World Bank Chief Economist Justin Lin's Marshall Lecture

A lot of readers seem to be interested in the research work of incoming World Bank Chief Economist Justin Lin. Here is latest one, a draft paper prepared for Marshall lecture delivered late last year.

BTW, simply gauging from the choice of economists to lead World Bank's and IMF's research (Simon Johnson) effort, it seems economists whose research efforts focus on the primary role of institutions as a driver of economic growth have been well accepted by the profession, at least by the bosses of the international financial institutions any way.

Larry Summers on Sovereign Investment Funds

The link is here, HT to Greg Mankiw for the pointer.

This is the part I like best:

Summers responded with an anecdote about how the Norwegian fund had sold short the shares of Icelandic banks, and the potential political complications those actions raised. Touché, right back! (At which point I turned to the private-equity executive sitting behind me, and said: "He's so sharp they should make him the president of Harvard." The response from the Harvard grad: "This is why he didn't make it as president of Harvard.") (Italics mine)

Taking Hayek Seriously Blog

Find it here. HT to the Austrian Economists for the pointer.

Oxford's Short Introduction Series

Oxford has published a series of short introductory books on various topics, I have read one of them called Political Philosophy, and it's pretty good.

Other books in the series I have purchased but have not read include Game Theory: A Very Short Introduction (by Ken Binmore, yes the guy who actually designed the scheme of auction for UK's 3 G license) and Economics: A Very Short Introduction. And David Warsh up at Economic Principals has a very positive review on the latter book.

More on World Bank's Chief Economist Justin Lin

Reader Kempton asked me if Justin did his thesis on China's agricultural reform. I believe he did. I think his 1992 AER piece was part of his dissertation. I believe that paper was also the first attempt to quantify the benefits of the introduction of the household responsibility system (聯產承包責任制) in China's country side.

Actually, in addition to Justin, I believe there are a couple of other Chinese graduates from Chicago who did choose China's agricultral reform as their thesis topic. They are James Wen (at Trinity), Dennis Yang (at CUHK) and Zhao Yaohui (at Beijing U)

A Surprise Cut in Fed Rate

Here is more.

Another recession is in the making years down the road if you believe in the Austrian business cycle theory (ABCT). Two wrongs (a low rate environment years ago which resulted in the current mess + current rate cuts to avoid the consequences of the earlier low rates) do not make one right.

But what are the options? If you were the Fed chief, and you believe in ABC theory, what would you do? Doing nothing? Just let the market sweep the slate clean and start all over again?

World Bank Chief Economist-to-be Justin Lin

Here is a story in mainland's financial magazine Caijing. Here is another story about Lin's employment up at WSJ.

Justin wrote his thesis under the supervision of the late Dale G Johnson at Chicago.

And here is a link to a video on Justin delivering his Marshall Lectures at Cambridge late last year.

Paul Krugman on Subprime

The fundamental cause of the sub-prime mess, according to Paul Krugman, is:

The real sin, both of the Fed and of the Bush administration, was the failure to exercise adult supervision over markets running wild.


His advice:

But let’s hope that when the dust settles a bit, Mr. Bernanke takes the lead in talking about what needs to be done to fix a financial system gone very, very wrong.

More here.

So the bottomline of Krugmanian approach to preventing economic crisis is:

Crisis ---> implies more regulation is need--->more regulation is implemented ----> if crisis still recurs ---> that means more and more regulations will be needed---> these additional regulations are implemented as well ---until the market is finally choked because of too many regulations, and there won't be any crisis. This then proves government regulation is effective in preventing crisis.

Assorted Links

1. A nice piece on supply side economics by U of Chicago professor A Coolsbee. He is advising the campaign of Senator Barack Obama of Illinois for the Democratic presidential nomination.

2. The Education of Ben Bernanke.

Violence for Fun?!

New research on mice shows the brain processes aggressive behavior as it does other rewards. Mice sought violence, in fact, picking fights for no apparent reason other than the rewarding feeling.

The mouse brain is thought to be analogous to the human brain in this study, which could shed light on our fascination with brutal sports as well as our own penchant for the classic bar brawl.

Here is more from LiveScience.

難題

Suppose you write a blog, somebody left a message/0r messages in one of your posts. And you all agree to meet for lunch.

The MILLION dollar question is: HOW should one go about organzing it. Yes, you could leave you contact number or your email address, but that's risky when cyber theft and all other threats are daily occurings.

The actual meeting is the easiest part of it all. You could just tell you cyber buddies what color of your outfit is or what book you are carrying with you for easy identification.


明, Angela, ideas please?

Gang Leader for a Day

That's the title of a book which I bought yesterday at Page One's Central branch.

What's it about?

Well, if you have read Freakonomics, you should remember that there is a segment in it where Steve Levitt wrote about his research on gang activities coauthored with sociologist S Venkatesh. Well, Venkatesh is the author of this new book.

Here is a short blurb of the book from Steve, here is another review by my former teacher Tyler Cowen up at Marginal Revolution.

Here is the page for the book.

Professor Ken Sokoloff

一位內地學生 追憶老師 UCLA professor of economic history Ken Sokoloff 的 教誨。

Finally, a Popular Book on Behavioral Economics

It's called Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Dan Ariely at MIT.

Advance praise from George Akerlof, Nobel Laureate in Economics:

“Predictably Irrational is wildly original. It shows why–much more often than we usually care to admit–humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser.”

Here is a page dedicated to the book, stay tuned!

