Economists Currie and Hotz wrote a paper* in which they show that some children are saved thanks to regulation but others will die because of it:
... higher educational requirements tend to crowd some children out of care, as do regulations requiring frequent inspections of child care facilities and lower pupil–teacher ratios. ... Some children benefit from safer environments, while those who are squeezed out of the regulated sector are placed at higher risk of injury.
The authors also note that children in the U.S. are more likely to die due to injury than disease.
* "Accidents Will Happen? Unintentional Childhood Injuries and the Effects of Child Care Regulations" Journal of Health Economics, Volume 23, Issue 1, January 2004, Pages 25-59 (earlier version)
Michael Manger describes why people respond to incentives, regardless of what system they work for.
Daniel Hamermesh has a great post about the costs of forcing employees to either work 100 or 0 percent of work time:
The head of his hospital-based practice said the work was either 100 percent or 0 percent — so our friend quit entirely and is now retired
...
allowing older workers greater flexibility in hours of work will become crucial as baby-boomer retirements begin to remove a lot of skill from the American workforce.
by Jan Zilinsky
Less than friendly comments from politicians in France and Germany have been around long enough to not really surprise us anymore. But the habit of giving hints to the European Central Bank about what it should or shouldn't do appears to be spreading.
José Luis Rodríguez Zapatero, Spain's prime minister said that "we all respect the independence of the European Central Bank but we all expect the European Central Bank to behave responsibly." When inflation is becoming a global disease, are attempts to bring it down irresponsible? Is an institution fulfilling its mission not acting responsibly? I wonder if Spanish journalists asked such questions.
For Spanish-speakers (or learners) the video of the comments is available here. On the one hand, it is understandable that a top politician would hope for a monetary policy suiting an individual country that elected him. When such hopes are verbalized, however, I don't see how they can be reconciled with a "respect" for ECB's independence.
Update: Trichet speak of the bank's challenges ahead
IHT reports:
JPMorgan says it has tapped Bear Stearns' former Asia CEO to run its sovereign wealth group, joining other Wall Street banks in seeking more business from state-run funds from the Middle East and Asia.
It hardly needs to be said that SWFs have been a blessing for many Western Banks in the recent period. As Stephen Schwarzman, Blackstone's chief executive recently wrote for the Financial Times: "It is difficult to think of how much worse off we would be in the current financial crisis without SWFs."
My guess is that financial institutions will only increase their efforts to attract SWF capital, especially if interest rates will rise, as The Economist argues: "The Fed and the Bank of England are likely to have to raise rates to retain their credibility."
The euro will still do, of course. But in Collobrières francs are accepted like in the old days:
This village deep in Provence has decided to accept the French franc in everyday commerce, along with the euro, and the colorful old bills adorned with French heroes and writers have people thinking.
I wonder: if some people prefer to use francs instead euros, would they be willing to pay premia (higher prices for goods) to offset the costs to the shopkeeper? Most people would probably choose lower prices but if the affection for the former currency was strong enough then we could see small "currency unions" within the state that is now part of a much larger currency union.
Hard to tell, but they are talking about it.
David Smith of economicsuk.com believes raising rates now would be a mistake:
Would raising rates help the pound? Not if seen by currency dealers as condemning Britain to even deeper misery. And, irrespective of what the Bank is doing, a market-driven tightening of monetary policy is taking place, through higher mortgage rates.
Two days ago, Bank of England Governor Mervyn King said that policy should not overreact to high inflation, so an interest rate hike appears to be unlikely in the near future.
According to the June 5 MPC minutes, committee members considered Q1 GDP growth the Euro area "unexpectedly strong" but worried that "the effects of the credit market turmoil on bank balance sheets might still lead to
reduced lending."
A different point of view: John Redwood, a British MP, argues that monetary policy should be less tight, while government spending should be restrained. He asserts that "we need some economic stability, which requires a different approach to running the public sector, to get us better service for less cost." That sounds great in principle but lowering interest rates would bring more price destabilization - is that consistent with "economic stability"?
Ahearne, Delgado and von Weizsäcker make a convincing case for asset price targeting in monetary unions, where the use of monetary policy might be inappropriate:
Euro area governments should prick housing bubbles using countercyclical taxation of housing. Whenever ECB interest rates become inappropriately low for a member state, for example, aggressive reductions in tax breaks on housing should aim to reduce the stimulus coming from ECB policy.
Recommended: In early 2006, Roubini argued at length that the FED might target asset prices in the future.
People love waterfalls, presumably because of their scale, sound and rareness. But placing one under the Brooklyn Bridge seems like a strange idea. Olafur Eliasson, the artist, said that waterfalls are "great natural phenomena" that "do things to us."
The idea of bringing nature to the city, of changing context unexpectedly is a compelling one. I do wonder though if the four establishments that provide food with a view of these water waterfalls (mentioned in the NYT) co-sponsored the project or were lucky to have an opportunity to free ride.
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