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COVID-19 will raise inequality if past pandemics are a guide

Will this time be different? https://voxeu.org/article/covid-19-will-raise-inequality-if-past-pandemics-are-guide.  See presentation, which also discusses other factors that could affect the evolution of inequality.

 

Will this time be different? https://voxeu.org/article/covid-19-will-raise-inequality-if-past-pandemics-are-guide.  See presentation, which also discusses other factors that could affect the evolution of inequality.

 

Read the full article…

Posted by at 9:30 AM

Labels: Inclusive Growth

Lockdowns averted 650,000 Covid-19 deaths

“Reducing movements within countries has been effective in developed economies – averting about 650,000 deaths – but not in developing ones,” according to new research. “Countries that acted fast fared better” and “closing borders has had no appreciable effect, even after 50 days.” The authors studied “various types of lockdowns implemented around the world mitigated the surge in infections and reduced mortality related to the Covid-19, and whether their effectiveness  differed in developing versus developed countries.” Their data cover 184 countries from December 31st 2019 to May 4th 2020, and identifies when lockdowns were adopted, along with confirmed cases and deaths. Link to paper: fast and local.

“Reducing movements within countries has been effective in developed economies – averting about 650,000 deaths – but not in developing ones,” according to new research. “Countries that acted fast fared better” and “closing borders has had no appreciable effect, even after 50 days.” The authors studied “various types of lockdowns implemented around the world mitigated the surge in infections and reduced mortality related to the Covid-19, and whether their effectiveness  differed in developing versus developed countries.”

Read the full article…

Posted by at 8:31 AM

Labels: Inclusive Growth

Algorithmic economics and how it might help recovery from Covid-19

AI Economist is a new portal devised by Salesforce to develop ‘ a new line of research that studies how to improve economic design using AI with the goal of optimizing productivity and social equality for everyone‘. Interesting piece in the FT on how the AI Economist can help in the Covid recovery.

Excerpts from the Salesforce interview  with the creators of the AI Economist:

How does the AI Economist work? 

Taxes and subsidies are important tools governments use to reduce inequality and redistribute wealth. However, we still haven’t quite figured out how to implement optimal tax policies for a wide range of social objectives, such as the trade-off between equality and productivity. Economic theory cannot fully model the complexities of the real world, and careful real-world experimentation with taxes is almost impossible. 

Through the AI Economist, we’re bringing reinforcement learning (RL) to tax research for the first time to provide a simulation and data-driven solution to defining optimal taxes for a given socio-economic objective.

The AI Economist uses a collection of AI agents designed to simulate how real people might react to different taxes. In the simulation, each AI agent earns money by collecting and trading resources and building houses. The agents learn to maximize their utility (or happiness) by adjusting their movement, trading, and building behavior. One way to do this is to maximize income while minimizing effort, for example, making as high of an hourly wage as possible.  

Simultaneously, the AI Economist learns to optimize taxes and subsidies to promote global objectives.”

AI Economist is a new portal devised by Salesforce to develop ‘ a new line of research that studies how to improve economic design using AI with the goal of optimizing productivity and social equality for everyone‘. Interesting piece in the FT on how the AI Economist can help in the Covid recovery.

Excerpts from the Salesforce interview  with the creators of the AI Economist:

Read the full article…

Posted by at 5:35 PM

Labels: Inclusive Growth

Forecasting Turning Points: An Update

An update of my previous work on forecasting turning points. While the previous work was on how well economists could predict recessions, this one is on how well they can predict recoveries.

An update of my previous work on forecasting turning points. While the previous work was on how well economists could predict recessions, this one is on how well they can predict recoveries.

Read the full article…

Posted by at 6:05 AM

Labels: Uncategorized

A Look at Demographia’s Latest Housing Affordability Survey

Global Housing Watch Newsletter: April 2020

 

 

*In this interview, Wendell Cox talks about Demographia’s latest housing affordability . Wendell Cox is an American urban policy analyst and academic. He is the principal of Demographia (Wendell Cox Consultancy). The survey is co-authored with Hugh Pavletich of Performance Urban Planning.

 

Hites Ahir: You recently released the 16th Annual Demographia International Housing Affordability Survey: 2020. Tell us about the housing affordability measure used in the survey.

Wendell Cox: Demographia uses the “median multiple,” which is the median house price divided by the median household income. This measure meets two important requirements for assessing middle-income housing affordability; it evaluates the relationship between housing costs and household incomes, and it measures the middle of the market.

 

Hites Ahir: How does your measure compare to other existing measures?

