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Brexit Commentary

June 30, 2016 Leave a comment

 

brexit

Though I am generally quite positive towards freer trade, economic ties as a way to secure peace by making war too expensive for elites, and freer movement of people across borders, I think it’s a mistake to think Brexit will have catastrophic effects.

Some thoughts:

(1) If economic specialization is good, why isn’t political and cultural specialization also beneficial? Suppose Germany stays very open to immigration and the UK becomes more closed. Isn’t this a good experiment on the economic and cultural impact of more (or less) open borders? Shouldn’t we have a little humility about what we do and do not know with regards to the impact of freer movement of labor?

(2) I suspect the UK will become very focused on making trade deals with a number of trading partners besides the EU. Feels like competition–of a positive kind–to me.

(3) This may help those within the EU who want to focus more on trade and economics and less on political union to gain clout. The EU people are smart and will make adjustments.

It’s really out of my area of expertise, though. Here’s some commentary by people smarter than me:

Paul Krugman

Tyler Cowen

Brexit impact on China: , but see this from an unnamed APF stringer.

 

Categories: International Trade

Good Question!

June 22, 2016 Leave a comment

20Mx1ca

Things for my intermediate microeconomics students to ask themselves going into the final:

  • Can I graph the effects on equilibrium price and quantity of changes in supply and demand? Can I identify which events will shift which curve, and in which direction?
  • Do I understand the concepts of substitutes and complements? Can I use these concepts to analyze how markets will react to different changes?
  • Can I graph binding and non-binding price ceilings and floors? Do I understand how to measure shortages and surpluses on a graph?
  • Do I understand the properties of indifference curves? Can I recognize indifference curves for perfect substitutes and perfect complements?
  • Could I create a demand schedule?
  • Can I correctly graph a demand schedule, a supply schedule, a production function, a PPF, and a budget constraint line?
  • Do I understand the meaning and significance of the beauty premium, superstar phenomenon, in-kind transfers, bundles of consumption, derived demand, world price, small market assumption, tariff, tax incidence, the ultimatum game, asymmetric information, the signalling theory of education, hidden characteristics, hidden actions, moral hazard and marginal cost and benefit?
  • Do I understand the difference between price discrimination and racial discrimination? Between positive and normative statements? Between movement of the curve and movement along the curve?
  • Can I accurately calculate the slope of a demand curve or a budget constraint line?
  • Do I understand MPL and MRS?
  • Do I understand the difference between PPFs that are straight lines and PPFs that bow outwards?
  • Can I give examples of perfect (or nearly perfect) substitutes and perfect (or nearly perfect) complements?
  • Do I understand the difference between a shift in the budget constraint line and a pivot? Can I graph the effects of a price increase or decrease or an income increase or decrease on the budget constraint line? Can I show how this might change consumption preferences?
  • Do I know how to calculate the slope of a budget constraint line? Can I calculate the marginal rate of substitution between two points?
  • Do I understand the difference between substitution and income effects, and the substitution and output effects? Do understand what an isoquant curve is?
  • Can I graph diminishing marginal utility of income and evaluate “fair” prices for insurance?
  • Can I graph the trade-offs in consumption today and in the future? Do I understand why in some cases an increase in interest might increase savings, and in some cases decrease it? Could I graph that?

 

 

Categories: Microeconomics