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Tanpreet Hunjan
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The Turn Down the Heat report for the World Bank displayed the disturbing effects and aftermaths of a world 4°C Warmer. The author at one point states the distribution of impacts is likely to be inherently unequal and tilted against many of the world’s poorest regions,”. This statement emphasized to me how currently it feels as if little is done internationally to act on reducing our international carbon footprint and international effort in holding large corporations account for the negative environmental externalities they leave unaccounted for. When reading that regions with higher economic development will have higher “economic, institutional, scientific, and technical capacity to cope and adapt.” It underscored to me the deepening divide between developed and developing countries and how developed countries while working on more advanced changes to their environmental law and governance will pose an obstacle for developing countries. However, the detriment of climate change means that developed countries due to globalization and interconnectedness will in time face similar struggles to those of lee developed regions. The dichotomy of alleviating poverty or increasing carbon emissions is one of great difficulty evidently seen in countries of rapid industrial growth such as China and India. Interestingly to me the legitimacy of climate change in the U.S is still debated. Making the need for policy reform and response to this report difficult. Coordination failure, therefore, plays a huge problem in being able to implement environmental policy reform. With some countries leadership denying climate changes negative externalities it is important going forward that awareness through report and research continues and that international reform and understanding occurs to make a real difference.
Goff and Singh’s paper shows that the question: Is trade more harmful then beneficial? Is not so clear cut. The role of technology and of structural unemployment is essential to my understanding of this article. Labor market fluidity in reality is difficult especially in increasing the incomes of unskilled unemployed in England. In England the manufacturing sector has taken a huge hit due to the economy becoming more service sector orientated. As a result of this England is now a great hub for service industry jobs within technology and financial services, however, the unemployed lack the necessary skills to enter these industries, due to many times the high barriers to entry. The recent Brexit heavily revolves around trade and with possible tariffs imposed on the UK due to the impeding exit. The Brexit decision economically is disastrous for UK businesses who export heavily to EU countries and import goods services from EU nations- if trade negotiations are not reached. Discussed in class were the positive and negative implications of trade and the paper reiterates this long standing dilemma. The regulation note: “Excessive regulations restrict growth because resources are prevented from moving into the most productive sectors and to the most efficient firms within sectors.” by Bolaky and Freund was interesting as it tackled a question that cropped up a lot among my internship in Sales and Trading this past summer. The general consensus among Investment banking at the firm I interned at, were that regulations, such as the Dodd Frank and capital ratio regulations, hindered spending to companies, entities or governments who needed it most. Balancing risk and the benefits of lending is difficult and the right solution isn’t always out there and problems systemic. Development Economics has taught me a lot about theories of development and models about how development and growth can occur in many LEDC’s but the reality is always more complex and nuanced then controlling for x amount of variables which makes development a tricky task and vastly interesting to study.
Toggle Commented Dec 1, 2016 on Reading for Thursday at Jolly Green General
In ‘Interest Rates in the North and Capital Flows to the South: Is There a Missing Link?’ Eichengreen and Mody come to the conclusion that capital flow to developing countries is not the single product of developed countries interest rates or a determinant of developed countries economic policy. Working in sales and trading on the Emerging rate and FX desk his summer US monetary policy had a lasting effect on developing country currencies. Several countries in which their currencies were being hedged and exchanged had their currency pegged to the dollar and would be exchanged solely through the U.S dollar like North Korea. This reliance on US interest rates therefore lead me to believe that US rates would be a large determinant of capital flows and accessibility in developing counties. It was interesting therefore to find that other factors affect capital accessibility and availability. With this is mind many developed and advanced economies welcome a rise in the U.S interest rates but this rings trouble for many emerging markets not due to previous thoughts I had such as currency issues or altering balance of payments. On my internship I learnt that in most developing economies there’s a case of low external debt levels, more flexible exchange rates and FX reserves which handle such economic shocks. A rise in U.S rates gives some certainty that there are future rate hikes to come and that developing economies may benefit from this due to reduced short term volatility in currencies and their capital flows. However, a stronger dollar pays stress to those countries with great levels of corporate debt in dollars and escalate difficulty in countries such as Turkey and Russia who suffer from economic mishandling and political instability. Ultimately, everyone is watching day to day what the U.S does in regards to monetary and fiscal policy as the effects are felt worldwide, especially within developing economies and this paper challenged some of my previous thoughts on capital flows to developing counties.
