… Sevi was wearing a tie on the BBC!
Good news for Edinburgh and the renewables industry in Scotland with the announcement of a wind turbine manufacturing plant in Leith. This comes shortly after other relevant announcements: offshore servicing in Nigg in Easter Ross, green finance with the Green Investment Bank in Edinburgh; and follows on from news of other renewables manufacturing plants in Dundee and Methil, and renewables R&D facilities in Glasgow and Edinburgh.
As well as being fantastic news for jobs in Scotland, it is an example of economic theory in action – the theory in question being the new economic geography developed by Paul Krugman which predicts and explains clusters of related activity.
There’s been a few good posts on microfoundations in macro over the past couple of days:
as well as:
“More Microfoundations Madness!
1a) Simon Wren-Lewis has more thoughts on microfoundations and when they have proven useful in the past.
1b) Angus of Kids Prefer Cheese says that current models basically give you the choice between using crappy microfoundations (RBC) or incomplete microfoundations (New Keynesian models). Peter Dorman I pretty much agree with all of these posts.
1c) Peter Dorman points out that even if you have good microfoundations, aggregation poses a daunting problem for macro models. Richard Serlin makes similar points.
1d) Peter Dorman and Andrew Gelman are even more critical of existing micro models than I am.”
& concludes: Did the Krugman insurgency fail?
I’m not directly answering Sean’s challenge in scotlands bid for independence explained that “Nationalists are invited to comment or counter-post” in that I am not dealing with the post that Sean linked to. I am however trying to justify my assertion in the comments that the economic impact will be small.
The CIA World Factbook reports that Gross World Product was about $79 trillion in 2011, and that international trade comprised about $18 trillion (23%) of that. There’s obviously a lot packed into that $18 trillion, but the top ten internationally traded goods are:
- Electrical machinery (including computers) 14.8%
- Mineral fuels (including oil, coal and gas) 14.4%
- Nuclear reactors, boilers and parts 14.2%
- Cars, trucks and buses 8.9%
- Scientific and precision instruments 3.5%
- Plastics 3.4%
- Iron and steel 2.7%
- Organic chemicals 2.6%
- Pharmaceutical products 2.6%
- Precious stones 1.9%
Is anyone else puzzed by item #3? The implication is that $2.6 trillion of nuclear reactors are being traded, which is about 3.2% of world output–somewhat larger than the total GDP of the UK. Yet this report from the US Department of Commerce suggests that the current global civil nuclear industry is less than $500 billion. This seems to imply one of the following: (a) most nuclear trade is military (but who sells nuclear weapons?), (b) nuclear parts and reactors are frequently re-exported (but can they be re-exported 5 times on average?), or (c) the facts are wrong.
I am confused.