Tag Archive for economics

Grossman Comments on the Economic Impact of Brexit

Richard Grossman

Professor of Economics Richard Grossman was asked by Wales Online about his expectations for the economic impact of Brexit over the next few years. He said:

“Leaving the European Union will be a drag on the British economy in the medium term. Even before Brexit takes effect, however, the economy will be hurt by two factors: expectations and uncertainty.

“The expectation that the UK will no longer have free access to the European market may lead exporters to reorient production toward domestic consumption or export to non-EU regions well before Brexit comes into force. UK-based financial firms may shift operations to EU locations in anticipation of Brexit, rather than waiting until it is a fait accompli.

“And firms that rely on high-skilled labour may relocate to other countries if they expect the reduction in immigration that is expected to accompany Brexit to  reduce the pool of talented workers in the UK.

“In addition to its anticipated effects, the economy will suffer from the uncertainty surrounding Brexit. There really is no precedent for a country to leave the EU, so no one really knows how the negotiations will turn out.

“And markets hate uncertainty. The worse the perceived effect of Brexit, the worse a drubbing the pound will take.

“A steady decline might support exports to some extent, but will lead to inflation at home as imported goods become more expensive. What is more likely than a steady decline is a more volatile pound, which will help no one.”

 

Grossman Presents Paper at the Bank of England

Richard Grossman

On June 23, Professor of Economics Richard Grossman presented a paper at an economic history symposium jointly sponsored by the Bank of England and the the Centre for Economic Policy Research. Titled, “Beresford’s Revenge: British equity holdings in Latin America, 1869-1929,” the paper looks at stock market returns of Latin American firms traded on the London Stock Exchange.

The program for the conference can be seen here.

Yohe Rebuts Sen. Paul’s Call to Withdraw from Paris Climate Agreement

Gary Yohe

Gary Yohe

Gary Yohe, the Huffington Foundation Professor of Economics and Environmental Studies, rebuts an op-ed on Fox News in which U.S. Senator Rand Paul argues for the United States to withdraw from the Paris Climate Agreement. Writing on the site Climate FeedbackYohe explains that Paul’s opinion relies on the flawed claim that the agreement would do little to slow climate change and would cost American jobs.

Yohe breaks down Paul’s assertions regarding anticipated global warming—both with and without the agreement—as well as the Senator’s predictions that the agreement would cost the country 6.5 million in lost jobs and $3 trillion in lost GDP. Yohe contends that Paul relies only on analysis by economists who will produce numbers that support his view. Instead, Yohe points to the recent experience in both the U.S. as a whole and in California, which has a cap and trade program. Both have seen carbon emissions fall dramatically while unemployment has fallen and GDP growth has increased. “These simple economic observations contradict the Senator’s claims,” he writes.

Yohe goes on to explain why energy transformation on the scale envisioned by those who support the Paris Accord is economically feasible, and writes that renewable energy will be the growth sector of the first half of the century. For the U.S. to withdraw from the climate agreement “would reduce investment incentives in the United States. Leaving the Accord would thereby limit employment growth opportunities. It is here that the future employment of those displaced by the contraction of, for example, the coal industry, would otherwise be found.”

Wesleyan Team Takes Second Prize in Investment Contest

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A team of Wesleyan students took second place with a 24.28 percent return in the 2017 Adirondack Cup, a stock picking contest for college students interested in the investment field. This is the sixth year that Wesleyan has fielded a team, and represented the best performance to date. The contest offers a unique setting for students to test their investment research skills using businesses not widely covered by analysts and the news media.

Over 160 students from 22 colleges and universities participated in the contest this year, which focuses exclusively on “small cap” public companies, the expertise of the contest’s sponsor, Adirondack Research & Management, Inc. This firm is an advisor to The Adirondack Small Cap Fund (ADKSX), an SEC registered no-loan mutual fund established in 2005. A team from Union College took first place. See the final results here.

Wesleyan’s team members included Eddie McCann ’19, Nikolas Ortega ’19, Daniil Plokhikh ’19, Attul Jakkampudi ’20, Sonja English ’20, Mitchell Motlagh ’20, Sahil Shah ’19, Kofi Ofori-Darko ’20, Dan Tran ’20, Allesandro Lorenzoni ’20 and Daniel Lombardo ’19.

Yohe Joins Conn. Governor to Oppose Environmental Program Cuts

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Gary Yohe

Gary Yohe, the Huffington Foundation Professor of Economics and Environmental Studies, joined Connecticut Gov. Dannel Malloy at a press conference March 22 at the Connecticut Science Center to speak out against major cuts to environmental programs proposed by President Donald Trump.

