How's Palau's economy doing?

IMF review's Palau's economy;

Directors supported the continued use of the U.S. dollar as legal tender, given Palau’s small size and administrative capacity. They observed that Palau has maintained its external competitiveness, but remains vulnerable to terms of trade shocks. Greater pass-through of global oil prices to contain debt accumulation in public utilities would therefore be desirable. Directors welcomed continued improvements in financial sector oversight, but urged caution in proceeding with the plans to launch a corporate and ship registry, which could pose new challenges in fighting money laundering given Palau’s current oversight capacity.

Directors noted that high-quality data are essential for policy formulation and surveillance. They looked forward to the adoption of the GDP numbers compiled with the help of the Pacific Financial Technical Assistance Center and to the increase in staffing levels at the Bureau of Budget and Planning.

Related:
Palau- data from WDI

Assorted

Felix Salmon wins the American Statistical Association's Excellence in Statistical Reporting Award

What Happens in Europe, Stays in Europe?

Spring Break and Game Theory Books

The Rise and Fall of the G.D.P.

Metric Mania

Assorted on Greece

Europe and IMF Agree €110 Billion Financing Plan With Greece

Prime Minister’s speech;

Our first concern was to regain credibility with our citizens. We have been honest from the very first moment with the Greek people.

Huge National Debts Could Push Euro Zone into Bankruptcy

When did Greek economic policy turn bad?

Key Links for the Greek Financing Package

Employment Cost Index- the most comprehensive measure of labor costs!

Employment Cost Index-

Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending March 2010, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.4 percent while benefits (which make up the remaining 30 percent of compensation)--increased 1.1 percent

Table A. Major series of the Employment Cost Index (Percent change)
Table 6. Employment Cost Index for total compensation(1), for private industry workers, by bargaining status and census region and division



Related:
Public Sector Pay Outpaces Private Pay;

The chart shows that public and private sector pay rose in parallel from 2001 to 2004. Then the lines diverged. Since early 2005, public sector pay has risen by 5% in real terms. Meanwhile, private sector pay has been flat.

Chart of the Day- G spot in the GDP

Stumbling and Mumbling has an interesting post;

There are three “headline” measures of government activity, which my chart shows.
One is the output of government services - health, defence, education etc - which shows up within the output measure of GDP.
Another is government consumption, which comes in the expenditure measure of GDP.
And a third is overall central government current spending, which is reported in table PSF3 of the public finances; in my chart, I’ve deflated this by the GDP deflator.
And here’s the queer thing. The correlation between annual changes in these three measures is low; no higher than 0.26 since 1984Q1.
How come? One reason is that central government spending includes debt interest and welfare payments, which the other two don’t.
Another reason is that government consumption includes spending on procurement which is excluded from output.

Related;
Public Service Output, Input and Productivity: Healthcare
Public Service Output, Input and Productivity: Education

Thoughts for your reflection- Cities and Economic Growth

“All throughout history, we’ve thought of heaven as the city on a hill. Done right, a city can be the pinnacle of human civilization. They’re the cathedrals of our era,”- Paul Romer

Related:
Global Prosperity Wonkcast;

“…just because something is unfamiliar that doesn’t mean it’s inconceivable or it can’t happen…[T]hink more broadly [about] challenges that look intractable — poverty, the environment, green globalization, an urbanization wave of 3 billion people. If we open up our notion of what’s possible then these intractable problems look like real opportunities that could reshape the globe and change history.”

Romer on Charter Cities

Paul Romer’s Bold New Idea for Charter Cities

Why Humanity Loves, and Needs, Cities;

The figure shows the 25 percent correlation between the logarithms of population density and 2008 gross metropolitan product per capita (using 2000 Census population numbers). Per capita productivity increases by 4 percent as population density rises by 50 percent.
But why does productivity rise with density?

