Archive for February, 2013

What Comprises China’s GDP?

February 25, 2013 Leave a comment

How much value is added from exports? Agriculture? Answers here.

Categories: China, International Trade

Will a Luxury Tax Help China’s Poor?

February 11, 2013 1 comment


There are plenty of good things to point out about the tax reforms announced by China’s cabinet, but I’d like my students to consider these questions:

  • What is the likely effect of the decision to levy “a number of luxury taxes”?
  • What substitutes do China’s richest consumers have for the kinds of things the government can levy luxury taxes on?
  • Why are initial tax revenues from these taxes likely to mislead officials into thinking they will be as effective in raising future revenue?

Happy New Year!

February 10, 2013 Leave a comment



Enjoy! Because in just 14 days, it’s back to economics and marketing classes…

Categories: China, Education

Big Macs and Undervalued Yuan

February 8, 2013 3 comments


If the Big Mac index is right, we should be heading for an exchange rate closer to 3.66.

That would be fine with me: my income is in RMB and I have a house payment in USD. For me, an appreciating RMB is good.

For some reason, most young Chinese I talk to about this don’t think it would be good for them. That’s in spite of the fact that their incomes are in RMB, and a big chunk of what they want to consume (travel abroad, higher degree program abroad, anything made of copper, steel, aluminum, beef, etc.) has a big USD component in the price.

I find it odd that they think a stronger yuan would hurt them, unless their families are exporters. In fact, it would make many of them better off.

Categories: China, International Trade

Economic Freedom and Life Expectancy

February 7, 2013 Leave a comment

live free or die

There’s a connection:

More specifically, the average life expectancy is over 80 years in all seven economically free countries (Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, and Ireland). Unfortunately, there are over 70 countries that are mostly unfree or repressed which represent almost 5 billion people with shorter life spans: in none of these individual countries is the average life expectancy over 80.

People who have economic freedoms also tend to live longer and be richer.

Some might argue that being richer leads to more freedom, not the other way around.

Does it really matter? Suppose it’s the other way around, and it’s increasing prosperity that brings more freedom. In any case, where’s the justification for economic repression? Is there any evidence anywhere of any kind of correlation between less economic freedom and prosperity? If not, on what basis is it ever honestly justified?


Categories: International Trade