Abstract The long lasting period of declining interest rates raises the question, whether the latter result from a savings glut, from a money glut, or from both. Moreover, it renewed the old question how the natural interest rate should be sensibly defined, and if it could ever fall below the growth rate, thereby causing dynamic inefficiency. The present article contributes to this debate on a pure theoretical base, leaving the empirical issue for other research. In particular, I briefly discuss Böhm-Bawerk’s three causes for the existence of an interest rate in a private barter economy. I argue that the natural interest rate remains a meaningful concept even in an economy with both a public sector and money. From a welfare economic view, it is also preferable above the so-called golden rule, provided the interest rate does not fall below the growth rate. Although the natural interest rate could well get negative by excess saving in principle, this is normally prevented when durable goods like land or precious metals are available for storing private wealth. On the other hand, issuing credit money tends to push the interest rate below its natural level, even in the long run. In order to prevent this, one could either replace it by neutral helicopter money or return to a gold currency.
{"title":"Natural Interest Rate and Money Interest Rates","authors":"Ulrich van Suntum","doi":"10.1515/ev-2019-0028","DOIUrl":"https://doi.org/10.1515/ev-2019-0028","url":null,"abstract":"Abstract The long lasting period of declining interest rates raises the question, whether the latter result from a savings glut, from a money glut, or from both. Moreover, it renewed the old question how the natural interest rate should be sensibly defined, and if it could ever fall below the growth rate, thereby causing dynamic inefficiency. The present article contributes to this debate on a pure theoretical base, leaving the empirical issue for other research. In particular, I briefly discuss Böhm-Bawerk’s three causes for the existence of an interest rate in a private barter economy. I argue that the natural interest rate remains a meaningful concept even in an economy with both a public sector and money. From a welfare economic view, it is also preferable above the so-called golden rule, provided the interest rate does not fall below the growth rate. Although the natural interest rate could well get negative by excess saving in principle, this is normally prevented when durable goods like land or precious metals are available for storing private wealth. On the other hand, issuing credit money tends to push the interest rate below its natural level, even in the long run. In order to prevent this, one could either replace it by neutral helicopter money or return to a gold currency.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2020-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2019-0028","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67361841","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There is no need for Europe to replicate the International Monetary Fund (IMF). The European Stability Mechanism (ESM) can provide the backstop for sovereigns, even without a financial contribution from the IMF. In this sense, the ESM already constitutes to a large extent a ‘European Monetary Fund’. Other IMF activities, such as surveillance and policy coordination should remain with the European Commission, the Eurogroup and other existing bodies. The financial resources of the ESM will be required as a backstop only intermittently, in times of great financial market instability. The need for this will evolve as a function of the nature of financial markets and their cross-border integration. It is not possible to forecast with any precision when the next financial crisis might break out and what form it will take. Any evolution of the ESM should thus aim at enhancing flexibility in its instruments while clarifying its overall mandate (financial stability), rather than changing the details of the rescue mechanism or its institutional structure. The financial stability function of the ESM should be extended to the central institutions of the Banking Union, with an ultimate backstop for the Single Resolution Fund (SRF). Moreover, the ESM should be viewed as the natural instrument for unifying the euro area’s representation in the IMF.
{"title":"An Evolutionary Path Towards a European Monetary Fund","authors":"Gros Daniel","doi":"10.1515/EV-2018-0012","DOIUrl":"https://doi.org/10.1515/EV-2018-0012","url":null,"abstract":"There is no need for Europe to replicate the International Monetary Fund (IMF). The European Stability Mechanism (ESM) can provide the backstop for sovereigns, even without a financial contribution from the IMF. In this sense, the ESM already constitutes to a large extent a ‘European Monetary Fund’. Other IMF activities, such as surveillance and policy coordination should remain with the European Commission, the Eurogroup and other existing bodies. The financial resources of the ESM will be required as a backstop only intermittently, in times of great financial market instability. The need for this will evolve as a function of the nature of financial markets and their cross-border integration. It is not possible to forecast with any precision when the next financial crisis might break out and what form it will take. Any evolution of the ESM should thus aim at enhancing flexibility in its instruments while clarifying its overall mandate (financial stability), rather than changing the details of the rescue mechanism or its institutional structure. The financial stability function of the ESM should be extended to the central institutions of the Banking Union, with an ultimate backstop for the Single Resolution Fund (SRF). Moreover, the ESM should be viewed as the natural instrument for unifying the euro area’s representation in the IMF.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2018-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/EV-2018-0012","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67362186","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract There are strong indications that actual consumer inflation in the euro area is understated by official price measures. The exclusion of homeowner shelter costs and inadequate quality adjustments for certain basket items are among the reasons for a potential downward bias in Eurostat's Harmonised Index of Consumer Prices, which would have widespread ramifications not only for consumers but also for the broader economy and financial markets. By focusing on the HICP as a yardstick for its primary objective of medium-term price stability, the European Central Bank relies on a too narrowly defined and error-prone inflation concept.
