 76 4.1 Structural Conditioning 76 4.1.1 Ongoing high level of Adolescents' Pregnancy in Honduras 76 4.1.2 Social determinants of health for Adolescent Pregnancy in Honduras 81 4.1.3 Analysis of structural conditioning of Adolescent Pregnancy in Honduras 104 4.2 Social Interaction 106 4.2.1 Personal concern; What we care about Sexual and Reproductive Health and Rights 106 4.2.2 Structural intervention; Quality Sexual and Reproductive Health and Rights Educational strategies 109 4.2.3 Analysis of Social Interaction of Adolescent Pregnancy in Honduras 117 4.3 Structural Elaboration 120 4.3.1 Changing Society through education 121 4.3.2 Analysis of Social Elaboration of Adolescent Pregnancy in Honduras 130 4.4 Analysis of Adolescent Pregnancy in Honduras using the Framework. 132 CHAPTER Ⅴ. DISCUSSION 136 5.1 The preexistence of great gulf fixed in structural conditioning 136 5.2 The importance of the agency to change society 138 5.3 The effective SRHR education as a positive intervention 143 5.4 The change of the agency through education for social change. 148 5.5 Limitation 152 CHAPTER Ⅵ. CONCLUSION 154 REFERENCES 157 APPENDIXS 167 Appendix 1. Textbooks in Honduras 167 Appendix 2. List of Example Questions used in the Interview 177 Appendix 3. IRB Documents 179 Appendix 4. Field Research Photos 184 Appendix 5. Spanish Abstract 186 국문 초록 190 ; Master
From the very young to the very old, disease defines our roles in society and affects everyone. But medical care saves or extends lives. Because it (seems) to have some power over disease and retards or slows the rate of depreciation of an individual´s initial endowment of health, it is perceived very positively. Thus, as of 2015, individuals and populations in the Organization for Economic Cooperation and Development (OECD) area-countries spent approximately 9.0 percent of their incomes (as measured by GDP per capita) on health care—up from 8.3 percent in 2008. With national governments assuming an increasing share of these costs and pressures to spend more likely to continue, controlling this type of spending is a problem that all modern societies face and one which every country must grapple with. Therefore, this thesis begins with the questions: what factors are behind this push for more spending? And does government involvement in health care affect health care costs and spending? If so, how? Thus, to inform on what is ultimately a political decision, we looked at the determinants of health care expenditure growth in Portugal and a set of countries in the OECD area, taking into account the role of income, the share of publicly funded health care, ageing population, as well as technological progress. Although governments seem unable to control health care costs and spending, the results from Part One of our research (Chapters 2 and 3) suggest that the current trend of increasing health care expenditure is rooted in a set of differentiated factors. In Chapter 2, higher Portuguese income levels lead to higher health care expenditure, and the magnitude of the estimated elasticity poses some concern about long-term sustainability of current trends of spending. However, the income elasticity of health care expenditure not only depends on the level of analysis but also the range of income and economic development. For example, characteristics of a non-luxury good for health care have been found in Chapter 3, in the study examining the determinants of expenditure growth in a sample of OECD countries. This indicates that the delivery of health is determined according to needs, rather than responsiveness to income changes, and thus warrants greater public involvement in the provision and financing of health care. In addition, our main results confirm that the growth in numbers of the elderly and the development of new medical technologies are determining factors of current health expenditure growth, and these may not be easily compressed if not through rationing. Besides informing on the factors that are behind the push for health care expenditure growth, this thesis also looks at the socio-economic determinants of health, particularly how government involvement in health care and social protection programs may lead to better health care outcomes. Although publicly funded health care spending seems to have very little impact on all-cause and cause-specific mortality rates, the results of our investigation indicate that other factors (such as, for example, higher levels of income and publicly funded welfare spending, as well as advances in new medical technologies, do significantly influence the overall health status and well-being of a country´s population. Thus, while using data from the European Union for a period that leads up to, and coincided with the ongoing recession (2008-2013), the evidence emerging from Part Two (Chapters 4, 5 and 6) of our research suggests that when it comes to protecting population health, the results are that social welfare spending is as relevant, if not more so, than public health spending in moderating increased vulnerabilities to adverse economic shocks, especially among younger males and females, the poor and their children, and should be accounted for in future inquiry into the determinants of aggregate population health. ; A doença afecta todos os indivíduos, independentemente da faixa etária, e é definidora do nosso papel na sociedade. Contudo, os cuidados de saúde salvam e/ou prolongam vidas. Assim, porque parecem ter algum poder para inverter (ou retardar) o ritmo de envelhecimento (i.e., ritmo de desgaste individual da dotação inicial de saúde e bem-estar), estes são sobejamente valorizada. Neste sentido, em 2015, os países membros da Organização para a Cooperação e Desenvolvimento Economico (OCDE) despenderam aproximadamente 9.0 por cento do seu rendimento (medido em PIB per capita) em cuidados de saúde—um valor substancialmente acima dos 8.3 por cento gastos em 2008. Sendo que os governos