More of these here
Economics Teaching Conference
4 weeks ago
Tuesday, November 25, 2008
Times cartoon
After several keynesian measures announced yesterday in the Pre-Budget report by the Chancelor Alistair Darling, the Times published this cartoon on today's cover:
More of these here
More of these here
Czech National Bank on the financial crisis
I would like to recommend some analyses by the CNB.
Governor Tuma and vice-governor Singer:
Member of the Board Tomsik:
Governor Tuma and vice-governor Singer:
Causes of the global crisis:
Coincidence of many global factors synchronisation of business cycles worldwide
Economic Financial Political Institutional
Czech Specifics:
- Balanced financial system financed by deposits rather than by foreign funds
- Sound non-financial sector and households (in total, financial assets and liabilities, indebtedness, etc.)
- External balance (trade surplus, modest current account deficit)
- Negligible share of toxic assets in domestic financial system (less than 1% of total assets)
- High ability for rapid supervisory action (tested in practice and by Société Générale hiccup)
Member of the Board Tomsik:
The macroeconomic situations in Hungary, Iceland, or Belgium have shown that countries and their financial markets have been suffering from crisis no matter whether they are a member of the Euro zone or not
National currency obviously no guarantee against the crisis.
The point is to have reasonable and stable economic policy and prudential approach of domestic regulation.
Without it you cannot have stable economic environment disregarding whether the country is inside or outside the Euro zone.
Sunday, November 23, 2008
WSJ: Lawrence Summers to Head National Economic Council
President-elect Barack Obama will name former Treasury Secretary Lawrence Summers the director of his National Economic Council, placing the Harvard University economist he passed over for Treasury secretary inside the White House as his closest economic adviser, Democratic officials said Saturday night.
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Obama with former Treasury Secretary Larry Summers in July.
The move came as the president-elect prepares Monday to introduce his new Treasury secretary nominee, Timothy Geithner, and the rest of his economic team at an event in Chicago Monday.
Among those on stage will be Mr. Summers, who was central to his campaign's economic team and is now leading efforts to draft a massive economic stimulus plan the president-elect hopes to sign into law as one of his first acts as the nation's leader.
Mr. Obama has instructed his economic advisers to draft a stimulus that could dwarf the $175 billion version he campaigned on, stretching it over two years and pushing to create 2.5 million new jobs with it.
Lawrence Summers
The plan, with its extended time horizon, could also push back planned tax increases on families earning over $250,000 from a planned 2010 start date to 2011, when they are set to expire in current law, economists familiar with the effort say.
"I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011 -- a plan big enough to meet the challenges we face that I intend to sign soon after taking office," Mr. Obama said in his Saturday radio address.
The plan he campaigned on was supposed to be large enough to create one million new jobs, though aides cautioned a final price tag could not be determined simply by more than doubling the initial $175 billion figure. Experts have called for economic infusions anywhere from $300 billion to $500 billion, a range that Obama aides are working within.
Jan Machacek: Havlův růst růstu
Kazdy den vychazi zajimave glosy Jana Machacka v Respektu.
V jedne z poslednich, nazvane Havlův růst růstu, polemizuje s kritikou ekonomickeho rustu:
Bývalý prezident Václav Havel se rád zlobí na hospodářský růst, resp. růst jako takový. Naposledy tak učinil při besedě v Brně, kterou otiskly Lidové noviny. Havel zde mluvil o „růstu růstu“ a ptal se proč musíme stále růst, když je nás pořád stejně. Taky si myslí, že se fenomén růstu bojí kdokoli kritizovat, už to prý nečiní ani strana zelených.
Růst si ale lze představit i nefinančně, filozofičtěji. Je totiž inherentně zakotven v lidské povaze i společnosti. Srovnejme si to s dialogem. Normální lidé (nikoli někteří čeští politici a novináři) vstupují do diskuse nikoli proto, aby se vzájemně zničili, nýbrž proto, aby debata vedla k vzájemnému obohacení.
