Author: John Quiggin

ICAPM

John Quiggin28 Comments

I’m at the Australian Conference of Economists in Perth, where I’m presenting a paper on water policy. I went to a paper today on ‘home bias’ and the International Capital Asset Pricing Model. The general home bias story is that most people hold most of their assets in their own country, when standard theory suggests the optimal portfolio should be much the same for everyone, regardless of location.

Following this up, this suggests that everyone should hold assets in a given country in proportion to its vaue share in the total world market (about 2 per cent for Australia).

It struck me that there’s a paradox here. Suppose I’m considering investing in two overseas stock markets with similar characteristics (mean return, variance, covariance with the Australian market). It seems obvious that I should invest the same amount in each market. But, if you accept ICAPM this is wrong, unless the two markets have the same capitalisation. ICAPM implies that I should invest more in whichever market is larger.

The paradox can be resolved if larger markets are more stable, but casual observation doesn’t support this. Has anyone seen this issue addressed?

What I’ve been reading

John Quiggin24 Comments

I finally got around to The Weather Makers by Tim Flannery, which I’ve had on my shelf for ages. I was happy to see I got a brief mention, pointing out the misleading way that model simulation results from MEGABARE on the cost of Kyoto were presented in public debate.

Overall, the book is impressive but depressing. It seems clear that lots of species are doomed to extinction even if we move rapidly to stabilise CO2 concentrations, something which the denialist lobby is doing its best to prevent.

An interesting (and alarming) sidelight was the observation that the destruction of the ozone layer would have gone much faster, potentially leading to catastrophic damage, if we’d used chemicals based on bromine rather than chlorine-based CFCs. It was only a matter of chance that the economics turned out better for chlorine. It’s worth recalling at this point that many of our leading climate change denialists (such as Pat Michaels, Sallie Baliunas, Fred Singer, John Brignell and Steve Milloy) were also ozone hole denialists and some still are.

Bin Laden dead ?

John Quiggin28 Comments

French Newspaper L’Est Republicain has published a report, citing sources in the French security services who claim that Osama bin Laden is dead of typhoid, having been unable treatment by virtue of his isolation.

« Selon une source habituellement fiable, les services saoudiens auraient désormais acquis la conviction qu’Oussama Ben Laden est mort. Les éléments recueillis par les saoudiens indiquent que le chef d’Al-Qaïda aurait été victime, alors qu’il se trouvait au Pakistan le 23 août 2006, d’une très forte crise de typhoïde ayant entraîné une paralysie partielle de ses membres inférieurs. Son isolement géographique, provoqué par une fuite permanente, aurait rendu impossible toute assistance médicale. Le 4 septembre 2006, les services saoudiens de sécurité ont recueilli les premiers renseignements faisant état de son décès. Ils attendraient, d’obtenir davantage de détails, et notamment le lieu exact de son inhumation, pour annoncer officiellement la nouvelle ».

Via ABC News

A good year

John Quiggin28 Comments

I’ve been checking my publications and I’ve had 15 refereed journal articles published (in print or online) so far this year, which is the most ever for me (though I’ve read that Harry Johnson had 18 articles in press at the time of his death). There are a few more that have been accepted, and might make it through by the end of the year.

Thinking about there are a few factors that contribute to this happy outcome. One is random fluctuation. Last year was a little below average, and some papers that should have been published then slipped into 2006. Similarly, I expect 2007 to be a bit light.

Another is that, with the Federation Fellowship, I’ve tended to do more applied policy stuff, particularly on water. That’s easier to write and publish than theory pieces aimed at international journals (though I’m still doing those).

Finally, I’ve cut back on travel. While some travel is necessary, I think most academics would benefit from less time on the road and more in front of the computer.

What’s really good about this is that it allays the fear that blogging will have a bad long-term effect on my productivity. I think it probably takes time that I might otherwise have put into a book or two, but books are a high-effort, low-payoff exercise for economists, unless you have something you really need to say at book length.

Free the Tripoli Six

John Quiggin7 Comments

This Nature editorial reports the alarming news that six international health workers face execution in Libya on bogus charges of spreading HIV. As the editorial points out, despite the absence of any real improvement in its human rights record, Libya is being treated as a Beacon of Light by both the US and EU because it has backed off its previous support for terrorism and WMDs. It should be made clear to the Gaddafi regime that murdering aid workers is on a par with terrorism as a crime against the international community.

More from ScienceBlogs

War on Science: Science Strikes Back

John Quiggin64 Comments

The war on science driven by a combination of Republican* ideology and corporate cash has been ably documented by Chris Mooney (see the Crooked Timber seminar here). Now, finally, science is striking back at one of the worst corporate enemies of science, ExxonMobil. As evidence of human-caused global warming has accumulated, leading energy companies like BP have seen the need to respond, with the result that industry groups like the Global Climate Coalition have broken down, leaving ExxonMobil to carry on a rearguard action through a network of shills and front groups. Now the company is finally being exposed by a major scientific organisation.

In an apparently unprecedented move, the British Royal Society has written to Exxon, stating that of the organization listed in Exxon’s 2005 WorldWide Giving Report for ‘public information and policy research‘, 39 feature

information on their websites that misrepresented the science on climate change, either by outright denial of the evidence that greenhouse gases are driving climate change, or by overstating the amount and significance of uncertainty in knowledge, or by conveying misleading impression of the potential impacts of climate change

(full copy of the letter here)

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