Thursday, October 8, 2009

Nobel Prediction Market

Here is a prediction market for who will win the Nobel Prize in Economics. My original pick, Robert Barro, is marginally leading, and all the other suspects are on the list.

I'd really like William Baumol to win it. My friend and colleague Astrid Kander wrote an interesting paper related to one of Baumol's ideas. Baumol gave her some good comments on it. Actually it was a chapter in her dissertation which I encouraged her to submit to Ecological Economics. She argues that the shift to a service economy is something of an illusion. The prices of services rise relative to those of manufactures over time and so the share of manufacturing in GDP falls over time. But this doesn't mean that material production as a share of GDP is falling when we use constant prices instead. Also, just as productivity growth in manufacturing is more rapid than in services the rate of increase in energy and environmental efficiency is more rapid in manufacturing. Therefore, it seems that emissions fall due to a shift to services but to some degree this too is an illusion.

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