nacionais têm vindo a assumir uma parte cada vez maior destes custos, o controle deste tipo de despesa é um problema que todas as sociedades modernas enfrentam e com o qual todos os países vão forçosamente ter de lidar. Visto estas considerações, esta tese começa por centra-se nas respostas ás perguntas seguintes: quais os factores capazes de fazer aumentar os gastos em saúde? Para além disso, em que sentido os gastos públicos na área da saúde afectam os custos e gastos nestes cuidados? Em caso afirmativo, como? Assim, para informar sobre um assunto que, em ultima analise, consta da esfera política, neste trabalho procura-se identificar as determinantes das despesas de cuidados de saúde em Portugal e num conjunto de países-membros da Organização para a Cooperação e Desenvolvimento Economico (OCDE), tendo em conta o rendimento (PIB) per capita, a quota-parte do financiamento publico de cuidados de saúde, o envelhecimento da população, bem como os custos associados ao recurso a mais (e melhor) tecnologia. Para além de sugerir a irrelevância da variável publica na determinação da despesa e custos de cuidados de saúde, os resultados que se depreendem da primeira parte deste trabalho (Capítulos 2 e 3) sugerem que a actual tendência de aumento destes tem como raiz um conjunto de factores diferenciados. Para Portugal (Capitulo 2), valores mais elevados de rendimento levam a um aumento de despesas e custos de saúde. Mais ainda, a magnitude estimada da elasticidade-rendimento em relação a estas despesas e custos força alguma preocupação sobre a sustentabilidade a longo prazo das tendências actuais destes gastos. No entanto, a elasticidade-rendimento em relação a estas despesas e custos não só depende do pormenor de analise sobre o qual olhamos cada país, mas também o respectivo nível de rendimento e grau de desenvolvimento económico.Por exemplo, no Capitulo 3, que analisa as determinantes do crescimento dos custos e despesas de saúde para um grupo de países membros da Organização para a Cooperação e Desenvolvimento Economico (OCDE), determina-se uma elasticidade-rendimento em relação a estes cuidados inferior a um, sugerido assim uma certa insensibilidade da procura de bens e serviços de saúde face a aumentos de rendimento. Este resultado não só indica que a procura de cuidados de saúde é determinada de acordo com as necessidades—em vez das capacidades de resposta a alterações de rendimento—mas também apela a um maior envolvimento público na prestação e financiamento destes cuidados de saúde. Além disso, os resultados são também indicativos de que o crescimento do número de idosos e o recurso a mais (e melhor) tecnologia são factores determinantes do actual crescimento das despesas de saúde e estas dificilmente poderão ser comprimidas, a não ser através do seu racionamento. Para além de informar sobre os factores capazes de influenciar o aumento de crescimento dos custos e despesas de saúde, esta tese também analisa os factores capazes de influenciar a saúde e bem-estar, particularmente como e em que sentido o investimento publico em programas de protecção social e cuidados de saúde afecta indivíduos e populações. Embora estes últimos pareçam ter pouco impacto sobre as mortes por "todas-as-causas" e as mortes por "causas-especificas" (tal como, por exemplo, suicídios), os resultados desta investigação indicam que outros factores (tais como, por exemplo, aumentos de rendimento e gastos públicos com medidas de protecção social, bem como o recurso a técnicas médicas mais avançadas) são factores potenciadores de saúde e bem-estar. Assim, a evidência que emerge dos Capitulos 4, 5 e 6, nos quais se analisa o efeito da actual crise económica (2008-2012) sobre a saúde das populações da União Europeia, indica que o investimento publico em programas de protecção social é tão relevante, se não mais, que os gastos públicos com a saúde, como forma de moderar os efeitos da crise económica sobre indivíduos e populações, especialmente entre os mais jovens, e os pobres e seus filhos, e devem ser assim incluídos em trabalhos futuros de investigação sobre os factores determinantes da saúde e bem-estar social.
SDM of Countryside process SDA Capital Property of People (Economic Study of Politics Policy Of Alokatif Orient Nationality) Problem of Resident Wild Countryside Gold-Mine and Clear Away Forest. Pursuant to result of paradigm analysis policy of alokatif in this research, economic study of case politics resident of countryside mineworker of wild gold (mining illegal) and forest clear away (illegal loging) in north Sulawesi. Referred as by central government of illegal and fought against by because bothering policy of program contract central government sharing holder masterpiece with foreign investor mining of and gold of HPH (result of processing of forest). After traced to be checked exhaustively come up with its problems root is found that; the root cause becoming problems root is laying in formula formulasi of ratio State capital, opportunity and advantage becoming policy of alokatif in system planning of played the part of APBN tanunan and specified by President, DPR, Bapenas and of kementrian. That in formulasi formulation of policy of alokatif, SDA and of SDM [do] not be viewed as by capital at mechanism rencara of APBN annual. As a result 50% capital properties of State of SDA taken by exit by foreign investor through policy of program sharing holder system alokatif contract masterpiece, 50% capital properties of State of SDA which is acceptance by central government become used expense finished in annual APBN makanisme. So that construction of APBN every year always in a state of empty budget deficit of productive capital, having an effect on negative to condition of political economy always in keadan before crisis and slowly reach its top happened national economic recession and later; then bother political stability, case example of when the fall of old order and of erde new. Capital