A Tale of Many Cities

Cities Do It Better

Broadband and Growth

The World Bank has found that in low- and middle-income countries every 10 percentage point increase in broadband penetration accelerates economic growth by 1.38 percentage points—more than in high-income countries and more than for other telecommunications services (Figure 1).16 In a similar study, McKinsey & Company estimates that ―a 10 percent increase in broadband household penetration delivers a boost to a country‘s GDP that ranges from 0.1 percent to 1.4 percent. Booz & Company found that ―10 percent higher broadband penetration in a specific year is correlated to 1.5 percent greater labor productivity growth over the following five years.Booz also suggests that ―countries in the top tier of broadband penetration have exhibited 2 percent higher GDP growth than countries in the bottom tier. These studies are the latest in the already extensive work estimating broadband‘s economic impact.

Developing other elements of the broadband ecosystem also provides economic benefits. For example, the growth of Internet-related services and applications has created jobs and led to the creation of new businesses. For example, in November 2009 Google had a market capitalization of $168 billion and employed 19,000 people in 20 countries. China‘s leading Internet search engine, Baidu.com, has a market capitalization of more than $14 billion and over 6,000 employees, and in 2008 had revenues of $460 million.

Developers have also been extremely active in creating applications for various handsets. Annual sales of applications for Apple‘s iPhone exceed $2.4 billion, as well as stimulating additional hardware sales. Thus broadband creates significant economic opportunities for users, service providers, application developers, and network operators alike. McKinsey estimates that ―bringing broadband penetration levels in emerging markets to today‘s Western European levels could potentially add US$300–420 billion in GDP and generate 10–14 million jobs.

-Building broadband: Strategies and policies for the developing world

Assorted

People, computers, and data

El Salvador’s Economic Rate of Return (ERR) Project Spreadsheets

Eight centuries of financial folly and counting

Our Giant Banking Crisis—What to Expect

The predictioneer: Using games to see the future

Global Economic Monitor

Global Monitoring Report 2010

Development Indicator Watch- ICT

International Internet bandwidth (bits per person) -International Internet bandwidth is the contracted capacity of international connections between countries for transmitting Internet traffic.

Source: WDI

Impact on Growth: 'a 10 percentage point growth in broadband penetration can raise annual economic growth per person by up to 1.5 percentage points'

Related:
Measuring the Information Society 2010;

The latest edition of Measuring the Information Society features the new ITU ICT Development Index (IDI) and the ICT Price Basket - two benchmarking tools to measure the Information Society

World Telecommunication/ICT Development Report 2010;

The Report reviews the 10 targets, proposes concrete indicators to monitor them and makes recommendations on policies and measures to help achieve them:
# To connect villages with ICTs and establish community access points
# To connect universities, colleges, secondary schools, and primary schools with ICTs
# To connect scientific and research centers with ICTs
# To connect public libraries, cultural centers, museums, post offices, and archives with ICTs
# To connect health centers and hospitals with ICTs
# To connect all local and central Government departments and establish web sites and e-mail addresses
# To adapt all primary and secondary school curricula to meet the challenges of the information society, taking into account national circumstances
# To ensure that all of the world’s population has access to television and radio services
# To encourage the development of content and put in place technical conditions in order to facilitate the presence and use of all world languages on the Internet
# To ensure that more than half the world’s inhabitants have access to ICTs within their reach

Broadband plan for high speed internet sent to Congress

Internet penetration - who’s online? ;

The country with the highest number of broadband subscribers in absolute terms is the United States, with more than 81 million. However, another way to use the data is to look at broadband penetration – essentially the number of subscriptions per 100 inhabitants. Looked at from this perspective, the Netherlands is the OECD leader, with a broadband penetration rate of about 38%; at the other end of the scale is Mexico, with a rate of just over 6%. It’s worth noting that the number of broadband subscribers isn’t the same as the number of broadband users, which tends generally to be higher...In countries where households tend to be bigger, the number of subscribers may be correspondingly lower.

US The National Broadband Plan

The plan sets ambitious, but achievable goals, including 1-gigabit connections to every community; affordable, 100 megabits broadband to 100 million households; and raising adoption from 65% to 90% adoption, heading to 100%.

Does Lowering the Price of Broadband Increase Its Use?

