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I am curious if any strides have been made in regards to microlending helping the poorest of the poor. One consistent theme in the paper regardless of urban or rural status, gender, or country, seemed to be that the best off amongst the poor were the best at using microloans to increase their income. The paper gives a few possible explanations, of which I think most are plausible. While it is great the microloans are helping anyone do better, I hope to see some type of focus on allowing the very very poor to utilize them as well. I found it interesting that the microloans did not increase investment in children as much as I would have expected. I was encouraged by the fairly frequent switch in spending from “temptation goods” to more durable goods as a result of having loans, as this changed the spending habits even with money that loan recipients already had prior to receiving a loan. For once, it seems as though men made better decisions with money than women, doing better at growing a business with a loan than women often did. I am also intrigued if delaying repayment of loans has become any more popular. It looked like a promising way to have recipients of loans be able to better use the loan to grow their business or create a better crop yield. But, it also appeared like the flip side was worse as people did default on loans, disincentivizing the lenders from using a delayed repayment system. I found the fact that microlending is highly profitable for lenders in the current form to be quite odd. Upon further analysis it makes sense as to how it would be, but I never really considered lending these small amounts of money to be a great way to make money as a lender. Overall, the reading was interesting and makes me optimistic about the future of microlending and what it can do to help people be better off.
It appears that a common theme of the paper is that foreign investment is, to some degree, a matter of luck for the country receiving investment. Sometimes investment is preceded by structural reform that bolsters investors’ confidence, and other times it has more to do with the investors own situation and interest rates in their country of residence. One thing is for certain though, foreign investors pulling out their money seems to ensure that the economic downturn that they were worried about actually occurs. I really enjoyed seeing examples as far back as World War 1 and 2 as I feel like economic analyses focuses on the last 50 years more often than not. I also wonder if the Fed’s concern in 1928 about stock market speculation shifting resources into a less productive sector is not also true now. It seems as though the quantitative analysis is at odds with the qualitative, which is an interesting difference. The paper we are reading though seems to come to the conclusion that “it depends” when looking at how U.S. interest rates impact investment in other countries. I am a bit out of practice with a lot of the terms the paper uses and wish that it had been written in a way that a lay person might better understand. I found the idea that East Asian countries are better at choosing when to pull back from international markets and when to open up to be unsurprising and consistent with much of what we have learned so far. I did not understand the author’s justification of this though.
Toggle Commented Nov 18, 2021 on ... at Jolly Green General
I was surprised to see that the screening hypothesis was rigorously tested and found to not be a significant contributor to earnings. I was not surprised that productivity gains were responsible for increased wages, but thought that screening might play a role. I was confused as to why the authors had a methods section that did not really discuss methods in the traditional sense as this is not an experimental study. I wonder if the reason that the returns to higher education are staying constant even though each new college graduate would seem to be a diminishing return is that college graduates being able to work with more college graduates increases their productivity. The author suggests that the relative stability of the productivity of higher education is due to increased demand for it, and I am sure that makes up most of the picture, but wonder about the other piece I just mentioned. I found it intriguing that Latin American and sub-Saharan Africa saw the highest returns to education. I am also intrigued what part school quality has to play in this story, but understand that this is incredibly difficult to measure, especially when conducting meta-analyses on hundreds of studies. At the end of the paper the authors mention looking into that, but I want to leave this comment in my post. I was not surprised to see that returns to education of girls were higher than for boys. I am also curious how a lot of this data was collected, mainly in developing countries that might have very lax laws regarding public education attendance and poor record keeping. I am curious how externalities are measured/quantified as I imagine that would be pretty nebulous regarding returns to education.
Toggle Commented Nov 9, 2021 on For Friday's Discussion at Jolly Green General
Female infanticide is nothing new to me, but the differences in mortality throughout women’s lives was surprising. It probably should not have been, as the Sen reading suggests that women are not given equal access to food, health services, or education unless they work for a wage. I wonder to what degree men in families give some preference to their sons due to wanting a subordinate group. Poor men have very fragile social standing with one group below them, poor women. I wonder if this social standing has anything to do with less opportunities and agency for women and young girls. The maternal mortality piece is interesting and sad, why would the family invest in their girls as much if they will die in childbirth soon? A common theme with women’s empowerment is that it feels like there needs to be a big push and that once that big push occurs, women’s empowerment will help grow the economy which will help empower women and create a cycle of beneficial growth. As I read through, it became clear the author disagrees with that previous point, but I felt like I might leave it. The problem, though, is that any type of push seems unlikely as it is difficult for poorer countries to do such a thing. I also found some of the parallels to rich Western countries intriguing, particularly that women were busy doing household work like childcare which limited their ability to participate in the market. It was cool to see some psychology concepts like stereotype threat come up, and I think they are great examples of some of the more nuanced barriers to women’s empowerment. The discussions of contraceptives and bank accounts in relation to the women’s husbands was a pretty eye opening tangible example of the lack of agency.
Toggle Commented Oct 28, 2021 on For Friday's Discussion at Jolly Green General
The sea level rise is one of the more interesting projected effects of global warming. I have heard people make arguments that it does not “make economic sense” to start addressing climate change due at least in relation to the sea levels rising. The argument basically says that the current cost is higher than the cost will be in the future. The person making this argument has no economic background but holds what I believe is a widespread view in that there are not economic incentives yet to fight back climate change. I would love to retire on the east coast but might not have the option to. Rising sea levels destroy not only passive use value, but the billions of dollars of investment in these cities. Unless we become amphibious, rising sea levels concern me quite a lot. The developing world will feel these effects disproportionately, being the least equipped to deal with these changes and having done the least to contribute to them. I also found the rain patterns changing to be an interesting and I think overlooked consequence of warming. Increased rain will evidently have very negative effects, which I had never thought of. Food shortages because of global warming seem to be one of the main things that will stunt development in the future, as many countries will be forced to import food and be susceptible to price hikes and the like. I also found it interesting that parts of Europe were covered in this paper as most people do not consider anywhere in Europe to still be developing.
Toggle Commented Oct 21, 2021 on For Friday's Discussion at Jolly Green General
I was really surprised to see a military government grow so quickly. In just 35 years after the Parks took power in 1961, South Korea had gone from an agricultural economy to being recognized by the Organization for Economic Cooperation and Development as a developed nation. I guess my association with military governments and slow-growing or shrinking economies is due to Latin American countries that fall into this category. I was also interested in the U.S. and South Korea relationship. I was not aware of the role South Korea played in the Vietnam war, sending 300,0000 troops and gaining experience through contracts with the Americans and South Vietnamese. I did not realize that South Korea had a dictatorship as recently as the 1970s. I am especially surprised that this dictatorship resulted in rapid growth. It is awesome to see how different companies that are household names today started out in entirely different sectors than we know them now. The government incentives seemed to work quite well at getting companies like LG out of toothpaste and into electronics, a huge shift. I wonder to what extent South Korea can serve as a roadmap for other countries in similar situations. I think that it really cannot as many of the drivers of growth required luck to work out. Keeping rural and urban incomes similar during a period of huge growth is impressive, and I would be curious to see if this could be applied to other developing nations as well.
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Oct 7, 2021