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Buck Armstrong
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The first thing that popped into my head when reading Eichengreen and Mody's "Interest Rates in the North and Capital Flows to the South: Is there a Missing Link?" was is going to happen when the United States raises its interest rate. Most experts believe a rate hike is due this December and its been almost 6 years since the last time interest rates changed. Yet, during this time the international macroenviroment has been hit hard. So what is going to come out of the impending U.S. rate hike? Eichgreeen and Mody stated that "Other analyses, however, stressed the role of low interest rates in the industrial countries in encouraging the resurgence of capital flows to emerging markets". Additionally, higher interest rates in major money countries such as the United States has a negative impact on the borrowers' issue decision. This impending hike in interest rates might discourage investors looking to foreign countries for higher yields which might ultimately constrain foreign investment into emerging countries which greatly hinders economic growth. Safe to say it will be interest to track what happen to the U.S. economy and the international economy as a whole when the interest rates rise in a month.
Toggle Commented Nov 18, 2015 on ECON 280 for Thursday at Jolly Green General
After reading the article about global warming the first thing that came to my mind was how exactly can this thing be slowed. Its apparent that there are still many people in our country and others that are still skeptical about the possibility of the Earth warming, but after reading the report of the World Bank, it is hard to ignore the evidence that our planet is indeed warming. However, it say that we can start ti mitigate the warming so we don't have to experience a 4 degree hotter world. However, my thought was how exactly do we as a world come together and fight such a thing. Clearly, after reading the report that the countries that will bear most of the consequences are usually considered poorer countries such as Mozambique, Bangladesh, Mexico, and other countries found in the tropics. Clearly, these countries are going to have a harder time getting the world to fix its problems that are hurting our planet. And on top of that its countries like China and the U.S. that are leading the charge in amount of greengages produced. So it should be our responsibility to lead the charge. But again, there is an apparent problem with this because the effects from a warming climate will not occur until the end of this Century, so how do we go about fixing a problem in which we endure the costs now and the benefits do not come for a long time. One thing that I thought could be a possibility in terms of jump-starting the fight would be focusing on the monetary impacts that would arise from this, because money is often the one thing that gets things going. In the report, it talked about the acidification of the ocean and how that would damage the reefs and therefore impact coastal towns since reefs are protective barriers. Well tourism is one of the world's largest industries and a world without coral reefs, or coastal cities would dramatically affect tourism. This is probably one way that can monetize the impact of global warming so we can help present the idea to fix it better since we would then have tangible evidence of the impact apart from the damages to environment.
Toggle Commented Nov 11, 2015 on ECON 280 for next Thursday at Jolly Green General
Upon reading Sachs and Malaney's article on the economic and social burden of malaria, the first thing that came is just the extreme magnitude of destruction one disease can have on a country. Maybe it came as a such aa surprise because malaria is nonexistent in the U.S. so we rarely hear about it hear. Obviously, the sheer number of deaths from malaria is horrific and needs to be addressed especially since majority of the deaths are from children, but the thing that particular stuck out to me was the economic consequences. Similar to what Jack said in his blog post, it shocked me that one disease could be such an extreme burden on economic growth, but after reading the article it makes complete sense. Especially considering the example of the mining company that put the largest foreign in Mozambique and how malaria continues to deter other such companies from providing investment. However, the question that still remains after reading the article is what the most logical step is to start properly fighting against malaria. In the end of the article it stated that current efforts to fight malaria were way below what organizations such as WHO suggested is necessary to help eliminate the disease. It almost reminds as the big push theory, in that there just needs to be one giant effort to fight malaria in sub-Saharan Africa, and that the economic growth will follow suit because of the improvements in human capital, productivity, savings rate, fertility rate and so much more. The justification for spending almost $4bn to fight malaria is there because of the unlimited number of economic benefits, but not to mention the number of health benefits. Where this money comes from will most likely have to be a combination of both public and private sectors, but there should be overwhelming support to help finance the fight against malaria.
