Thursday, January 28, 2010

Comment Moderation

Because of spam comments from this this guy and others I'm turning on comment moderation for older posts...

Saturday, January 23, 2010

But Swedish Social Scientists are Right Wing

According to this new study Swedish social scientists are more likely to vote for the right wing parties than left wing parties. This is of course, in marked contrast to the situation in the US and anecdotally in Australia. The authors note though that:

"Here we have to keep in mind that an american academic to the left may, in actual views, be close to a swedish academic to the right."

However, academics who favored the right favored a less right wing party - the Liberals - than the population as a whole (Moderate Party) and those that favor the left favor a more left-wing party (Left Party) than the population (Social Democrats). Not surprisingly sociologists were left leaning and economists and business academics right-leaning.

Maybe academics are just non-conformist? Urgent research is required on Swedish bartenders :)

Friday, January 22, 2010

Too Big to Fail


The Obama administration is acting to do something about the too big too fail phenomenon, which I flagged as a possible policy direction. I'm not enthusiastic though about the anti hedge fund/proprietary trading moves that are accompanying this. Luckily none of the crazier ideas in Jackson's book are included. I'd favor limits on risk budgets rather than just banning institutions from certain activities. The key thing is to make sure the regulation is adaptable to new financial instruments. For example, limits on margin loan leverage has been totally bypassed by all the other methods of increasing leverage that are available.

But, the NYT says:

"Both changes require legislation by Congress, and Republican leaders, as well as the banking industry, signaled on Thursday that they would resist the proposals."

And that is going to be an issue now. So don't expect too much of this is going to go anywhere. Though it's hard to think that the Republicans could block all regulatory action in response to this crisis and remain electorally viable? You never know.

Thursday, January 21, 2010

Conservatism of Non-Academic Scientists


There's been discussion lately about how "liberal" professors are (at least in North America). For example, this blogpost and the paper by Ethan Fosse and Neil Gross. The latter argue that people with liberal political views are more likely to want to become professors. Demographic differences explain 43% of the difference in liberalism between professors and others.

The interesting thing to me is the huge gap between professors and non-academic scientists in the chart. It does makes sense that non-academic social scientists are more liberal than non-academic natural scientists. But non-academic scientists are four times as likely to be conservative as professors and less than half as likely to be liberal.

ARC vs. NSF

I've been doing more work on my upcoming ARC proposal including meeting with ANU's pro-VC for research (who used to work at the ARC as "Executive Director, Humanities and Creative Arts and as the co-ordinator of the Discovery Projects scheme") and getting her feedback. I've commented before that compared to the U.S. National Science Foundation (NSF) the Australian Research Council (ARC) appears much more focused on giving grants to excellent individuals than on giving grants to excellent projects. Another major (and obvious) difference is that the key recommendations in the ARC system are made by interdisciplinary panels of experts rather than mostly by disciplinary panels in the case of the NSF. Economics proposals go to a panel of social scientists that includes some economists and management people but also people from psychology, public health etc. This should be good for interdisciplinarity but I'm feeling it might favor proposals that are fairly vague on the methodology side but strong on explaining their national and social benefits. ARC does use experts in the field but they have only an advisory role to the panel that makes the decisions as I understand it.

The problem at NSF is they often call for interdisciplinary proposals but then allocate them for review to disciplinary experts who tend to favor proposals with minimal interdisciplinarity. At least that was my experience in the past.

It's a difficult balance to achieve.

Follow Up on Europe Research Links

A while ago, I mentioned that I signed up for an EU database of experts. I've now been contacted twice through being a member of this database. The first query was from a consulting firm who need an Australian reviewer on their proposal to the European Union and the second to review a grant proposal (paid) from Cyprus. So it's not a blackhole you throw your name into and never hear anything again from.

Scott Brown


This doesn't seem to be getting much attention in Australia but it's bad news for getting anything done in the US in the next few years...

Saturday, January 16, 2010

Analysis of Copenhagen Accord

Interesting analysis of the Copenhagen Accord from Carlo Carraro and a coauthor. He argues that if the funding for developing countries is primarily used for mitigation actions then the Accord could achieve the goal of getting the world on the path towards the 2C limit on warming. I'm skeptical though that the money will:

1. Be spent at all - often aid pledges turn out not to be realised...

2. Not get wasted on bureaucracy and corruption...

3. Actually get spent on useful mitigation rather than adaptation...

4. Get spent on efficient things rather than white elephant prestige projects...

But maybe I'm too cynical...

Wednesday, January 13, 2010

Consumption Based Carbon Tax

An interesting proposal from Geoff Carmody for a consumption based carbon tax. It cleverly plays on protectionist sentiments and impulses by taxing the carbon content of imports and exempting exports. Every country can set its own carbon tax rate or coordinate as much as they like. I imagine this must have been proposed before. It sounds like a good idea but I can see two major pitfalls:

1. Will the WTO agree to taxing the carbon content of imports but not exports? It sounds unlikely to me.

2. Complicated accounting for embodied carbon is needed both to assess the carbon content of imports and of exports. Inputs purchased by exporters will have the carbon tax built into them and presumably this needs to be claimed back some way to symmetrically exempt exports while taxing imports. Or will only direct fuel use by exporters be counted? That can't be the case because in many cases the producer will not be the exporters. An alternative is to provide credits for exports based on an average estimate of embodied carbon - say one rate per dollar or weight for cars, another for coal etc.

What do you think?

Friday, January 8, 2010

Arndt-Corden Division of Economics Joins the Crawford School

As many of you know the Arndt Corden Division of Economics became part of the Crawford School at ANU from 1st January. Following the merger the Crawford school is now ranked 7th or 8th * among economics programs in Australia according to RePEc. I only informed RePEc of the merger yesterday (don't know if anyone else did but they didn't say they already knew) so the change isn't reflected in many other places in their system yet.