Malaysia’s broadband plan – stimulating the private sector

DATA:
National ICT Data
ITU's ICT Eye
OECD telecommunication price baskets

Policy Advice:
Building broadband: Strategies and policies for the developing world-Given recent developments in the broadband market involving networks, services, applications, and users, and the experiences of leading markets—especially Korea—this report proposes that broadband be reconceptualized as an ecosystem rather than just high-speed connectivity. Using the ecosystem concept, the report discusses the characteristics of broadband strategies and identifies potentially useful policies and regulations.

*Source of the chart above, Malaysia Economic Update, Box 13,Developing Broadband in Malaysia

Country Economic Updates

Malaysia;

the Malaysian economy is projected to grow again at 4.1 percent in 2010, following a contraction of 2.3 percent in 2009.

The Malaysia Economic Monitor calls attention to four key policy thrusts to meet this challenge:
* Promoting further specialization of the economy
* Improving the skills base of the labor force
* Making growth more inclusive
* Bolstering public finances

Philippines;

Real GDP growth is projected to reach 3.5 percent in 2010 and 3.8 percent in 2011.Our analysis shows that, so far, the size and pace of the peak-to-trough and the projected recovery in 2010 is closely aligned with past recessions in the Philippines. However, unless reforms address long-standing growth bottlenecks, the recovery’s shape over the medium-term will move from V to \/¯¯ , i.e., stabilize at a lower equilibrium growth rate.

Sunday Economic Indicator - I/S Ratio shows inventory replenishment

Coverage of an economic indicator every week- the idea borrowed from Sunday Function over at Built on Facts blog.


Definition: Inventories / Sales Ratios (Retail) - The inventories / sales ratios show the relationship of the end-of-month values of inventory to the monthly sales. These ratios can be looked at as indications of the number of months of inventory that are on hand in relation to the sales for a month. For example, a ratio of 2.5 would indicate that the retail stores have enough merchandise on hand to cover two and a half months of sales.

Latest Numbers: Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of February was 1.27. The February 2009 ratio was 1.46.

Implications: 'this is the message of the inventory cycle, which appears to have largely run its course. Inventories surged as the recession intensified, leaving firms scrambling to bring output in line with the new level of sales. Now, firms have inventories under control'

More on the Implications:

Today's data is also encouraging because it shows that any business expansion we've seen in the first part of 2010 isn't outpacing consumer demand, with inventory levels remaining nearly flat. Considering how strong retail sales were in March, there's also reason to believe that inventories will fall during the month -- unless more hiring produced additional goods to compensate for the increased buying. Given the current balance of inventories and sales, there's little reason to believe U.S. businesses should engage in many more mass layoffs unless consumer demand unexpectedly weakens significantly.

Over at Macroblog more analysis;

I have been pondering those data as well, ever since the advance fourth quarter gross domestic product report indicated that 3.4 percentage points of the then-reported 5.9 percent annualized growth rate was accounted for by a slowing in the pace of inventory decumulation. (The numbers have subsequently been revised to 3.8 percentage points of a 5.6 percent growth rate.) It certainly appears that inventory-sales ratios have reverted to the prerecession norm, justifying Duy's sense that inventories will not be a big part of the economic story as we move through 2010.

That conclusion does rest, of course, on the likelihood that a downward trend in the ratio truly did break in the middle part of the decade. As the chart shows, the same pause in the trend occurred in the mid-1990s, only to commence its southward trek on the other side of the 2001 recession.

But the situation is even more curious than that. If you dig a little deeper, you find that not all inventory-sales ratios tell the same story. In particular, inventory-to-sales ratios at the retail level look very lean relative to prerecession levels while manufacturer's inventories still appear to be relatively bloated.

What, exactly, is that chart trying to tell us? Does it represent some shift in supply-chain management, with inventory holdings being pushed down from the retail level to manufacturers? If not, can we expect some resurgence in retail inventories (as the Duy-cited Bloomberg article suggests), coupled with continued decumulation at the manufacturing level? And what would be the net effect of such developments on aggregate inventory levels?

From Bloomberg: The ratio of business inventories to sales was 1.25 in January, just above a 29-year low of 1.24 set in 2006 and down from a recession high of 1.46 in January 2009. The ratio averaged 1.3 in the last economic expansion, from 2001 to 2007.

