Editors' Picks – 21st September 2014

This week, in domestic news, we take a look at Australia’s obsession with international competitiveness, and the most recent RBA minutes. Internationally, editors’ picks pertain to the economics of violence, ostensibly incomprehensible practices in international lending, and the results of the Scottish referendum.
The Economics of Violence – Bj­ørn Lomborg
Recent months have seen a flood of media coverage of the most brutal conflicts around the world, substantiating common intuition that these regions of war are also society’s greatest source of violence, and the reduction such violence requires the most global resources. But what does cost-benefit analysis say? Perhaps not so many resources. The Economics of Violence explores the economic losses of not curbing, comparatively underreported, domestic violence, as compared to violence born from war.
Ken Henry Slams Australia’s ‘mercantilism’ – Gareth Hutchens
We can take for granted that passage of time, new global and domestic economic conditions, may render previous theoretical economic frameworks divorced from reality, and thus, no longer applicable . Ken Henry has slammed Australia’s, purportedly, outdated focus on improving international competitiveness, adamant that the subsistence of the ideology demonstrates an ignorance of ongoing structural changes in the Australian economy post the Chinese boom. He concludes that optimising well-being requires less attention to our cross-border competitiveness.
Scottish Independence referendum: Scotland votes no – as it happened – Andrew Sparrow, Claire Phillips, and Paul Owen
The referendum has spoken: Scotland’s voted ‘NO’ by a small majority. No independence does not mean no change, however. Find out what observers have suggested about how the vote will change the political and economic landscape for the foreseeable future, as journalists from The Guardian chronicle commentary from around the country shortly after Scotland voted ‘NO’.
RBA minutes bubble talks drive dollar gains – Houses and Holes in Australian interest rates
RBA minutes from its most recent monthly meeting highlighted the increase in speculative demand in the Australian economy, and the concurrent increase in price of commercial property. With recent record size issuing of mortgage backed securities, and subsistence of very accommodative monetary policy, are we tinkering on the edge of another housing bubble? Read further, through the RBA minutes, which hint at this outcome, and subsequent upward pressure on the dollar.
Why do poorer countries lend to richer ones? – Philippe Bacchetta and Kenza Benhima
That fact that ‘poorer’ countries lend to ‘richer’ countries, presents an inconsistency with many dynamic international macroeconomic models to date. The key to answering this question is finding an appropriate model to explain global imbalances. What is currently missing from models is understanding the role of corporate savings in international borrowing, which have increased more sharply in the developing world. Read on and discover why this may create a substantial difference in relative liquidity holdings, and why, as a result, the poor lend to the rich.

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