properties of state Ought to SDA dug by self by our SDM later;then its result have to be defended as capital as according to economic principle, capital in mechanism expense rotation of APBN formulated annual to yield advantage, later;then advantage taken as expense finished wear. So that capital properties of State which have been dug remain to be intact on-hand government, and stepped-up mount rhythm with make-up of prosperity of people flatten by itself, because capital properties of SDA dug by sharing holder people with government, people also get rotation capital, thereby capital properties of SDA State remain to be intact in political economy rotation, expanding to have continuation become rich State of capital in rich governmental artian and rich people flattened. Become strength of tatanan economic of self-supporting and permanent national politics, APBN shall no longger depend on foreign investor or foreign capital.Formula policy of alokatif by delivering foreign investor or foreign capital only enriching foreigner, because capital properties of their State dredge up some of becoming property of them. Sachs & Warner, Todaro, Kosack in Ahmad E.Y., (2009), telling there is no Nations evidence expand world develop;build its economics with foreign investor or foreign capital becoming byword have gone forward and is rich, in general remain to be impecunious, national income depend on that foreign investor and trapp overseas debt, so that become rich Nations patient as previous pendonor aim to help.Result of research qualitative which I execute in the year 1995 hitting impact policy of program contract masterpiece central government of mining of and gold of HPH (result of processing of forest) by take careing foreign in north Sulawesi, becoming elementary evidence result of the analysis above, result of research of menunjukan that policy of alokatif, do not have the character of and ditributif of redistributive to resident of didesa-desa in north Sulawesi. Malahan removed from previous farm of their place of gold-mine and process forest wood. And because resident of countryside there is no other choice of work to fulfill requirement of everyday life, so that they perforced to continue it him till now, volunteer accept risk. This problem have endless since new order hitherto long draw out, so that push me to continue research to find concept solve problem. For the purpose of and target of this, research continued in the year 1999, entitling is: In perpective of Human Resource in Rural In Ell Natural Resources and Environment. Result of research of menunjukan that in the reality; what referred as by central government of mineworker of wild gold and clear away of that forest is resident of countryside having technique readyness and ability of tibean, owning appliance produce tibean, powered of productive performance, efficient and effective in process SDA forest wood and gold. They is SDM countryside termpil ready for use, ought to in viewing as capital properties of State in formulation of policy of alokatif. this Research evidence if compared to result of gold production, Skillful SDM of that countryside by take careing is foreign of great Minahasa Newmont, hence skillful SDM of countryside of menghasikan 150 gold singk of perminggu (working team sample 200 people), while take careing is foreign of Newmont yield 100 gold singk of perminggu, clear result of production of SDM skillful of superordinate. In north Sulawesi there are 25.598 people mineworker of gold, 3.482 people processor of wood result of forest, operating on regional farm of forest for the width of 1.660.000 Ha. Pursuant to fact in this research is found by concept "Tibean'' name of appliance produce wise gold of local resident of sub-province countryside of Bolaang north Sulaewsi mongondow, containing meaning of SDM countryside termpil is capital properties of State, having technical ability, owning production appliance, powered of productive kenerja, efficient and effective in process SDA, ready for use in process wood and gold result of forest, representing State capital which must be powered.In line with and utilize research develop theory later;then find new theory or concept to solve problem resident of wild gold-mine countryside and wood merambah result of forest as victim policy of alokkatif. Conception controlled by important tibean of its scope performance setting of him in time and room proceed as which the existence of is productive. Defended and developed will become model enableness of SDM countryside termpil in policy of alokatif process SDA gold mineral through research program with title : Approach Of Concept of Tibean In Enableness Of Skillful SDM of Countryside Process SDA As Authorized Capital Prosperity of People.Idea and idea Enableness Of Skillful SDM of Countryside Socialization to resident of government and countryside will become enableness model since early research of year 1995, inwrought dilasanakan with stages;steps process research of continuation at region of obyek and of focus research which have been determined as research sampel with resident of regional countrysides of National Park of Dumoga Bone Sub-Province of Bolaang Monondow. Result of socialization, resident understand citizen rights and obligations exploit SDA which pursuant to constitution commendation of UUD 1945, resident agree to struggle with conception diterimah tibean become program of kibijakan gold natural resources allocation and wood result of forest. Is to be dialogued and discussion with resident of government and countryside in District of Dumoga Center organization structure Co-Ordinate Reform of Dumoga Bone (PKRDB) in the year 1999, countryside office of Imandi. Start since then society of Dumoga claim government through lobby and demonstration is so that given by opportunity of gold-mine and process forest cane and wood with sharing holder system with government like [at] program of konrak masterpiece. demand of Diterimah in the year 2001 by government of Sub-Province of Bolaang Mongodow with government of Province Sulawesi North, given by region for the width of 305 Ha countryside of Toraut national park area as region for example conception Tibean at the same time await decision of central government. Pemeritah Center as owner of authority promise will be processed by since year 2001, hitherto there is no realization because actor maker of policy, politician and bureaucracy as determinant of owner of decision, orient idea in taking policy of resource allocation still handcuffed with program contract masterpiece with foreign investor. So that process struggle of concept of tibean remain to be continued by socialization to get political support through political process succeed.Keyword: Legality of SDM Skillful of Countryside