Other tables released with the data;

Table 1. Estimated Monthly Sales and Inventories for Manufacturers, Retailers, and Merchant Wholesalers
Table 2. Percent Changes for Sales and Inventories--Manufacturers, Retailers, and Merchant Wholesalers
Table 3. Estimated Monthly Retail Sales, Inventories, and Inventories/Sales Ratios, By Kind of Business

Comments: Businesses generally prefer 1.45 months worth of goods. Though a lagging indicator, a window onto future orders and production activity. Remember GDP is calculated by adding all the sales in the economy plus change in inventories.

Related:
Manufacturing and Trade Inventory-to-Sales Ratio: Inventory Adjustment Over;

inventory to sales ratio. This has declined sharply to 1.25 (SA) from the peak of 1.46 back in Dec 2008. This could decline further - the trend is definitely down over time - but clearly most of the inventory adjustment is over.

This is important because the change in inventory added significantly to Q4 GDP growth. (See BEA line 13: the contribution to GDP in Q4 from 'Change in private inventories' was 3.88 of the 5.9 percent annualized increase in GDP.)

Inventories to Sales on Google Fast Flip

What We Don’t Know About the Economy

Economic History Lesson in Brief

"...E. and S. Europe were just as backward in industrializing...as L. Am. and S. Asia."-Arthur Lewis

From Garret Jones twitter feed.

Trinidad and Tobago- finding binding constraints not always easy

Source: Trinidad & Tobago: Economic Growth in a Dual Economy

Related:
Trinidad and Tobago- data from IDB

Sir Arthur Lewis Institute of Social and Economic Studies,
The University of the West Indies

Housekeeping - Blogs and Division of Labor

Slight change to the coverage and focus of our blogs.

Tracking the Economy- the themes to be covered include economic indicators, country economic updates, interviews with economists, IMF reviews, Country Economic Memorandums, economic growth, poverty, economic policy, Small States, Tourism Economics, Statistics.

MTEF- PFM, Public Finance, Debt Management, Public Management and Public Policy.

The Bayesian Heresy- Art, Psychology, Religion, Behavioral Economics, Book Reviews,Current Affairs, Politics,Spirituality, Effective Habits, Personal Productivity, Design, Philosophy, Carnival of Podcasts, Tourism, Parenting, Education.

The Blog University- hopes to be blog version of MIT's OpenCourseWare

Control of Corruption- everything about corruption and governance

Assorted Podcasts

What's wrong with macro-economics-Paul Omerod

New economics- Arnold Kling

State Building in Afghanistan: and Lessons from Seventeenth Century France


The Invention of the Jewish People

Professor Shlomo Sand has triggered a debate with his new book which argues that one of the founding myths of Israel - the exile and return of the Jews from their ancestral land - is a myth.

Why was Christmas banned for almost 20 years in England

A.C. Grayling - A Very Public Philosopher

A.C. Grayling, one of Britain's foremost philosophers and public intellectuals. An extraordinarily wide-ranging writer, Grayling has written plays, he's written works of technical philosophy and he's written about great philosophers: including books on Berkeley, Russell and Wittgenstein and a biography of René Descartes More recently, he's turned his attention to historical topics, with a book on the Allied bombing of civilians in WWII, and that's one of the issues that we discuss with him today: what is the role of the philosopher in assessing the moral validity of the Allies' prosecution of the war against barbarism?

The liar's paradox and other philosophical absurdities

The man who taught Darwin beetles

The parable of the wise ones

Religion and Pluralism in a Divided World
Speaker: Anwar Ibrahim

Studying Islam across times and place: how to compare?
Speaker: Professor John Bowen

Beyond Copenhagen- Lord Stern

Public hospitals - reform overseas

Thailand's democracy

The tale of two cities
Over the past ten years Australian cities and towns have faced water shortages and water restrictions, yet Singapore, which once imported 80 per cent of its water, has become self sufficient. Are there any lessons Australian cities can learn from Singapore?

Babies at risk?
Figures show that the number of babies taken from mothers at birth is rising dramatically, particularly in NSW. Judgments must err on the side of child safety, but there's concerns some babies are taken needlessly. One couple is suing for $18 million.

