The theory of optimum currency areas essay

Posted on November 30, by Scott Alexander I.

The theory of optimum currency areas essay

The resulting antibiotic resistance has spread and will likely continue to do so in the future to other bacteria and other regions, hurting or destroying the Antibiotic Commons that is shared on a worldwide basis [25] Publicly shared resources Spam email degrades the usefulness of the email system and increases the cost for all users of the Internet while providing a benefit to only a tiny number of individuals.

Vandalism and littering in public spaces such as parksrecreation areasand public restrooms. Knowledge commons encompass immaterial and collectively owned goods in the information age. Including, for example, source code and software documentation in software projects that can get "polluted" with messy code or inaccurate information.

The idea of evolutionary suicidewhere adaptation at the level of the individual causes the whole species or population to be driven extinctcan be seen as an extreme form of an evolutionary tragedy of the commons.

Commons dilemma researchers have studied conditions under which groups and communities are likely to under- or over-harvest common resources in both the laboratory and field.

Research programs have concentrated on a number of motivational, strategic, and structural factors that might be conducive to management of commons. They organize these classes and distinguish between psychological individual differences stable personality traits and situational factors the environment.

The theory of optimum currency areas essay

Situational factors include both the task social and decision structure and the perception of the task. One often-studied strategic factor is the order in which people take harvests from the resource.

There is a clear order effect in the latter games: The interpretation of this effect is that the first players feel entitled to take more. With sequential play, individuals adopt a first come-first served rule, whereas with simultaneous play people may adopt an equality rule. Another strategic factor is the ability to build up reputations.

Moreover, those who harvest less gain greater prestige and influence within their group. Structural factors[ edit ] Much research has focused on when and why people would like to structurally rearrange the commons to prevent a tragedy.

Hardin stated in his analysis of the tragedy of the commons that "Freedom in a commons brings ruin to all. Groups are more likely to endorse a leader when a common resource is being depleted and when managing a common resource is perceived as a difficult task. Groups prefer leaders who are elected, democratic, and prototypical of the group, and these leader types are more successful in enforcing cooperation.

A general aversion to autocratic leadership exists, although it may be an effective solution, possibly because of the fear of power abuse and corruption.

The theory of optimum currency areas essay

The provision of rewards and punishments may also be effective in preserving common resources. Selective rewards work, provided that they are open to everyone.

An experimental carpool lane in the Netherlands failed because car commuters did not feel they were able to organize a carpool. In many situations, locals implement often complex social schemes that work well.

The best governmental solution may be to do nothing. When these fail, there are many possible governmental solutions such as privatization, internalizing the externalities, and regulation. Non-governmental solution[ edit ] Sometimes the best governmental solution may be to do nothing.

Robert Axelrod contends that even self-interested individuals will often find ways to cooperate, because collective restraint serves both the collective and individual interests.

Appell criticized those who cited Hardin to "impos[e] their own economic and environmental rationality on other social systems of which they have incomplete understanding and knowledge. In general, it is in the users of a commons interests to keep the common running and complex social schemes are often invented by the users for maintaining them at optimum efficiency.

Johnson remarks that many nomadic pastoralist societies of Africa and the Middle East in fact "balanced local stocking ratios against seasonal rangeland conditions in ways that were ecologically sound", reflecting a desire for lower risk rather than higher profit; in spite of this, it was often the case that "the nomad was blamed for problems that were not of his own making and were a product of alien forces.

Examining relations between historically nomadic Bedouin Arabs and the Syrian state in the 20th century, Dawn Chatty notes that "Hardin's argument […] was curiously accepted as the fundamental explanation for the degradation of the steppe land" in development schemes for the arid interior of the country, downplaying the larger role of agricultural overexploitation in desertification as it melded with prevailing nationalist ideology which viewed nomads as socially backward and economically harmful.

One factor is the resource itself; resources with definable boundaries e. A second factor is resource dependence; there must be a perceptible threat of resource depletion, and it must be difficult to find substitutes. The third is the presence of a community; small and stable populations with a thick social network and social norms promoting conservation do better.

When the commons is taken over by non-locals, those solutions can no longer be used. Examples of government regulation include privatization, regulation, and internalizing the externalities.Marginal Revolution University creates free and engaging economics videos taught by top professors.

This paper documents the sources of data used in the construction of the estimates of the Levy Institute Measure of Economic Wellbeing (LIMEW) for the years , , , , , , , , , , , and The history of Western ethics Ancient civilizations to the end of the 19th century The ancient Middle East and Asia.

Glossary of research economics

The first ethical precepts must have been passed down by word of mouth from parents and elders, but as societies learned to use the written word, they began to set down their ethical beliefs.

These records constitute the first historical evidence of the origins of ethics. The theory of optimum currency areas (OCA) explores the conditions under which a common currency can maximize the economic efficiency of a region.

It strives to identify the essential characteristics for forming a common currency zone as well as its possible costs and benefits. The research has also. When Robert Mundell wrote his pathbreaking eight-page-essay on “A theory of optimum currency areas” in , he triggered a never-ending wave of publications on this theme (cp.

the overviews in . AN APPROACH FOR THINKING ABOUT MONETARY INTEGRATION Roman Horvath And Lubos Komarek The OCA theory serves as an approach for thinking about monetary integration and Theory of the optimum currency areas was fully developed during the debates of the.

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