Economics Journals’ Response Times

In a blog post, Douglas Campbell offers a ranking of economics journals by response times (based on non-representative data). The ranking (with # indicating the rank according to citations):

#    Journal Name    Accept %    Desk Reject %    Avg. Time    Median Time    25th Percent. (Months)    75th Percent. (Months)    N =
1    Quarterly Journal of Economics    1%    62%    0.6    0    0    1    71
12    Journal of the European Economic Association    4%    56%    1.2    0.5    0    2    25
14    Journal of Human Resources    18%    58%    1.3    1    0    2    38
6    American Economic Journal: Applied Economics    3%    33%    1.6    2    0    2.5    36
31    European Economic Review    29%    50%    1.6    1    0    3    34
15    Review of Financial Studies    15%    20%    1.8    2    1    2    20
13    American Economic Journal: Economic Policy    7%    40%    1.8    2    0    3    30
42    IZA Journal of Labor Economics    100%    0%    2.0    2    2    2    1
39    Journal of Financial and Quantitative Analysis    33%    7%    2.1    2    1    3    15
44    Journal of Law and Economics    0%    42%    2.1    2    0.5    3    12
17    Journal of Economic Growth    0%    0%    2.1    2    2    3    7
27    Journal of Financial Intermediation    14%    29%    2.1    3    1    3    7
7    Journal of Finance    0%    32%    2.2    2    0    4    19
16    Economic Journal    20%    46%    2.2    2.5    0    4    41
19    Journal of Financial Economics    29%    21%    2.2    2    1    3    14
34    Journal of Health Economics    14%    57%    2.3    2    0.5    4    28
38    Journal of Population Economics    29%    43%    2.3    3    0    4    7
5    American Economic Journal: Macroeconomics    11%    26%    2.3    2    0    4    19
32    Theoretical Economics    8%    0%    2.3    2    2    2.5    12
49    Econometrics Journal    0%    60%    2.4    0    0    5    5
9    American Economic Review    7%    45%    2.4    2    0    4    71
45    Review of Finance    0%    9%    2.5    3    2    3    11
26    Journal of Urban Economics    19%    19%    2.5    3    1    4    16
35    Labour Economics    12%    35%    2.5    2    1    3    17
24    Journal of Applied Econometrics    0%    42%    2.6    2    0    5    19
4    Econometrica    4%    25%    2.9    3    1    4    24
30    American Economic Journal: Microeconomics    23%    15%    2.9    3    2    4    13
3    Review of Economic Studies    3%    37%    3.1    3    0    5    63
21    Journal of Public Economics    8%    25%    3.2    3    1    4    51
36    World Bank Economic Review    0%    50%    3.4    3    1.5    6    8
11    Journal of Labor Economics    0%    20%    3.5    4    2    6    15
43    Journal of Risk and Uncertainty    0%    75%    3.8    3.5    3    4.5    4
10    Review of Economics and Statistics    2%    50%    3.8    2    0    6    50
23    Journal of Development Economics    14%    33%    3.8    3    1    5    36
25    Journal of Business and Economic Statistics    22%    11%    3.9    3    2    5    9
41    Journal of Environmental Economics and Management    24%    10%    4.0    3.5    2    5    21
22    RAND Journal of Economics    7%    15%    4.1    4    4    5    27
47    Journal of Economic Dynamics and Control    50%    17%    4.2    3    1    4    18
33    Journal of Economic Theory    17%    13%    4.2    4    3    5.5    23
46    Journal of International Money and Finance    41%    6%    4.4    3    2    6    17
50    Oxford Bulletin of Economics and Statistics    23%    38%    4.6    4    2    6    13
2    Journal of Political Economy    0%    60%    4.8    3    1.5    7    25
18    Journal of International Economics    19%    6%    4.8    3.5    2.5    6.5    16
20    Journal of Money, Credit, and Banking    20%    15%    5.1    4    2    8    20
40    Journal of Economic Surveys    0%    40%    5.2    5    0    7    5
28    Experimental Economics    29%    14%    5.9    6    3    9    7
29    Journal of Econometrics    11%    11%    7.0    7    5    10    9
48    Econometric Theory    0%    0%    7.0    5    4    12    3
8    Journal of Monetary Economics    21%    0%    7.7    4    3    9    14