Mahatma Gandhi: from lawyer to national liberator

The crime gene
Convicted murderer Abdulmalek Bayout recently made legal history when a court in Italy reduced his sentence because it accepted that Bayout was genetically predisposed to being aggressive and violent! Controversial...well it gets worse...the so-called crime gene is more prevalent in some racial groups than others!

Influentional Books Assorted

Mathew Yglesius

William McNeil, Plagues & Peoples: This had a kind of revelatory quality to me, the idea that everything you thought was important about history was actually kind of trivial and the real determinants of human destiny are something else entirely. Guns, Germs, and Steel is arguably the better book in this genre, but I only ever read it because I’d read P&P first so I’m giving McNeil the nod.

Tyler Cowen (who started the meme);

John Stuart Mill, Autobiography. This got me thinking about how one's ideas change, and should change, over the course of a lifetime. Plus Mill is a brilliant thinker and writer more generally.

Bryan Caplan;

Judith Harris, The Nurture Assumption. Harris sucked me into the exciting world of behavioral genetics - and got me thinking about the implications for the meaning of life.

David Henderson;

A Guide to Rational Living, by Albert Ellis. I hit some bumps in my last year in the Ph.D. program at UCLA. I got extreme writer's block and was getting nowhere on my dissertation. I write about this in Making Great Decisions in Business and Life, co-authored with Charley Hooper. I went to see a therapist, Roger Callahan, who gave every one of his new patients a copy. That one book has helped me deal with so many life situations.

Arnold Kling;

Carl Shapiro and Hal Varian, Information Rules. Again, you may find that the examples seem old, but no better book has been written on the economic issues of the information-driven economy. Among other things, this book convinced me that Price Discrimination Explains Everything.

Josh McCabe;

Off the Books by Sudhir Venkatesh. I hate to add something so recent from a guy who turned into one of the “superstars” of sociology, but this was one of the books which got me excited about the kind of things ethnography could do for your analysis. Like Jacobs, Venkatesh finds all sorts of order where others only see chaos.

Will Wilkinson;

A Theory of Justice by John Rawls. I dug into this book with the intention of saying what was really, really wrong with it. Instead, I ended up feeling like I understood political philosophy.

Kieran Healy;

Thomas Schelling, Micromotives and Macrobehavior. So clever, so unassuming, so it made me want to be an economist. Then I took some economics and it wasn’t much like Schelling at all.

William S. Cleveland, Visualizing Data. “This book presents a set of graphical methods for displaying data”. Does it ever. Tufte gets the Presidential Commissions and the high media profile, and deserves all that, but Cleveland shows you how it’s done in practice and wrote the software that lets you code it yourself. For me it opened up the world of serious thinking on data and model visualization for quantitative data.

Russell Arben Fox;

Richard K. Matthews, The Radical Politics of Thomas Jefferson: A Revisionist View. I think I must have underlined every sentence in this book. It was the first book I'd read that made me think both critically and practically about all the stuff I'd been reading about "republicanism" for years.

Updated

'I've photgraphic memory'- Sir Arthur Lewis

A great video of Sir Arthur Lewis from UC.

In the interview Sir Lewis states that he would have preferred to become an engineer but in the colonial England he wouldn't have got a job with it. So instead he became an economist- thanks to British racism.

Related;
W. Arthur Lewis: Evolution of the International Economic Order

Which Nobel Laureate was rejected by The Economist magazine?

They said that they could not hire a black journalist since he would have to interview people who might refuse to see him because of his color

A New Game in Town -Predictalot

Predictalot ;

The basic game play is simple: select a prediction type, customize it, and invest points on it. Yet you'll never run out of odds to explore: you can make hundreds of millions of predictions! The odds on each update are continuously based on other players' predictions and the on-court action...

n technical terms, Predictalot is a combinatorial prediction market of the sort academics like Yahoo! and George Mason University professor Robin Hanson have been dreaming about since early in the decade...

