It is well known that government intervention, be it through taxation or regulation, can obstruct the functioning of markets. Yet there is another kind of influence that may also have strong effects on the efficiency of an economy but is much less discussed, namely the set of values, traditions, and moral standards a society subscribes to. To some extent, the moral framework of a society is reflected in its legal system and in this way affects the economy, but more often an informal consensus that some things should or should not be done in certain ways ...
ISET Economist Blog
A blog about economics in the South Caucasus.
Feb
14
Feb
06
Since some years, Azerbaijan experiences an immigration wave. Chart 1 shows the net immigration (immigration minus emigration) to Azerbaijan during the last 22 years. As can be seen, in every year since 2008 more people are immigrating to Azerbaijan than there are emigrating. In 2012, for instance, 2000 net migrants came to Azerbaijan.
Migration flows are governed by economic, social, and political motives. One may categorize these to be either pull factors or push factors. Push factors are typically the lack of economic opportunities in the countries of...
Jan
26
Last week I discussed the economic consequences of inequality. Contrary to a traditional tenet of economics, empirical research has shown that inequality may have adverse economic consequences. Inequality increases the risk of political instability in a country, posing a threat to investments due to the fact that political unrest is highly detrimental to the profits made from any economic activity. Therefore, foreigners will bring less capital into a country when the risk of instability goes up, and even local investors will move their money over the bor...
Jan
24
Economics Nobel Prize winner Joseph Stiglitz, well-known for sharply criticizing the conventional wisdoms of development economics, once summed up his views in a rhetorical question: “We have felt the pain, when do we get the gain?”
Stiglitz wanted to point out that standard development strategies require countries to pay a high price in exchange for the promise of a better future. The price comes in form of harsh poverty for some members of the society, income reduction for many, social strain, and increased inequality. While it is obvious that the “pai...
Jan
20
Why should we care about income inequality? According to Nobel Prize laureate Joseph Stiglitz and Harvard economist Jason Furman, “greater inequality leads to more political instability, and greater political instability leads to lower growth” (“Economic Consequences of Income Inequality”, Federal Reserve Bank of Kansas: Journal Proceedings, 1998, pp. 221-232). Consequently, even if one does not care about income inequality directly, there may be reason to care about its indirect effects.
In their article "Income Distribution, Political Instability, and ...
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