Bogdan Tereshchenko🇺🇦

@GuthmannR I guess this discussion illustrates the challenge with this whole macro development concept. Both stories are plausible, and it’s hard to adjudicate which is true without strong identification.

Rodrik's research is very popular among Brazilians because he provides an intellectual justification consistent with mainstream economic theory for our stupid policies that caused enormous harm to our development. The idea that currency devaluation is a good policy for developing countries comes from the correlation between industrialization and development in the 19th century. Back in the day, people looked at Britain, at the time the world's richest country, and saw lots of smokestacks. Therefore, they concluded, one must maximize the number of smokestacks in the nation to become rich! The lead to policies such as currency devaluation, among others, because such a policy increases the local prices of manufactured goods, and therefore acts as a subsidy for industrial activity. Brazil took this idea to its logical limit and created an economy where industry reached over one-third of GDP in the 1980s without any comparative advantage for it. Did it work? Of course not, Brazil reached the end of the 20th century with the lowest standard of living of a major country in the Western world. In fact, I would expect that developing countries should have strong currencies. That is so because developing countries have little capital, so the marginal return of investment should be high, which should attract capital flows, causing the currency to become overvalued. Thus, one should expect export sectors to become underdeveloped in developing countries. In practice, the inverse tends to happen: international investors see developing countries as dangerous destinations for their capital compared to the good'ol S&P 500, and developing countries' currencies tend to be extremely cheap. As developing countries have great growth potential, one often finds that cheap currency is associated with growth. In addition, these countries' export sectors tend to become highly developed because exporting can earn "hard currency" that is much stronger than their local currency. Thus, the statistical correlation between fast growth, devalued currency, and export-oriented economies.

@jbsteinberg @wakincognitwo But I guess those kinds of papers even if arguably useful wouldn’t get published in a top journal so incentives don’t quite align.

It's certainly true that cross-country growth regressions suffer from all kinds of identification problems, but I think we've still learned far more about what generates material improvements in living standards from macro-dev than micro-dev. Empirical macro-dev research isn't bad just because it lacks clean causal identification. That's an impossible bar to meet for macro in general (at least if we want to explain a significant fraction of the economically meaningful variation). There are lots of very bad empirical macro-dev papers, of course, but there are also some good ones. Take Dani Rodrik's 2008 paper on undervaluation and growth (brookings.edu/wp-content/upl…). The main observation is that real exchange rate depreciation (relative to where a country's exchange rate "ought" to be based on its initial level of development) triggers persistent growth in developing countries, but not developed ones. Rodrik's hypothesis is that market imperfections (e.g. financial frictions) that are pervasive in developing countries disproportionately affect the tradable sector (manufacturing relies more on external financing than services in the Rajan-Zingales sense), and depreciation alleviates the effects of these frictions by raising the relative price of tradables. This is important because it tells policymakers that even when fixing the underlying institutional causes of poverty is hard, there may be some second-best options that involve distorting relative prices away from the laissez-faire equilibrium. The paper shows convincing evidence that this is indeed the operative channel: undervaluation reallocates resources from services to industry, and the association between growth and undervaluation is largely explained by this reallocation in a two-stage regression. (IVs can be used to learn something about economics, not just to get identification!) Rodrik is also not just cherry-picking Asian tigers: appreciation hurts growth in lots of African countries in his sample through the same channel. This, in and of itself, provides an important (if underappreciated) cautionary tale about the unintended consequences of foreign aid. Rodrik's identification isn't clean (as Mike Woodford explains in a follow-on comment) and the paper wasn't published in a prestigious outlet (it's in the BPEA), but I think it teaches us more about development than the vast majority of micro-dev papers published in QJE & AER. Moreover, macro-dev isn't just empirics, it's also theory and quantitative modeling. Take the 2019 Econometrica by Itskhoki and Moll (onlinelibrary.wiley.com/doi/abs/10.398…).* I love this paper because it illustrates how market imperfections create a role for government to accelerate growth, but also highlights the tradeoffs and distributional tensions inherent in doing so: "The optimal policy intervention involves pro-business policies like suppressed wages in early stages of the transition, resulting in higher entrepreneurial profits and faster wealth accumulation." Finally, even focusing specifically on the empirical part of macro-dev, it isn't just growth regressions. Like many other subfields of macro, it's also increasingly come to emphasize rigorous microdata work, despite the challenges in collecting this data in developing countries. My colleague, Diego Restuccia, exemplifies this trend with his work on African farm-level data. Overall, I think this research program has been far more successful than many people think. Conversely, the elevation of clean identification as the primary goal of research in development economics has been far less successful in yielding useful insights than many people think. As John Cochrane argues (grumpy-economist.com/p/causation-do…), the primary goal of economic research should always be to explain economically-meaningful variation, even if doing so is inherently messy. * This is the paper I tried (and largely failed) to write in grad school when I was thinking about Rodrik's empirical work. My attempt is preserved for posterity here: joesteinberg.com/pdf/rerpaper. It's amazing to look back and see how far I've come as a researcher in 15 years!

