Environmental Economics

Benefits and costs of free trade (off-topic)

We might be going off-topic a heck of a lot during the next four years:

While the costs of free trade tend to be concentrated, benefits like lower prices for imported goods are spread very broadly, making them less obvious. In an interview on Fox News on Sunday, Newt Gingrich, former speaker of the House and a Republican Trump ally, questioned whether that trade-off made sense.

In some cases, he said, Americans should be “prepared to pay a little bit more for imported products” to keep jobs at home.

If trade advocates can’t make a better case, or at least come up with better ways to help the inevitable economic losers of globalization cope, then free trade itself may be imperiled, whatever the overall benefits.

via www.nytimes.com

Using the very simplest (a static demand and supply model), and most compelling, economic analysis of international trade shows that the economic costs of tariffs (lost consumer surplus due to higher prices and lower consumption) exceed the benefits (producer surplus gains which are positively correlated with jobs).

Congrats to the Appalachian State University Fed Challenge Team

From a Federal Reserve Board of Governors' Press Release:

Rutgers University won the 13th annual national College Fed Challenge on Thursday, a competition that encourages students to learn about the U.S. economy, monetary policymaking, and the role of the Federal Reserve System. The team, from New Brunswick, N.J., represented the New York Federal Reserve District and included Karn Dalal, Ali Haider Ismail, Andrew Lee, Shivram Viswanathan, and Ashton W. Welles. Jeffrey Rubin was the team's faculty adviser.

The finals were held in the Board Room at the Board of Governors as the capstone to five district competitions held around the country. The other national finalists were second place: Dartmouth College, with honorable mentions for Appalachian State University, Princeton University, and The University of Chicago. College Fed Challenge is a team competition for undergraduate students. Teams analyze economic and financial conditions and formulate a monetary policy recommendation, modeling the Federal Open Market Committee.

"Preparation for the Fed Challenge broadens students' understanding of the workings of the U.S. economy and the Federal Reserve," said Federal Reserve Board Chair Janet L. Yellen. "The competition provides a forum for participants to apply their knowledge in the areas of economics and finance and is intended to promote further study and perhaps even careers in these fields."

Teams competing in the College Fed Challenge finals gave 15-minute presentations and answered questions for a panel of judges. Teams were evaluated on economic analysis, responses to judges' questions, teamwork, and presentation. The judges were Ellen Meade, senior adviser in the Division of Monetary Affairs at the Federal Reserve Board; Argia Sbordone, vice president in the macroeconomic and monetary studies function of the Federal Reserve Bank of New York; and William A. Strauss, senior economist and economic advisor in the economic research department at the Federal Reserve Bank of Chicago. The teams competed in their local Reserve Bank Districts, and the top teams moved on to the finals in Washington, D.C.

Here is a link to the Richmond Fed's press release (with a picture and names) when they won the district competition.