Environmental and Urban Economics

I have lived in the City of Baltimore for 6 months now.  The City faces challenges. It needs to hire more police officers and it needs to upgrade the infrastructure of the public schools and upgrade public transit.  The City will be expected to also contribute $ to enact the education recommendations embedded in the Kirwin Report.  At a time of historically low interest rates, should the city be issuing more bonds? There is a demand for such bonds.  The city's bond rating appears to be pretty good and there isn't a large risk premium associated with not having a perfect bond rating.

As the Chinese leadership uses it power to try to stop the coronavirus contagion, does this horrible event offer a test of Barro's 2006 QJE paper?   As I understand his paper,  asset prices reflect the fact that there is a positive probability of large drops in a nation's output.  To compensate investors for such low probability but dangerous risk, there has to be  an equity premium (i.e the rate of return on stocks versus safe bonds).

In this Big Data age, what do we now know about urban government productivity?  Whether the city is Baltimore or Chicago or San Diego, when a city spends an extra dollar on public goods such as street safety or public transit, how much local public goods are produced?  This is a surprisingly difficult question to answer and in the next series of blog posts, I will argue that this "opacity" benefits several interest groups including the Mayor, the urban government and the public sector unions.

I just read Jason Furman's review of Ezra Klein's new book Why We're Polarized.    I would like to offer a simpler economic explanation.   Every economist is taught that a necessary condition for trade through markets to yield a mutually beneficial outcome is that we must agree on who has the property rights.   When I enter a Starbucks,  I want a coffee.  Starbucks owns the coffee beans and the capital stock and has trained the talent to make me a coffee.

Back in 2004, Dora and I published a paper documenting that from 1940 to 1990 the estimated value of a statistical life in the U.S grew faster than U.S per-capita GNP.    Other studies from Taiwan and India have documented a similar result.

These findings have implications for China today and risk regulation policy in the face of the contagion risk.  As China has grown richer, the value of risk avoidance rises.  There is a greater aggregate demand for safety.