• One more nail in the coffin of climate skeptics


    A new paper in the Proceedings of the National Academy of Science, by James Hansen, Makiko Satoa, and Reto Ruedyb, argues that the increased occurence of episodes of very high temperatures, such as the 2003 heat wave in Europe, provides statistical confidence that there is an underlying process of global warming.

    Perception of climate change
    “Climate dice,” describing the chance of unusually warm or cool seasons, have become more and more “loaded” in the past 30 y, coincident with rapid global warming. The distribution of seasonal mean temperature anomalies has shifted toward higher temperatures and the range of anomalies has increased. An important change is the emergence of a category of summertime extremely hot outliers, more than three standard deviations (3σ) warmer than the climatology of the 1951–1980 base period. This hot extreme, which covered much less than 1% of Earth’s surface during the base period, now typically covers about 10% of the land area. It follows that we can state, with a high degree of confidence, that extreme anomalies such as those in Texas and Oklahoma in 2011 and Moscow in 2010 were a consequence of global warming because their likelihood in the absence of global warming was exceedingly small. We discuss practical implications of this substantial, growing, climate change.

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  • Le crime de la finance

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    Inside job, en VF

    Et si la crise financière dont nous subissons encore les effets était bel et bien une vaste fraude ?
    Voici un “autre récit” du krach. En tout cas, pas celui proposé en général par les économistes ou les financiers.
    Décryptant les mécanismes ayant permis une succession d’actes criminels, reprenant les événements pièce par pièce et les replaçant dans une histoire plus longue, Jean-François Gayraud va ainsi au-delà de la stigmatisation de quelques boucs émissaires ou de la dénonciation de certains excès. Des politiques aveugles et dogmatiques de dérégulation des marchés ont ouverts la voie à des comportements criminels de grande ampleur au point de déclencher la crise des “subprimes”. Dès lors, pour lui, il est impossible d’envisager un vrai assainissement, une reconstruction durable de la finance si ce diagnostic criminel n’est pas fait.

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  • The US election at a glance


    Here are a couple of great sources. A memo by Doug Sosnik, which summarizes a number of key issues around the 2012 presidential election.

    Ds Fall Elections 9.14.2012 Final Memo

    Particularly noteworthy in my view:

    – A pretty clear summary of why Obama maintains a strong advantage so far, including this, which tend to prove that economic agents don’t have such short memory after all:

    Voters Still Blame Bush More than Obama for Economic Problems: The public continues to blame Bush more than Obama for the current state of the economy. According to an August 25th Washington Post poll, more than half of voters (54%) blame Bush for the current economic problems in the country, while only 32% blame Obama.

    and this, which is the state-by-state reason why Obama is in such a strong position:

    Even though the national polls continue to show the presidential race neck-and-neck, the surveys mask Obama’s relative strength when it comes to the allocation of Electoral College votes. Obama’s path to secure the 270 electoral votes he needs to win is far easier than Romney’s. A state-by-state electoral analysis continually demonstrates Obama’s decisive advantage heading into the final eight weeks.

    – A nice illustration of the key role of money in US presidential elections:

    We are entering the stage of the campaign where none of the boasting about contesting states matters unless it’s backed up by significant expenditures in key media markets. This week, NBC’s First Read analyzed spending by Obama and Romney and their so-called independent support groups since March 19. They found that of the $575 million booked on television and radio for the general elections the greatest expenditures have gone to three states that would seal an Obama victory: Florida (21 EV)-$117.4 million, Ohio (18 EV)-$112.1 million and Virginia (13 EV)-$85.7 million.
    The Obama campaign has pinned down Romney in states that he should have put away by now. At the same time, Romney’s campaign has burned through a lot of money in Obama states that it failed to make competitive, leaving Romney in a much more defensive position in the final weeks.
    In North Carolina, a state which is pretty far down on Obama’s list of must win states, Romney has been forced to book $12.5 million dollars more than Obama in paid media simply to hold on to his tenuous lead. In Pennsylvania, Romney has spent $3 million more than Obama in a state that most people no longer consider competitive. Similarly, in Michigan, a state that seems well outside of Romney’s reach, his campaign has spent $8 million on media to Obama’s $10,500. So far, Romney has booked $7.6 million dollars of media in Wisconsin, while Obama and his supporters have only booked $535,000 (although the campaign just announced that it will buy an additional $670,000 of media time in the state).

    – And the leadership question:

    1. Democrats currently have the three most towering figures in American politics: Obama (if he wins), Bill Clinton and Hillary Clinton. The Republicans simply have no equal. Of course, neither Barack Obama nor Bill Clinton is eligible to run for president in 2016, and it remains to be seen if Hillary Clinton will re-enter the fray. Regardless, it is difficult to recall a time when one party had the three most dominant political figures at the same time.
    2. Democrats now have the high ground on three issues – foreign policy, social issues and taxes – that have virtually paralyzed them for the past 50 years.

    Finally, if you are rather interested in election forecast, this is a great source: US election forecasts and analysis.

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  • Formalización en la triple frontera


    Recientemente publicado en Foreign Affairs, este artículo de Christina Folch (su blog “defringing Latin America” figura en mis enlaces permanentes al costado del blog), presenta un panorama detallado de la situación de la triple frontera. Particularmente interesante resulta el recuento del proceso de formalización del negocio de reexportación, iniciado por la misma comunidad de comerciantes locales, y codificado desde el 2009 a través de un acuerdo entre el gobierno de Fernando Lugo y el de Lula en Brasil. El quiebre de dicho proceso, en gran medida ignorado en el debate público, es probablemente una de las consecuencias más dañinas del reciente quiebre institucional y de la postura de desconfianza de las actuales autoridades vis à vis del Mercosur.