Say’s Law

From The Economist’s economics brief on Say’s Law:

Supply gives people the ability to buy the economy’s output. But what ensures their willingness to do so? According to the logic of Say and his allies, people would not bother to produce anything unless they intended to do something with the proceeds. … Even if people chose to save not consume the proceeds, Say was sure this saving would translate faithfully into investment in new capital …

But what if the sought-after thing was [money] … as a store of value, to be held indefinitely? A widespread propensity to hoard money posed a problem for Say’s vision. It interrupted the exchange of goods for goods on which his theory relied. … And if, as he had argued, an oversupply of some commodities is offset by an undersupply of others, then by the same logic, an undersupply of money might indeed entail an oversupply of everything else.

Say recognised this as a theoretical danger, but not a practical one.

Berlin, or Berlin Tegel, or Air Berlin?

Berlin Tegel airport (TXL). Air Berlin flight to Zurich. Passengers have been waiting in the cabin for about half an hour. Apparently, some disagreement or confusion among ground staff on how to deal with delayed passengers. Enter the Maître de Cabine:

Ja, meine Damen und Herren. Sie haben es sicher schon bemerkt: Hier wieder mal völliges Chaos in Berlin Tegel … (Well, Ladies and Gentlemen: As you surely realize, we have once again complete chaos here in Berlin Tegel …)

While Berlin (and specifically BER) has recently been a recurring source of embarrassment for the “Made in Germany” label the chaos at Tegel is surprising. And while passengers are used to frustration with their carriers (on the outbound Air Berlin flight with a connection at TXL, I waited 5 days for my luggage) it is unusual to see airline staff vent their frustration in front of customers in such honesty.

What’s the source of the problem: The airport, the airline, or the city?

Corporate Governance of Crypto Currencies

The Economist reports about conflicting strategies among important Bitcoin players; the struggle aligns pragmatists against libertarian ideologists. It also reports about attempts by competing crypto currencies to strengthen corporate governance:

Tezos, another blockchain, will … not only have regular votes on competing proposals for how to change the system, but a more scientific approach to evaluating them and a way to compensate the developers for coming up with ideas. If their proposals are accepted, they will get paid in Tezos coins. The approach appears to have resonated within the crypto world: when Tezos closed its ICO earlier this month, it had raised a record $232m.

Bitcoin, Arbitrage, and the Human Side of the Blockchain

On Bloomberg view, Matt Levine discusses the recent bitcoin fork. The handling of long and short positions on Bitfinex, a bitcoin exchange, created an arbitrage opportunity, until Bitfinex changed its mind.

Bitfinex announced a policy to deal with the fork, people took advantage of the policy, and Bitfinex changed its mind after the fact. Each of its decisions was rational, and quite plausibly the fairest option available to it. None of those decisions were required by, like, the nature of bitcoin, or of short selling: There is no single obviously correct solution to these issues. Instead, each decision was sort of weird and contingent and reversible: not the immutable code of the blockchain, but just humans sitting around and trying to figure out which approach would cause the fewest complaints. …

The blockchain has a certain stark logical completeness, but it doesn’t address all of the actual human uses required of it. And so it has become encrusted with other human institutions. And those institutions turn out to be unsurprisingly human.

Limits of Arbitrage and Covered Interest Parity

In a BIS working paper, Dagfinn Rime, Andreas Schrimpf, and Olav Syrstad analyze the apparent breakdown of covered interest parity (CIP). They argue that

CIP holds remarkably well for most potential arbitrageurs when applying their marginal funding rates. With severe funding liquidity differences, however, it becomes impossible for dealers to quote prices such that CIP holds across the full rate spectrum. A narrow set of global top-tier banks enjoys risk-less arbitrage opportunities as dealers set quotes to avert order flow imbalances.

