Readings in Economics

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    Corporate tax in America: How to stop the inversion perversion | The Economist →

    Twenty years ago inversions were rare. But as other countries chopped their rates and America’s stayed the same, the incentive to flee grew. Until a decade ago Bermuda and other tax havens were the destination of choice, until Congress banned inversions where less than 20% of the company changed hands. Democrats have proposed expanding that prohibition to any transaction where less than 50% of the company changes hands—so an American company that bought a smaller foreign firm could not reincorporate abroad if its original shareholders remained in charge. Such a ban would be at best a temporary palliative. An American company paying higher taxes than its foreign competitors has a powerful incentive to find a way around the rules. Consultants are already coming up with dodges in case this proposal becomes law.

    — 16 hours ago
    #the economist  #economics  #tax reform  #inversions  #corporate taxes  #America  #law and economics 
    Wealth Inequality May Be a Bigger Problem in the U.S. Than Income Inequality | St. Louis Fed On the Economy →

    Research Director and Economist Christopher Waller and Senior Research Associate Lowell Ricketts, both with the St. Louis Fed, noted that, “Households in the top 10 percent of the income distribution have earnings so great that they raise mean income over the median for the entire population.” In 2010, the median household income was about $46,000, while the mean income was close to $78,500. They also noted that some inequality in the U.S. income distribution naturally develops between age groups and that a lot of it is determined by educational attainment.

    — 19 hours ago
    #federal reserve  #income inequality  #saint louis fed  #economics  #families and households  #money 
    Exceptional forecasting on the part of the government.

    Exceptional forecasting on the part of the government.

    — 1 day ago with 3 notes
    #tuition  #college  #education  #subsidized  #economics  #government  #politics  #primed for disruption 
    Exceptional forecasting on the part of the government.

    Exceptional forecasting on the part of the government.

    — 1 day ago with 2 notes
    #tuition  #college  #education  #subsidized  #economics  #government  #politics  #primed for disruption 
    Toward a Run Free Financial Systems | John Cochrane →

    Via @johnhcochrane

    The financial crisis was a systemic run. Hence, the central regulatory response should be to eliminate run-prone securities from the financial system. By contrast, current regulation guarantees run-prone bank liabilities and instead tries to regulate bank assets and their values. I survey how a much simpler, rule-based, liability regulation could eliminate runs and crises, while allowing inevitable booms and busts. I show how modern communications, computation, and financial technology overcomes traditional arguments against narrow banking. I survey just how hopeless our current regulatory structure has become.

    — 2 days ago
    #John cochrane  #chicago booth  #long reads  #papers  #academics  #economics  #finance  #systems  #research 
    The Grumpy Economist: Blair and Reserves for All →

    Via @johnhcochrane

    What is it? Banks can have accounts at the Fed, called “reserves,” and these accounts pay interest. In essence, the new program allows other financial institutions, that aren’t legally “banks,” to also have interest-paying accounts at the Fed. The program involves repurchase agreements, which is a bit silly — who needs collateral from the Fed? — but really think of it just as interest-paying bank accounts at the Fed.

    — 2 days ago
    #john cochrane  #chicago booth  #federal reserve  #banking  #finance  #economics  #financial crisis 
    A theory of the allocation of a Nobelist’s time | The University of Chicago Magazine →

    This is wonderful:

    As Nobel laureates, central bankers, Council of Economic Advisers chairs, and other distinguished guests made their way to assigned tables throughout the dining room, I was told a seat for me had been found, but I would have to be on my best behavior. Ronald Coase couldn’t make it to the dinner, and there was an open seat at the head table. It was Gary; Guity Becker, PhD’73; Milton; Rose Friedman, PhB’32; Jim Heckman; Lynne Heckman, AM’73; University President Don Randel and his wife, Carol; trustee Ned Jannotta; and me—a philosophy/political science/economics undergraduate who wasn’t even supposed to be in the room.

    I sat next to Guity, who when I approached the open seat said, “You know, there’s supposed to be a Nobel laureate sitting here, so I hope you can keep up your end of the conversation.” I must have done all right, because she encouraged Gary when I asked him if he had any research positions available. He told me to come by his office and we’d figure something out—which I promptly chalked up to bar talk, and left for three months to study Western European civilization in Barcelona. It’s a testament to how much Gary trusted Guity’s judgment that there was a position waiting for me when I returned.

    — 2 days ago
    #gary becker  #economics  #UofC economics  #nobel  #life  #opportunity  #editorial  #remembrance 
    US Food Prices Declining on Increased Supply

    US Food Prices Declining on Increased Supply

    — 2 days ago with 1 note
    #food prices  #economics  #agriculture  #charts  #statistics 
    Smartphones as Branch Bank Job Killer

    via @Convertbond: (1) Bank of America Deposits using Smart Phones and Tablets

    (1) 2014: 10%
    2008: 0%

    (2) 1487 net US bank branches were closed over the last year, 113 in Manhattan shutdown since 2012

    — 3 days ago with 3 notes
    #banking  #technology  #creative destruction  #joseph schumpeter  #economics  #mobile  #consumer electronics 
    "Different constraints are decisive for different situations, but the most fundamental constraint is limited time."
    Gary Becker, @nobelprize_org Lecture, December 9, 1992
    — 3 days ago with 1 note
    #gary becker  #uchicago  #nobel prize  #economics  #constraints  #time  #quotes  #academics  #genius  #lecture