“As a scholar with more than three decades of experience studying climate change, I fear our new president is on a course to reverse this progress with extremely dangerous consequences,” Yohe said at the event, according to The Hartford Courant.

Yohe was a senior member of the Intergovernmental Panel on Climate Change (IPCC)—which received a share of the 2007 Nobel Peace Prize—from the early 1990s through 2014. He is past-vice chair of the National Climate Assessment Development and Advisory Committee for the Obama Administration; the Assessment was released by the White House in 2014.

Yohe contrasted progress made against climate change by former President Barack Obama to the approach taken by Trump.

“By way of stark contrast, President Trump does not even have a science advisor,” Yohe said. “His administration has attacked climate science, and it has announced its intention to abandon any initiative designed to ameliorate climate risk in any way.”

Yohe also was interviewed by Fox CT, and his comments were featured in stories on WTNH and CT News Junkie.

Yohe Talks Climate Change and Politics on ‘Where We Live’

Gary-YoheGary Yohe, the Huffington Foundation Professor of Economics and Environmental Studies, was a guest on WNPR’s “Where We Live” recently to discuss climate change and politics. President Donald Trump’s newly released budget proposal substantially cuts the Environmental Protection Agency, the Department of Energy, the Department of Commerce and other agencies that conduct research and do work on climate change. (Yohe begins speaking around 2 minutes into the program).

Since the election, Yohe explains, he and others in the scientific community “have been concerned that part of the attack on science will be the eradication of scientific data scattered around all of the federal agencies. A lot of us have been spending an enormous amount of time trying to protect that data” by posting it to public websites outside the country.

Yohe says that for the next four years, most of the action against the effects of climate change is going to be at the local and state levels.

“That’s where people have the ability to tell their leaders that they want to be protected from the risks of climate change and want them to do something to reduce the sources of growth in the temperatures that they’re seeing,” he said.

Yohe also spoke about a recent visit by former Vermont Governor Peter Shumlin ’79 to his class at Wesleyan. Shumlin’s message: “You can’t just sit here and study this stuff and be convinced that it’s happening. You have to go out and do something which means, in this environment, run for office,”

Yohe Brings “Rap Guide to Climate Chaos” to Campus

On Feb. 2, the Wesleyan community will be treated to a performance of “The Rap Guide to Climate Chaos,” a one-man show written and performed by Baba Brinkman on the politics, economics and science of global warming.

The performance will begin at 7 p.m. in the Ring Family Performing Arts Hall. The event is free of charge.

Gary Yohe

Gary Yohe

Gary Yohe, the Huffington Foundation Professor of Economics and Environmental Studies, has worked with Brinkman in the past and was responsible for bringing his performance to Wesleyan. In May 2016, Brinkman invited Yohe to serve as the climate expert during an off-Broadway performance of the show at the SoHo Playhouse in New York City. Yohe spent 25 minutes on stage taking questions from the audience, which provided material for the closing raps.

Now, Yohe has sponsored the creation of a new rap, titled “Erosion,” that has been produced by Brinkman on climate change and the election of President Donald Trump. Yohe provided peer review to ensure the scientific accuracy of all climate science statements made in the rap. Watch the new rap online at https://www.youtube.com/watch?v=EEx-F-pSdXA, or below.

During the Wesleyan performance on Feb. 2, Yohe will reprise his role as the climate expert on stage and Baba will offer the world premier performance of “Erosion.”

Yohe also has used “The Rap Guide to Climate Change” in a class he taught in the fall semester, ECON 212/ ENVS 310: The Economics of Sustainable Development, Vulnerability and Resilience.

“I taught my students how to apply IPCC (Intergovernmental Panel on Climate Change) and Department of Defense standards for confidence to statements in the show. Each student was assigned to research and provide literature on two tracks, then assess where the lyrics may have overstated confidence,” Yohe explained. “I shared the students’ work with Baba, and he was very appreciative; only a few sources of concern were detected.”

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Hornstein Presents Papers at American Economic Association Conference

Abigail Hornstein

Abigail Hornstein

Abigail Hornstein, associate professor of economics, presented two papers at the 2017 American Economic Association meeting held Jan. 6-8 in Chicago.

In her working paper, “Words vs. Actions: International Variation in the Propensity to Honor Pledges,” Hornstein used data on contracted and utilized foreign direct investment in China to show that firms fulfill an average of 59 percent of their pledges within two years. “The propensity to fulfill contracts is lower for firms from countries with greater uncertainty avoidance, power distance and egalitarianism; and is higher if the source country is more traditional,” she explained. Prior literature has shown that these cultural characteristics are associated with higher levels of utilized foreign direct investment, while Hornstein shows that these cultural characteristics also affect the likelihood that planned corporate investments are actually made.