* It is ranked 8th when only Australian institutions are considered and ranked. It is ranked 7th when Australian institutions are compared to all others in the world. In other words it performs slightly better on the criteria in which institutions are strong globally and slightly weaker on criteria where Australian institutions tend to perform well. Australians get lots of publications in good journals but get fewer citations than global averages.

Thursday, January 7, 2010

Zhang et al. Now on RePEc

The official version of the Zhang et al. working paper on the effect of environmental news on stock prices is now up at RPI and, therefore, catalogued in RePEc.

Convergence of Energy Efficiency



I've been making more progress in my Environmental Economics Research Hub Project. I still don't have final results, but I am close. The above chart shows the estimated underlying energy efficiency, controlling for the structure of the economy etc. for five countries. I don't quite believe that the US is more efficient than Switzerland but at least the two developing economies are less efficient than the developed ones. However, it appears there has been convergence over time, particularly between China and the others. It's, therefore, not reasonable to suppose that gains in energy efficiency in China will be as fast in the future as in the 1979-2007 period under business as usual. Perhaps the 2000-2007 period will be more representative? This makes China's carbon intensity target a lot harder to achieve than many people think. It's not unachievable though given China's goals for renewable energy. This is what we are going to look at in our AARES paper.

Tuesday, January 5, 2010

EERH Working Papers Statistics for December 2009

A few less downloads and abstract views this month, but December is always a weak month for working papers. For all the details visit the LogEc website

Energy/Capital Ratio and Capital Density

Back in October, I blogged about the energy/capital ratio arguing that it was a rough proxy of the level of energy efficiency and/or environmental technology in a country. The following chart plots the energy/capital ratio against the capital density - the amount of capital per unit land area in a country (both are averages for 1971-2007):



Now there could be quite a lot of explanations of the strong correlation (-0.72) between the two variables including lower transport distances in more densely populated countries and measurement errors. But I'd argue that capital density is a rough proxy of the potential environmental disruption in the absence of any ameliorating policies and that E/K is a rough measure of the stringency of policy. In my 2005 paper in Journal of Environment and Development I argued that one of the key determinants of environmental policy was likely to be the level of damage in the absence of action, finding found some support for the hypothesis. I am now testing this idea more rigourously in my current research. So far it is holding up.

The important point is that K/T isn't just a function of the level of income per capita. Australia ($329k per km^2) and Canada ($362k per km^2) have similar levels of this variable. But so do Brazil and Peru. The USA has near $4 million per square kilometre, while Britain has $20 million...

Sunday, January 3, 2010

The Kuznets Curve



The evidence for the original Kuznets curve - a supposed inverted-U shape relationship between inequality and income per capita - is not very strong either. The Y axis shows an average of the available data on the Gini coefficient of income inequality for the period 1971-2007 (mostly from the World Development Indicators) and the X axis average income per capita over the period in 2007 PPP Dollars. The data is for 85 non-petroleum economies. Of course, it would be more desirable to plot 2007 Gini coefficients, but data on inequality is very sporadic and so we would be only able to investigate a small number of countries. The fitted curve is a simple quadratic.

There does seem to be less inequality at higher income levels and a greater variability of inequality at lower income levels. If you were to drop the former communist countries in Eastern Europe from the sample then more of an inverted U would result. Middle income levels would then be dominated by Latin American countries, which has historically been a more unequal region than other parts of the world at similar income levels.

Corruption and Development


Most of my readers are probably familiar with the correlation between corruption and the level of economic development, but as I was entering the data into my database I thought I'd go ahead and blog about it. The chart shows the 2007 Transparency International Corruption Perception Index on the Y axis and average income per capita over the 1971-2007 period in 2007 PPP dollars (from the Penn World Table) on the X axis for the 85 countries in my energy efficiency study. The sample excludes oil economies. The correlation between these variables in the sample is 0.90. It goes to 0.92 when Luxembourg - the point at the extreme right - is excluded. Including the petroleum exporters would reduce the correlation. The corruption index is bounded from above at 10.

The direction of causation is not clearcut. Poor countries tend to underpay their government employees (relative to the private sector) resulting in these employees seeking (small) bribes to make ends meet. In the other direction, corruption (large bribes) is supposed to result in economic policies that protect special interests and according to the Prescott-Parente theory of growth reduce total factor productivity and, therefore, GDP per capita in corrupt countries. My perception is that special interests in the energy and mining industries do wield a lot of influence in nominally low corruption economies such as the US and Australia. My colleague, Sambit Bhattacharya's research shows that resource endowments do not negatively affect growth in democracies. But do they negatively affect energy efficiency and environmental quality? In my Hub research, I am going to test the effects of resource endowments, perceived corruption and other variables on energy efficiency and hopefully come up with some answers.

Saturday, January 2, 2010

There are More Chinese Students in Australia than in the U.S.

It is hard to believe that there are 50% more Chinese students in Australia than in the U.S. which has 14 times the population of Australia. Digging around on the web I found plenty of other articles from different sources corroborating the 130,000 number.

Friday, January 1, 2010

Krugman on China

I don't want to turn this blog into some kind of pro-China rant but I keep reading so many occidentcentric articles that just fail to see things in any kind of balanced way. Krugman says that China should revalue the Yuan. In the long-term I agree, as the Chinese currency is clearly undervalued. And China was doing exactly that prior to the Global Financial Crisis when they halted abruptly:



The last thing that China wanted to do in a recession was to revalue the RMB further which would put pressure on employment in the export sector in China, the sector that was already hard hit in the crisis. Why should China sacrifice Chinese jobs to save American ones? Of course, if China does not recommence revaluation once the GFC is well and truly over I'll join in the criticism.