The Selectorate Theory and Global Governance

One random thought just occurred to me when I was reading Duncan Snidal's “The Limits of Hegemonic Stability Theory:”

Is Bruce Bueno de Mesquita's "selectorate theory" applicable to global governance? When the selectorate (in this case members of the international system) expands, for example decolonization after WW2, in order for the "hegemon" to sustain legitimacy, it is more likely to provide public goods instead of paying the "winning coalition" off--simply because it would be far too costly to provide private goods to every single member of the coalition. This might explain the effort of the US to promote public goods such as free trade.

I'm not sure whether BDM's theory can be applied like this, but it sure sounds interesting if it can. What do you think? Comments appreciated!

So this is the rating we cared so much about.

How Moody sold its ratings.

The ratings deeply affect the cost of borrowing. This is extremely important for the semiconductor industry in Taiwan, which does a lot of borrowing. I wonder whether Taiwan was overrated or underrated. Or maybe the effects canceled off each other...

Via IPE at UNC.

Geographical Distance and the Internet

Distance Is Not Dead: Social Interaction and Geographical Distance in the Internet Era

While technology has undoubtedly increased the overall level of communication, this increase has been most pronounced for local social ties. We show that the volume of electronic communications is inversely proportional to geographic distance, following a Power Law. We directly study the importance of physical proximity in social interactions by analyzing the spatial dissemination of new baby names. Counter-intuitively, and in line with the above argument, the importance of geographic proximity has dramatically increased with the internet revolution.

The study is based on facebook and e-mails data. In addition, to show evidence of the importance of physical proximity over time, they study...baby names.

Via Trade Diversion.

More Comments On The Nobel Prize in Economics

Stephen Walt, "A More Rational Choice for a Nobel Prize."

Ostrom (and the co-winner, organization theorist Oliver Williamson) join a group of recent winners chosen more for theoretical insight and real-world relevance than for mathematical scholasticism. Others in this same group would include economic historians Douglass North and Robert Fogel, behavioral economist Daniel Kahneman, game theorist/strategist Thomas Schelling, and economist-philosopher Amartya Sen. Scholars with an international orientation have been doing pretty well in recent years too: Schelling was awarded for game-theoretic work on international conflict, Paul Krugman for his work on international trade, and Sen's work on poverty and famines has clear international implications. Kudos to the prize committee for their eclectic approach to the award--if only more economics departments thought this way.

Daniel Drezner, "What Other Political Scientists Deserve the Nobel?"

Paul Romer, "Skyhooks versus Cranes: The Nobel Prize for Elinor Ostrom."

A typical conclusion was that rules that assign property rights and rules that let people trade lead to good outcomes. What’s the skyhook? That people will follow the rules. Why would they respect the property rights of someone else? We had no idea. We might have had in mind something like this: police officers will arrest people who don’t follow the rules. But this is just another skyhook. Who are these police officers? Why do they follow rules? This is not an idle concern. Elinor showed that there are lots of important cases where people follow rules about ownership without police officers. One of the central challenges in understanding failures of economic development is that in many places, police officers don’t follow the rules they are meant to enforce.

This Year's Nobel Prize In Economics Goes to...

A political scientist and an economist! Congratulations Elinor Ostrom and Oliver Williamson!

To read more about their contributions specifically in the field of "New Institutional Economics," the following are some related links:

Blogging by Paul Krugman, "An Institutional Economics Prize. "

The way to think about this prize is that it’s an award for institutional economics, or maybe more specifically New Institutional Economics.

Commentary by Michael Spence, "Markets Aren't Everything." (Via Mankiw)

The common theme underlying the prize this year is that markets do not solve all problems of resource allocation and incentives well or even at all. That is not a new idea. What is important is that people and societies find ways through organizational structures and arrangements, political and other institutions, values, incentives and recognition, and the careful management of information, to solve these problems. Professors Ostrom and Williamson have led the development of this increasingly important part of economics.

...The prizes this year can be celebrated in recognizing two highly original scholars and in so doing, highlighting the important parts of economics, political science and political economy that they have done so much to build.

Blogging by Steven Levitt, "What This Year's Nobel Prize in Economics Says About the Nobel Prize in Economics."

So the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama. Economists want this to be an economists’ prize (after all, economists are self-interested). This award demonstrates, in a way that no previous prize has, that the prize is moving toward a Nobel in Social Science, not a Nobel in economics.

Government Stimulus and Empirical Evidence

Robert Barro concludes in today's WSJ article that when looking at the US:

"The existing empirical evidence on the response of real gross domestic product to added government spending and tax changes is thin."

Simply put, he argues that "government stimulus packages don't work," which brings up the question about whether the recent "consumer voucher" policy and stimulus packages in Taiwan worked or not.

If I recall correctly, The Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan in Taiwan has given estimates proving that consumer vouchers worked, though moderately.

This points to an interesting research topic: perhaps people in Taiwan who are interested in Macroeconomics could investigate empirically how government stimulus packages are affecting real GDP.

Settling Down in Charlottesville

The Rotunda

Two weeks have already passed since I arrived here at UVA. Below are some of the things that have kept me busy.

For the first week or so I was busy settling down: buying furniture (I was offered an unfurnished apt.) and home appliances, etc. Soon after courses began, I was then overwhelmed by reading materials and TA work. Leading TA sections were the most challenging at first, since I had to shake the rust off my English comprehension skills and talk about concepts I've learned in Mandarin. The huge reading lists have benefited me, however, by significantly expanding my vocabulary in such short time.

Considering the limited free time I will have in the near future, perhaps sharing the notes of my recent readings will be a plausible way to keep this blog running.

Below are some more pictures I've taken recently.

Garrett Hall and the symbol of the "Z" society

The Rotunda

The Chapel