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52. The Economic Mentality of Nations
- Author:
- Pál Czeglédi, Brad Lips, and Carlos Newland
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Two hundred forty‐five years after the publication of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, economists continue to debate the causes of disparities in wealth among the countries of the world. Some scholars focus on the role of climate, natural resources, proximity to markets, or access to technology. Others study human capital, capital accumulation, the use of comparative advantages and economies of scale, and institutional and legal frameworks. We believe that another factor must be considered as well: the economic attitudes and causal beliefs (henceforth, “mentality”) of the population. While a growing body of research shows a clear association between economic growth and the institutions of economic freedom, those institutions can be quite fragile if the population does not have a clear understanding of what makes a country prosperous. To measure popular attitudes toward economic values, we have created the Global Index of Economic Mentality (GIEM).
- Topic:
- Economics, Markets, Capitalism, Youth, and Free Market
- Political Geography:
- Global Focus
53. The Limits of Democracy
- Author:
- D. Eric Schansberg
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- There’s an old saying that democracy is the worst form of government, except for all of the others. Or putting it another way: the best form of government is a benevolent and knowledgeable dictator, except for the problem of finding a good and wise leader. Whatever democracy’s strengths, they are relative not absolute, and they are contingent on context—namely, the people being governed, the people governing, and the underlying institutions.
- Topic:
- Politics, Governance, Democracy, and Populism
- Political Geography:
- Global Focus
54. The Covid‐19 Coin Shortage: Causes, Responses, and Lessons
- Author:
- Nicholas Anthony
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Covid‐19 altered almost every facet of the human experience in 2020. For those who were lucky, living rooms became offices, cocktail hours went virtual, and spare time was spent exploring new passions. But others suffered: hundreds of thousands of people died, millions became unemployed, and even more were left uncertain about their future. All the while, smaller inconveniences multiplied. Of these, the most unexpected was a serious coin shortage in the summer of 2020.
- Topic:
- Currency, COVID-19, Cash, and Shortage
- Political Geography:
- Global Focus
55. The War on Cash: Institutional Hostility and Covid‐19
- Author:
- Edoardo Beretta and Doris Neuberger
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- There is significant economic literature investigating the hostility to cash or “war on cash” (Beretta 2005, 2007; Deutsche Bundesbank 2017; Jain 2017; Scott 2013; White 2018) by which financial institutions supported by governments discourage individuals from using (publicly issued) physical means of payments and convince them to move to digital (privately issued) ones.
- Topic:
- Economics, COVID-19, Digitization, and Cash
- Political Geography:
- Global Focus
56. Covid Cash
- Author:
- Kenneth Rogoff and Jessica Scazzero
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The advent of the Covid‐19 pandemic has witnessed a strong uptick in paper currency demand across advanced economies, even as contactless methods surged ahead of cash in payments. This article explores these two contrasting phenomena, which are in fact continuations of much longer‐term trends. The use of cash, while still important for small in‐person transactions, has been declining as a share of overall consumer payments for decades, thanks to a steady stream of innovations including credit cards, debit cards, electronic transfers, and smartphone payment apps. For example, in the United States, paper currency accounted for 26 percent of the number of consumer payments in 2019 but only 6 percent in value terms, down from 40 percent and 14 percent, respectively, in 2012. Meanwhile, U.S. dollars in circulation have increased from $1.1 trillion in January 2012 to $1.8 trillion in January 2020, exploding to $2.1 trillion in December 2020. The same pattern remains if one excludes foreign holdings (50–60 percent of the total) and is found in most other advanced economies as well. Some argue that soaring currency demand contests the view that the world is headed to a cashless future, or even a “less‐cash” society (see Bech et al. 2018; BIS 2020).
- Topic:
- Currency, COVID-19, Digitization, and Cash
- Political Geography:
- Global Focus
57. Effects of Immigration on Entrepreneurship and Innovation
- Author:
- Robert Krol
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Economic growth in advanced economies is driven primarily by innovations that improve productivity. Entrepreneurs and researchers, who are motivated by economic incentives, generate new ideas that result in either new or expanded businesses. The resulting expansion of businesses generates new and better products and services. Entrepreneurs also change the way production is organized because they improve efficiency that lowers prices for consumers. Such actions produce economic growth, which manifests itself by increasing product variety, jobs, and wages. As a result, economic well‐being increases (Alcigit and Kerr 2018; Jones 1995, 2016; McCloskey 2016; Romer 1990).
- Topic:
- Immigration, Entrepreneurship, Economic Growth, and Innovation
- Political Geography:
- Global Focus
58. The GameStop Episode: What Happened and What Does It Mean?
- Author:
- Allan M. Malz
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The GameStop stock trading episode that began in January 2021 has been unprecedented in some ways, especially in the ability of market participants to organize collective action openly yet anonymously. In other ways, it’s been an unsurprising repetition of past experience. Financial markets are imperfect, they display many frictions, and the imperfect alignment of interests is a perpetual dilemma in designing both contracts and public policy.
- Topic:
- Regulation, Economy, Public Policy, and Stock Markets
- Political Geography:
- United States of America
59. GameStop and the Rise of Retail Trading
- Author:
- Jennifer J. Schulp
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In January 2021, a curious event in the stock market caught the attention of the media, regulators, and the public. A well‐known struggling company dominated the headlines, not for its business model, but for the meteoric rise of its stock price. GameStop Corp. started the year trading around $19.00 a share, a pretty robust share price for a company that had been trading below $5.00 as recently as August 2020. Yet, by the end of January, GameStop’s shares were trading at over $300, at one point hitting a high of $483. GameStop’s stock price has receded from those meteoric highs, but, as of late May, it continues to trade between $160 and $180 a share.
- Topic:
- Markets, Economy, Investment, Stock Markets, and Equity
- Political Geography:
- Global Focus
60. The Impact of Public Debt on Economic Growth
- Author:
- Jack Salmon
- Publication Date:
- 10-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Following the 2007–2008 global financial crisis (GFC) and subsequent sovereign debt crisis in Europe, there has been a renewed interest in exploring the relationship between government debt and economic growth. One of the cornerstone studies on the subject that triggered an emergence of new literature was Carmen Reinhart and Kenneth Rogoff’s “Growth in a Time of Debt” (2010), which became widely cited and influential among commentators, academics, and policymakers in the debate surrounding austerity and fiscal policy in debt‐burdened economies. Much of the research that followed the GFC uses panel data analysis of the debt‐growth nexus using datasets from the World Bank, International Monetary Fund (IMF), European Commission, and Organisation for Economic Co‐operation and Development (OECD).
- Topic:
- Economy, Economic Growth, Survey, and Public Debt
- Political Geography:
- Global Focus