News
On Thursday, March 22 and Friday, March 23, the School of International and Public Affairs and the Center on Global Economic Governance at Columbia University hosted a two-day conference in Beijing titled “China and the West: The Role of the State in Economic Growth.” The forum was cosponsored by the Columbia Global Center in Beijing, the Institute of New Structural Economics (INSE) at Beijing University and the Tsinghua University’s School of Economic and Management and School of Public Policy and Management.
The conference was strategically planned to take place just after the 2018 National People’s Congress and immediately prior to the China Development Forum.
The event focused on critical issues now facing China, the U.S., and Europe in regard to their economic policy choices. There were three private sessions held under Chatham House Rule. Overall, these meetings contrasted the US, EU, and Chinese models for the role of the state in economic growth and development in order to derive the potential evolution of growth strategies on the world stage.
Session one focused on changes in Chinese, US, and European Economic Policies in light of recent political developments and the implications of such on economic globalization. Session two centered on international trade and the potential for cooperation and competition amongst the US, the EU, and China. Lastly, session three analyzed the role of innovation and technological adaptation in the digital economy.
In addition, a fourth session that was open to the public and media focused on the future of economic relations between China, the U.S. and Europe and the major themes of the forum, including economic policy, trade, innovation and technology.
Participants of the conference includes numerous key policymakers, academics, and business leaders from around the world. Examples include Yi Gang, Governor of the People’s Bank of China, Jack Lew, former U.S. Treasury Secretary, Joseph Stiglitz, Nobel Laureate, Tao Zhang, Deputy Managing Director of the IMF, Merit Janow, Dean of Columbia SIPA, Larry Summers, former U.S. Treasury Secretary, and Jan Svejnar, director of Columbia’s Center on Global Economic Governance.
The breadth and expertise of roundtable participants fostered productive transnational discussions on issues important to China and the global economic order.
Yuriy Gorodnichenko, Debora Revoltella, Jan Svejnar, and Christoph T. Weiss
Abstract
Using a new survey, we show that the dispersion of marginal products across firms in the European Union is about twice as large as that in the United States. Reducing it to the US level would increase EU GDP by more than 30 percent. Alternatively, removing barriers between industries and countries would raise EU GDP by at least 25 percent. Firm characteristics, such as demographics, quality of inputs, utilization of resources, and dynamic adjustment of inputs, are predictors of the marginal products of capital and labor. We emphasize that some firm characteristics may reflect compensating differentials rather than constraints and the effect of constraints on the dispersion of marginal products may hence be smaller than has been assumed in the literature. We also show that cross-country differences in the dispersion of marginal products are more due to differences in how the business, institutional and policy environment translates firm characteristics into outcomes than to the differences in firm characteristics per se.
Liliana Rojas-Suarez and Lucia Pacheco
Abstract
This paper constructs and index of regulatory quality for improving financial inclusion for the purpose of assessing and comparing the quality of rules and regulations in a sample of eight Latin American countries. The index comprises 11 regulatory practices classified into three categories: those that determine the overall quality of the financial environment where providers of financial services that meet the needs of the poor operate (the enablers); those that deal with specific types of market frictions and regulate the provision of specific financial products and services (the promoters) to large segments of the population; and those that, albeit unintentionally, create distortions and barriers that adversely affect financial inclusion (the preventers). An important novelty of the index is that the assessment of individual regulatory practices not only takes into account accepted standards, but also recognizes that there are important interactions between regulations for financial inclusion as well as between these regulations and other type of government interventions. Among the countries in the sample, by mid-2017, Peru ranked first in this index, followed closely by Mexico. Chile, Colombia, Paraguay and Uruguay obtained lukewarm results, although there were wide differences among these countries’ individual results. Argentina and Brazil were the two countries with the lowest overall scores. An additional contribution of the paper is that, throughout the analysis, countries’ specific areas of strengths and weakness in financial regulatory practices for improving financial inclusion are identified.
Lorenzo Casaburi and Jack Willis
Abstract
The gains from insurance arise from the transfer of income across states. Yet, by requiring that the premium be paid upfront, standard insurance products also transfer income across time. We show that this intertemporal transfer can help explain low insurance demand, especially among the poor, and in a randomized control trial in Kenya we test a crop insurance product which removes it. The product is interlinked with a contract farming scheme: as with other inputs, the buyer of the crop offers the insurance and deducts the premium from farmer revenues at harvest time. The take-up rate for pay-at-harvest insurance is 72%, compared to 5% for the standard pay-upfront contract, and the difference is largest among poorer farmers. Additional experiments and outcomes provide evidence on the role of liquidity constraints, present bias, and counterparty risk, and find that enabling farmers to commit to pay the premium just one month later increases demand by 21 percentage points.
