As if we couldn't think for ourselves when it comes to pouring hot liquids down our throats, the warnings about hot tea and coffee are ubiquitous. “Caution Handle with Care I’m Hot,” says one cup. "Caution Contents Hot," says another, with variations on the theme repeated in thousands of restaurants and cafes around the world. Businesses, it seems, don't trust us to be careful … [Read more...] about When Too Much Choice Distorts Electoral Results
Macroeconomics and Finance
The Psychology of Support for Trade
Is free trade beneficial to Latin America and the Caribbean? Most economists believe it is. Free trade allows countries to specialize in what they do best, developing competitive advantages and leading to greater consumer choice and lower prices. Most citizens seem to agree. An IDB-commissioned poll, included in the cross-regional Latinobarómetro survey, finds popular … [Read more...] about The Psychology of Support for Trade
A Rapid Transit System That Boosts Productivity
Confronted with sprawling development and paralyzing traffic, cities throughout Latin America and the Caribbean have moved to built rapid transit systems, ranging from subways to bus rapid transit systems (BRTs). New rapid transit, government officials hope, will get people out of their cars, improve the environment and boost wellbeing and productivity. But demonstrating … [Read more...] about A Rapid Transit System That Boosts Productivity
When Tax Hikes Doom Governments at the Polls
A Latin American president faces a steep economic downturn. She introduces fiscal austerity measures, perhaps a tax hike, to try to contain the damage. Mass protests erupt, police clash with demonstrators, and the political mood grows darker by the day. Can the president and her party survive? The short answer is usually no. In a recent study, Martín Ardanaz, Mark Hallerberg … [Read more...] about When Tax Hikes Doom Governments at the Polls
When Worsening Credit Conditions Trigger Recessions
Economists have long known that aggregate measures of economic activity vary during recessions. Unemployment rates increase, for example, while both GDP growth and investment rates decrease. But when we look at actual firms, the individual units of production in an economy, during a recession do they all behave in the same way? And if not, can we use that information to learn … [Read more...] about When Worsening Credit Conditions Trigger Recessions