Anna Schwartz: Blame Greenspan for the Sub-prime Crisis!

"There never would have been a sub-prime mortgage crisis if the Fed had been alert. This is something Alan Greenspan must answer for," she says.

More here from the British Paper the Telegraph. HT to Austrian Economists for the pointer.

The Most Bogus Reason for Building a Government House

According to Director of Administration, one of the nice things about the the $4.94-billion new government complex is that it will help ease unemployment problem of the contruction workers. This is the case because the project is expected to hire about 3,000 contruction works.

More here.

If these workers are really deserved to be helped, why don't they just pay them directly instead? Doing so would certainly cut the efficiencies which plague all government projects anyway. Regardingthe problem of shortage of office space for both civil servants and our "honourable" LegCo members, why not just rent some place for them?

Those LegCo members even dare to call themselves "OUR" representatives? It's our money we are talking about here. If they were indeed "OUR" Reps, they should be more careful in using our hard-earned money, wouldn't hey? If they were indeed "OUR" Reps, they should not have passed that governemnt expenditure bill in the first place!!!!!

Damn, am I angry!!!!

有心人

再次感謝明 (I do not know Aries and 明 are the same person), Kempton 和 王小姐為教授所撰寫的維基 entry (這字應如何翻繹 ?)。

Angela: Of course I have heard about the Lion Rock Institute, actually I am the one who asked Simon to try his luck at Apple when I left there back in 2005. Congratulations and welcome to Hong Kong.

Angela and Kempton: please do not address me as prof, I left Chinese University of Hong Kong in 2003. And even then, I was not a professor, I had only research and admin duties there.

Aries: Are you an econ major? Just curious. Also under the heading contribution to economics in professor Cheung's entry, item 2.4, I think what you are referring to should be neoclassical econoimcs, not New Classical economics(they are two different things). Of course, I could be wrong on that.

Professor Steven Cheung's Wikipedia Entry

Here it is.

Many thanks to the authors of this entry, Kempton, Angela Wang, Wallace and Aries.

I have also learned from Angela's blog that Cato has set up a Chinese venture, more here. And thanks Angela for the pointer. Even better, Angela is an economist by training!!!

不說鬼話，不說神話，只說人話

上引句是余英時 (Yu Ying-shih) 在傑出 華 人 系 列 節目中說的。 In addition, professor Yu also made use of a central theme in Hayek's Fatal Conceit to support his claim that it is dangerous for someone to think that society can be changed according to one's wishes.

Markets For Everything, a Car that Drives for Itself

Yes, all the major car makers (like Toyota, GM, VW, and Daimler AG) are working on cars that drive themselves. That is from a story in WSJ, more here.

And I think this stuff is really cool: "Millions of vehicles on the road now have GM's OnStar communications system. In the future it could provide the backbone for accident avoidance technology that kicks in if two vehicles equipped with communications systems are in danger of colliding."

Notable Books For January 2008

1. A book on prediction market for the layman.

2. How Judges Think by Judge Richard Ponser.

3. Tom Sowell's new book Economic Facts and Fallacies. Thanks to my old friend Dennis Chan for informing me about the existence of this title over dinner tonight.

4. Game Theory, part of the A Very Short Introduction series from the Oxford University Press by game theory master Ken Binmore.

A Revisionist History of Yuan Shikai's Attempt to Resurrect Monarchy

This is the book I am reading right now, highly recommended. The author is not as harsh on Yuan Shikai's attempt to revive monarchy as older historians.

集結號

自小愛看戰爭電影。喜歡的原因随時光的流逝而不同。

小時愛看戰爭場面，長大了仍喜歡，近年更多為這些電影描寫的手足情。

說實話，when is the last time you have a friend who is willing to use his or her life to save you? 現實中找不着的，只能在電影的虛擬世界中尋回。

人的本性是求存，軍令卻要求你留守到最後一刻，what would you do?

Here is the official website of the movie, Assembly. I saw it last night. It is really good, highly recommended.

Best Line I Have Read Today

说得不好听，经济发展是要有很多枯骨的——不容许枯骨，何来一将？

That's professor Steven Cheung talking, more here.

Actually, when you think of it, the professor's statment is very Hayekian. You let more players with diverse knowledge to participate in the exchange process, a larger knowledge base will get utilized as a result and the more likely that some successful product, production process or organization form will emerge from the the competitive process.

Does Shifting Polluting Industries Aboard Account for Lower Emissions in the US?

Since the 1970s, US manufacturing output has risen by 70% but air pollution has fallen by 58%. Was this due to improved abatement technology or shifting dirty production abroad?

Increased net imports of polluting goods account for about 70 percent of the composition-related decline in US manufacturing pollution. The composition effect in turn explains about 40 percent of the overall decline in pollution from US manufacturing. Putting these two findings together, international trade can explain at most 28 percent of the clean-up of US manufacturing.

More here.

A Movie You Wouldn't Want to Miss

It will start showing tomorrow at major cinemas in town.

Will the Real Coase Theorm Please Stand Up!

My view is that virtually all of the criticism of the Coase theorem
fails to appreciate the actual message that Coase intended with “Social
Cost” and is, therefore, essentially irrelevant. Tragically, because
we have focused on what he was not saying, we have not grasped what
he was saying. Consequently we have been neither sufficiently appreciative
nor sufficiently critical of his actual message.

Read the paper here.

Mind you, the author has not cited any of professor Steven Cheung's work in the piece. Will it affect the quality of his work, you decide by yourself!