A new paper by Besley and Persson illuminating the relationship between development and patterns of taxation.
A quick summary from the conclusion of the paper:
“As a state moves from collecting a low level of public revenue of around 10%
of national income towards collecting around 40%, tax bases typically shift
from trade taxes and excises towards labor income and other broad bases
such as value added. To study this process is a challenge of appreciating
incentives and constraints.”
Why are some people more trusting than others? From a new CEPR paper by Jeff Butler, Paola Giuliano and Luigi Guiso:
“we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners”
Link to Abstract at CEPR
From Nathan Nunn and Paola Giuliano
Abstract
We provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level. Auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy, with better quality institutions, and higher level of economic development.
In Economic Growth, we are focusing on technology, efficiency and productivity tomorrow. Here is a current related paper from the Centre for Economic Policy Research.
From the Abstract
“We find significant evidence that technology diffuses slower to locations that are farther away from adoption leaders. This effect is stronger across rich countries and also when measuring distance along the south-north dimension.”
Possibly of interest to students in both micro theory (insurance) and the MIPP program (food security), this short brief from IFPRI looks at the effects of micro-insurance in Ethiopia.
The connection between culture and economic growth is a complicated one – made particularly difficult by the fact that cultures change far more slowly than patterns in economic growth. Regardless, this column is remarkable for being a concise argument for why conservative culture drives economic growth. It would be fair to call me a skeptic.
H/T to Dan Herman, PhD student at the Balsillie School of International Affairs.
Recent evidence from Derek Headey at IFPRI on the impact of the food price crisis using self-reported levels of food-insecurity.
Abstract
We provide the first large-scale survey-based evidence on the impact of the global food crisis of 2007–08 using an indicator of self-assessed food security from the Gallup World Poll. For the sampled countries as a whole, this subjective indicator of food security remained the same or even improved, seemingly owing to a combination of strong economic growth and limited food inflation in some of the most populous countries, particularly India. However, these favorable global trends mask divergent trends at the national and regional levels, with a number of countries reporting substantial deterioration in food security. The impacts of the global crisis therefore appear to be highly context specific.
This week in micro theory we are focused on adverse selection. A current article in VoxEU looks at the issue of information asymmetry in capital markets, and finds the evidence one might expect – information asymmetries increase the cost of raising capital.
Tomorrow in the International Policy class, we are focused on food policy issues – so the column by the Director-General of the FAO today in Project Syndicate is very topical.
The key point is that “The Council of the United Nations Food and Agriculture Organization decided that the FAO’s goal should no longer be merely to reduce hunger, but to eradicate hunger, food insecurity, and malnutrition.”
Full column at Project Syndicate.
Optimistic as usual, Jeffrey Sachs on the need for sustainable development – a new article at Project Syndicate.