有强烈的迹象表明，欧元区的实际消费者通胀被官方价格指标低估了。欧盟统计局(Eurostat)的消费者价格协调指数(Harmonised Index of Consumer Prices)可能会出现向下倾斜，这不仅会对消费者产生广泛影响，还会对更广泛的经济和金融市场产生影响，原因之一是排除了房主住房成本，以及某些篮子项目的质量调整不足。欧洲央行将HICP作为衡量中期价格稳定这一主要目标的标准，依赖于一个定义过于狭隘且容易出错的通胀概念。
{"title":"The Fairy Tale of Low Inflation in the Euro Area","authors":"Martin Hochstein","doi":"10.1515/ev-2018-0025","DOIUrl":"https://doi.org/10.1515/ev-2018-0025","url":null,"abstract":"Abstract There are strong indications that actual consumer inflation in the euro area is understated by official price measures. The exclusion of homeowner shelter costs and inadequate quality adjustments for certain basket items are among the reasons for a potential downward bias in Eurostat's Harmonised Index of Consumer Prices, which would have widespread ramifications not only for consumers but also for the broader economy and financial markets. By focusing on the HICP as a yardstick for its primary objective of medium-term price stability, the European Central Bank relies on a too narrowly defined and error-prone inflation concept.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2018-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2018-0025","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67361773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Food insecurity is increasingly recognized as a major health crisis in the U.S. More than 42 million persons were food insecure in 2015, far higher than the levels preceding the 2007 Great Recession. Decades of research demonstrate that food insecurity diminishes individuals’ overall well-being. The recognition of food insecurity as a health crisis, however, stems from a more recent appreciation of the multiple negative health outcomes and, thus, higher health care costs, attributable to food insecurity. An extensive literature from multiple fields, including agricultural economics, economics, medicine, and nutrition, has emerged in recognition of food insecurity as a health crisis. Among other findings, food insecurity among children is associated with increased risks of some birth defects, anemia, lower nutrient intakes, cognitive problems, and aggression and anxiety. Food insecurity is also associated with higher risks of being hospitalized, poorer general health, worse oral health and with having asthma, behavioral problems, depression, and suicidal ideation. For adults, studies have shown that food insecurity is associated with decreased nutrient intakes; increased rates of mental health problems (including depression), diabetes, hypertension, and hyperlipidemia; being in poor or fair health; and poor sleep outcomes. Food insecurity and poor health are likely linked bi-directionally; that is, it is true both that living in a food insecure household predisposes an individual to poor health, and that poor health predisposes one to living in a food insecure household. After describing how food insecurity is measured, we turn to the multiple causes of food insecurity and potential pathways through which food insecurity leads to these negative health outcomes. Finally, we describe two recently articulated interventions designed to address both food insecurity and its health impact. The first is a targeted increase in benefit levels for supplemental nutrition assistance program (SNAP, formerly known as the Food Stamp Program) enrollees and near eligible households, and the second provides tailored support for food insecure individuals with diabetes.