With 9.2 quintillion outcomes, Predictalot is to our knowledge the largest prediction market built, testing the limits of what the wisdom of crowds can produce. Predictalot is a game, and we hope it's fun to play. We'd also like to pave the way for serious use of combinatorial prediction market technology.

Markets like Predictalot, WeatherBill, CombineNet, and Internet advertising systems, to name a few, represent the evolution of markets in the digital age, empowering users with extreme customization

Assorted

Defenders and Demonizers of Credit Default Swaps

The problem with the Value-Added Tax

Do fish stir the ocean?

Algebra in Wonderland

It Takes Two to Tango

What Game Theory Can Tell Us About Terrorism

Building a Better Teacher

Mom, Apple Pie and Mortgages

Solow Quote of the Day

Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon Bonaparte.

- Solow

Intellectuals and Society

Sowell discusses his new book, Intellectuals and Society

We also recommend Posner's book, Public Intellectuals

Another Profile of Krugman- From Asimov to Keynes

Last August, Krugman decided that before he and Wells departed for a bicycle tour of Scotland he would take a couple of days to speak at the sixty-seventh world science-fiction convention, to be held in Montreal. (Krugman has been a science-fiction fan since he was a boy.) At the convention, there was a lot of extremely long hair, a lot of blue hair, and a lot of capes. There was a woman dressed as a cat, there was a woman with a green brain attached to her head with wire, there was a person in a green face mask, there was a young woman spinning wool. There was a Jedi and a Storm Trooper. Those participants who were not dressed as cats were wearing T-shirts with something written on them: “I don’t understand—and I’m a rocket scientist,” “I see dead pixels,” “Math is delicious.” Krugman has always had a nerdy obsession with puns. (He is very proud of a line in one of his textbooks: “Efforts to negotiate a resolution to Europe’s banana split had proved fruitless.”) He also likes costumes. Once, he and Wells gave a Halloween party where the theme was economics topics—two guests came as Asian tigers, several came as hedge funds, one woman came as capital, dressed as a column. Sitting up onstage at the science-fiction convention, Krugman looked happy to be there. It seemed that these were, in some worrying sense, his people.

“Hi, everyone!” he called out.

“Hi!” everyone called back.

Krugman explained that he’d become an economist because of science fiction. When he was a boy, he’d read Isaac Asimov’s “Foundation” trilogy and become obsessed with the central character, Hari Seldon. Seldon was a “psychohistorian”—a scientist with such a precise understanding of the mechanics of society that he could predict the course of events thousands of years into the future and save mankind from centuries of barbarism. He couldn’t predict individual behavior—that was too hard—but it didn’t matter, because history was determined not by individuals but by laws and hidden forces. “If you read other genres of fiction, you can learn about the way people are and the way society is,” Krugman said to the audience, “but you don’t get very much thinking about why are things the way they are, or what might make them different. What would happen if ?”

Econ Podcast of the Day

Phelps on Unemployment and the State of Macroeconomics;

Samuelson's project to correct, clarify and broaden the theory brought into focus its strengths; but also its limitations: It abstracted from the distinctive character of the modern economy--the endemic uncertainty, ambiguity, diversity of beliefs, specialization of knowledge and problem solving. As a result it could not capture, or endogenize, the observable phenomena that are endemic to the modern economy--innovation, waves of rapid growth, big swings in business activity, disequilibria, intense employee engagement and workers' intellectual development. The best and brightest of the neoclassicals saw these defects but lacked a micro-theory to address them.

Sex, Lies and Economists

Sounds like an interesting book project;

A short chapter will cover Bernard Mandeville, author of "An Essay upon Whoring: A Modest Defence of Publick Stews," which made the case for state-run brothels. He congratulated the city fathers of Amsterdam for tolerating "Houses in which Women are hired as publickly as Horses at a Livery Stable." Mandeville's simultaneous celebration of both free markets and licentious behavior posed a problem for Adam Smith's generation, which had to find a way to respond to Mandeville in making their case for markets on ethical grounds. Mandeville reappears centuries later in Keynes' General Theory, in making his case for the need to stimulate demand.

EconTalk- A History of Time

Economics Roundtable: Granger and Engle from UCTV