The IMF “In Principle” Approves Funding For Greece

In the FT, Mehreen Khan reports about the IMF’s conditional acceptance to lend to Greece.

The IMF’s “agreement in principle” (AIP) tool draws on a practice where the fund is able to greenlight its involvement in a debtor country, conditional on the government and its creditors agreeing to future debt relief measures.

Of course, the dispute about the merits of debt relief is unresolved. The IMF thinks Greek debt is ‘unsustainable’ and the European creditors should bear more losses, earlier on while some Euro area countries disagree. (For the numbers, see here).

Earlier in July, the European Stability Mechanism had approved a new cash injection (FT). This followed a dodgy compromise in June, as reported by Jim Brunsden in the FT:

Euro area ministers and the International Monetary Fund unveiled a deal … that will … sav[e Greece] … from default this summer. The IMF will join the bailout as a partner but withhold any money until euro area finance ministers give more detail on what debt relief they might offer Athens. …

Euro-area policymakers have been trying to reconcile competing EU and IMF visions of the €86bn programme and, crucially, whether it will make Greece’s debts sustainable.

Programme conditions set by euro area governments in 2015 included budget surplus targets that the IMF said were punishingly ambitious and unlikely to be met. The fund set out a different vision: lower primary surplus targets for Athens, coupled with comprehensive pension and tax reform and, crucially, far-reaching debt relief.

At the centre of the puzzle was Germany’s finance minister, Wolfgang Schäuble, who has insisted that the IMF must join if Greece is going to continue receiving tranches of bailout aid — but has also resisted significant debt relief commitments.

Given that the fund could not join up unless convinced that Greece’s debts were being put on to a sustainable path, the euro area and IMF had to find another solution — and it came in the form of asking Athens to do more.

To give the IMF confidence that Greece could hit budget surplus targets set by the euro area, Athens was asked to widen its income tax base and cut pensions. The measures, adopted in May, are estimated to be worth about 2 percentage points of gross domestic product.

In the meantime, Greece plans to regain market access by 2018 (FT).

The Reformation, Education, and Secularization

In a paper, Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman argue that the Protestant reformation after the year 1517 triggered major reallocation, due to religious competition and political economy.

[T]he Reformation produced rapid economic secularization. … shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated … particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. … students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: … religious construction declined, particularly in Protestant regions, while secular construction increased, especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.

The Black Death and Atmospheric Lead Concentration

During the black death epidemic (1349–1353), atmospheric lead concentration collapsed as mining ceased. This is the result of a study by Alexander More, Nicole Spaulding, Pascal Bohleber, Michael Handley, Helene Hoffman, Elena Korotkikh, Andrei Kurbatov, Christopher Loveluck, Sharon Sneed, Michael McCormick, and Paul A. Mayevski on lead levels in an Alpine glacier. They write that

[c]ontrary to widespread assumptions, … resolution analyses of an Alpine glacier reveal that true historical minimum natural levels of lead in the atmosphere occurred only once in the last ~2000 years. During the Black Death pandemic, demographic and economic collapse interrupted metal production and atmospheric lead dropped to undetectable levels.

Levels-of-atmospheric-lead-c-geohealth-2017

Connecting Central Bank Payments Systems

In the FT, Martin Arnold reports about a new cross-border payment method tested by the Bank of England. The “interledger” program transfers money “near-instantaneously and without settlement risk.” The Bank of England

set up two simulated RTGS systems on a cloud computing platform, using the Ripple interledger to simultaneously process “a successful cross-border payment”.

This is not necessarily good news for the blockchain community. The Bank of England’s proof of concept is

“about connectivity between central bank systems rather than replacing the central bank systems with the blockchain,” [according to] Daniel Aranda, head of Europe at Ripple.