LITHOSTRATIGRAPHICAL SCHEMES OF THE TERTIARY FROM THE POLISH LOWLAND AREASummaryLithostratigraphical division of the Tertiary formations has for the first time been made for West and Middle Poland, along a section from the Lower Oligocene to the Pliocene inclusive. The section comprises several beds, the age·of which has·been determined on the basis of palaeontological evidences, mainly from palynological examinations.The scheme of this division is as follows. Lower Oligocene – Upper Eocene (?) are represented by the Lower Mosina Beds. These are greenish quartz-glauconite sands with gravels ("bean-gravel") phosphorites and sphaerosiderites with pelecypod, gastropod and foraminifer fauna. As the shallow-sea transgressive deposits they may be parallelized with the SchØnewald Beds, and with the Wittenberg Beds from the German Democratic Republic. Middle Oligocene comprises the Czempin Beds, which area, complex of siltstone-like, silty, shaly, silt-sandy and micaceous sediments, dark grey or dark brown-grey in colour, intercalated with green marine glauconite sands. These beds are an equivalent of the formations previously called "Toruń clays". The age of the Middle Oligocene deposits has been documented both palynologically and with the aid of foraminifer fauna. The complex consists of 4–6 biostratigraphical horizons, and contains thin coal seams that are referred to the Czempin group of coal seams (V). These are regressive, marine, brackish or continental formations with the sediments of repeated marine ingressions. They rest unconformably on the Lower Mosinra Beds and correspond to the Calau Beds from the German Democratic Republic. Upper Oligocene is represented by the Upper Mosina Beds, Leszno Beds and Dąbrowa Beds.The Upper Mosina Beds rest unconformable on the Czempin Beds. They consist of quartz-glauconite sands and gravels. Among the gravels are found quartz, lydite, quartz schists, and Mesozoic rocks. Frequently, phosphorite concretions and small pyrite nodules are encountered, too. Fauna remains are represented by otoliths, fish teeth and fragments of mollusc shells. The deposits are of marine origin and correspond to the Lower Cottbus Beds from the Lusatia area of the German Democratic Republic.The Leszno Beds are built of silty and fine-grained quartz sands, light grey in colour, locally with light grey day intercalations. They may be divided into two series: the lower series, which consists of strongly micaceous·cross-bedded silt sands, and the upper series, built of quartz sands, too, but of coarser fraction, less micaceous, horizontally bedded, with bands of coal dust. At the boundary of these series a layer of grey-brown sand occurs, revealing coal dust and plant fragments (stalks, branches, roots). The Leszno Beds rest here discordantly on the·Upper Mosina Beds. In their development, they resemble German "light micaceous sands" (helle Glimmersande), and correspond to the Upper Cottbus Beds.The Dąbrowa Beds of uniform development make the uppermost part of the Upper Oligocene. They consist mainly of a complex of coal-siltstone-sand deposits, from 6 to 11 m in thickness. The Upper Oligocene age of the coal seams has been determined on the basis of palynological examinations. The Dąbrowa Beds have been laid down under the sea-shore-and-continental, and continental conditions within the wide marshland areas (coal seams) left after the recession of the Upper Oligocene sea. The coal seams belong to the Dąbrowa group of coal seams (IV) which, in the German Democratic Republic, correspond to the IV Lusatia seam from Bitterfeld.Lower Miocene consists of the Rawicz Beds, which make a complex, mainly of fat clay and siltstone, light grey and whitish in colour, locally coal-bearing, intercalated with quartz sands. In the sandy formations are found white, strongly weathered feldspars. At places one or two dark-red variegated clay horizons occur, disclosing druses of coarse-clastic gypsum and veins of silver-white aragonite. Palynological examinations point to the Lower Miocene age of the coals found in the beds considered. The clay formations contain thin coal seams, which belong to the Rawicz group of coal seams (III). In the German Democratic Republic, they correspond to the Brieske Beds, or to the Lower Brieske Beds, and in the south-eastern part of the Lusatia – to the Spremberg Beds. Within these beds there occurs the III series of the Lusatia seams, too, and the light colours of the clay deposits of these beds is responsible for an additional name of these beds, i.e. "helle Serie". Midd1e Miocene is represented by the Ścinawka Beds and Pawłowice Beds.The Ścinawka Beds make a complex of coal-clay-sand deposits developed in several coal seams, intercalated with clays, silts, shales or sands. They comprise the Ścinawka group of coal seams (II) of the Tertiary in Poland, and practically may be of great economical importance, mainly due to their thick coal seams found in them, and to their widespread occurrence, particularly in the western areas of Poland. According to the palynological examinations, the age of the coal seams has been