Yesterday in trade class, a classmate pointed out that if international trade costs go to zero then trade is the same within a country as it is between countries, so the study of trade is just the study of economics in general. So why should trade exist as a separate discipline?
I thought the best reply to the challenge was that country level data are really good. Governments collect tariffs on imports, and thus keep very thorough records of what is crossing borders. Trade focuses on countries because that is where we can see what is bought and sold in great detail, with data going back a long time.
However, it is also true that trade should work in a similar way at an intranational and even individual level as it does at the international level. Our models should reflect this. One could call such a property scalability. I think we should be suspicious of a model that cannot scale, say, because factors cannot be moved over borders as is true in many trade models. The reason that we should be interested in international trade in particular should be that (1) it is where the data is, and (2) laws are often made at the national level.
This morning I read some of the articles linked to in a debate about the gains from trade over at The Economist's Free Exchange Blog. I think many of the articles, particularly this one by Uwe Reinhardt, describe trade in the right way, in the sense that it works the same within a country as it does between countries.
I woke up this morning to find State College under a blanket of wet snow...what does that PA rodent know anyway!
I have spent much of my work time in the last three weeks on a project for my empirical methods class. The point of the project is to do high quality work using (ideally) real data and statistical software. My project is an application of an existing trade model to estimate the effects of immigrant stocks on trade. The idea is that connections of immigrants to their source country make trade more likely.
The bulk of my time these last few weeks was spent cleaning up and combining datasets. I have bilateral trade data, immigrant stock data, and distance data, which all came separately in different formats (Excel, Stata). Understanding, combining, and weeding out weird observations took a long, long time. Once I had this done, writing the actual estimation routine was (well, relatively) easy.
Someone told me that people who do empirical projects usually take six years to finish their PHD. I can see why!
On a side note, this evening I am running a bootstrap in the computer lab using MATLAB's parallel computing toolbox to run the program on both of one computers cores. My first time doing parallel computing--cool beans.
The Economist's Free Exchange blog is usually a bit to finance orientated for my taste, but today they had a great post about rising income inequality. In particular, they link to an interactive income inequality graphic set up by the Economic Policy Institute. I stole their screenshot:
Can you believe that!
Now that I am working on my methods project, I spend a lot of time waiting for code to run. I try to surf the internets, but you can only visit the New York Times and Digg so many times in one day :p
Question: How come STATA can run my probit in less than one minute, whereas doing the exact same thing in MATLAB (fminunc with gradient supplied by me) takes 5-10 minutes and sometimes doesn't even converge?!?!?!
Chris Blattman has an excellent post about how difficult it is to speculate about what the results of Mubarak's overthrow will be five years down the road. That is what is thrilling about this week in Egypt-- the future could go in many different directions. Egyptians' actions in the coming months will determine the course of history. Of course, none of this would have been possible with the Mubarak family in power.
Egyptians: The future is yours, good luck!
This morning I was listening to WPSU and heard this poem on The Writer's Almanac:
The Death Deal
by Ron Padgett
Ever since that moment
when it first occurred
to me that I would die
(like everyone on earth!)
I struggled against
this eventuality, but
never thought of
how I'd die, exactly,
until around thirty
I made a mental list:
hit by car, shot
in head by random ricochet,
crushed beneath boulder,
victim of gas explosion,
head banged hard
in fall from ladder,
vaporized in plane crash,
dwindling away with cancer,
and so on. I tried to think
of which I'd take
if given the choice,
and came up time
and again with He died
in his sleep.
Now that I'm officially old,
though deep inside not
old officially or otherwise,
I'm oddly almost cheered
by the thought
that I might find out
in the not too distant future.
Now for lunch.
"The Death Deal" by Ron Padgett, from How Long. © Coffee House Press, 2011. Reprinted with permission. (buy now)
It will be a death sentence for many Afghan women hiding in shelters if they have to appear before courts. I was amazed at the extent of honor killings in Turkey, and from what I have read, Afghanistan is much worse. On a side note, check out these ridiculous related laws.
A few days ago I posted some thoughts about waiting in line. This morning I was flipping through a book about the exponential probability distribution and found a chapter devoted to queueing theory. Go social science!
I must admit that it was fun to see the president, and the best part about it was the crowd reactions. People were just crazily cheering everything he said. First he said he was going to use government funds to invest in clean energy, and create a million jobs (big cheer), then a couple minutes later he said he was going to cut subsidies to big oil companies (big cheer). This time he didn't add the part about destroying a million jobs, of course.
The most surprising part of the whole experience was when a bit before the president was supposed to appear, a Lutheran minister got up on the podium and said a prayer: "Dear Lord, oh source of all wisdom, please help us to use clean energy," etc. Very strange.