Podobně je to v obchodě. Lidé nevstupují do obchodních transakcí proto, aby jeden druhého okradl. Na konci úspěšné obchodní transakce jsou obohaceni oba (nebo více aktérů). Růst si můžeme „nefinančně“ představit tak, že když hospodářství roste, proběhne v ekonomice více transakcí, které vedou k obohacení aktérů. Když hospodářství klesá, přibývá transakcí, které jsou pro jednu nebo obě strany nakonec nevýhodné (a frustrující).
Měl-li ale Havel na mysli především nekontrolovatelný růst měst, skladišť, překladišť a aglomerací laciných šmoulodomů, lze mu dát jen za pravdu. A bývalý prezident je koneckonců „povoláním“ absurdní dramatik, nikoli tvůrce bezchybných logických systémů a nenapadnutelných tvrzení. Může se mýlit, ale stačí když zůstává inspirativní.
Friday, November 21, 2008
Varian on new economics
If there was a new economy, why wasn't there a new economics?
New York Times; New York, N.Y.; Jan 17, 2002; Hal R. Varian
THERE was never a new economics to go along with the new economy. Sure, there was a lot of talk about increasing returns, network effects, switching costs and so on. But these are hardly new concepts; they've been part of the economics literature for decades.
Furthermore, although these are important ideas, they aren't Big Ideas. They explain certain phenomena well, but they have limited reach. Those in search of a really big idea had to look further back in the economics literature. They hit gold with ''The Nature of the Firm,'' a 1937 paper written by the Nobel laureate Ronald Coase.
The Coase paper asked a deceptively simple question: If the market is such a great tool for allocating resources, why isn't it used inside the firm or company? Why doesn't one worker on the assembly line negotiate with the worker next to him about the price at which he will supply the partly assembled product?
That sort of negotiation rarely happens. Instead of using markets, companies tend to be organized as hierarchies, using a chain of command and control rather than negotiation, markets and explicit contracts. Paradoxically, the primary unit of capitalism, on close inspection, looks a lot like central planning.
Mr. Coase didn't just ask this question; he also provided a provocative answer: it all hinges on the costs of making transactions. What economists call firms, he said, are essentially groups of activities for which it is more effective and less costly to use command-and-control than markets to have things done.
New-economy advocates found this a compelling idea. One consequence of the Internet has surely been to make it cheaper to communicate. This should, in turn, lower transaction costs and change company boundaries. Their conclusion was that companies would inevitably downsize and outsource, spin off unnecessary functions, and carry out more and more transactions using the Internet instead of internal memos.
Not so fast. The Internet lowers communication costs, that's for sure. But that means it lowers transaction costs within organizations as well as across organizations. The internal memo might disappear, but only because it is replaced by the internal e-mail message.
It just doesn't follow that lower communication costs lead to smaller companies. In fact, Mr. Coase himself said that ''changes like the telephone and telegraphy, which tend to reduce the cost of organizing spatially, will tend to increase the size of the firm.''
There's a lot of other evidence in the economics literature for Mr. Coase's observation. The Harvard business historian Alfred D. Chandler's classic work ''The Visible Hand'' documented how the deployment of the telegraph and railroad led to the creation of the giant corporation.
Maybe the Internet's role is to provide the inexpensive communications that can support megacorporations. This thought is enough to make a new-economy guru shudder.
What do the facts say about company size? Alas, they are inconclusive. From 1962 to 1992, the average size of a company hardly budged, and the small reduction that did occur could be attributed to the increased importance of the service sector, which tends to have smaller companies.
Later on in his article, Mr. Coase acknowledges that inventions like the telephone might reduce a company's size, if they reduce the costs of using markets by more than they reduce internal communication cost. In other words, it could go either way. We need a deeper understanding of transaction costs to resolve the issue.
So what are the important transaction costs? Mr. Coase, citing another economist, mentions three general categories: search and information costs, bargaining and decision costs, and policing and enforcing costs.
The Internet certainly reduces search and information costs, but, as we have seen, this cuts both ways. Bargaining and decisions still require a team of managers and lawyers sitting around a table. What makes contracts easier is codification and standardization, trends that are important, but are not greatly affected by the Internet, at least so far.