determined as Middle Miocene. At the lower part of these beds are found glauconite and planctonic forms of Hystrichosphaeridae, similarly as the fragments of the Miocene marine pelecypods in the quartzite sandstones from the vicinity of Bolesławiec. Thus, the Ścinawka Beds are continental sediments, disclosing traces of a marine ingression that approached from west, and invaded the south-eastern part of West Poland. In the German Democratic Republic these beds correspond to the Lower Brieske Beds with the Lusatia coal seam. The Pawłowice Beds are represented by arenaceous, siltstone and micaceous formations, strongly charred in the upper part, with plant remains. Locally, a thin coal seam occurs, called Lubin seam II-A. Both glauconite and sponge spicules seem to point here to marine influences. The Pawłowice Beds correspond in the German Democratic Republic to the Lower Rauno A Beds, and the Lubin coal seam – to the upper accompanying seam (oberbegleiter FlØz). Upper Miocene consists of the Adamów Beds, Middle-Polish Beds and Lower Poznań Beds.The Adamów Beds rest discordantly on the Pawłowice Beds, locally also on the older beds (Ścinawka Beds and even Rawicz Beds), in the places of a strong erosion of the deposits older than those at Adamów. The unconformity is stressed here by the presence of coarse-grained quartz or lydite sands and gravels, and even of quartz pebbles, up to 15 cm in diameter. At the lower part, they are developed as silty, micaceous or fine-grained sands, in which thin intercalations with few glauconite grains and sponge spicules occur. At the upper part in turn they appear as sands with coal dust. In the Lusatia area (GDR) they correspond to the Rauno B Beds.The Middle-Polish Beds are built of clays and silts, grey or greenish-grey in colour, disclosing numerous plant fragments. In the central areas of Poland, these clays are interbedded with a coal seam, locally also even with 2 or 3 contiguous seams. Now, this seam is called the Middle-Polish seam. Locally, in the south-western area of Poland, the Middle-Polish Beds contain large coal lenses that correspond to the Oczkowice seam I, which, in relation to the Middle-Polish seam, would be characterized by a diachronic arrangement. At the top of the Middle-Polish seam the Upper Miocene deciduous flora appears.The Lower Poznań Beds make a thick complex of grey, green-grey or olive-green clays, and disclose abundant plant remains observed mainly in the form of plant detritus, or fragments of stalks, branches and roots. The plant remains markedly separate them from the green clays with glauconite. The Lower Poznań clays may be correlated with the Rauno Beds from the German Democratic Republic.Both Upper Miocene and Pliocen eara represented by the Upper Poznań Beds. They are built of a thick series of clayey formations, the lower part of which consists of green, fat an silty-arenaceous days with sand intercalations, and the upper part – mainly of variegated clays, previously called mottled clays (Flammentone). In the lower part of the Upper Poznań Beds, there occur glauconite and Tortonian microfauna. Most probably, these elements are related to a marine ingression from South Poland, caused by uplifting movements of the Carpathian foredeep. In the Lower Silesia and Sudetes areas, the Late Pliocene is represented by a series of white, kaolin clays with quartz gravels, quartz-feldspar sands and gravels with kaolin clays, and quartz-feldspar sand and gravels.Both western and central areas of the country lack these formations, and the Quaternary deposits rest here immediately on the variegated or green Upper Poznań Beds.
This paper investigates the effect of access to finance on job growth in 50,000 firms across 70 developing countries. Using the introduction of credit bureaus as an exogenous shock to the supply of credit, the paper finds that increased access to finance results in higher employment growth, especially among micro, small, and medium enterprises. The results are robust to using firm fixed effects, industry measures of external finance dependence, and propensity score matching in a complementary panel data set of more than four million firms in 29 developing countries. The findings have implications for policy interventions targeted to produce job growth in micro, small, and medium enterprises.
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I've been reading a lot of macro lately. In part, I'm just catching up from a few years of book writing. In part, I want to understand inflation dynamics, the quest set forth in "expectations and the neutrality of interest rates," and an obvious next step in the fiscal theory program. Perhaps blog readers might find interesting some summaries of recent papers, when there is a great idea that can be summarized without a huge amount of math. So, I start a series on cool papers I'm reading. Today: "Tail risk in production networks" by Ian Dew-Becker, a beautiful paper. A "production network" approach recognizes that each firm buys from others, and models this interconnection. It's a hot topic for lots of reasons, below. I'm interested because prices cascading through production networks might induce a better model of inflation dynamics. (This post uses Mathjax equations. If you're seeing garbage like [\alpha = \beta] then come back to the source here.) To Ian's paper: Each firm uses other firms' outputs as inputs. Now, hit the economy with a vector of productivity shocks. Some firms get more productive, some get less productive. The more productive ones will expand and lower prices, but that changes everyone's input prices too. Where does it all settle down? This is the fun question of network economics. Ian's central idea: The problem simplifies a lot for large shocks. Usually when problems are complicated we look at first or second order approximations, i.e. for small shocks, obtaining linear or quadratic ("simple") approximations. On the x axis, take a vector