Her other working paper, “Board Overlaps in Mutual Fund Families” (co-authored by Elif Sisli Ciamarra of Brandeis University), is based on hand-collected data on directors at 3,948 U.S. equity mutual funds belonging to 328 fund families. Hornstein and Sisli Ciamarra used this data to document the prevalence and effects of a common board structure whereby a set of directors serves simultaneously on the boards of multiple funds within the family. Fifty-nine percent of all funds have unitary board structures where a single board serves all funds within the complex. “We find that overlapping boards generally represent 74 percent of the funds within a family, and that this overlapping board structure provides limited benefits to investors while benefiting the fund family,” she said.

In addition to her paper presentations, Hornstein also was elected to the executive board of the Association for Comparative Economics Studies, for a term ending in 2020.

Grossman Argues Truth Was Lost in the Election

Richard Grossman

Richard Grossman

Professor of Economics Richard Grossman tells his students that getting closer to the truth is what economic research is all about. That’s why he was so dismayed when “my devotion to, and belief in, the truth was battered by the presidential election,” he writes in an op-ed on The Hill.

He writes:

It turns out that polling data and analysis contained very little truth. The news were no better. The mainstream media got many things wrong. And there was no shortage of fake news. Although peddled as the real thing, it really wasn’t even trying to provide truth, only to shape opinion.

But by far the biggest letdown in the truth department was Donald Trump, who proved that telling lie upon lie upon lie need not prevent someone from being elected president.

“What should the truth-loving public do going forward?” Grossman asks.

First, pay attention to sources. It is relatively easy to construct a realistic website that has the look and feel of a real news organization or reputable think tank. Do not be fooled. If someone tells you something about the state of employment in the United States, double check facts at Bureau of Labor Statistics’ website. The U.S. government is the best, most reliable source for factual data about the nation’s economy. Obama didn’t fudge the numbers, and Trump is unlikely to be able to do so.

Second, even relatively trusted new sources have their less trustworthy bits. In print media, the division between truth and opinion is usually clear. You can generally trust what you read in the Wall Street Journal, until you get to the opinion pages. Television networks are less clear about separating fact from fiction. CNN’s hiring of Trump campaign employee Corey Lewandowski—while he was on the Trump payroll and still subject to a non-disclosure agreement—should have set off alarm bells among CNN viewers, not to mention the better journalistic instincts of CNN’s management.

Third, be demanding. I encourage my students to challenge the authors that they read in class, including me. Ask questions, check sources and verify the truth for yourself. Just because something has been shared on Facebook a million times does not mean it is true. We should challenge the assertions of politicians of all stripes just as vigorously.

Finally, we need to care more about the truth. One of the most troubling aspects of the election was that so many people voted for Trump despite being fully aware of his many lies because “he shouldn’t be taken literally.” At the risk of sounding naive again, approaching national elections with the attitude that outright lies don’t matter does not bode well for the future of our democracy.

Kuenzel Published in European Economic Review

David Kuenzel

David Kuenzel

David Kuenzel, assistant professor of economics, is the author of a new paper published in the European Economic Review titled “WTO Dispute Determinants.”

In the paper, Kuenzel investigates what factors drive the decisions of World Trade Organization member countries to engage in trade disputes with each other. “Understanding the determinants of the dispute pattern is crucial, since the WTO can only function properly if its dispute settlement mechanism is equally accessible to all member countries,” Kuenzel said.

The paper presents a new theory and empirical evidence to show that trade policy flexibility, which is defined as the difference between the tariff rate a country is legally allowed to set and the tariff rate it actually applies, is the key to understanding the WTO dispute pattern. Less trade policy flexibility constrains WTO members’ legal policy options when responding to adverse shocks in the world economy, and leads more frequently to the application of illegal trade barriers.

Countries with less trade policy flexibility, Kuenzel says, are also more likely to gain from dispute filings, since WTO rulings have to be enforced by countries themselves through the threat of applying higher tariffs rates.

“Importantly, the results in the paper illustrate that the WTO’s current emphasis on providing subsidized legal advice to developing countries is not making the WTO dispute settlement mechanism more accessible,” he says. “While the subsidy helps poorer members to file disputes and increases the likelihood of winning a case, developing countries still lack the power to enforce WTO rulings due to their much greater trade policy flexibility relative to other WTO member groups, which substantially diminishes the economic incentive for low-income members to initiate a dispute.”

