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To be asked by the Center on Global Economic Governance (CGEG) to write about my time in Columbia brings up two inescapable reactions: a nostalgic feeling of being close to the end, but with it the joy of remembering months of thrilling study and research.
Alex Eble and Feng Hu
Abstract
Every government chooses the number of years of schooling needed to complete primary education, but little is known about how this policy decision affects educational attainment and subsequent labor market outcomes. We study a policy change in China which extended the length of primary school from five years to six but did not change the primary school curriculum. We exploit the gradual rollout of the policy to estimate its impact on affected individuals’ schooling and performance in the labor market. The policy causes average years spent in primary school to increase from 5.2 to nearly six, and post-primary attainment to increase slightly. The policy raises monthly income on average by 2.6% and is progressive, bringing higher income returns (5-8%) for the least educated. We estimate the policy has already reallocated 450 million years of labor from work to schooling and we generate cost-benefit estimates to quantify this tradeoff, highlighting the large public finance implications of this policy decision.
The current status of the relationship between the Trump administration and China is a precarious one, and a closer look shows the constant struggle for a balance of power.
Willem H. Buiter and Anne C. Sibert
Abstract
The recent reduction in the US corporate profit tax rate from 35 percent to 21 percent has triggered renewed interest in the impact of a cut in the corporate tax rate on capital accumulation and real wages. This theoretical contribution demonstrates that the familiar proposition that a cut in the corporate profit tax rate boosts the capital intensity of production and the real wage is sensitive to a number of key assumptions. Even when the real interest rate is exogenously given, full deductibility of capital expenditure from the corporate profit tax base will result in no impact of a corporate profit tax rate cut on the incentive to invest. Adding deductibility of interest can result in a negative effect on the capital intensity of production of a corporate profit tax rate cut.
When the real interest rate is endogenous, we use the “perpetual youth” OLG model to demonstrate that the effects on consumption demand of a corporate profit tax cut will reduce the impact on capital intensity of a corporate profit tax cut if the tax cut is funded by higher lump-sum taxes on “permanent income” households. We have not been able to find examples where the capital intensity impact is reversed. Alternative funding rules (e.g. lower public consumption purchases) and the introduction of “Keynesian” consumers could lead to a larger positive effect on capital intensity from a cut in the corporate profit tax rate.
Francisco Costa and Francois Gerard
Abstract
A growing body of evidence documents that policies can affect household behaviors persistently, even if they are no longer in place. This paper studies the importance of such “hysteresis” – the failure of an effect to reverse itself as its underlying cause is reversed – for the welfare evaluation of corrective policies. First, we introduce hysteresis into the textbook framework used to derive canonical sufficient statistics formulas for the welfare effect of corrective policies. We then derive new formulas allowing for hysteresis. We show that, under certain conditions, the persistent effect of a short-run (i.e., temporary) policy becomes a new key statistic for evaluating the welfare effect of such a policy, and also of a long-run (i.e., permanent) version of a similar policy. Second, we estimate the persistent effect of a short-run policy, for which we argue that these conditions are met, in a policy-relevant context: residential electricity use in a developing country setting. We estimate that about half of the dramatic short-run reductions in residential electricity use induced by a 9-month-long policy that was imposed on millions of Brazilian households in 2001 persisted for at least 12 years after the policy ended. Finally, we combine our estimates with our framework to illustrate the implications that hysteresis can have for the welfare evaluation of corrective policies.
To be asked by the Center on Global Economic Governance (CGEG) to write about my time in Columbia brings up two inescapable reactions: a nostalgic feeling of being close to the end, but with it the joy of remembering months of thrilling study and research. The opportunity to join the CGEG BRICLab as a visiting scholar during the spring term of 2018 allowed me to benefit from the School of International and Public Affairs and to conduct studies that I organized under three thematic pillars.
First, what are the current relevant discussions and where my country stands amongst them?
Second, how to support the press and use my work as a journalist to serve democratic ideals?
Lastly, how are the justice system and anti-corruption policies – themes that have dominated headlines in Brazil and the focus of much of my coverage as a reporter - treated abroad?
My efforts were set by these guidelines as a way to enhance my professional skills and become an even more committed journalist in times of political change in Brazil and challenges for the press.
The course "The New (and Old) Foreign Policy Challenges in the Americas," taught by Professor Christopher Sabatini, and the "Green Transition in Emerging Markets," taught by Professor Christian Deseglise, were crucial for my first purpose. In the former, I could explore relations between Latin American countries and their positions toward the United States. The latter offered an overview of the growth environment in emerging markets and the push towards sustainable development.
To my second line of study, I had the opportunity to enroll in the terrific course "Global Media: Innovation and Economic Development" taught by Professor Anya Schiffrin. In it, we discussed how to engage and lead innovation processes within the media to ensure the survival of good quality journalism. To be with students and guest speakers from around the globe sharing insights, dilemmas, and outcomes from newsrooms was a valuable opportunity. I've focused part of my research efforts on writing about how Brazil's 2018 presidential elections may test journalism in the face of fake news stories and potential election-meddling.
The third basis of my study is related to what I've been covering during the last four years as a reporter for O Estado de S. Paulo. In the "Local & Global Corruption: Maneuvering Toward Good Governance," taught by Professor Paul Lagunes, we discussed solutions to promote good governance in administrations. I'm glad I was able to do a presentation and share with the class a bit about the Brazilian Car Wash Operation. It is undeniable that the US procedures inspired the Car Wash investigations in part and I was curious to dedicate part of my time to research this influence, which led me to sit on the seminar "International Criminal Investigations," by Professor Frederick Davis, at Columbia Law School.