of productivity shocks for each firm, and scale it up or down. The x axis represents this overall scale. The y axis is GDP. The right hand graph is Ian's point: for large shocks, log GDP becomes linear in log productivity -- really simple. Why? Because for large enough shocks, all the networky stuff disappears. Each firm's output moves up or down depending only on one critical input. To see this, we have to dig deeper to complements vs. substitutes. Suppose the price of an input goes up 10%. The firm tries to use less of this input. If the best it can do is to cut use 5%, then the firm ends up paying 5% more overall for this input, the "expenditure share" of this input rises. That is the case of "complements." But if the firm can cut use of the input 15%, then it pays 5% less overall for the input, even though the price went up. That is the case of "substitutes." This is the key concept for the whole question: when an input's price goes up, does its share of overall expenditure go up (complements) or down (substitutes)? Suppose inputs are complements. Again, this vector of technology shocks hits the economy. As the size of the shock gets bigger, the expenditure of each firm, and thus the price it charges for its output, becomes more and more dominated by the one input whose price grows the most. In that sense, all the networkiness simplifies enormously. Each firm is only "connected" to one other firm. Turn the shock around. Each firm that was getting a productivity boost now gets a productivity reduction. Each price that was going up now goes down. Again, in the large shock limit, our firm's price becomes dominated by the price of its most expensive input. But it's a different input. So, naturally, the economy's response to this technology shock is linear, but with a different slope in one direction vs. the other. Suppose instead that inputs are substitutes. Now, as prices change, the firm expands more and more its use of the cheapest input, and its costs and price become dominated by that input instead. Again, the network collapsed to one link. Ian: "negative productivity shocks propagate downstream through parts of the production process that are complementary (\(\sigma_i < 1\)), while positive productivity shocks propagate through parts that are substitutable (\(\sigma_i > 1\)). ...every sector's behavior ends up driven by a single one of its inputs....there is a tail network, which depends on \(\theta\) and in which each sector has just a single upstream link."Equations: Each firm's production function is (somewhat simplifying Ian's (1)) \[Y_i = Z_i L_i^{1-\alpha} \left( \sum_j A_{ij}^{1/\sigma} X_{ij}^{(\sigma-1)/\sigma} \right)^{\alpha \sigma/(\sigma-1)}.\]Here \(Y_i\) is output, \(Z_i\) is productivity, \(L_i\) is labor input, \(X_{ij}\) is how much good j firm i uses as an input, and \(A_{ij}\) captures how important each input is in production. \(\sigma>1\) are substitutes, \(\sigma<1\) are complements. Firms are competitive, so price equals marginal cost, and each firm's price is \[ p_i = -z_i + \frac{\alpha}{1-\sigma}\log\left(\sum_j A_{ij}e^{(1-\sigma)p_j}\right).\; \; \; (1)\]Small letters are logs of big letters. Each price depends on the prices of all the inputs, plus the firm's own productivity. Log GDP, plotted in the above figure is \[gdp = -\beta'p\] where \(p\) is the vector of prices and \(\beta\) is a vector of how important each good is to the consumer. In the case \(\sigma=1\) (1) reduces to a linear formula. We can easily solve for prices and then gdp as a function of the technology shocks: \[p_i = - z_i + \sum_j A_{ij} p_j\] and hence \[p=-(I-\alpha A)^{-1}z,\]where the letters represent vectors and matrices across \(i\) and \(j\). This expression shows some of the point of networks, that the pattern of prices and output reflects the whole network of production, not just individual firm productivity. But with \(\sigma \neq 1\) (1) is nonlinear without a known closed form solution. Hence approximations. You can see Ian's central point directly from (1). Take the \(\sigma<1\) case, complements. Parameterize the size of the technology shocks by a fixed vector \(\theta = [\theta_1, \ \theta_2, \ ...\theta_i,...]\) times a scalar \(t>0\), so that \(z_i=\theta_i \times t\). Then let \(t\) grow keeping the pattern of shocks \(\theta\) the same. Now, as the \(\{p_i\}\) get larger in absolute value, the term with the greatest \(p_i\) has the greatest value of \( e^{(1-\sigma)p_j} \). So, for large technology shocks \(z\), only that largest term matters, the log and e cancel, and \[p_i \approx -z_i + \alpha \max_{j} p_j.\] This is linear, so we can also write prices as a pattern \(\phi\) times the scale \(t\), in the large-t limit \(p_i = \phi_i t\), and \[\phi_i = -\theta_i + \alpha \max_{j} \phi_j.\;\;\; (2)\] With substitutes, \(\sigma<1\), the firm's costs, and so its price, will be driven by the smallest (most negative) upstream price, in the same way. \[\phi_i \approx -\theta_i + \alpha \min_{j} \phi_j.\] To express gdp scaling with \(t\), write \(gdp=\lambda t\), or when you want to emphasize the dependence on the vector of technology shocks, \(\lambda(\theta)\). Then we find gdp by \(\lambda =-\beta'\phi\). In this big price limit, the \(A_{ij}\) contribute a constant term, which also washes out. Thus the actual "network" coefficients stop mattering at all so long as they are not zero -- the max and min are taken over all non-zero inputs. Ian: ...the limits for prices, do not depend on the exact values of any \(\sigma_i\) or \(A_{i,j}.