Policing and enforcing costs are the most relevant category. The reason the assembly-line worker doesn't negotiate with the person next to him is that it's too easy for him to say, ''Give me a good deal or I'll stop the line.'' Putting all the assembly-line workers under command-and-control reduces this sort of opportunistic behavior, at least as long as it can be easily observed.
Oliver Williamson, a significant contributor to transaction cost economics, argues that the temptation to be opportunistic is a major component of transaction costs, and hence a major determinant of the boundaries of the company. If certain suppliers are critical to your success, you want them inside, under your control, not outside, where their objectives may differ from yours.
The temptation to be opportunistic hasn't been affected much by the Internet. The Internet has made it easier, however, to monitor some sorts of contracts. Nowadays it is easy to tell if your supplier's claim that it shipped the parts to you on time is true; you can get the tracking number and check the shipper's Web page. Within the company, smart cash registers, inventory management systems, vehicle monitoring systems and the like help ensure that workers are performing their tasks, even when not directly observed.
Computers are monitoring more and more contracts, and that may well, in time, make companies more comfortable about letting functions move outside the command-and-control boundaries.
The real issue confronting a company trying to decide if some unit will be inside or spun off is what incentives the spinoff will have. If you spin off something critical to your business, you leave yourself open to extortion down the road. An internal monopoly supplier may be sluggish and inefficient, but its incentives are at least party aligned with the rest of the organization. An external monopoly can be much worse.
Mr. Coase's point about transaction costs' determining how organizations are structured is both profound and subtle. The Internet certainly affects transaction costs, but determining whether that means companies will be bigger or smaller requires careful analysis of competing forces.
New York Times; New York, N.Y.; Jan 17, 2002; Hal R. Varian
THERE was never a new economics to go along with the new economy. Sure, there was a lot of talk about increasing returns, network effects, switching costs and so on. But these are hardly new concepts; they've been part of the economics literature for decades.
Furthermore, although these are important ideas, they aren't Big Ideas. They explain certain phenomena well, but they have limited reach. Those in search of a really big idea had to look further back in the economics literature. They hit gold with ''The Nature of the Firm,'' a 1937 paper written by the Nobel laureate Ronald Coase.
The Coase paper asked a deceptively simple question: If the market is such a great tool for allocating resources, why isn't it used inside the firm or company? Why doesn't one worker on the assembly line negotiate with the worker next to him about the price at which he will supply the partly assembled product?
That sort of negotiation rarely happens. Instead of using markets, companies tend to be organized as hierarchies, using a chain of command and control rather than negotiation, markets and explicit contracts. Paradoxically, the primary unit of capitalism, on close inspection, looks a lot like central planning.
Mr. Coase didn't just ask this question; he also provided a provocative answer: it all hinges on the costs of making transactions. What economists call firms, he said, are essentially groups of activities for which it is more effective and less costly to use command-and-control than markets to have things done.
New-economy advocates found this a compelling idea. One consequence of the Internet has surely been to make it cheaper to communicate. This should, in turn, lower transaction costs and change company boundaries. Their conclusion was that companies would inevitably downsize and outsource, spin off unnecessary functions, and carry out more and more transactions using the Internet instead of internal memos.
Not so fast. The Internet lowers communication costs, that's for sure. But that means it lowers transaction costs within organizations as well as across organizations. The internal memo might disappear, but only because it is replaced by the internal e-mail message.
It just doesn't follow that lower communication costs lead to smaller companies. In fact, Mr. Coase himself said that ''changes like the telephone and telegraphy, which tend to reduce the cost of organizing spatially, will tend to increase the size of the firm.''
There's a lot of other evidence in the economics literature for Mr. Coase's observation. The Harvard business historian Alfred D. Chandler's classic work ''The Visible Hand'' documented how the deployment of the telegraph and railroad led to the creation of the giant corporation.
Maybe the Internet's role is to provide the inexpensive communications that can support megacorporations. This thought is enough to make a new-economy guru shudder.
What do the facts say about company size? Alas, they are inconclusive. From 1962 to 1992, the average size of a company hardly budged, and the small reduction that did occur could be attributed to the increased importance of the service sector, which tends to have smaller companies.