{"title":"Food Insecurity and Health Outcomes","authors":"Craig Gundersen, H. Seligman","doi":"10.1515/ev-2017-0004","DOIUrl":"https://doi.org/10.1515/ev-2017-0004","url":null,"abstract":"Abstract Food insecurity is increasingly recognized as a major health crisis in the U.S. More than 42 million persons were food insecure in 2015, far higher than the levels preceding the 2007 Great Recession. Decades of research demonstrate that food insecurity diminishes individuals’ overall well-being. The recognition of food insecurity as a health crisis, however, stems from a more recent appreciation of the multiple negative health outcomes and, thus, higher health care costs, attributable to food insecurity. An extensive literature from multiple fields, including agricultural economics, economics, medicine, and nutrition, has emerged in recognition of food insecurity as a health crisis. Among other findings, food insecurity among children is associated with increased risks of some birth defects, anemia, lower nutrient intakes, cognitive problems, and aggression and anxiety. Food insecurity is also associated with higher risks of being hospitalized, poorer general health, worse oral health and with having asthma, behavioral problems, depression, and suicidal ideation. For adults, studies have shown that food insecurity is associated with decreased nutrient intakes; increased rates of mental health problems (including depression), diabetes, hypertension, and hyperlipidemia; being in poor or fair health; and poor sleep outcomes. Food insecurity and poor health are likely linked bi-directionally; that is, it is true both that living in a food insecure household predisposes an individual to poor health, and that poor health predisposes one to living in a food insecure household. After describing how food insecurity is measured, we turn to the multiple causes of food insecurity and potential pathways through which food insecurity leads to these negative health outcomes. Finally, we describe two recently articulated interventions designed to address both food insecurity and its health impact. The first is a targeted increase in benefit levels for supplemental nutrition assistance program (SNAP, formerly known as the Food Stamp Program) enrollees and near eligible households, and the second provides tailored support for food insecure individuals with diabetes.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2017-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2017-0004","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48373725","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Americans spend billions of dollars a year fueling enormous commercial agricultural operations to plant more crops than we need, while tens of millions of Americans – and a huge number of American children – live tenuously close to hunger. Millions more are kept from the brink by our Supplemental Nutrition Assistance Program, or SNAP, that provides a paltry $4.13 per person each day.1 Having a two-headed policy that addresses production and consumption is necessary. Just having a bounteous supply does not ensure each American will be fed. And just giving poor Americans money to buy food does not ensure they can or will do so. However, when the end result is that we produce far more food than we need, because of subsidies, whilemillions of our citizens both have inadequate food on the table and suffer from nutrition-related diseases in epidemic proportions, there is clearly a problem in need of an urgent solution. Post-depression-era farm subsidies made sense because they relieved farmers’ poverty, allowing them to keep producing food so that the nation could feed itself. The 21st century is not the 1930s. While many might nostalgically think of the family farmer in overalls and a straw hat, the vast majority of farm subsidies go to a small number of very large American corporations and conglomerates that wield disproportionate political power. Modern subsidies do not tackle modern dietary problems and, in fact, exacerbate the health problems associated with Americans’ distorted diets. These dietary distortions have had devastating consequences, especially in low-income areas: exploding obesity rates, increasing rates of Type 2 diabetes, and declining learning outcomes. Dietary inequality is a factor that reduces quality of life amongst those most affected by income inequality. Poor nutrition is a cause of the epidemic level of diabetes2 and other poor health outcomes. The food paradox is that we collectively spend huge amounts on farm subsidies, yet many citizens do not have access to high-quality, nutritious food. We collectively spend huge amounts on healthcare, yet our health outcomes, particularly for those living in poverty, are a national emergency. A chain of poor policy choices is exacerbating inequality. One of our main anti-poverty efforts is SNAP (modern-day food stamps). Despite providing only $125.50 per person permonth,3 the Center on Budget and Policy Priorities estimates that SNAP kept 10.3 million Americans out of poverty in 2012.4 However, a two-person household receiving SNAP benefits and a $7.25 per hour minimum wage job is still below the poverty line, and more so if that income is the sole source for a family of four or more.5 We clearly need a stronger food stamp program and more rational subsidies for food production. Stagnant minimumwages with rising costs of living magnifies the health and human development problems associated with poor access to nutrition. Budget constraints and thework requirement to obtain benefits6 h