    Desperate for a way to halt the economic contraction, merchants in Ciudad del Este’s technology sector have taken a gamble on transparency to lower costs in Paraguay and increase sales in Brazil. An importer based in Paraguay acknowledged in 2006 that one of the main reasons he (and others) operated in the informal sector was the price of doing business in Paraguay: in addition to a minor tax increase, the regular cost of bribes for fully registered firms doubled the cost of importing goods into the country. So, with transparency as the goal, traders, looked to USAID, the Mercosur agreement, and the international community to carve out their own niche in the Common Market.

    First, using a 2003 Mercosur provision that allowed special tax breaks for technology imports, merchant associations proposed a plan to stabilize profit margins by ensuring that merchandise from Ciudad del Este would still be priced competitively for resale in the Brazilian market. It involved simplifying and reducing the Brazilian federal tax on such goods from 45 to 60 percent down to 25 percent; regularizing and legalizing the reexport trade, which would eliminate the black market premium that drives up costs; and making importing into Paraguay transparent, which would stem the cost of customs bribes.

    In order to convince the Brazilian government to grant this concession to Ciudad del Este, merchant leaders started to “formalize” their own businesses. The aim was to encourage all import firms to register, systematize and document all their imports, document all their sales to Brazilian petty merchants, pay all the proper taxes, register all the vehicles they used to transport goods across the Friendship Bridge, and, most importantly, store all of this information in a database housed and monitored in Brazil’s Receita Federal (rather than the existing state of control by Paraguay’s less attentive Customs Office). By conducting formalization under the aegis of Mercosur, merchants hoped to curtail the predatory pressures from customs officials in Paraguay.

    In 2009, the outlines of the merchants’ plans were codified; the “Unified Tax Regime” became law following an agreement signed by Brazilian President Lula da Silva and Paraguayan President Fernando Lugo. In February 2012 both countries enacted the UTR. Brazil financed the technical infrastructure and rolled out the new system in June. The first transaction under the new law took place on June 8, when a Brazilian petty merchant bought $1000 worth of electronics from a shop in Ciudad del Este, crossed the Friendship Bridge, and registered the transaction at the Brazilian Customs Office.

    If left operational, the UTR’s transparency and documentation regimes will eventually help tamp down on transnational crime and provide the very surveillance the 3+1 Group seeks. But recent events in Paraguay have jeopardized the UTR and threaten to punish those merchants who have formalized their businesses. At the end of June, President Fernando Lugo was ousted in an impeachment trial widely understood to have been the result of backroom deals between his vice president’s party and opposition parties. Within Paraguay, the anti-democratic impeachment is a step backward — now, the “fully formalized” firms are at a greater risk from predatory behavior from customs officials who operate with impunity. Governments across Latin America resoundingly condemned the events in Paraguay, describing the transition as a golpe, a coup. Mercosur suspended the country’s membership and only icily recognized the new president, Federico Franco. Many speculate that Paraguay might withdraw from the Common Market, which leaves the future of the UTR and the Triple Frontier uncertain.

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  • Deforestation and carbon emissions


    In this previous post, I refered to work showing that policies can help curbing deforestation when cleverly designed and implemented (note that the Brazilian experience also calls for a reconsideration of the widespread idea that developing countries addressing environmental challenges at home, in particular carbon emissions, would necessarily do so at the expense of economic growth, thereby supporting an unfair burden.).

    This news article from Nature provides some more precisions on how the deforestation trend may actually translate into an emission reduction.

    The rate of deforestation in the Brazilian Amazon has plummeted by 77% in the past seven years, but annual carbon emissions associated with deforestation have not fallen nearly as much, says a Brazilian study that combines satellite data and biomass maps to model the change. The difference is in large part due to a natural lag as carbon stocks slowly decay and make their way into the atmosphere as carbon dioxide.

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  • Social sciences new frontier?


    Among recent evolutions that change the social science research landscape in general and, peripherally, that of economics, is the growing use of “big data”. This Nature News feature provides an accessible summary and some references on this trend.

    The challenge and opportunities for economic researchers may well be to bring their field specificities to any such interdisciplinary undertaking. I am thinking in particular of the vast toolkit of econometrics, which will be needed to address the many potential selection bias issues:

    When such Twitter-based polls began to appear around two years ago, critics wondered whether the service’s relative popularity among specific demographic groups, such as young people, would skew the results. A similar debate revolves around all of the new data sets. Facebook, for example, now has close to a billion users, yet young people are still overrepresented among them.

    I am also thinking of the ability to bring a theoretical framework to bear on issues before crunching the data:

    Granovetter has a more philosophical reservation about the influx of big data into his field. He says he is “very interested” in the new methods, but fears that the focus on data detracts from the need to get a better theoretical grasp on social systems. “Even the very best of these computational articles are largely focused on existing theories,” he says. “That’s valuable, but it is only one piece of what needs to be done.” Granovetter’s weak-ties paper, for example, remains highly cited almost 40 years later. Yet it was “more or less data-free”, he says. “It didn’t result from data analyses, it resulted from thinking about other studies. That is a separate activity and we need to have people doing that.”

    This should have a large impact for research oriented towards developing countries. The huge increase in coverage that started with mobile phones and, as these allow many previously unconnected poor households to access the internet, now extends to social networks use, provides a clear opportunity to access better data from otherwise poorly studied populations. This is not to say that the digital divide is dead, but lines are certainly shifting and new research should quickly fill the gap.

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