Later on in his article, Mr. Coase acknowledges that inventions like the telephone might reduce a company's size, if they reduce the costs of using markets by more than they reduce internal communication cost. In other words, it could go either way. We need a deeper understanding of transaction costs to resolve the issue.
So what are the important transaction costs? Mr. Coase, citing another economist, mentions three general categories: search and information costs, bargaining and decision costs, and policing and enforcing costs.
The Internet certainly reduces search and information costs, but, as we have seen, this cuts both ways. Bargaining and decisions still require a team of managers and lawyers sitting around a table. What makes contracts easier is codification and standardization, trends that are important, but are not greatly affected by the Internet, at least so far.
Policing and enforcing costs are the most relevant category. The reason the assembly-line worker doesn't negotiate with the person next to him is that it's too easy for him to say, ''Give me a good deal or I'll stop the line.'' Putting all the assembly-line workers under command-and-control reduces this sort of opportunistic behavior, at least as long as it can be easily observed.
Oliver Williamson, a significant contributor to transaction cost economics, argues that the temptation to be opportunistic is a major component of transaction costs, and hence a major determinant of the boundaries of the company. If certain suppliers are critical to your success, you want them inside, under your control, not outside, where their objectives may differ from yours.
The temptation to be opportunistic hasn't been affected much by the Internet. The Internet has made it easier, however, to monitor some sorts of contracts. Nowadays it is easy to tell if your supplier's claim that it shipped the parts to you on time is true; you can get the tracking number and check the shipper's Web page. Within the company, smart cash registers, inventory management systems, vehicle monitoring systems and the like help ensure that workers are performing their tasks, even when not directly observed.
Computers are monitoring more and more contracts, and that may well, in time, make companies more comfortable about letting functions move outside the command-and-control boundaries.
The real issue confronting a company trying to decide if some unit will be inside or spun off is what incentives the spinoff will have. If you spin off something critical to your business, you leave yourself open to extortion down the road. An internal monopoly supplier may be sluggish and inefficient, but its incentives are at least party aligned with the rest of the organization. An external monopoly can be much worse.
Mr. Coase's point about transaction costs' determining how organizations are structured is both profound and subtle. The Internet certainly affects transaction costs, but determining whether that means companies will be bigger or smaller requires careful analysis of competing forces.
Wednesday, November 19, 2008
Myers-Briggs Type Indicator: my results
I did Myers-Briggs Type Indicator (MBTI) test. Moreover we spend one day analysing the results and personal characteristics with teachers from the LSE and London Business School.
In the past I was really sceptical towards all these tests. I though they were just some astrology you read in tabloid. What a surprise was it when I did MBTI test during the CEMS assessment process. Results were incredibely exact. Even though you are answering questions like "Do you like looking at fire" or "Do you like men with beard?".
So this time I was not suprised by the results as such but what I enjoyed more is the thourogh analysis of the results.
So my type is INTJ (Introversion, iNtuition, Thinking, Judging)
The words are not so much important, they just represent the characteristic but are not self-explanatory and for example E does not mean fully extrovert person. It just speaks about the prevailing characteristic. (my I is 5% only. That means that I am only 5% from being the same E and I) and so on.
Here is the characteristics of INTJ:
and another one:INTJs apply (often ruthlessly) the criterion "Does it work?" to everything
from their own research efforts to the prevailing social norms. This in turn
produces an unusual independence of mind, freeing the INTJ from the constraints
of authority, convention, or sentiment for its own sake... INTJs are known as
the "Systems Builders" of the types, perhaps in part because they possess the
unusual trait combination of imagination and reliability. Whatever system an
INTJ happens to be working on is for them the equivalent of a moral cause to an
INFJ; both perfectionism and disregard for authority may come into play...
Personal relationships, particularly romantic ones, can be the INTJ's Achilles
heel... This happens in part because many INTJs do not readily grasp the social
rituals... Perhaps the most fundamental problem, however, is that INTJs really
want people to make sense.