Wendell Cox: Demographia presents current housing affordability between markets as well as in an historical context. This may be the most important difference with other measures, which often consider only recent experience, limited to only a few years or a decade or two.

In many metropolitan markets, housing affordability has deteriorated significantly in the last three decades, from a time that in many nations the median multiple was 3.0 or below.

 

Figure 1.

Hites Ahir: Which countries and cities does it cover?

Wendell Cox:The Survey includes Australia, Canada, China (Hong Kong), Ireland, New Zealand, Singapore, the United Kingdom and the United States. The principal focus is on the more than 90 major housing markets areas (metropolitan areas) with more than 1,000,000 residents. More than 200 additional smaller markets are also included.

 

Hites Ahir: What is the overall message from the latest survey?

Wendell Cox: The message of this edition as well as the entire series is that governments should closely monitor housing affordability, to position themselves to restore it where it has been lost and maintain it where it remains.

The costs of housing largely define differences in the cost of living and thus, the standard of living. In the United States, we estimate that 87 percent of the excess cost of living in higher cost metropolitan areas is comprised of housing costs.

This is an international problem, as is indicted in recent Organisation for Economic Cooperation and Development (OECD) research, Under Pressure: The Squeezed Middle-Class, suggests an existential threat to the middle-class in OECD countries. According to the OECD, the costs of living have risen much more rapidly than household incomes over the past three decades.  Housing, according to the OECD, has been “the largest spending category” and “has been the main driver of rising middle-class expenditure in recent decades.” According to the OECD, owned housing costs have contributed more to the problem than those of rentals, though rental cost increases have been significant.

 

Figure 2.

Considerable economic research has associated diminished housing affordability with more restrictive land use regulation. In the Demographia Survey, virtually all of the major housing markets that are “severely unaffordable” have urban containment (such as urban growth boundaries and other policies that severely limit or prohibit new development on the urban fringe).

Research in Australia, New Zealand, the United Kingdom and the United States has found comparable land values spiking 10 times and more across urban growth boundaries. Within the San Francisco metropolitan area, economists Edward Glaeser of Harvard and Joseph Gyourko of the University of Pennsylvania found land values for median value houses were “roughly 10 times” the “minimum profitable production cost.” This is in a market stretching across five counties, with ample suitable land, nearly all of it off-limits to development.

There is need for reform, and we cite Paul Cheshire, Max Nathan and Henry Overman of the London School of Economics who suggest that urban planning should focus on “people rather than places.” Part of the solution, according to former World Bank principal planner Alain Bertaud, is to apply “basic economic principles to the practice of urban planning.”

 

Hites Ahir: How does the findings of this editions compare to the past editions?

Wendell Cox: We have reported on the commitments made by New Zealand’s Labour government to make major land use policy revisions to restore housing affordability and establish effective infrastructure finance mechanisms.

We have also focused on subsidized low-income housing and the extent to which its cost and availability is driven by market housing costs. Because housing subsidies are typically based on ability to pay, deteriorating housing affordability compromises the ability of government to provide for low income housing.

 

Hites Ahir: In the current issue of the survey, you talk about Singapore. Could you talk to us about “Singapore’s unequalled housing challenge”?

Wendell Cox: Singapore is a city-state confined to an island that has virtually no hinterland in which inexpensive housing development can occur. Yet this topographically contained market has housing affordability considerably better than many markets that have administratively imposed urban containment.

Singapore designed a market that kept house price increases under control, despite the shortage of land. It started with a commitment, more than a half-century ago, to “(…) encourage a property-owning democracy in Singapore and to enable Singapore citizens in the lower middle-income group to own their own homes.” The mandate was assigned to the Housing Development Board (HDB) which has delivered on the objective.

Singapore’s model for the world is not so much the characteristics of its market, as it is having adopted a fundamental objective of housing affordability and focusing on its achievement.

 

Hites Ahir: How is the ongoing crisis related to Covid-19 likely to affect next year’s survey?

Wendell Cox: Obviously, the economic decline from the lockdowns will make things worse, and probably more for the middle-income households we focus on. Lower-income households are likely to be impacted even more. Housing affordability seems more likely to worsen than to stay the same or improve.

Global Housing Watch Newsletter: April 2020

 

 

*In this interview, Wendell Cox talks about Demographia’s latest housing affordability . Wendell Cox is an American urban policy analyst and academic. He is the principal of Demographia (Wendell Cox Consultancy). The survey is co-authored with Hugh Pavletich of Performance Urban Planning.

 

Hites Ahir: You recently released the 16th Annual Demographia International Housing Affordability Survey: 2020.

Read the full article…

Posted by at 5:00 AM

Labels: Global Housing Watch

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