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October 10, 2015

Latest Posts from Economist's View

Posted: 04 Oct 2015 12:06 AM PDT
Posted: 03 Oct 2015 03:52 PM PDT
We need to do more to "inoculate young children's pliable brains against the ravages of poverty":
How poverty affects children's brains, Washington Post: ... In a study published this year in Nature Neuroscience, several co-authors and I found that family income is significantly correlated with children's brain size — specifically, the surface area of the cerebral cortex, which ... does most of the cognitive heavy lifting. Further, we found that increases in income were associated with the greatest increases in brain surface area among the poorest children. ...
Some feared the study would be used to reinforce the notion that people remain in poverty because they are less capable than those with higher incomes. As neuroscientists, we interpret the results very differently. We know that the brain is most malleable in the early years of life...
Our [new] clinical trial is designed to provide strong evidence regarding whether and how poverty reduction promotes cognitive and brain development. This study, however, will take at least five years to complete — far too long for young children living in poverty today. We should not wait until then to push for policies that can help inoculate young children's pliable brains against the ravages of poverty. ...
Posted: 03 Oct 2015 11:46 AM PDT
Joshua Gans:
The Romer Model turns 25: 25 years ago this month Paul Romer's paper, "Endogenous Technological Change" was published in the Journal of Political Economy. After over 20,000 citations, it is one of the most influential economics papers of that period. The short version of what that paper did was to provide a fully specified model whereby technological change (i.e., the growth of productivity) was driven not be outside (or exogenous) forces but, instead, by the allocation of resources to knowledge creation and with a complete description of the incentives involved that provided for that allocation. Other papers had attempted this in the past — as outlined in David Warsh's great book of 2006 — and others provided alternatives at the same time (including Aghion, Howitt, Grossman, Helpman, Acemoglu and Weitzman) but Romer's model became the primary engine that fueled a decade-long re-examination of long-term growth in economics; a re-examination that I was involved in back in my student days.
Recently, Romer himself has taken on others who, more recently, have continued to provide models of endogenous economic growth (most notably Robert Lucas) for not building on the work of himself and others that grounded the new growth theory in imperfect competition but instead trying to formulate models based on perfect competition instead. I don't want to revisit that issue here but do want to note that "The Romer Model" is decidedly non-mathy. As a work of theoretical scholarship, every equation and assumption is carefully justified. The paper is laid out with as much text as there is mathematics. And in the end, you know how the model works, why it works and what drives its conclusions. ...
After explaining the contributions in detail, he also covers:
So why has work in this area somewhat petered out? ...
And ends with:
In summary, the Romer model was a milestone and led to much progress. It is a stunningly beautiful work of economic theory. But there is more to be done and my hope is we will see that happen in the future as the cumulative process that drives new knowledge can drive new economic knowledge as well.
Posted: 03 Oct 2015 11:16 AM PDT
The people who say "think of the children!" when stoking unfounded fears about the debt seem to have no problem with this. Maybe the children aren't really their main concern:

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