Toggle Commented Nov 16, 2016 on Readings for this week at Jolly Green General
When reading Schulz’ paper Sen’s paper on food and freedom was at the forefront of my mind. Sen states that “a public distribution system geared to the needs of the vulnerable sections of the community can bring the essentials of livelihood within easy reach of people whose lives may remain otherwise relatively untouched by the progress of real national income”. Growth is important to economic development but providing positive freedoms such as welfare is paramount in creating effective development. As we can see from various countries like India and China growth can be rapid and incredible for many citizens but the benefits of this growth is rarely available to every citizen. Social stratification, among other factors, ingrains inequality into communities. Positive freedoms that governments can offer such as investment into healthcare are able to abolish life-threatening diseases like Malaria which is crucial to a developing countries ability to grow. Schulz’ belief in treating quality as a scarce resource, “applying economic value to quality” is interesting. “When returns to quality exceed the cost, the population will have been improved.” In Seema and Lleras-Muney’s, “Life Expectancy and Human Capital Investments: Evidence From Maternal Mortality Declines”, human capital is responsive to longevity with the elasticity of literacy with respect to life expectancy 0.6 – 1 extra year of life = 0.12 to 0.15 more years of schooling. The returns to education for women led to labor market returns of 7% (Psacharapoulos 1994). An increase in female education can spur economic growth through improving the quality in productive human capital. This reading from my South Asian Economics class shows the weight that the returns to quality bring to society. The virtuous cycle of one factor such as a decline in MMR can have such diverse impacts on literacy and labour markets that they cannot be ignored by government and policy makers.
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
Duflo and Sen both mention the nutritional discrepancies among gender in developing countries, with girls being given less to eat then boys. Duflo tries to extend this argument through talking about a study where researcher’s attempted to keep diaries on how much each member in the household consumes over a given period. She then explains this research is often misreported by households who would want to hide these findings. This is a topic that was discussed at large in my South Asian Economics class. When trying to explain nutritional discrimination I discussed an interesting finding among my culture (which derives from rural Panjab in India) on eating patterns. When eating a meal, the entire family does not eat together but instead the men/ boys eat together first out of respect and the women/ girls eat after the men have finished eating. This finding from my own experiences found that males in the family were getting more meat and a balanced diet as well as a larger quantity of food compared to the females who would eat the less nutritional cuts of meat and food. For a family with substantially less money this can lead to great nutritional and health detriments for the girls. When sharing this similar experience with my professor the majority of the class found this eating pattern confusing and out of the ordinary and it reminded me of the role of religion, culture and tradition in shaping gender inequity among many developing countries-especially within South Asian. Religious and cultural traditions are deeply embedded into my community within India and the importance of education has only recently been emphasized in my hometown. Duflo mentioned the association between the education of the mother having a positive effect on her children. She also made the link that as women become more educated employment levels rise and fertility rates fall. The empowerment and individual choice that having a job gives women makes it understandable as to why women don’t want the drain of this freedom through having many children.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
Rodrik's countless case studies throughout his paper illustrates that no one model should dominate the way in which we thing about growth strategies. He highlights the importance of context and how the Washington Consensus is not a method in which may be the best growth strategy for many countries. With juxtaposing cultures and existing infrastructures, it is hard to replicate successful policies that have worked in the past. Latin America is one of his examples he used as a region who held the most similar reality to the Washington Consensus prescriptions but with this process had very little growth benefit. With Latin Americas growth remaining below pre-1980 levels Rodrik's emphasizes how the process of growth is scattered and unpredictable and in some case more unorthodox methods can lead to great growth results (China). Another area of his paper that also interested me is the concept that sustaining growth is more difficult then igniting it. The trajectory of convergence is rarely steady and his comment that growth spurts end only after a decade perplex me. Looking forward to Rodrik's interest in entrepreneurship and on how to get entrepreneurs excited about investing in an economy, it seems to me that the two pronged growth strategy could be, for select countries, the way to sustainable growth. The elimination of government and market failures makes the several pathways to growth, monotonous and complex.
