Ec101: Links for 14th November, 2019

Four of one today, and one of the other.

 

  1. “In their new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, economists Emmanuel Saez and Gabriel Zucman challenge seemingly every fundamental element of conventional tax policy analysis. Given the attention the book has generated, it is worth stepping back and considering their sweeping critique of conventional wisdom. Spoiler: My goal here is to present these issues, not resolve them.”
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    William G. Gale on the public economics topic du jour, tax policy as per Saez and Zucman.
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  2. “I find this episode appalling, and I hope The New York Times is properly upset at having been “had.”#TheGreatForgetting”
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    Strong language from Prof. Cowen is an underrated signal by definition. He is less than happy about this article.
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  3. A Twitter thread that only econ nerds should read – but econ nerds really should read it.
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  4. And finally, another post about it from MR.
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    “”This is quite remarkable. If the sensible way of defining tax rates involves excluding transfers from the denominator (as they claim), the fact that it leads to very high rates by construction at the bottom should be because this is a sensible summary of reality. Yet, in their own words, it’s a problem. Rather than switching method, they drop the people at the very bottom which conveniently covers up the problem (but leaves a less severe version of the problem in their remaining lower income sample). Of course, they could have just used the standard definition which includes transfers in the denominator, but doing this destroys the entire headline result.”
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  5. And because we can all have more than our fair share of public economics and taxes, here’s Gulzar Natarajan wondering aloud, as he puts it, about the Indian economy.
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    “”Therefore public spending has to be tailored to maximise the boost to consumption and investment. In other words, it should seek to target instruments with the highest fiscal multipliers and target population or consumption groups with the highest marginal propensity to consume.”

Links for 3rd May, 2019

  1. “So in the end what we get for policy to decide is whether the Indian aviation business should comprise large, medium or small oligopolies. If resolved sensibly it yields a solution to the problem of cross-subsidisation: the larger the number of firms, the greater will be the need for intra-firm cross-subsidisation as firms focus on a variant of the Ramsey Rule which says that network firms must maximise revenue instead of profits.This is best achieved via a public monopoly which far from reducing output, raising prices and making excessive profits as monopolies are expected to, can do the opposite just as Air India and Indian Railways do. In short, if we want to avoid a return to public sector transport monopolies, we must decide on the size of the oligopolies in the sector.”
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    A very short article, but an immensely interesting one, talking about airlines, India, monopoly, oligopolies, and regulation and policy in India.
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  2. “All that said, zero is still the best price. I think it’s appropriate for foundations or other funding sources to support a multiplicity of free textbook options. (I’m not looking at you, Bill Gates.) INET has done this with its CORE project, but no one else. I don’t think funding is the whole story, however. Economics needs to regard pedagogy as one of its central missions. This is not only a matter of having more panels about it at the national meetings; there needs to be more disciplinary reward for putting one’s time and energy into the development of strategies and materials for the classroom. This means promotion, prizes and esteem, and it would require a substantial cultural shift. Where to begin? I suspect we have a vicious circle that could well become virtuous. Today we have a bleak landscape of minimal innovation in pedagogy and little institutional recognition for those who do this work. In a world well-populated with innovative experiments in teaching and learning, it would be natural to reward the most successful or even just provocative projects. So again the next step seems to belong to the funders.”
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    A fairly interesting take on textbooks (econ textbooks, to be clear), what they cover, what they should cover, and what the price should be. Meta, but out of necessity.
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  3. “We find that the probability of seeing an outcome within 180 days from the date of admission is less than 5%. However, it picks up once the 180 day deadline is passed. Within 270 days, the chances of case closure are between 10 to 30% depending on the bench and case characteristics (e.g., creditor type). We observe high closure rate just past the 270 day period. Within 360 days of admission, the probability of seeing an outcome is significantly higher (30 to 70%). Quicker outcomes (liquidation or resolution) are observed for resolution proceedings triggered by the debtors themselves. Similarly, proceedings triggered before some benches result in resolutions speedier than those before some others.”
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    On the impact of the IBC on dealing with bankruptcies in India. Visit the link to find a link to a fairly good data-set pertaining to the issue being discussed.
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  4. “So buying shares of an IPO could be rational or irrational depending on your time horizon…and how lucky you are with what happens on the first day of trading.”
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    An interesting analysis on IPO’s and why they tend to be oversubscribed. Fairly well known, I’d say, if you’re a student of finance – but interesting nonetheless.
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  5. “The estimated cost of NYAY is substantial – Rs. 3.6 trillion a year. It would be broadly six times what has been allocated to MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) in the interim budget presented in February 2019. It is also nearly 13% of total central government expenditure for the fiscal year 2020. It is hard to see how such a large incremental spending programme can be funded through cuts in other expenditure items alone, including non-merit subsidies. That will be a very difficult political economy call, given that non-merit subsidies mostly benefit vocal interest groups. There thus has to be either fiscal expansion or an increase in tax collections. The latter could – but need not – entail higher tax rates. India could be at an inflection point at which its tax-GDP (gross domestic product) ratio begins to grow rapidly, but that is a guess rather than a hard fact. In short, there is ample reason to worry about the fiscal burden of NYAY. ”
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    Niranjan Rajadhakshya on the economic feasibility of NYAY. Students of public finance especially should read this to get a sense of how to judge questions such as the ones put forth in the interview.