The Unassuming Economist

In a latest blog for the Conversable Economist, author Timothy Taylor studies data from the OECD publication, Health at a Glance (2021) to understand why meaningful healthcare reform in the USA may be harder to achieve.

It glances over evidence that demonstrates USA’s not-so-commendable performance on health and wellbeing indicators (like mortality, growth in life expectancy, etc.) despite a large share of expenditure on healthcare. Subsequently, parameters of Americans’ satisfaction from their healthcare industry are discussed, which are found to be upbeat and high-ranking in contrast.

Click here to read the full blog.

In a recent column for VoxEU CEPR, Elwyn Davies, Mary Hallward-Driemeier and Gaurav Nayyar of the World Bank write about prospects of services-led development and the role of small firms in driving it.

“This column argues that the services sector deserves more credit for helping drive economic transformation than it generally receives. Using firm-level data from 20 developing economies, the authors find that while services establishments are smaller than manufacturing establishments, this matters less for their productivity. Services firms can scale up without sizing up through investments in human and other more intangible forms of capital can leverage the diffusion of digital technologies. “

This theme is elaborated upon further in their book, At Your Service?: The Promise of Services-Led Development (2021), which “assesses the scope of a services-driven development model and policy directions that maximize its potential”.

Related Reading:

Services Development and Comparative Advantage in Manufacturing

Global services value chains: A new path to development

Source: Journal of Political Economy

“Do elites capture foreign aid? This paper documents that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management but not in other financial centers. The estimates are not confounded by contemporaneous shocks—such as civil conflicts, natural disasters, and financial crises—and are robust to instrumenting using predetermined aid commitments. The implied leakage rate is around 7.5% at the sample mean and tends to increase with the ratio of aid to GDP. The findings are consistent with aid capture in the most aid-dependent countries.”

Click here to read the full paper and here to join the discussion on it.

Source: VoxEU CEPR

“Early signs of a recession can lead to a negative feedback loop, with workers’ concerns about unemployment dampening demand and thus deepening the recession. This column uses a heterogeneous agent model to quantify the importance of the ‘unemployment-risk’ channel for business cycle fluctuations in the US economy. It shows that the channel accounts for around one-third of observed unemployment fluctuations. As the demand amplification through precautionary savings is inefficient, this finding provides an additional rationale for stabilisation policies by policymakers. “

Figure: Estimated response of unemployment to monetary policy and total factor productivity (TFP) shocks

Click here to read the full article.

Source: Financial Times

“Territorial inequality of productivity is the core problem; it is what causes inequality of incomes that can only partly be remedied by redistribution. It also suggests an enormous amount of waste — if lagging regions could close at least some of their productivity shortfall, a lot of prosperity would be gained.”

This article delves into ways in which policymakers can deal with regional inequality in the UK, as the wait for further governmental action on it continues. It discusses some aspects on which productivity growth depends, like “slow-to-acquire resources such as infrastructure and skilled labour” and “productive businesses choosing to expand”. Further, it goes on to suggest measures by which this regionally lagging productivity growth can be remedied and ways to target such policies better.

Click here to read the full article.

Related Reading:

The Great Divide: Regional Inequality and Fiscal Policy