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
This paper turned the concept of models upside down for me and made me see modelling for ‘’maps instead of reality’’. Studying economics at high school, models were extensively dictated to me and there was little discussion of economics in the real world- where models often don’t fit verbatim. It reality several exogenous variables come into play and this concept was not brought to the forefront. Krugman’s mention of Alfred Marshals preference to metaphors as opposed to confusing math’s and models therefore surprised me. It was also interesting to read models as an unusual mechanism used in social science due to their prevalence in physical sciences. Krugman’s mention of high development theory losing creditability due to lacking formal modelling also perplexed me. A theory that challenged standard economic assumptions for me should not be glanced over because of its inability to theorize and test in formal measures. On a broader scale reading this article made me question the broad generalizations we make in class when learning about fundamental models. The word ceteris paribus is used excessively and is used to dismiss what is happening in reality and real life. Often at times there is never one variable to test by itself which makes social and physical sciences so complex. Although models give us an insight into shaping public policy among other things, it stops short at telling us about the bigger picture.
One of the most interesting topics discussed by Sen was nutrition in England during the second world war. ‘’Even though per capita availability of food fell significantly in Britain cases of undernourishment also declined sharply, and extreme undernourishment almost entirely disappeared. Moreover, mortality rates also went down sharply.’’ During World War I and II economic growth was slow but development it shows was fast. This for me was an unexpected finding and interesting to see that in the case of WWII economic growth and development had an inverse correlation. The interesting change in perspective that war brought about also intrigued me. Through shared social arrangements and supportive policies to the masses, public policy really came to the forefront and the creation of the national health service had such major implications for mortality rates and to England today. At a time of upheaval and uncertainty it’s great to see that the health of the countries citizens is on politician’s minds. Another topic that Sen mentioned in his book is the social backwardness of India compared to china and the way in which that has stunted India’s potential growth. With such deep class divisions that exist even today it’s perplexing to me how class divisions haven’t dissolved when knowledge of collaboration in regards to social policy can improve the standard of living for the masses. Something else that interested me from Sen is his discussion on ‘missing women’. This is an area covered in my South Asian economics class with Silwal in which we began to try to explain the reasoning’s behind this. From reading a paper by economist Oyster about the topic of sex imbalance, conclusions for the sex imbalance came from female babies having differences to males on vaccinations, nutrition and medical care. However, the most interesting finding from Oyster’s study on sex imbalance is that the reasoning’s she found only accounted for 50% of the missing women. Touching the surface of the issue of Sen’s ‘missing women’ intrigues me and leaves me asking questions about the other 50% of the women and what happened to them.
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Sep 14, 2016
Whilst reading “Economic lives of the poor” I felt prepared for what the statistics and the trends were about to say regarding living in extreme poverty. Visiting my grandma in India every 1-2 years and classing India as my second home I was brought up with both a cultural understanding and appreciation of India and England. I understand many of the traditions, cultures and pressures that many Indian families in poverty feel. The feelings that relative poverty invoke to me are also apparent with people experiencing absolute poverty. What this paper touched on was that in the 13 countries that were studied, food represented somewhere between 56% and 74-78% of a household's budget in rural and urban areas. At the same time, the median household spends 10% percent of their annual budget on festivals. This part of the paper really spoke to me in regards to my culture and my personal experiences. Being Indian myself I have attended many extravagant weddings and festivals held by families who were spending more than their means on such events. My father, for example, grew up in Kenya living on less than $2 a day but had such an excessive wedding. Banerjee’s response demonstrates confusion as to why they were not more rational with their money and on their expenditures. However, his report also reflected higher happiness levels among those that were poor. In this case utility trumps rationality. This is understandable when you consider that even the poorest people need enjoyment in living their day to day lives. For me there are 3 main reasons why such spending on festivals/ weddings occur in South Asia: • Weddings in South Asian cultures aren't so much about the individuals involved rather than about societal pressure. It's a show to your community, almost a peer pressure, to uphold an extravagant wedding so that they are not talked of badly. • In particularly uneducated areas of South Asia more focus is given to daughter’s weddings as opposed to their education. This is seen in the paper where the expenditure on education is only 3% in Pakistan. • The expensive dowry system is meant to make it so that the daughter’s future is invested in and secured through selling her marriage rights off to a man who will be able to provide for her in the future. Tanpreet Hunjan
Toggle Commented Sep 14, 2016 on ECON 280 Reading for Thursday at Jolly Green General
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Sep 8, 2016