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Chaz Cunningham
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From not having much previous knowledge of microfinancing, I found this paper to be very well structured and informative. One thing I really found interesting was this emphasized idea of selecting borrowers to be maximize returns of microfinancing. As the paper stated, borrowers can either choose to invest their loans into business, smooth their consumption or manage risk. However, their is another 'risk' in giving loans to low performers that will not see great returns based off their consumption preferences. I think the psychographic tool described in the paper is a very unique and interesting idea yet I am still confused as to how accurate this evalutaion of honesty is in this design. I was thinking of a way to set a benchmark on borrower returns at a certain point to see how well they are performing with their loans. One point made in the paper that I did not fully understand is about how women were able to "shield" their income to serve as an explanation for why their consumption levels increased as a result of borrowing. Is this suggesting that the women were not getting taxed therefore having a higher level of disposable income? I thought the point about women's spending less of the loan on business investments and more so on household expenditures and family necessities was cirtical This is because although business investments are the most highly regarded investment for return mentioned in the reading, household expenditures are crucial for increasing welfare and overall family health.
I found it really interesting to read a piece on global markets and the flow of interest rates. This paper is also definitely a bit different than the text we usually read for class and it makes it a bit more complex to follow, especially right off the bat. I like the pieces of historical economics that show when falling interest rates became a problem for lenders who were not getting good returns on the ir money. Particularly, I would like to discuss the capital inflows in regards to interest rates. in my microtheory class currently, we spent a lot of time going over foreign markets and capital relative to shocks that change the interest rate. We know that capital inflows changes directly with the change in interest rate, yet this affects the suppply and demand of foreign currency. As I was reading this paper, I saw an example of this relationship in the Asian crisis as it is written. In addition, I thought the piece about the Fed keeping rates low in the 1920's during financial hardships is relatable to what we have seen in the Federal Reserve over the past year and a half due to covid. The money supply has greatly increased and in turn, the interest rates have stayed very low in order to recover and stimulate spending. The one section I would like to have understood more clearly is the econometric regression model ran on the issuance of bonds in Latin America. I do see however that these findings represent key structural differences in Latin America compared to other regions. I understood why the high interest rates in the US decentivize developing country borrowers in their decision, but something I would like to discuss further in class is the relationship between the floating rate and fixed rate East Asian bonds.
Toggle Commented Nov 18, 2021 on ... at Jolly Green General
I liked how this paper began with the primary conclusions it drew from several empirical studies such as that the highest returns of education come from primary education and womens education, as well as prioritizing education in low income countries. Furthermore, I found it interesting how it suggested two approaches to this relationship between education and earnings. This is whether education creates greater productivity leading to more earnings or the screening approach where employers select people with greater qualifications (education wise). I think the real relationship lies at a median between both of these. We can see this in present time with the fact that we do go to college to increase our skills and productivity, but there is also a stigma behind where you go to school and the greater reputation one can get from a prestigious instituion versus a lesser-known school. It seems realistic to say that two people with the same exact skills and abilities are not exactly on the same tier in an employers view if one has graduated from a much higher qualified institution. In addition, I really found this idea of the race between technology and education to be intersting. If technology is increasing at a faster rate than the supply of education of human capital, then then the rates of return on education aren't as significant. I thought the author described it well by saying "the demand for skill is outpacing the growth in supply of skills". This point is further exemplified in looking at returns on education in lower income countries and wealthier nations. In a lower income country, the skill demand isnt as high, so those who can meet and exceed the demand for skill and education will see much greater returns in earnings than someone working in a highly developed country. This leads me to only agree with the suggestion that increasing human capital (education) is a must in developing countries. Earnings returns on education will be more evident and as a result can stimulate growth in overall technology and capital. Lastly, I think the social returns on education was an important piece to include. I'm not sure why they first ignored externalites of education in their analysis, but I do think mortality rates was an important benefit of education returns to include. I do think some larger effects like a grounded political ruling and changes in crime rates would also be effective in emphasizing positive social returns on education.
Toggle Commented Nov 11, 2021 on For Friday's Discussion at Jolly Green General
I found Duflo's message of "Empowerment to Development" to be very direct and powerful. I found it interesting how the reading mentioned a report on one of our earlier studies, MDG's in reference to supporting economic development by means of women empowerment. The research done on how this concept can be proven to be true was new information. I am referring to the claims made that state how women provenly invest more money into goods and services that increase the well-being for families. Another observation I made while reading this text is the topic of mothers education on child welfare. In my econometrics class, we wrote a project on the relationship between parents education and child earnings. This article talks about the greater freedom that a more educated and richer woman can have in choosing a husband who may care more about their child's well-being. The first thought of reasoing that came to my mind was the strong relationship and bond that a child and mother share very early in life. It seems that a woman who is the person solely nurturing the child from a very young age would have a greater impact on the child's future qualities. Therefore, a highly educated woman can increase the future well-being of a child's life because of the importance of a female figure in that child's upbringing. On a bit of a different note, this article made me think of how our society is slightly moving in this direction with the increase of female political leaders in our country and institutions.
