Race and financial deregulation

Policies can have unintended consequences and most of the time if we talk about them they are negative. However, financial deregulation in US might have had a favorable one; that of reducing the wage gap between whites and blacks. This weeks Economic Focus from the Economist comments on two papers which argue that it was indeed the case.

Is Obama really that different?

If Obama wins the elections tonight, it indeed would be a historical moment. But what does this mean for other nations? Will the rise of Obama significantly alter the way the world sees US? Will US ever refrain from mindless meddling in other nation's affairs under the pretext of "war on terror"? Will it ever stop touting 9/11 as the only deplorable act of terrorism in the world? Will it ever stop to think that people who see American planes bombing their homeland actually see it as act of terror?

This article in the Economic and Political Weekly uses the words of Obama from his book, The Audacity of Hope, to speculate about what exactly we might have in store when Obama becomes the President of the US.

Nobel in Economics

So as you know this year's prize goes to Krugman and rightly so. But it is also interesting to see that the Nobel committee is not above popular perceptions. In awarding the prize for work in international trade it conveniently forgot Jagdish Bhagwati and Avinash Dixit.

Bhagwati should have got it in his own right, though its diffcult to put your finger on one particular contribution. Dixit should have got it becasue Krugman would not have got it in first place if Dixit did not write that paper with Stiglitz!

So its important to do good work, but its probably more important to make your presence felt!

Economics of free labor mobility!

Ever wonder what would happen if humans moved freely across borders as against just goods and capital? Jess Benhabib and Boyan Jovanovic of the NYU have something interesting to say on this. They ask what level of migration would maximize world welfare. Welfare is assumed to be a weighted average of the utilities of the world’s various citizens. Using a calibrated one-sector model they find that unless the weights are heavily biased towards the rich, the extent of migration that would be optimal far exceeds the levels observed today. The claim remains true in a two-sector extension of the model.

Of course, political considerations and constraints are paramount in formulating an immigration policy; be it allowing in geeks or non-geeks! Notwithstanding this, the Benhabib-Jovanovic paper is definitely an interesting thought and simulation exercise in a relatively unexplored area of modeling and policy analysis.

Click here to read the article.

A Tale of Twenty Cities!

The National Council of Applied Economic Research (NCAER) has recently published a report titled, "The Next Urban Frontier: Twenty Cities to Watch". NCAER definitely expects the report to be a cash cow given that its priced at Rs.100,000 (approximately $2200)!

But that does not mean that you have to go without reading it. Here is a PowerPoint presentation based on the report. Relax, the numbers do all the talking!

McCain or Obama: What do economists think?

This recent article in the Economist gives interesting statistics on what Economists think about the two presidential candidates. Interesting points to note:

1. Economists either identify with the democrats or abstain from identification. Very few identify with the republicans.
   
2. A significant proportion of economists think that elections will influence the economic policy in years to come.

India-US Nuclear Deal

This controversial deal for trade in nuclear reactors targeted for civilian use has finally come through. All the downside apart, it will be great to have the energy problem solved in a much cleaner way. Read the coverage in the Financial Times for details.

However, given that the nuclear deal is for non military purposes, there is nothing ironic about it coming through on October 2, as FT would like us to believe!