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1 month

A Puzzle: Why Do Retail Chains Charge Uniform Prices Across Stores?

Imagine yourself as the profit-seeking owner of a chain of retail stores. Would you charge the same (or nearly the same) price across all the stores? Or would you vary prices according to average income level of consumers who use that store, or according to whether the local economy was  robust or shaky, or according to whether the store had geographically nearby competitors?

1 month

Thaler on the Evolution of Behavioral Economics

Richard Thaler won the Nobel Prize in economics in 2017  "for his contributions to behavioural economics".  He tells the story of how the field evolved from early musings through small-scale tests and more comprehensive theories and all the way to public policy in his Nobel prize lecture, "From Cashews to Nudges: The Evolution of Behavioral Economics." It is ungated and freely available in the June 2018 issue of the American Economic Review (108:6, pp. 1265–1287).  Video of the lecture being delivered is here. 

1 month

The Global Output Gap Has Closed: What Next?

A decade after the global financial crisis circa 2008, the global economy has finally recovered. The Global Economics Prospects 2018 report just published by the World Bank, subtitled "Broad-Based Upturn, but for How Long?" tells the story. 

1 month

G-7, G7+, G20

When the G-7 gatherings originated in the 1970s, they included only finance ministers who typically met with little notice or publicity. They were working meetings. But in the 1980s, they became public events with top government leaders present. As the Council of Foreign Relations has noted, it "The G-7 serves as a forum for highly industrialized democracies to coordinate economic, security, and energy policy."

1 month

Bangladesh Reaches Middle Income Status

Bangladesh has over 160 million people, which makes it the eighth most populous country in the world (just behind Pakistan and Nigeria, just ahead of Russia, Mexico, and Japan). I can't claim that I've been paying close attention to its economy, but I was nonetheless started to see that Bangladesh has shifted (in the World Bank's classification) from being a "low-income" to a "middle-income" country.

1 month

Blood Plasma: US Paid Donors Dominate Global Market

When market forces of supply and demand become involved with parts of the human body, the result can be a high degree of ambivalence. In the US, for example, a system has evolved where the health care system primarily relies on volunteers for blood, but on paying those who donate blood plasma. Not coincidentally the system of paid US now supplies nearly two-thirds of all the blood plasma available in the world.

1 month

Bitcoin and Illegal Activity

One of the main attractions of bitcoin is its anonymity, which is worth the most to those who are carrying out questionable or illegal transactions. But how much of bitcoin used is tied to illegal activity? Sean Foley, Jonathan R. Karlsen,  and Tālis J. Putniņš tackle this question in their January 2018 working paper, "Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies?" available at the SSRN website.