Assorted Links

1. MR points to a new paper on income inequality. It is pretty detailed one. What caught my eye is this:

…the top 25 hedge fund managers combined appear to have earned more than all 500 S&P 500 CEOs combined (both realized and estimated).

2. Dani Rodrik points out to an interesting graph- why Asia and Africa grew? Basically Asia gre on account of undervalued currency. He says (look at the graphs first) :

In Asia, growth accelerations are preceded by a period of sustained increase in undervaluation, which is maintained during the period of high-growth. In Africa, by contrast, growth accelerations are preceded by growing overvaluation; the currency always remains in the overvalued zone (= negative undervaluation).

Here is the simplest explanation. In Asia, growth is typically engineered by increasing the profitability in manufacturing and other tradables. But in Africa the typical growth spurt is preceded by aid inflows and other transfers, which appreciate the exchange rate, and render future growth less sustainable. This is the so-called Dutch disease.

He has also written a new paper which he explains how an undervalued real exchange rate can promote economic growth.

3. WSJ Blog points out the problems with FOMC forecasts.

4. Jungle Economics….pretty interesting

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