{"title":"The Economists’ Voice: Special Issue on Nutrition and Poverty Introduction","authors":"M. Cragg, J. Stiglitz","doi":"10.1515/ev-2017-0010","DOIUrl":"https://doi.org/10.1515/ev-2017-0010","url":null,"abstract":"Americans spend billions of dollars a year fueling enormous commercial agricultural operations to plant more crops than we need, while tens of millions of Americans – and a huge number of American children – live tenuously close to hunger. Millions more are kept from the brink by our Supplemental Nutrition Assistance Program, or SNAP, that provides a paltry $4.13 per person each day.1 Having a two-headed policy that addresses production and consumption is necessary. Just having a bounteous supply does not ensure each American will be fed. And just giving poor Americans money to buy food does not ensure they can or will do so. However, when the end result is that we produce far more food than we need, because of subsidies, whilemillions of our citizens both have inadequate food on the table and suffer from nutrition-related diseases in epidemic proportions, there is clearly a problem in need of an urgent solution. Post-depression-era farm subsidies made sense because they relieved farmers’ poverty, allowing them to keep producing food so that the nation could feed itself. The 21st century is not the 1930s. While many might nostalgically think of the family farmer in overalls and a straw hat, the vast majority of farm subsidies go to a small number of very large American corporations and conglomerates that wield disproportionate political power. Modern subsidies do not tackle modern dietary problems and, in fact, exacerbate the health problems associated with Americans’ distorted diets. These dietary distortions have had devastating consequences, especially in low-income areas: exploding obesity rates, increasing rates of Type 2 diabetes, and declining learning outcomes. Dietary inequality is a factor that reduces quality of life amongst those most affected by income inequality. Poor nutrition is a cause of the epidemic level of diabetes2 and other poor health outcomes. The food paradox is that we collectively spend huge amounts on farm subsidies, yet many citizens do not have access to high-quality, nutritious food. We collectively spend huge amounts on healthcare, yet our health outcomes, particularly for those living in poverty, are a national emergency. A chain of poor policy choices is exacerbating inequality. One of our main anti-poverty efforts is SNAP (modern-day food stamps). Despite providing only $125.50 per person permonth,3 the Center on Budget and Policy Priorities estimates that SNAP kept 10.3 million Americans out of poverty in 2012.4 However, a two-person household receiving SNAP benefits and a $7.25 per hour minimum wage job is still below the poverty line, and more so if that income is the sole source for a family of four or more.5 We clearly need a stronger food stamp program and more rational subsidies for food production. Stagnant minimumwages with rising costs of living magnifies the health and human development problems associated with poor access to nutrition. Budget constraints and thework requirement to obtain benefits6 h","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2017-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2017-0010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45283981","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP) are critical programs in the U.S. because they form the basis of the nation’s nutrition and hunger safety net. SNAP has large effect nationwide offering nutrition assistance to 1 in 7 low-income Americans, while WIC serves more than half of all infants in the U.S. and a quarter of all children ages 1-5 years. Despite the reach of these programs, there is still room for improvement, especially when it comes to increasing access to healthy food items and improving eating habits. The objective of this paper is to make recommendations for how WIC and SNAP can work better together to continue to incentivize purchases and support low-income population’s knowledge and access to healthier food choices, particularly those foods that have traditionally been most expensive – fruits and vegetables.
{"title":"Ensuring Access to Fruits and Vegetables for the Nation’s Most Vulnerable – Contributions of WIC and SNAP","authors":"D. Herman","doi":"10.1515/ev-2017-0005","DOIUrl":"https://doi.org/10.1515/ev-2017-0005","url":null,"abstract":"Abstract The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP) are critical programs in the U.S. because they form the basis of the nation’s nutrition and hunger safety net. SNAP has large effect nationwide offering nutrition assistance to 1 in 7 low-income Americans, while WIC serves more than half of all infants in the U.S. and a quarter of all children ages 1-5 years. Despite the reach of these programs, there is still room for improvement, especially when it comes to increasing access to healthy food items and improving eating habits. The objective of this paper is to make recommendations for how WIC and SNAP can work better together to continue to incentivize purchases and support low-income population’s knowledge and access to healthier food choices, particularly those foods that have traditionally been most expensive – fruits and vegetables.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2017-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2017-0005","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46634130","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Obesity in the US is treated as a medical condition, while its socioeconomic roots are all but ignored. Yet obesity was a univariate predictor of voting patterns in the 2016 presidential election at both state and county level. Health indicators, linked to socioeconomic variables, may be the new political force.