Abstract
Local industrial development has the potential to improve health and well-being, while also damaging health through exposure to harmful pollution. It is an empirical question which of these effects dominate. Exploiting the quasi-experimental expansion of African large-scale gold mining, I find that local infant mortality rates decrease by more than 50% alongside rapid economic growth. The instantaneous reduction is comparable to overall gains in infant survival rates in the study countries from 1970 to today. The results are robust to migration. Local industrial development—despite risk of pollution—may be an effective tool to reduce infant mortality in developing countries.
The Center on Global Economic Governance hosted a panel discussion on “Artificial Intelligence: Implications for Governance and Public Policy" on February 23, 2018.
Paulo Bastos, Joana Silva, Eric Verhoogen
Abstract
This paper examines the extent to which the destination of exports matters for the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. We use exchange rate movements as a source of variation in export destinations and find that exporting to richer countries leads firms to charge more for outputs and pay higher prices for inputs, other things equal. The results are supportive of the hypothesis that an exogenous increase in average destination income leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs.
Timothy Foreman
Abstract
Dust storms are a fact of life for populations residing in semi-arid environments. These storms can result in a variety of immediate and long-term impacts. Reports have included evidence of people suffocating due to airborne dust, transport networks being disrupted and leading to traffic accidents, as well as increases in asthma attacks. Despite these records, we do not know their total effect on health. In this paper, I study the effects of dust storms on child mortality using reanalysis data on Aerosol Optical Depth (AOD) and household health data from the Demographic and Health Surveys. I use dust observed over the Sahara to instrument for the dust over where the child is born. I find that a one standard-deviation increase in AOD at month of birth leads to a 0.4 percentage point decrease in the probability that a child survives to age 5. This estimate implies that about 7% of all child mortality observed in the sample is affected by dust storms.
Abstract
Recent research suggests that the threat of harsh sanctions does not deter juvenile crime. This conclusion is based on the finding that criminal behavior decreases only marginally as individuals cross the age of criminal majority, the age at which they are transferred from the juvenile to the more punitive adult criminal justice system. Using a model of criminal capital accumulation, I show theoretically that these small reactions close to the age threshold mask larger responses away from, or in anticipation of, the age threshold. I exploit recent policy variation in the United States to show evidence consistent with this prediction - arrests of 13-16 year olds rise significantly for offenses associated with street gangs, including drug, homicide, robbery, theft, burglary and vandalism offenses, when the age of criminal majority is raised from seventeen to eighteen. In contrast, and consistent with previous work, I find that arrests of 17 year olds do not increase systematically in response. I provide suggestive evidence that this null effect is likely due to a simultaneous increase in under-reporting of crime by 17 year olds when the age of criminal majority is raised to eighteen. Last, I use a back-of-the-envelope calculation to show that for every 17 year old diverted from adult punishment, jurisdictions bore social costs on the order of $65,000 due to the corresponding increase in juvenile offending. In sum, this paper demonstrates that when criminal capital accumulates, juveniles may respond in anticipation of increases in criminal sanctions, and accounting for these anticipatory responses can overturn the conclusion that harsh sanctions do not deter juvenile crime.
Elliott Ash and Miguel Urquiola
Abstract
This paper presents research-based rankings of public policy schools in the United States. In 2016 we collected the names of about 5,000 faculty members at 44 such schools. We use bibliographic databases to gather measures of the quality and quantity of these individuals' publication output. These measures include the number of articles and books written, the quality of the journals the articles have appeared in, and the number of citations all have garnered. We aggregate these data to the school level to produce a set of rankings. The results differ significantly from existing rankings, and in addition display substantial across-field variation.
On December 4, 2017, the Center on Global Economic Governance – in collaboration with the Program for Economic Research, the Columbia University Press, and the Finance Division at the Columbia Business School – hosted A Special Symposium in Memory of Kenneth J. Arrow at Columbia University’s School of International and Public Affairs.
Christopher Hansman, Jonas Hjort, Gianmarco Lion, and Matthieu Teachout
Abstract:
We study the relationship between exporters’ organizational structure and output quality. If only input quantity is observable, theory predicts that vertical integration may be necessary to incentivize suppliers to increase input quality. Using data on suppliers’ behavior, supplier ownership, supply transactions, and manufacturers’ output by quality grade and exports from the Peruvian fishmeal industry, we show the following. After integrating with the plant being supplied and losing access to alternative pay-per-kilo buyers, suppliers take more quality-increasing and less quantity-increasing actions. Integration consequently causally increases output quality, and manufacturers integrate suppliers when facing high relative demand for high quality grades.
For all of their focus on asset prices, financial economists rarely ask if assets are priced ethically—that is, if their prices are compatible with the public good.
Globalization has been at a crossroads for a while. Trade protectionism is on the rise. At the same time, sophisticated technologies inaugurate a new era of threats and opportunities that holds the world in awe.
Frans Timmermans, the first vice-president of the EU’s European Commission, visited SIPA on September 18 to offer a European perspective on “Free Expression in a Time of Uncertainty.”