Showing posts from March, 2013

Reblogging Comments: "Why we should stop teaching Mundell Fleming" (S. Wren-Lewis)

In his last blog post, S. Wren-Lewis from "Mainly Macro" blog argued that the "classical" Mundell-Fleming model should be out of the students macroeconomic course, and the Uncovered Interest Covered (UIP) model instead. The main reason is that Mundel Fleming's assumption that domestic interest rate should be equal to world interest rates, and the theoretical effects that this kind of assumption generates. Though, S. Wren-Lewis is a little extreme, because one shouldn't eliminate economic theories just because they seem to be wrong (if fact all might be wrong, because of the more o less lack of reality). In other words, we might find UIP model adequate for contemporary analysis, but still have some weakenesses. For instance, arbitrage theory is not totally stable nor efficient, which could be the case of some financial markets. Even so, if efficiency and stability becomes an assumption, the UIP is  more discretional, in a simplistic way, which requires lots o

Comentario de artículo: "La tradición igualitaria de la economía". (Cohen, T. George Mason Univ.)

Un reciente artículo en el diario New York Times, escrito por Tyler Cohen, de la Universidad George Mason, afirma entre otras cosas lo siguiente: "La economía se asocia usualmente al estudio y defensa del egoísmo e inequidad material, no obstante, tiene un aspecto central de libertad civil e igualitaria que debería ser celebrado. Y dicho aspecto central puede guiarnos en direcciones muy sorprendentes (...)" . [ Link al artículo] . Así mismo, luego en otra parte del artículo afirma que: "En cualquier caso, existe un aspecto moral sobreviniente Imagine que es su deber profesional reportar un analysis costo-beneficio de una política de migraciones liberalizadora. Ud. no soñaría en realizar un estudio que contabilice a "solo hombres" o "sólo blancos", por lo menos no especificando claramente las razones por las cuales está dividiendo la data de esa manera". No debe confundirse lo igualitario con lo equitativo. (Inclusive puede haber un problema de t

Paper Comment: "The Economics of Political Transitions: Implications for the Arab Spring"

ABSTRACT: "Over the past two years, ongoing political transitions in many Arab countries have led to social unrest and an economic downturn. This paper examines comparable historical episodes of political instability to derive implications for the near- and medium-term economic outlook in the Arab countries in transition. In general, past episodes of political instability were characterized by a sharp deterioration in macroeconomic outcomes and a sluggish recovery over the medium term. Recent economic developments in the Arab countries in transition seem to be unfolding along similar lines, although the weak external environment and large fiscal vulnerabilities could result in a prolonged slump." (by: Khandelwal, Padamja ; Roitman, Agustin / IMF Working Paper No. 13/69 ) COMMENTS: A very interesting papers that deals with the relationship between political cycles and its economic effects. While the Latin-America's economic consequences of such phenomenon are slightly d

"De los modelos ARDL - Primera Parte" (Traducción)

La siguiente es una traducción al español del post originalmente publicado por D.Giles en su blog "Econometric Beats" ; la cual se publica sólo con fines académicos: "Modelos ARDL [Rezagos Distribuidos]- Parte I He prometido, durante demasiado tiempo, proveer una entrada sobre los modelos ARDL y pruebas de campo. Bueno, por fin llegó la hora de hacerlo! "ARDL" significa modelo "Autoregresivo de Rezagos Distribuidos". Los modelos de regresión de este tipo han estado en uso durante décadas, pero en tiempos más recientes han demostrado  proporcionar un vehículo muy valioso para probar la presencia de relaciones de largo plazo entre series de tiempo económicas.

Paper Comments: "Young Democracies and Government Size: Evidence from South America" (Bittencourt, M.)

ABSTRACT: "We investigate in this paper the hypothesis that when democracies are young, or still fragile and unconsolidated, the size of government tends to increase, predictably in an attempt of redistribution, or to buy out the electorate, so that democracy becomes acceptable and "the only game in town". For that we use a sample of all nine South American young democracies during the period between 1970 and 2007. The results, based on dynamic panel data analysis, suggest that the young democracies of South America have been indeed associated with bigger governments. Furthermore, we test for the hypothesis that the outgoing dictatorships of the day engaged in activities which would bequest the young democracies with big bills to be repaid at the initial stages of those new democratic regimes. This hypothesis is not con.rmed by the analysis conducted here. Finally, there is evidence that, as those democracies mature over the long run, the size of governments tends to dec

How true is that Dave Giles? "Non-linear Functions of Non-Stationary Data Can be Stationary"

What will happen if you do a non linear transformation to non-stationary data? Dave Giles  help us understand the obvious but important aspects of data transformation, in particular a Sin - Cos  transformation.  Nevertheless, besides the matematical and statistical usefulness of data transformations, the econometric foundations and analysis is often forgotten. There is no way you can explain economically those graphs to Kids, Mr. Giles. That why econometrics is a different from the others, where the "econ" prefix, must never be kept aside.