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Pearce Embrey
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I'm not going to lie, this article is pretty scary. I've always heard that it is important to take care of our environment, but I've never really thought much about it, especially in terms of the economy. I guess this is kind of similar to what we talked about Tuesday- how many people don't really think or care about issues until they are able to relate to the adverse effects themselves. It appears, at least from looking at my colleagues' comments, that the story of the Russian heat wave of 2010 struck a chord with us all. While maybe 1% of national GDP doesn't seem THAT high at first glance, if the world experienced a consistent warming of 39.2 degrees fahrenheit, all of our economies would experience problems of this magnitude or greater. It is true that the poorest people in the world would be affected more by global warming, perhaps this fear of losing GDP to major world powers will incite us more to solve the problem of greenhouse gas emissions.
The article, "Does Trade Reduce Poverty? A View from Africa," really speaks to our class's motto of "it depends." In this rather empirical paper, researchers Le Goff and Singh spend a great deal of their time reviewing literature that attempts to determine whether trade reduces poverty, and the previous literature basically can't come to a consensus. Sometimes trade reduces poverty and sometimes it doesn't. After completing their own research and running a regression based on data in Africa, the researchers also conclude that their is more to the problem of whether trade reduces poverty. Rather, it is institutional policies that can really augment trade in reducing poverty in Africa. However, what policy to implement is a million-dollar question; every country has completely different economies and institutions. Even if one policy in a country in Africa pushes them out of a low-level equilibrium trap, that doesn't mean that it would work in a country like India. That is where researchers should focus their attentions: finding a sort-of blanket policy that can help developing countries, since the Washington Consensus attempted to solve this problem and didn't work.
Toggle Commented Nov 30, 2016 on Reading for Thursday at Jolly Green General
Eichengreen and Mody's "Interest Rates in the North and Capital Flows to the South: Is There a Missing Link?" really dove into the empirics of determinants of international finance. I think that their study is very important, as it is able to draw substantial conclusions regarding the relationship between the supply of international credit and the demand for developing-country debt. I think that this research is particularly interesting, because it goes beyond the traditional notion of direct foreign investment. The most striking point of the article, to me, is that there are a number of reasons why some developing-countries may not choose to borrow from more industrialized nations. The study of economics deals a lot with the idea of incentives, and I wonder if there is a way to incentivize the developing-countries into borrowing, even if the interest rates are relatively high. I understand the initial hesitation on the part of the developing-countries, but they are in need of some sort of financial influx to jump-start their economies.
Toggle Commented Nov 16, 2016 on Readings for this week at Jolly Green General
I enjoyed reading both articles through the lens of thinking about the human capital aspect of poverty and inequality. It is tough to see the statistics in the malaria article; it is powerful enough to incite people to action, and I think the article largely promotes the use of foreign assistance to help families combat the social cost of preventative care. It is true that if the incidence of malaria were reduced, the social benefits from expenditures on human capital would increase, and we know this to be fact from the theory discussed in class. Schultz also advocates for expenditure on human capital development in his nobel talk, and while I think that this is important, I am worried about economies that are still largely agricultural based. Schultz states that increasing human capital is more important for development than land-based policies, but what do people in these largely agricultural based economies do with more education? Would the increase in production and lowering of fertility rates really help these people attain much higher standards of living?
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
It is interesting to see topics that span across multiple classes. In Duflo's article, "Women's Empowerment and Economic Development," in 3.1, she mentions how mother's education and earnings are correlated with their children's health. In Professor Blunch's 276 class, Health Economics of Developing Countries, we spent an extensive amount of class time reviewing articles and data that attributed to this perceived relationship. I think the education of women in developing countries is really important, both as a fundamental right, but also a way to empower them. I believe that if a woman is more educated, she will feel more confident, whether in searching for a job or for increasing their bargaining power in the home.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
Reading Dani Rodrik’s “Growth Strategies,” I find my self a little uneasy. Through the first 2 two-thirds of the paper, Rodrik essentially says that there is no fit-all way to create growth for LDC’s. Of course, there is a group of free-trade suggestions, called the Washington Consensus, that a Western economist would almost certainly give to a country asking for help, but Rodrik makes the point, using the nations of China, South Korea, Argentina, and India as examples of governments that created growth using their own approaches. While Rodrik does give an interesting investment strategy at the end of the paper, the whole time I was reading this paper, I kept asking myself, “Why does Rodrik’s theory matter?” If these governments are able to construct their own policies that stimulate economic growth and make the lives of its people “better,” then why are we trying to determine their best course of action? Rodrik acknowledges that is difficult to grow and then maintain economies, so shouldn’t we allow each government to do what they see fit? It seemed to work in the individual cases of the nations listed above, even if they did take a little bit of trade liberalization theory with them.
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
I thought that Krugman made some very interesting points in his paper "The Rise and Fall of Development Economics." It is obvious to the modern college student that modeling is an incredibly important tool in economics. Models are able to give us a glimpse into some sort of economic reality. But that is just it-they are glimpses. Economic models are not meant to account for everything under the sun. In Professor Guse's microeconomic theory class, the models we examine are almost always in what he calls "Pizza and Beer World," where the consumer is making decisions with pizza and beer being the only two goods available. Of course we know that this is overly simplistic, but we use the model to get a general idea of an economic concept. The world is way too complex and difficult to understand just looking at economic models. For Pete's sake, in these economic classes we always assume that individuals are rational thinkers, but now there is even evidence that calls that into question. Economics is a discipline that evolves over time. I think that Krugman is wrong to sort of crucify Hirschman for not taking the time to model his high growth theory. Maybe modeling didn't make sense to Hirschman at the time, but today, we still could learn a lot from his ideas of high growth theory, with or without the formal modeling.
Chapters 1 and 2 of Amartya Sen's "Development as Freedom" provides an interesting perspective on outcomes that goes beyond the realm of traditional development economics. Sen's whole point in these chapters is that members of developing countries would have better outcomes only if they were less oppressed, whether the oppression comes from the current reigning government, or from each individual's lack of economic resources. I think that this way of looking at economics is fascinating, because it attempts to explain factors not necessarily covered by contemporary economic models. The conversation between the husband and wife about wealth and immortality at the beginning of chapter 1 was of particular interest to me. The couple discuss whether if they had all of the wealth in the world, would they achieve immortality or not. Usually, I tend to think that an individual's preferences are generally monotonic, meaning that they would gain higher utility by simply consuming more of a given good. Sen, through the story of the husband and wife, promotes the idea of happiness and freedom as alternate ways to determine the well-being of individuals. I found the idea of freedom very compelling as a way to really determine the status of a country, especially developing ones. Perhaps economists should factor in freedom more in modeling than they do today.
Last winter term, I took Professor Blunch's course on Health Economics in Developing Countries. Throughout the course, the class analyzed various health-related issues in these developing countries and attempted to determine the best courses of action to alleviate these issues. While reading Banerjee and Duflo's "The Economic Lives of the Poor," the first thing that caught my attention was the incredibly low literacy rate of women in the Indian city of Udaipur- roughly five percent in 1991 (2). Continuing through the article, Banerjee and Duflo describe a variety of different health issues in the countries they surveyed. In Udaipur, they mentioned the prevalence of diarrhea in children. According to Blunch's class, the issue of diarrhea in children is directly correlated to the low literacy rate of women, overall, in the area. I believe that a way to fix a large number of health issues in these poor countries is to provide adult literacy programs for women, especially mothers. If a mother is more literate, then she will be better able to take care of her children if they are sick.
Toggle Commented Sep 14, 2016 on ECON 280 Reading for Thursday at Jolly Green General
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Sep 14, 2016