Imai Presents Economics Research at Banking Conference, Macroeconomics Research Workshop

Masami Imai

Masami Imai

Masami Imai, chair and professor of economics, professor of East Asian studies, presented a paper at the 19th Annual International Banking Conference held at the Federal Reserve Bank of Chicago on Nov. 4. This year’s theme was Achieving Financial Stability: Challenges to Prudential Regulation, giving Imai the opportunity to speak on “Japan’s Regulatory Response to Banking Problems.”

At the 12th Annual Workshop on Macroeconomics Research at Liberal Arts Colleges, held at Williams College in August, and at the Japanese Economic Association Meeting held at Waseda University College in Tokyo, Japan in September, Imai discussed “The Effects of Ethnic Chinese Minority on Vietnam’s Regional Economic Development in the Post-Vietnam War Period.”

His work examined the impact of the Hoa, an ethnically Chinese, economically dominant minority on regional economic development in Vietnam following the Vietnam War. Imai found that the ethnic group had a positive impact on the development of Vietnam, but the “post-Vietnam War exodus of ethnic Chinese is likely to have had long-term negative economic impacts.”

Imai teaches courses on money, banking and financial markets, economy of Japan, economies of East Asia, and quantitative methods in economics. His research interests include money and banking, political economy, and the economy of Japan.

(Randi Plake contributed to this article).

 

Barber Remembered as a Founding Member of the College of Social Studies

William Barber (Photo courtesy of Wesleyan's Special Collections and Archives)

William Barber (Photo courtesy of Wesleyan’s Special Collections and Archives)

William J. Barber, the Andrews Professor of Economics, Emeritus, died Oct. 26 at the age of 91. A memorial service will be held at 1 p.m., Jan. 28 in Memorial Chapel with a reception to follow in Daniel Family Commons.

Barber arrived at Wesleyan in 1957 after receiving his BA from Harvard University and completing a Rhodes Scholarship and earning a BA, MA and Doctor of Philosophy from Oxford University. He taught at Wesleyan for 37 years before retiring in 1994. Barber was actively engaged in the leadership of the University throughout his time at Wesleyan. He was a founding member of the College of Social Studies, served as chair of the economics department and faculty secretary, and was appointed by the Board of Trustees as Acting President for three months in 1988 until President Chace assumed the office.

Barber was a productive scholar who published widely, including A History of Economic Thought, which after its release in 1967 became a standard in the field of economics for decades and was translated into seven languages, including Chinese, Japanese, Swedish and Farsi (Persian). He published 11 other books as author or editor, and hundreds of articles on economic trends and developments in the United States, Africa, Britain, Europe, India and other areas of Asia. He was the recipient of many honors and awards throughout his distinguished career, including the George Webb-Medley Prize in Economics from Oxford in 1950 and a Ford Foundation Foreign Area Fellowship for study in Africa from 1955-57, and he was twice appointed a research associate of the Brookings Institution. In 2002 he was honored as a Distinguished Fellow of the History of Economics Society and in 2005 received a Honorary Doctor of Letters from Wesleyan. Barber served as the American Secretary for the Rhodes Scholarship Trust from 1970 to 1980; during this tenure he was instrumental in opening the Rhodes Scholarship to women and his service to the Trust was recognized by the British Government through his appointment as an honorary member of the Order of the British Empire.

On Nov. 23, Barber was featured in a Hartford Courant article titledExtraordinary Life: Economist Made A Career At Wesleyan.”

“Bill Barber was an academic who ‘came alive’ in the classroom, and whose major work on the history of economic thought was translated into more than a half dozen languages. He was an economist in the traditional sense: his approach was not quantitative but drew from many disciplines,” wrote author Anne M. Hamilton in the Courant article.

Barber’s friend, Richard Miller, said, “Bill was a valued friend and colleague for over half a century. He provided guidance, counsel, and support to me and to many others. The economics department and the University have been immeasurably stronger for his contributions and his leadership.”

Born a Midwesterner and having survived World War II as an infantry soldier, Barber found in Wesleyan his intellectual and emotional home. He loved the classroom as well as the intellectual freedom that the University offered. He was devoted to his family and is survived by his wife, Sheila, who herself has long been an active member of the Wesleyan community, and his sons, Charles, John, and Tom, their wives, and six grandchildren.

Memorial contributions in Bill Barber’s name may be made to Middlesex Hospital Hospice and Palliative Care at 28 Crescent Street, Middletown, CT 06457.