Toggle Commented Oct 28, 2021 on For Friday's Discussion at Jolly Green General
While this summary first points out the projected impacts to our ecosystem from ongoing climate change, I found the social vulnerability consequences to be eye-opening and something that I have never previously considered. Urban expansion is a topic I previously studied in urban economics and I found it interesting that expansion into these "hazard-prone" areas leaves room for climate change events to affect a greater margin of people and push more groups into poverty. It makes me wonder that at the same time, if disadvantaged groups are being adversely trapped in extreme climate change areas, then we must focus on preventing catastrophic climate conditions before these areas become inhabitable and unable for development. Another topic I wanted to talk about was energy production. As discussed in class this week, a move towards sustainable energy production is crucial for our goal of global development. However, the Executive Summary points to how increasing temperatures and droughts will leave us with changes in waterflow temperature, making hydropowered energy production less available. In addition, less available water will hurt agricultural productivity which is one of the biggest industries, especially in poorer regions. In class we talked about how we have the technology to implement these sustainable energy systems, but need the collective policy and will to do so. Well in this case, it seems like the resources necessary for this energy production will not be as available if climate change continues to plague our ecosystem.
Toggle Commented Oct 21, 2021 on For Friday's Discussion at Jolly Green General
I found the extensive connection between political leadership and economic growth/stagnation in this text to be interesting. The political ties between the US and South Korea were much more crucial to South Korea's economy than I had ever originally thought. It led me to think of how South Korea's military assistance was seen as an exchange for our financial aid. One idea I really found intriguing was the chaebols. It seems like a very efficient allocation of money and effort to base the chaebols off of an evaluation of performance. However, these family-like entrepreneurships between business and state seem to form a ethical problem in terms of labor opportunity. If the top business conglomerates were all family occupied and funded by the state then how does that create fair play for other entrepreneurs not automatically tied into positions within the business? It seems like a creates a minor problem of inequity within the business sector, but maybe the family ownership aspect helps the business competitiveness.
I found this article to be very informative of the development factors that both increase and slow down economic growth, or relative income in this case. I think the structure in this text made it easier to understand the concepts behind the data results by first learning the data parameters and framework given by Wang, Wong and Kip. A particular case that stood out to me was that of Mauritius. Mauritius is seen as an African "miracle" due to it's rapid climb in relative income starting in 1968. Out of the fast-growing countries studied, Mauritius was the one country to bounce back substantially after a period of relative income decline. An insight I took from this is the extent to which industry reform can change an society's economic growth. This article discusses institutional barriers and how policy reform is so closely linked to economic change. I think this was a good example of how Mauritius changing its business focus from sugarcane agriculture to tourism services was much more economically beneficial in the long run. This reminded me of our discussion the other week of how many poorer countries find themselves trapped in reliance on agricultural business.
Toggle Commented Sep 30, 2021 on For Friday's Discussion at Jolly Green General
Krugman's article pointed out to me that there's this dilemma between accepting a model for what it is and theorizing off what is given or choosing to stagnate our understanding of economic development due to "blind spots" in our ability to formally model. This article caused to me think furthermore about my macroeconomic class, where we are reviewing the Mundell-Fleming Model on a macroeconomic scale. The final effect always contains some ambiguity because the model accounts for direction and "linkage" and not so much the precision of some shift. So although we do not have the exact inputs for the change in Monetary or Fiscal Policy, we still choose to follow the model because it can still be broken down for us to understand further "insight into why the vastly more complex real system behaves the way it does" as Krugman states. On the other hand, it is also shocking to me how long the abandonment of such modeling implications lasted, given how fundamentally crucial it (economies of scale, increasing returns) was to economic development. I thought Krugman's point about Lewis' model was fascinating yet alarming at the same time. The absence of economies of scale in Lewis' work allowed economic theorists to model his work so well. This seems to directly associate to Krugman's concluding point that maybe "temporary ignorance is the price of progress".
Toggle Commented Sep 23, 2021 on Krugman for Friday at Jolly Green General
Having no prior knowledge of what MDG's and SDGs are, I found this article to be very informative of how we can develop SDGs as a result of stagnation in the progression towards MDG'S. The emphasis Sach's makes on the triple bottom line really stood out to me because the SDG's take a wholesome global approach to full sustainability rather than just focusing on rich countries aiding developing countries. My biggest takeaway was how Sach's built off lessons learned from the MDG's that can be applied to the milestone SDG's in the next 15-30 years. His point about how striving for global sustainability instead of looking to fund the poorer countries is more productive in the long term changed my view of our economic development. If we (countries) are all better off and sustainable, then does that mean we need to adopt similar policies amongst different countries. The problem of political compatibility between countries leads to believe there will be a long delay before we can see tangible progress of the SDG's listed. Sach's covers all grounds to make SDG's possible, but I am curious as to how they believe governing agreements on topics such as human rights and climate change can be made. Many countries are unprogressive in both area of concern there. Another critical point I thought about when reading this article was the danger of population growth to our global economic development. Population growth seems like something that is nearly impossible to slow down with realistic policy and rapid rises in population seem to only worsen our problems of human-caused environmental damage and inflationary food prices. Reducing gas emissions from food production seems conflicting to our priority of having a production of food that is quantifiable enough for the growing world population.
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