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Market Power versus Price-taking in Economic Growth –

A Concise Introduction to Policy Responses to Europe’s fundamental economic challenges

Originally posted on Miguel Costa Matos:

This short essay was written as my submission towards the 1989 Generation Initiative, which will take place in London on the 26th June. I will be participating in the Economic Affairs roundtable alongside Nobel economist Christopher Pissarides, author and former economic adviser to the EU Philippe Legrain and others.

* * *

In this essay, I will discuss what economic policy reforms the EU should prioritise to respond to its fundamental economic challenges. I believe these two fundamental challenges to be the crisis of secular stagnation (de Grauwe, Summers) and the crisis of public finances.

The latter crisis involves two sub-challenges. The first is to deal with debt legacy. When the crisis started, total Eurozone debt stood at 80%. At the end of 2013, it was 95% and 5 countries have debt over 100%. As Paris and Wyplosz note in their MADRE plan, this means that the sovereign debt crisis…

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Does Digital Tech Lower Income & Reduce Jobs?

Originally posted on Delightful & Distinctive COLRS:

Source: HBR, May 2015

 Brynjolfsson and McAfee explain that while digital technologies will help economies grow faster, not everyone will benefit equally—as the latest data already shows. Compared with the Industrial Revolution, digital technologies are more likely to create winner-take-all markets.

once you adjust for inflation, an American household at the 50th percentile of income distribution earns less today than it did in 1998, even after accounting for changes in household size.

… the Great Decoupling. The two halves of the cycle of prosperity are no longer married: Economic abundance, as exemplified by GDP and productivity, has remained on an upward trajectory, but the income and job prospects for typical workers have faltered.

Workers’ prospects are deteriorating in the developing world, too. A recent study by Loukas Karabarbounis and Brent Neiman found that labor’s share of GDP had declined in 42 out of 59 countries, including China, Mexico, and…

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Five For Friday: Costs of War.

Originally posted on middle east revised:

This week, Five For Friday presents five charts and graphics concerning wars in Afganistan, Iraq and Pakistan. These exist thanks to the Costs of Warproject. First released in 2011, the Costs of War report has been compiled and updated by more than 30 economists, anthropologists, lawyers, humanitarian personnel, and political scientists as the first comprehensive analysis of over a decade of wars in Afghanistan, Iraq, and Pakistan.

The project analyzes the implications of these wars in terms of human casualties, economic costs, and civil liberties. Some of this data is from 2011 and 2012, so have in mind that these numbers are probably significantly higher today.

1. Iraqi IDPs and refugees.


There are more than 1.5 million internally displaced Iraqis and 1.5 million Iraqi refugees. Fifty-eight percent of Iraqi IDP households are food insecure, consuming only cereals and carbohydrates on a daily basis. Approximately 500,000 people live as squatters in Iraq. For more on…

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inheritance tax changes as a lever for structural change in Japan


value investing and corporate change…

One of the basic tenets of value investing in the US is that when a company is performing badly, one of two favorable events will occur:  either the board of directors will make changes to improve results; or if the board is unwilling or incapable of doing so, a third party will seize control and force improvements to be made.

…hasn’t worked in Japan

Not so in Japan, as many Westerners have learned to their sorrow over the thirty years I have been watching the Japanese economy/market.

Two reasons for this:

culturally it’s abhorrent for any person of low status (e.g., a younger person, a woman or a foreigner) to interfere in any way with–or even to comment less than 100% favorably on–a person of high status.  So change from within isn’t a real possibility.

–in the early 1990s, as the sun was setting…

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African and Asian leaders call for new development bank

Originally posted on developmenttruths:

Leaders of emerging African and Asian countries are calling for the establishment of a new development to rival the World Bank.

At the 60th commemoration of the Asian African Conference in Jakarta, Indonesia last month a number of leaders agreed that, to succeed, there is a need for a new bank, totally separate from the World Bank and the International Monetary Fund (IMF) because the two can no longer be trusted to fully fund development infrastructure projects.

Indonesian President Joko Widodo, the conference host, said those who still insisted that global economic problems could only be solved through the World Bank, International Monetary Fund and Asian Development Bank were clinging to “obsolete ideas”.

In his opening statement, Widodo said that African and Asian countries felt a global injustice because the developed world is reluctant to change the status quo:

“The view that the world economic problems can only be solved by…

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