{"title":"Poverty and Obesity as Political Indicators","authors":"A. Drewnowski","doi":"10.1515/ev-2017-0006","DOIUrl":"https://doi.org/10.1515/ev-2017-0006","url":null,"abstract":"Abstract Obesity in the US is treated as a medical condition, while its socioeconomic roots are all but ignored. Yet obesity was a univariate predictor of voting patterns in the 2016 presidential election at both state and county level. Health indicators, linked to socioeconomic variables, may be the new political force.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2017-0006","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67361822","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We lay out a framework for assessing if calorie sweetened beverage taxes are effective, and, concluding they are not, provide recommendations for better solutions. Similar taxes, known as sin taxes, generally have three specific goals: 1) to lower consumption of the offending substance or activity; 2) to minimize the black market; and 3) to generate government revenues. We find that on the whole, caloric sweetened beverage taxes fail to meet each of the criteria for effective sin taxes. They neither meaningfully lower consumption of caloric sweeteners generally, nor do they provide for a healthier alternative. They are straightforward to geographically circumvent, and there are many carve outs which are not taxed, dampening the impact they could have on the consumption of caloric sweeteners. Although these taxes are potentially a significant source of tax revenue, such collections are largely and disproportionately borne by the poor. Instead, we propose enacting a broad policy on a national level consisting of three components: 1) removing government support for caloric sweeteners, 2) levying a federal excise tax on caloric sweeteners at the producer level, and 3) investing in research, implementation of significant subsidies, and development and transmission of explicit government advice in favor of foods that are irrefutably beneficial for the vast majority of human beings.
{"title":"Caloric Sweetened Beverage Taxes: A Toothless Solution?","authors":"E. Cohen, Jehan deFonseka, R. Mcgowan","doi":"10.1515/ev-2017-0009","DOIUrl":"https://doi.org/10.1515/ev-2017-0009","url":null,"abstract":"Abstract We lay out a framework for assessing if calorie sweetened beverage taxes are effective, and, concluding they are not, provide recommendations for better solutions. Similar taxes, known as sin taxes, generally have three specific goals: 1) to lower consumption of the offending substance or activity; 2) to minimize the black market; and 3) to generate government revenues. We find that on the whole, caloric sweetened beverage taxes fail to meet each of the criteria for effective sin taxes. They neither meaningfully lower consumption of caloric sweeteners generally, nor do they provide for a healthier alternative. They are straightforward to geographically circumvent, and there are many carve outs which are not taxed, dampening the impact they could have on the consumption of caloric sweeteners. Although these taxes are potentially a significant source of tax revenue, such collections are largely and disproportionately borne by the poor. Instead, we propose enacting a broad policy on a national level consisting of three components: 1) removing government support for caloric sweeteners, 2) levying a federal excise tax on caloric sweeteners at the producer level, and 3) investing in research, implementation of significant subsidies, and development and transmission of explicit government advice in favor of foods that are irrefutably beneficial for the vast majority of human beings.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2017-0009","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67362054","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
D. Goldman, D. Lakdawalla, J. Baumgardner, M. Linthicum
Abstract Medical innovation has generated significant gains in health over the past decades, but these advances have been accompanied by rapid growth in healthcare spending. Faced with a growing number of high-cost but high-impact innovations, some have argued to constrain prices for new therapies – especially through global caps on pharmaceutical spending and limits on prices for individual drugs. We show that applying this threshold to past innovations would have limited access to many highly valuable drugs such as statins and anti-retrovirals. We also argue that budget caps violate several important principles of health policy. First, budget caps treat healthcare spending as a consumption good, like going to a movie or buying a meal. However, healthcare spending should be viewed as an investment, whose benefits accrue over many years – much like spending on education. Second, budgetary cost is a poor indicator of value, thereby distorting coverage decisions. Third, affordability arguments often use a short-term horizon, thereby missing that long-term health is society’s ultimate goal. Fourth, assessments of benefit should incorporate not just the immediate clinical benefit to patients, but also long-term health improvements, cost savings, and increased productivity. Fifth, global budget caps arbitrarily anchor spending on the status quo, thereby setting too stringent a threshold for socially-desirable innovation. In sum, a solitary focus on short-term costs can be detrimental to population health in the long-run. When medical treatment decisions are properly viewed as investments, budget caps are not the answer; rather, we need to find mechanisms to encourage spending decisions based on long-term value. Only then can we generate health returns to societal investments, while also encouraging the new research and development necessary to extend the gains of recent decades.