@Peter_Turchin Why not say it out loud? Would Esther Duflo come after them? :))

Very true. A few young economists have expressed similar sentiments to me privately, but they would never say it out loud.

@arindube Hard to argue for the developed world when debt to GDP ratios are soaring… I doubt this is also the case for developing countries but maybe less clear cut?

What if I told you - hear me out - that over the past 50 years we unnecessarily reduced growth across developing and developed worlds with structural adjustment and austerity?

🌞

@superwuster Radiologists giving us all hope! :)))

Among the unexpected features of AI has been a lot of thinking about what a "job" is (versus a task). In an ideal world we'd all end up working less & earning more money -- yet somehow I have my doubts we'll structure things that way

@asymmetricinfo @Nemtastic1 If that’s the upshot seems fine. “Life” tests executive function enough. No reason course grades should do it too.

@BogdanTereshch3 @Nemtastic1 The smart, disorganized kid who fails to turn papers in on time but aces timed exams is a thing. That kid benefits from in-class assessment where their lack of executive function goes untested.

This is going to reward a different kind of student. Returns to conscientiousness 📉, returns to memory and raw cognitive ability 📈. One unintended side effect will likely be to improve male performance relative to female, since men tend to be lower on conscientiousness.

@Nemtastic1 @asymmetricinfo I agree but is the premise here that writing a take home essay takes conscientiousness rather than “ability”? Seems debatable.

I wouldn't overindex on that one variable, but to the extent it's true, it might not be a bad thing. Academia in general is much more feminized than it used to be. Conscientiousness is a virtue, but it may have become overrewarded. And I say this as a father who is very proud of my daughter's extreme academic conscientiousness.

@rafkhach Praxis! :)

@mattyglesias Voters also think crime is high even when it’s actually low. Voters don’t have very sophisticated ideas on such issues.

Plenty of Trump-disapprovers still don’t want to vote for Democrats because they think Democrats have bad ideas on issues like crime. theargumentmag.com/p/why-democrat…

@AlecMacGillis It’s crazy that it’s considered untouchable. Would be logical to have it fluctuate with enrollment lol.

"New York manages to *spend* so much on its teachers without *paying* them all that much by having so many of them. New York City’s pupil-to-teacher ratio is lower than that of each of the next 80 largest school districts." theatlantic.com/ideas/2026/04/…

@sc_cath This CJ argument feels very speculative. But I think pied-a-terre became an “English word” long before this tax proposal.

It’s nice how people from other continents give French nicknames to their taxes

@JillFilipovic Yes, and the natalist discourse annoyingly occludes individual agency in favor of aggregate value or policy arguments.

I think an under appreciated part of the birth rate discourse is that many more young people simply have richer and more textured lives than young people in previous generations: hobbies, travel, meaningful jobs, deep friendships. Children present more possible disruption than they did a generation or two ago. nytimes.com/2026/04/26/bus…

@mattyglesias I guess publicly funded health consumption is part of the consumption measure.

@EricLevitz I see these articles and then remember how it’s dark all the time and the mood of the noirs on Netflix and have difficulty reconciling it all haha. Universal healthcare is good but so is sunlight…

The Nordic social democracies outperform other rich nations on measures of life satisfaction, low-end household income, economic security, and citizens' self-reported sense of freedom. And life for ordinary Scandinavians seems to have *improved* in the era of globalization

@RomanStanek Wow so in socialist times it was a bit drab :(. I guess better than the USSR but still.

This is how I remember Cesky Krumlov when I was a little boy.

In economics and other social sciences (including management and entrepreneurship), the empirical turn of the last two decades prioritized technical skills like coding and project management over deep knowledge of theory and history. Will the pendulum now swing the other way?

@arindube Right, I just didn’t know what the standard errors are on these granular age/education subcategories but yes, of course, both sources could be “noise.” Nobody knows yet for sure if the AI effect is real in the data.

These are based on official monthly surveys conducted by the BLS (current population survey). They are as reliable as it gets for monthly unemployment rates in USA. However, 1) there is sampling error, 2) there are "true" month-to-month fluctuations. Both are "noise" if we're interested in persistent changes.

Yes, and this is true for HS grads as well as those with a BA degree: latter supposed to be more exposed to AI. Is there a mystery here? Not much. These swings are not unusual. Strong priors led some influential voices to tell over-confident stories about noise.

@DinaPomeranz That’s not really a scam. It’s rational for institutions to incentivize donations.

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