\) All that matters is whether the elasticities are above or below 1 and whether the production weights are greater than zero. In the example in Figure 2, changing the exact values of the production parameters (away from \(\sigma_i = 1\) or \(A_{i,j} = 0\)) changes...the levels of the asymptotes, and it can change the curvature of GDP with respect to productivity, but the slopes of the asymptotes are unaffected....when thinking about the supply-chain risks associated with large shocks, what is important is not how large a given supplier is on average, but rather how many sectors it supplies...For a full solution, look at the (more interesting) case of complements, and suppose every firm uses a little bit of every other firm's output, so all the \(A_{ij}>0\). The largest input price in (2) is the same for each firm \(i\), and you can quickly see then that the biggest price will be the smallest technology shock. Now we can solve the model for prices and GDP as a function of technology shocks: \[\phi_i \approx -\theta_i - \frac{\alpha}{1-\alpha} \theta_{\min},\] \[\lambda \approx \beta'\theta + \frac{\alpha}{1-\alpha}\theta_{\min}.\] We have solved the large-shock approximation for prices and GDP as a function of technology shocks. (This is Ian's example 1.) The graph is concave when inputs are complements, and convex when they are substitutes. Let's do complements. We do the graph to the left of the kink by changing the sign of \(\theta\). If the identity of \(\theta_{\min}\) did not change, \(\lambda(-\theta)=-\lambda(\theta)\) and the graph would be linear; it would go down on the left of the kink by the same amount it goes up on the right of the kink. But now a different \(j\) has the largest price and the worst technology shock. Since this must be a worse technology shock than the one driving the previous case, GDP is lower and the graph is concave. \[-\lambda(-\theta) = \beta'\theta + \frac{\alpha}{1-\alpha}\theta_{\max} \ge\beta'\theta + \frac{\alpha}{1-\alpha}\theta_{\min} = \lambda(\theta).\] Therefore \(\lambda(-\theta)\le-\lambda(\theta),\) the left side falls by more than the right side rises. Does all of this matter? Well, surely more for questions when there might be a big shock, such as the big shocks we saw in a pandemic, or big shocks we might see in a war. One of the big questions that network theory asks is, how much does GDP change if there is a technology shock in a particular industry? The \(\sigma=1\) case in which expenditure shares are constant gives a standard and fairly reassuring result: the effect on GDP of a shock in industry i is given by the ratio of i's output to total GDP. ("Hulten's theorem.") Industries that are small relative to GDP don't affect GDP that much if they get into trouble. You can intuit that constant expenditure shares are important for this result. If an industry has a negative technology shock, raises its prices, and others can't reduce use of its inputs, then its share of expenditure will rise, and it will all of a sudden be important to GDP. Continuing our example, if one firm has a negative technology shock, then it is the minimum technology, and [(d gdp/dz_i = \beta_i + \frac{\alpha}{1-\alpha}.\] For small firms (industries) the latter term is likely to be the most important. All the A and \(\sigma\) have disappeared, and basically the whole economy is driven by this one unlucky industry and labor. Ian: ...what determines tail risk is not whether there is granularity on average, but whether there can ever be granularity – whether a single sector can become pivotal if shocks are large enough.For example, take electricity and restaurants. In normal times, those sectors are of similar size, which in a linear approximation would imply that they have similar effects on GDP. But one lesson of Covid was that shutting down restaurants is not catastrophic for GDP, [Consumer spending on food services and accommodations fell by 40 percent, or $403 billion between 2019Q4 and 2020Q2. Spending at movie theaters fell by 99 percent.] whereas one might expect that a significant reduction in available electricity would have strongly negative effects – and that those effects would be convex in the size of the decline in available power. Electricity is systemically important not because it is important in good times, but because it would be important in bad times. Ben Moll turned out to be right and Germany was able to substitute away from Russian Gas a lot more than people had thought, but even that proves the rule: if it is hard to substitute away from even a small input, then large shocks to that input imply larger expenditure shares and larger impacts on the economy than its small output in normal times would suggest.There is an enormous amount more in the paper and voluminous appendices, but this is enough for a blog review. ****Now, a few limitations, or really thoughts on where we go next. (No more in this paper, please, Ian!) Ian does a nice illustrative computation of the sensitivity to large shocks:Ian assumes \(\sigma>1\), so the main ingredients are how many downstream firms use your products and a bit their labor shares. No surprise, trucks, and energy have big tail impacts. But so do lawyers and insurance. Can we really not do without lawyers? Here I hope the next step looks hard at substitutes vs. complements.That raises a bunch of issues. Substitutes vs. complements surely depends on time horizon and size of shocks. It might be easy to use a little less water or electricity initially, but then really hard to reduce more than, say, 80%. It's usually easier to substitute in the long run than the short run. The analysis in this literature is "static," meaning it describes the economy when everything has settled down. The responses -- you charge more, I use less, I charge more, you use less of my output, etc. -- all happen instantly, or equivalently the model studies a long run where this has all settled down. But then we talk about responses to shocks, as in the pandemic. Surely there is a dynamic response here, not just including capital accumulation (which Ian studies). Indeed, my hope was to see prices spreading out through a production network over time, but this structure would have all price adjustments instantly. Mixing production networks with sticky prices is an obvious idea, which some of the papers below are working on. In the theory and data handling, you see a big discontinuity. If a firm uses any inputs at all from another firm, if \(A_{ij}>0\), that input can take over and drive everything. If it uses no inputs at all, then there is no network link and the upstream firm can't have any effect. There is a big discontinuity at \(A_{ij}=0.