Before the financial crisis of 2008, most governments lacked an institutional framework for handling financial policy. Central banks focused on monetary policy. They mostly used interest rates to influence inflation and output, believing such a focus could guarantee economic stability. But when it came to financial policy they were inclined to trust the invisible hand of the … [Read more...] about When Focusing on the Interest Rate is Not Enough
Politics and Institutions
Who Benefits from Job Creation in Cities?
When it comes to urban economic development, everything is a question of tradeoffs. There are, as economists like to say, "no free lunches." Consider California. The astronomical wages paid by firms like Google, Apple and other digital firms draw thousands of people to the Silicon Valley/San Francisco area, and the high wages of the Hollywood studios lure people to Los … [Read more...] about Who Benefits from Job Creation in Cities?
When Anti-Crime Strategies Reflect Ignorance Rather than Knowledge
When it comes to crime, we are easily swayed by false perceptions and information. We lose our wallet to a pickpocket or hear about a mugging in our generally safe neighborhood and immediately assume that we are in the midst of a crime epidemic. We are pushed to anxiety by politicians who peddle exaggerated homicide statistics to prove they are tough on crime; by the … [Read more...] about When Anti-Crime Strategies Reflect Ignorance Rather than Knowledge
Can We Reduce Emissions While We Wait for a Carbon Tax?
We environmental economists have long advocated carbon taxes as the fastest and most efficient way to reduce greenhouse-gas emissions from cars and power plants and prevent catastrophic global warming later this century. But carbon taxes can be politically problematic. Witness recent events in France where efforts by the government to increase fuel taxes triggered weeks of … [Read more...] about Can We Reduce Emissions While We Wait for a Carbon Tax?
Tougher Sentences: The Key to Fighting Crime in Latin America?
Latin America and the Caribbean is in a punitive mood. The penitentiary population doubled in 17 countries to 1.2 million between 2002 and 2014 as a result of tougher sentencing of criminals and could triple to almost 3.4 million people by 2030. Citizens, meanwhile, demand harsher sentences. In Chile, one of the region's safest countries, a government-sponsored poll released … [Read more...] about Tougher Sentences: The Key to Fighting Crime in Latin America?