Toggle Commented Nov 4, 2015 on econ 280 for Thursday at Jolly Green General
Upon reading Rodrick's article it is clear that there is no single economic policy that can be applied to each country to encourage development. Upon analyzing the various countries that experienced growth since 1960, Rodrick lays out that there cannot be one way that a country can experience growth. Specifically, Rodrick uses the differences between the policies implemented in Latin America and East Asia to support his point. However, this idea continues to support our conversations in class about economic models and how they have changed over time. There cannot be one model that fits each country, since each country has varying institutions, economies, people and governments. The Washington Consenus was developed to help countries experience growth by creating a check list of what to do, yet when it was applied things did not necessarily pan out the way the economists intended. Additionally, as we discussed in class about development in Europe post WWII, just because that worked for those countries doesn't mean it would work again. As countries change overtime so should the development policies in order for growth to avoid fluttering out. However, Rodrick did point out that best way to experience growth is implementing a "two-pronged growth strategy" that effectively kick-starts short term growth while simultaneously setting up long-term growth. I thought this was particularly interesting because the challenge with jumpstarting short term growth all depends on what the country's needs are. It could be just getting investors excited about what the country has to offer or it takes a government to shifts its policies. Or even its a calculated combination of both. Regardless of what it takes, it is clear after reading "Growth Strategies" is that there is no one clear answer to how to make countries experience growth.
This article does a great job of giving insight on how families that qualify as being below the poverty line spend their money. It is hard to conceptualize what living on $1-$2 a day, but Banerjee and Duflo show how families across the world do it. One part that stuck out in particular was how the poverty stricken families no matter the geographic location spent a big portion of their earnings on festivities. It comes to no surprise to me that tobacco and alcohol are high expenses, but the festivities portion of their money reminded me of what we discussed in class on tuesday about the three parts of development: levels of living, raising wellness and freedom. Although these families are below the poverty line, they are still willing to spend a portion of their money on things such as weddings. Although, they can't afford luxury items, they all value meaningful events in life. These events bring wellness to their lives that nothing else can. They don't spend money on movies or video shows, they choose to spend their money of events that bring the most happiness to their life. Although they are below the poverty line and struggle to eat food on a regular basis, they all choose to take part in these memorable events. Some people believe that raising the levels of living will lead to bigger freedom and wellness, which might be the case, but the people that took part in the survey show that raising freedom and wellness is more important that just increasing the levels of living.
While reading the Krugman article, there was one major theme that kept popping up in my mind. This thought was my personal opinion about Econ and how it's models are not always taking all factors into account. I think that belief comes from being a business administration major and also having a limited experience in Econ outside of Econ 101. Nonetheless, the moment in Krugman's piece where I started to really think about my opinion is when he referenced his old friend who loves Africa and collected historic maps. He used this anecdote to show how thoughts and theories evolve over time which is a main theme in his piece. This little story reminded me of the article we read for Tuesday in which the World Bank discussed how the current economic models neglect to take in new theories about how humans think into account. Up until recently economic models always stated that humans are rationale people with their self-Interest at heart. However the World Bank report stated that there are new theories about how humans think such as automatically thinking or thinking socially. This world bank report fits in with Krugman's article because he talks about how Hirschman's theories evolved. While, the World Bank report also noted that the new theories about how humans think hasn't been accounted in the models yet, but they are cognizant about how the future models will be. While prior to this class I had a fixed thought about Econ and how it's too archaic and doesn't take all factors into account, now I know it has always been changing and that the future economic models will be even more comprehensive in the future. I was so wrong about Econ and I'm looking forward to learn more.
Being a business administration major I haven't taken a ton of economics classes prior to this one, so I feel like most of the information in the article was extremely new. That being said, I found that what the World Bank was doing to expand the economics models to take into account how humans think as very interesting. Although there were three main points to how economics models have been wrong in the past, the one that stood out the most to me was the claim that humans think automatically. Obviously in Econ 101, you are taught to believe that humans are rationale decision makers with their best interest in heart. However, the research provided to show that humans often think automatically which in turn is more detrimental to their "utility". In the example, the article discuss the lockbox experiment. However, I was curious to find out what other ways do humans think automatically which is actually hurting us. For example, is the credit card a prime example on why our country is so indebted. Do we subconsciously put off financial thinking since, humans can just use a credit card to purchase items. Clearly, the lockbox example showed that physically saving was much better than just learning about the benefits of saving. Yet, is it the "buy now, pay later" in which humans have failed financially. I don't think humans will care to admit that the choose things automatically, but the world around us has become so automated maybe we have no other option but to keep up.
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Sep 16, 2015