The Department of Economics at the University of California, Davis offers nationally and internationally recognized graduate and undergraduate programs. The Department of Economics has 25 permanent faculty members, all active in research, and by various ranking criteria the department consistently ranks between number 25 and 35 in the country. The department specializes in macroeconomics, applied microeconomics, public finance/labor economics, economic theory, economic history, econometrics, and industrial organization.
We examine the price and variety of a sample of consumer goods at the barcode level in cities within China. Unlike the position in the United States, in China the prices of goods tend to be lower in larger cities. We explain that difference between the countries by the more uneven spatial distribution of manufacturers' sales and retailers in China, and we confirm the pro-competitive effect of city size on reducing markups there. In both countries, there is a greater variety of goods in larger cities, but that effect is more pronounced in China. Combining the lower prices and greater variety, the price indexes in China for the goods we study fall with city size by around seven times more than in the United States.
This paper projects China's national savings through 2040 based on China's national account data, demographic data, and data on rural and urban life-cycle income and consumption. Our baseline projections show that China's national saving in 2040 will be 16 times the current national saving. The annual growth rate of wealth will decline from 16.3 percent in 2012 to 9.5 percent in 2040. Lowering the growth rate of wealth accumulation to the current rate of return to wealth increases consumption through 2040; lowering the growth rate of wealth further may increase consumption more in the short run, but less in the long run.
Internal Versus External Convertibility and Developing-Country Financial Crises: Lessons from the Argentine Bank Bailout of the 1930s
Argentina’s money and banking system was hit hard by the Great Depression. The banking sector was awash with bad assets that built up in the 1920s. Gold convertibility was suspended in December 1929, even before the crisis seriously damaged the core economies. Commonly, these events are seen as being driven by external real shocks associated with the World Depression, espite the puzzle of the timing. We argue for an alternative, or complementary, explanation of the crisis that focuses on the inside-outside money relationship in a system of fractional-reserve banking and gold-standard rules. This internal explanation for the crisis involves no timing puzzle. The tension between internal and external convertibility can be felt when banks fall into bad times, and an internal drain can feed an external drain. Such was the case after financial fragility appeared in the 1914–27 suspension. Resumption in 1928 was probably unsustainable due to the problems of the financial system, and a dynamic model illustrates the point well. The resolution of the crisis required lender-of-last-resort actions by the state, discharged at first by the state bank issuing rediscounts to private banks. When the state bank became insolvent, the currency board started bailing out the system using high-powered money. Thus came about the demise of the currency board and the creation of a central bank in 1935, an institution that had no pretense of a nominal-anchor commitment device and no ceiling on lender-of-last-resort actions—innovations with painful long-run consequences for inflation performance and financial-sector health. As one of its first substantive actions, the central bank engineered a bailout of the banking system at a massive social cost. The parallels with recent developing-country crises are remarkable, and the implications for the institutional design of monetary and banking systems are considered.