 

 

 

Arguments Against Strict Monetary Policy Rules

In its July 2017 Monetary Policy Report, the Board of Governors of the Federal Reserve System discusses monetary policy rules. On pp. 36–38, the Board argues that

[t]he small number of variables involved in policy rules makes them easy to use. However, the U.S. economy is highly complex, and these rules, by their very nature, do not capture that complexity. …

Another issue related to the implementation of rules involves the measurement of the variables that drive the prescriptions generated by the rules. For example, there are many measures of inflation, and they do not always move together or by the same amount. …

In addition, both the level of the neutral real interest rate in the longer run and the level of the unemployment rate that is sustainable in the longer run are difficult to estimate precisely, and estimates made in real time may differ substantially from estimates made later on …

Furthermore, the prescribed responsiveness of the federal funds rate to its determinants differs across policy rules. …

Finally, monetary policy rules do not take account of broader risk considerations. … asymmetric risk has, in recent years, provided a sound rationale for following a more gradual path of rate increases than that prescribed by policy rules.

“Monetary Economic Issues Today,” Panel, 2017

Panel discussion with Ernst Baltensperger, Otmar Issing, Fritz Zurbrügg and Mark Dittli (moderator) on the occasion of the publication of the Festschrift in honour of Ernst Baltensperger, Bern, June 16, 2017. SNB press release. Video (SNB Forschungs-TV).

Financial Intermediation and Standardization

On his blog, John Kay speculates about the future of financial intermediation:

The paradox of modern capital markets is that although there is less and less need for market activity from the point of view of either the end users of finance, or the investors who are the ultimate beneficiaries of finance, the volume of market activity has increased exponentially. …

The growth of secondary market trading at the expense of an understanding of the underlying exposure led to disaster in the global financial crisis of 2008, just as it had earlier led to disaster at Lloyd’s. …

Standardisation is not an answer to the problem of information provision in financial markets, nor is pervasive information asymmetry successfully resolved by insistence on the provision of detailed financial information on a standardised basis, whether in company accounts or key features documents.

… it is time to raise question marks over the entire market based model of financial services provision. We should be talking about risk management and capital allocation without any presumption that markets are the best way of handling these issues.

On Cheques

On his blog, JP Koning discusses the versatility of cheques:

  • A cheque instructs a bank to transfer deposits.
  • It is a derivative on bank deposits.
  • A post dated cheque serves as debt instrument, e.g., vis-a-vis pay day lenders.
  • An uncashed cheque may serve as money if marked “to bearer” or endorsed by the recipient. Laws grant cheques currency status.
  • A cheque may be used for payments even if other payment mechanisms break down. During the Irish banking strike of 1970, “for six months post-dated cheques circulated as the main form of money.”
  • A cheque can be used by the unbanked.

This combination of negotiability, robustness, openness, and decentralization means that long before bitcoin and the cryptocoin revolution, we already had a decentralized payments system that allowed pretty much everyone to participate and, indeed, fabricate their own personal money instruments! …

… a whole language of cheques has emerged, allowing for significant customization. By putting crossings on cheques, like this the cheque writer is indicating that the only way to redeem it is by depositing it, not cashing it. This means that the final user of the cheque will be easy to trace, since they will be associated with a bank account. Affix the words non-negotiable within the cross on the front of the cheque and it loses its special status as currency. Should it be stolen and passed off to an innocent third-party, the victim can now directly pursue the third-party for restitution. To even further limit the power of subsequent users to use the cheque as money, the writer can indicate the account to which the cheque must be deposited. This language of checks can be used not only by those that have originated the cheque, but also by those that receive it in payment. On the back of any check, any number of endorsements can be written, effectively allowing for the conversion of someone else’s payment instructions into your own unique medium of exchange.

Currency Status

On his blog (here and here), JP Koning discusses currency status:

… laws that … grant … currency status. … Say that person A is carrying some sort of financial instrument in their pocket and it is stolen. The thief uses it to buy something from person B, who accepts it without knowing it to be stolen property. If the financial instrument has not been granted currency status by the law, then person B will be liable to give it back to person A. If, however, the instrument is currency, then even if the police are able to locate the stolen instrument in person B’s possession, person B does not have to give up the stolen [instrument] to person A. We call these special instruments negotiable instruments.