\) We would prefer a theory that does not jump from zero to everything when the firm buys one stick of chewing gum. Ian had to drop small but nonzero elements of the input-output matrix to produces sensible results. Perhaps we should regard very small inputs as always substitutes? How important is the network stuff anyway? We tend to use industry categorizations, because we have an industry input-output table. But how much of the US industry input-output is simply vertical: Loggers sell trees to mills who sell wood to lumberyards who sell lumber to Home Depot who sells it to contractors who put up your house? Energy and tools feed each stage, but don't use a whole lot of wood to make those. I haven't looked at an input-output matrix recently, but just how "vertical" is it? ****The literature on networks in macro is vast. One approach is to pick a recent paper like Ian's and work back through the references. I started to summarize, but gave up in the deluge. Have fun. One way to think of a branch of economics is not just "what tools does it use?" but "what questions is it asking? Long and Plosser "Real Business Cycles," a classic, went after idea that the central defining feature of business cycles (since Burns and Mitchell) is comovement. States and industries all go up and down together to a remarkable degree. That pointed to "aggregate demand" as a key driving force. One would think that "technology shocks" whatever they are would be local or industry specific. Long and Plosser showed that an input output structure led idiosyncratic shocks to produce business cycle common movement in output. Brilliant. Macro went in another way, emphasizing time series -- the idea that recessions are defined, say, by two quarters of aggregate GDP decline, or by the greater decline of investment and durable goods than consumption -- and in the aggregate models of Kydland and Prescott, and the stochastic growth model as pioneered by King, Plosser and Rebelo, driven by a single economy-wide technology shock. Part of this shift is simply technical: Long and Plosser used analytical tools, and were thereby stuck in a model without capital, plus they did not inaugurate matching to data. Kydland and Prescott brought numerical model solution and calibration to macro, which is what macro has done ever since. Maybe it's time to add capital, solve numerically, and calibrate Long and Plosser (with up to date frictions and consumer heterogeneity too, maybe). Xavier Gabaix (2011) had a different Big Question in mind: Why are business cycles so large? Individual firms and industries have large shocks, but \(\sigma/\sqrt{N}\) ought to dampen those at the aggregate level. Again, this was a classic argument for aggregate "demand" as opposed to "supply." Gabaix notices that the US has a fat-tailed firm distribution with a few large firms, and those firms have large shocks. He amplifies his argument via the Hulten mechanism, a bit of networkyiness, since the impact of a firm on the economy is sales / GDP, not value added / GDP. The enormous literature since then has gone after a variety of questions. Dew-Becker's paper is about the effect of big shocks, and obviously not that useful for small shocks. Remember which question you're after.My quest for a new Phillips curve in production networks is better represented by Elisa Rubbo's "Networks, Phillips curves and Monetary Policy," and Jennifer La'o and Alireza Tahbaz-Salehi's "Optimal Monetary Policy in Production Networks," If I can boil those down for the blog, you'll hear about it eventually. The "what's the question" question is doubly important for this branch of macro that explicitly models heterogeneous agents and heterogenous firms. Why are we doing this? One can always represent the aggregates with a social welfare function and an aggregate production function. You might be interested in how aggregates affect individuals, but that doesn't change your model of aggregates. Or, you might be interested in seeing what the aggregate production or utility function looks like -- is it consistent with what we know about individual firms and people? Does the size of the aggregate production function shock make sense? But still, you end up with just a better (hopefully) aggregate production and utility function. Or, you might want models that break the aggregation theorems in a significant way; models for which distributions matter for aggregate dynamics, theoretically and (harder) empirically. But don't forget you need a reason to build disaggregated models. Expression (1) is not easy to get to. I started reading Ian's paper in my usual way: to learn a literature start with the latest paper and work backward. Alas, this literature has evolved to the point that authors plop results down that "everybody knows" and will take you a day or so of head-scratching to reproduce. I complained to Ian, and he said he had the same problem when he was getting in to the literature! Yes, journals now demand such overstuffed papers that it's hard to do, but it would be awfully nice for everyone to start including ground up algebra for major results in one of the endless internet appendices. I eventually found Jonathan Dingel's notes on Dixit Stiglitz tricks, which were helpful. Update:Chase Abram's University of Chicago Math Camp notes here are also a fantastic resource. See Appendix B starting p. 94 for production network math. The rest of the notes are also really good. The first part goes a little deeper into more abstract material than is really necessary for the second part and applied work, but it is a wonderful and concise review of that material as well.
