EconoMonitor

Ed Dolan's Econ Blog

Roubini Topic Archive: Advanced Economies

  • When Does ‘It Will Hurt the Poor’ Outweigh ‘It’s Good for the Environment?’

    “Nearly every environmental policy hurts the poor the most,” say Iain Murray and David Bier of the Competitive Enterprise Institute. Writing recently in the Washington Examiner, they don’t limit their criticism to absurdities like federal tax credits for the $100,000 plug-in Fisker Karma (“a bold expression of uncompromised responsible luxury.”) The two analysts have it […]

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  • Are Financial Regulators Flying Blind? Would Better “Risk Topography” Help?

    Data on the capital and liquidity of banks are the navigation aids that regulators depend on to avoid another financial crash. Improvements to these indicators, adopted last year by the Basel Committee on Bank Supervision, are among the most heralded regulatory reforms since the 2008 crisis. But what if the instruments are faulty, even in their upgraded form? If so, regulators are flying blind, and our chances of avoiding another crash are slim. What can be done?

    A recent paper by three prominent financial economists suggests one possible answer: a sort of Manhattan project that would map out a “risk topography” of the financial system. The authors are Markus K. Brunnermeier of Princeton, Gary Gorton of Yale, and Arvind Krishnamurthy of Northwestern. All three are also affiliated with the National Bureau of Economics Research. (I will refer to the team in what follows as BG&K.)

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  • The Ecosocialist Critique of Capitalism vs. Real World Socialism

    It has been twenty years now since first glasnost and then the collapse of the USSR lifted the curtain on the appalling environmental record of Soviet socialism. Over that same 20 years, the burgeoning economy of socialist China has overtaken the United States as the world’s largest emitter of greenhouse gasses. Still, it remains common to hear capitalism singled out as the greatest environmental threat to our planet, and socialism as its salvation.

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  • What Can We Learn About the Ryan Medicare Plan from the German Experience?

    Last week Republicans in the US House of Representatives, following the lead of Representative Paul Ryan, endorsed a far-reaching plan to reform Medicare, the nation’s health care system for the elderly. Since it began in 1965, Medicare has been a government-run, single-payer system that reimburses private doctors and hospitals for the health care services they provide. Under the Ryan plan, it would be transformed into a system in which seniors would choose from a list of  competing private insurance plans, with the premiums paid partly by government and partly by the beneficiaries themselves.

    Supporters of the Ryan plan see several benefits. An open letter, posted on the web site of the American Enterprise Institute and signed by a list of prominent physicians and economists, puts it this way:

    Having more control over their health care spending would encourage consumers and patients to make better health care choices. It would stimulate more innovative and accountable competition by health care providers and give them incentives to better coordinate the care of their patients. Enhanced competition could offer seniors relief from rising Medicare premiums. Just as important, this reform could begin to ease the crushing tax burden imposed by the current program on our children and grandchildren.

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  • Is Tax Reform on the Table, or Not?

    Last October I wrote a lengthy post explaining why tax reform is the best path to growth-friendly deficit reduction. At that time, six short months ago, hardly anyone in Washington was talking about tax reform. Now both the Republicans, in the Ryan plan, and President Obama, in this week’s deficit-reduction speech, are trumpeting tax reform as the centerpiece of their respective proposals. Does that mean tax reform is finally on the table? Should we expect a dramatic, bipartisan breakthrough soon? I’m afraid not. 

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  • Is Financial Reform Working, or Will it Make Things Worse?

    The 2008 financial crash gave rise to a world-wide call for a review of regulations. In the United States, the EU, and international forums like the Basel Committee on Bank Supervision, the conclusion was reached that regulators had allowed banks and other financial institutions to take risks well in excess of those justified by the public interest. Legislatures were brought into the act where needed to change the regulatory framework. Everyone vowed to fix things.

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  • Econ 101, Hayek, and Why We Are Losing the War Against Drugs

    Last week The New York Times reported that the drug cartels, after shaking the political and economic structures of Colombia and Mexico to their foundations, are moving into Central America. Just one more sign, as if we needed it, that the United States is losing its endless war on drugs.

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  • Will Central Banks Accommodate the Oil Price Shock?

    Inflation rates are rising in the world’s major economies. The consumer price index rose by half a percent in the United States in February, equivalent to an annual rate of 6.2 percent. Consumer prices rose at a 4.4 percent annual rate in the UK and a 2.4 percent rate in the euro area. All three central banks have explicit or implicit inflation targets of 2 percent or less.

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  • Move Over Ethanol, Market Forces Favor CNG as a Gasoline Replacement

    Ethanol is finally getting the bad press (1) (2) it richly deserves. Cracks are even beginning to appear in its once-solid support on Capitol Hill. In April, the Senate Environment and Public Works Committee plans to hold hearings that are expected to skewer ethanol. The Committee is led by Democratic Chair Barbara Boxer and ranking Republican James Inhofe, both committed foes of burning food to run our cars.

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  • What Can the U.S. Learn from the French Health Care System?

    As reported in the first post in this series, the French health care system comes in at or near the top of international rankings, while the US system falls well down the lists. It stands to reason, then, that US health care reformers should have something to learn from the French experience, but just what? There seem to be lessons both for those who are optimistic about US health care reform and those who think reform will be difficult.

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