Furthermore, it would be unfair not to mention all the parallel events that take place within Columbia which make this university a unique venue and creative environment to connect with the policymakers and leading thinkers in a range of fields. And this is how, during the last semester, I came across talks with people such as Justice Ruth Bader Ginsburg and Patti Smith. Likewise, I also learned about efforts surrounding open governance, regulation of cryptocurrencies, storytelling using podcasts, the role of satire in the political journalism, access to justice in India, the peace process in Colombia, the insertion of women in the US elections, the MeToo movement, African investigative journalism, and so much more that is not possible to fully enumerate.
It is impossible to leave Columbia without being grateful for this stunning experience that initiated after being chosen for the scholarship "Jornalista de Visão" (in English, Visionary Journalist), sponsored by Instituto Ling, and become possible through the BRICLab at the Center on Global Economic Governance.
Beatriz Bulla is a journalist and reporter for O Estado de S. Paulo. She joined the newspaper in 2012, after being chosen from the best professionals to have participated in the paper's training program. Since then, she has covered economics, politics, and justice for the paper. In 2014, Beatriz moved to Brasilia, the national capital, to assume the news coverage of the Supreme Court for O Estado de S. Paulo.
The Center on Global Economic Governance (CGEG) hosted the 3rd annual Central Bankers Roundtable conference, titled “Challenges to Monetary and Fiscal Policy in Emerging Market Economies,” on Monday, April 23rd.
The Center on Global Economic Governance hosted Ambassador Daniel Fried, distinguished fellow with the Atlantic Council and former sanctions coordinator at the U.S. State Department on Friday, April 20th.
Abstract
This paper evaluates the effects of encouraging the selection of local politicians in India via community-based consensus, as opposed to a secret ballot election. While secret ballot elections prevent vote capture by guaranteeing voter anonymity, consensus-based elections may improve welfare by promoting the exchange of information. I find that politicians elected via community consensus are younger and more educated, but lead to worse governance as measured by a fall in local expenditure and regressive targeting of workfare employment. These results are consistent with qualitative evidence that finds that community-based processes are prone to capture by the local elite, and need not improve the quality of elected politicians or governance.
The Center on Global Economic Governance (CGEG) and the Urban and Social Policy Concentration at Columbia University’s School of International and Public Affairs (SIPA) hosted an event on “Leadership in Anticorruption: Insights into Singapore & NYC’s Investigative Agencies” on April 2, 2018.
Jonas Hjort and Jonas Poulsen
Abstract:
This paper provides evidence on how the expansion of fast Internet along its current frontier in developing countries affects job creation. We exploit the gradual arrival in African coastal cities of submarine Internet cables from Europe and maps of the continent’s terrestrial cable network that connects those cities with users. Robust difference-in differences estimates from four datasets covering 14 countries show large positive effects on employment rates. A decrease in unskilled jobs is offset by a bigger increase in jobs in higher-skill occupations, and outside of South Africa job inequality between more and less educated workers falls. We use detailed firm level data available for some countries to investigate how higher average speeds for existing users and higher take-up enable greater (skilled) job creation. We find an increase in (i) workers and skilled positions per firm, firm level productivity, and the productivity of workers in skilled positions in existing Ethiopian manufacturing firms, (ii) firm entry in South Africa in the sectors that hire workers in the occupations that see growth when fast Internet becomes available, and (iii) workers in skilled positions, exports, and use of websites among firms in seven countries. Finally, we show that the impact on job creation is accompanied by a rise in average incomes. Our findings shed light on how modern information and communications technology affects total job creation, structural change, job inequality, and firm growth in the poorest region of the world.
Published in American Economic Review 2019, 109(3): 1032-1079
Nava Ashraf, Natalie Bau, Corinne Low, and Kathleen McGinn
Abstract
Using a randomized control trial, we examine whether offering adolescent girls nonmaterial resources – specifically, negotiation skills – can improve educational outcomes in a low-income country. In so doing, we provide the first evidence on the effects of an intervention that increased non-cognitive, interpersonal skills during adolescence. Long-run administrative data shows that negotiation training significantly improved educational outcomes over the next three years. The training had greater effects than two alternative treatments (offering girls a safe physical space with female mentors and offering girls information about the returns to education), suggesting that negotiation skills themselves drive the effect. Further evidence from a lab-in-the-field experiment, which simulates parents' educational investment decisions, and a midline survey suggests that negotiation skills improved girls' outcomes by moving households' human capital investments closer to the efficient frontier. This is consistent with an incomplete contracting model, where negotiation allows daughters to strategically cooperate with parents.
Jan Hagemejer, Jan Svejnar, and Joanna Tyrowicz
Abstract
In this paper we provide the first analysis of whether rushed privatizations, usually carried out under fiscal duress, increase or decrease firms’ efficiency, scale of operation (size) and employment. Using a large panel of firm-level data from Poland over 1995-2015, we show that rushed privatization has negative efficiency, scale and employment effects relative to non-rush privatization. The negative effect of rushed privatization on the scale of operations and employment is even stronger than its negative effect on efficiency. Our results suggest that when policy makers resort to rushed privatization, they ought to weigh these negative effects against other expected effects (e.g. on fiscal revenue).
Jan Svejnar, Director of the Center on Global Economic Governance, was recently quoted in a New York Times article on China's financial regulatory shake-up. The article discusses what the changes mean for China's financial reform agenda and the roles top regulatory officials will play in crafting and implementing economic policy.
The Center on Global Economic Governance and the School of International and Public Affairs hosted the third annual summit forum on China and the West: The Role of the State in Economic Growth Conference on March 22nd and March 23rd, 2018 in Beijing, China.