INTJs are strong individualists who seek new angles or novel ways of looking at things. They enjoy coming to new understandings. They tend to be insightful and mentally quick; however, this mental quickness may not always be outwardly apparent to others since they keep a great deal to themselves. They are very determined people who trust their vision of the possibilities, regardless of what others think. They may even be considered the most independent of all of the sixteen personality types. INTJs are at their best in quietly and firmly developing their ideas, theories, and principles.
Anybody disagree?
Interestingly I have a similar result as famous economist Gregory Mankiw.
Moreover I shoul probably start playing war games
Some more links:http://web.forret.com/tools/mbti.asp?type=INTP&lang=EN
Tuesday, November 18, 2008
Tomáš Sedláček Doba d(l)uhová a křesťanská symbolika v ekonomice
Dalsi pekny clanek od Tomase Sedlacka, ktery propojuje krestanstvi s ekonomii.
Sedlacek studoval a uci na IES, jeho diplomova prace On the Morals of Homo Oeconomicus a jeho CV zde.
v jeho textech se dobre ctou profesori Sojka, Kouba, Mlcoch a snad i Pulpan.
Venuje se institucionalni ekonomii, etice a filosofii. Jeho prednasky jsou originalnim zazitkem, ackoliv ne kazdemu jeho soumenstvi sedi.
Sedlacek studoval a uci na IES, jeho diplomova prace On the Morals of Homo Oeconomicus a jeho CV zde.
v jeho textech se dobre ctou profesori Sojka, Kouba, Mlcoch a snad i Pulpan.
Venuje se institucionalni ekonomii, etice a filosofii. Jeho prednasky jsou originalnim zazitkem, ackoliv ne kazdemu jeho soumenstvi sedi.
Sunday, November 16, 2008
President Klaus in the British news again
Here is The Times article and The Irish Independent
article about the Klaus's visit to Dublin.
The story is clear, Klaus as a Eurosceptical and anti-federalist polititian who os obsesced with being controversial compared himself to a "dissident within the EU".
Such a comparision is of course inappropriate and attracted a lot of attention.
I am really looking forward how the Czech diplomacy lead by Karel Schwarzenberg will handle President Klaus during the Czech EU Presidency.
I just hope that I will not have to feel ashamed. We had worse times though. When Stanislav Gross was our Prime minister - that was too much.
However, the Czech politics still lacks educated elites. Therefore I feel somehow that our generation should perceive some kind of commitment to enter the politics in the future. We are actually the first generation that had most of the possibilities and options like the young in the democratic countries. Travelling, studying abroad, meeting people, speaking foreign languages, having a good education. All that what the previous generations could not have and what is so important for politics.
Here is the most interesting quotation about Klaus from the article by Jiri Dienstbier:
“While we were concerned with running the country, Klaus was concerned with building his own Power through attacking us as ‘elitist’,” said Jiri Dientsbier, a former foreign minister and the Civic Forum leader deposed by Klaus. “This is a tactic he has continued to this day.”
article about the Klaus's visit to Dublin.
The story is clear, Klaus as a Eurosceptical and anti-federalist polititian who os obsesced with being controversial compared himself to a "dissident within the EU".
Such a comparision is of course inappropriate and attracted a lot of attention.
I am really looking forward how the Czech diplomacy lead by Karel Schwarzenberg will handle President Klaus during the Czech EU Presidency.
I just hope that I will not have to feel ashamed. We had worse times though. When Stanislav Gross was our Prime minister - that was too much.
However, the Czech politics still lacks educated elites. Therefore I feel somehow that our generation should perceive some kind of commitment to enter the politics in the future. We are actually the first generation that had most of the possibilities and options like the young in the democratic countries. Travelling, studying abroad, meeting people, speaking foreign languages, having a good education. All that what the previous generations could not have and what is so important for politics.
Here is the most interesting quotation about Klaus from the article by Jiri Dienstbier:
“While we were concerned with running the country, Klaus was concerned with building his own Power through attacking us as ‘elitist’,” said Jiri Dientsbier, a former foreign minister and the Civic Forum leader deposed by Klaus. “This is a tactic he has continued to this day.”
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