{"title":"Are Biopharmaceutical Budget Caps Good Public Policy?","authors":"D. Goldman, D. Lakdawalla, J. Baumgardner, M. Linthicum","doi":"10.1515/ev-2015-0012","DOIUrl":"https://doi.org/10.1515/ev-2015-0012","url":null,"abstract":"Abstract Medical innovation has generated significant gains in health over the past decades, but these advances have been accompanied by rapid growth in healthcare spending. Faced with a growing number of high-cost but high-impact innovations, some have argued to constrain prices for new therapies – especially through global caps on pharmaceutical spending and limits on prices for individual drugs. We show that applying this threshold to past innovations would have limited access to many highly valuable drugs such as statins and anti-retrovirals. We also argue that budget caps violate several important principles of health policy. First, budget caps treat healthcare spending as a consumption good, like going to a movie or buying a meal. However, healthcare spending should be viewed as an investment, whose benefits accrue over many years – much like spending on education. Second, budgetary cost is a poor indicator of value, thereby distorting coverage decisions. Third, affordability arguments often use a short-term horizon, thereby missing that long-term health is society’s ultimate goal. Fourth, assessments of benefit should incorporate not just the immediate clinical benefit to patients, but also long-term health improvements, cost savings, and increased productivity. Fifth, global budget caps arbitrarily anchor spending on the status quo, thereby setting too stringent a threshold for socially-desirable innovation. In sum, a solitary focus on short-term costs can be detrimental to population health in the long-run. When medical treatment decisions are properly viewed as investments, budget caps are not the answer; rather, we need to find mechanisms to encourage spending decisions based on long-term value. Only then can we generate health returns to societal investments, while also encouraging the new research and development necessary to extend the gains of recent decades.","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2015-0012","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67361328","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract There is no doubt that the US is embedded in a weak economy. Bond markets are now saying that neither inflation rates approaching 2 percent targets or real interest rates substantially above zero are on the horizon anytime in the foreseeable future. Growth forecasts are being revised downwards in most places, and there is growing evidence in the US that inflation expectations are becoming unanchored to the downside. That, along with widening credit spreads and a stronger dollar as Europe and Japan plunge more deeply into the world of negative rates is alarming and suggests that we are at risk of another recession. Presidential candidates on both sides of the aisle have laid out their positions on major issues ranging from taxes, minimum wage, the federal debt, to issues such as immigration, military strategy, and climate change. While candidates’ policy positions differ generally, it is not clear what their priorities are when it comes to most of these issues. In this paper, we apply text analytics to analyze hundreds of thousands of words that appeared in policy releases, interviews, or debate transcripts related to all of the 2016 presidential candidates. Among other things, we find that macroeconomic policy or “what to do about recessions” has been largely ignored by presidential candidates in this year’s election. Perhaps not surprisingly, Donald Trump’s positions are focused on Mexico and China while Hillary Clinton’s positions are heavily focused on gender and social factors. This appears to present a contrast from Bill Clinton’s campaign in the early 1990s, which was focused on America’s declining economy, emphasizing a basic but effective slogan, “It’s the Economy, Stupid!”
{"title":"Elections and the Economy: What to do about Recessions?","authors":"Rand Ghayad, M. Cragg, F. Pinter","doi":"10.1515/ev-2016-0007","DOIUrl":"https://doi.org/10.1515/ev-2016-0007","url":null,"abstract":"Abstract There is no doubt that the US is embedded in a weak economy. Bond markets are now saying that neither inflation rates approaching 2 percent targets or real interest rates substantially above zero are on the horizon anytime in the foreseeable future. Growth forecasts are being revised downwards in most places, and there is growing evidence in the US that inflation expectations are becoming unanchored to the downside. That, along with widening credit spreads and a stronger dollar as Europe and Japan plunge more deeply into the world of negative rates is alarming and suggests that we are at risk of another recession. Presidential candidates on both sides of the aisle have laid out their positions on major issues ranging from taxes, minimum wage, the federal debt, to issues such as immigration, military strategy, and climate change. While candidates’ policy positions differ generally, it is not clear what their priorities are when it comes to most of these issues. In this paper, we apply text analytics to analyze hundreds of thousands of words that appeared in policy releases, interviews, or debate transcripts related to all of the 2016 presidential candidates. Among other things, we find that macroeconomic policy or “what to do about recessions” has been largely ignored by presidential candidates in this year’s election. Perhaps not surprisingly, Donald Trump’s positions are focused on Mexico and China while Hillary Clinton’s positions are heavily focused on gender and social factors. This appears to present a contrast from Bill Clinton’s campaign in the early 1990s, which was focused on America’s declining economy, emphasizing a basic but effective slogan, “It’s the Economy, Stupid!”","PeriodicalId":42390,"journal":{"name":"Economists Voice","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2016-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/ev-2016-0007","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67361465","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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