How blockchain technology will impact the digital economy–Christian Catalini

MIT Sloan Professor Christian Catalini

MIT Sloan Professor Christian Catalini

From University of Oxford Faculty of Law.

The Platform of the Future?

The survival of any organization depends on its ability to outperform competitors and marketplaces in attracting and rewarding talent, ideas and capital. As communication and transaction costs have drastically declined because of the internet, new platforms have emerged, delivering goods and services at a speed and efficiency previously unimaginable. These new digital players took advantage of the changes in the underlying technology to challenge established business models and rethink pre-existing value chains. The ones that succeeded did so because they achieved a level of efficiency that their brick and mortar counterparts had trouble replicating. Through online reputation and feedback systems, digital players were able to create global marketplaces where individuals, products and services could be matched more effectively than ever before. By providing curation and ensuring the safety of transactions, these new types of intermediaries were able to reap the returns of this first wave of digitization.

A similar transformation is about to happen as blockchain technology and cryptocurrencies mature and mainstream applications emerge. Under this new wave of technological change, intermediaries will still be able to add value to transactions, but thenature of intermediation will fundamentally change. Whereas some established players will be able to use this opportunity to further scale their operations, others will be challenged by new entrants proposing entirely new approaches to value creation and value capture.

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The democracy of data: how Venezuelans can stand up to government lies – Alberto Cavallo

MIT Sloan Assoc. Prof. Alberto Cavallo

From infobae

Venezuela, once one of Latin America’s wealthiest countries, appears to be teetering on the brink of collapse. Its economy is shrinking. Food is in short supply. Its currency—the bolivar—is virtually worthless, and inflation appears to be out of control. But, in light of the fact that the country’s Central Bank stopped publishing inflation data in December 2015, no one has an accurate picture of just how dire the situation is.

This dearth of inflation data may seem like an academic problem, but in actual fact, economic indicators are no small things. Without official statistics, it’s impossible to draw accurate conclusions about the wellbeing of the Venezuelan people. The lack of data has consequences on a micro level, too. The inflation rate, for instance, is a vital number for anyone who wants to negotiate a wage, decide on an affordable rent, or make any savings or financial plans for the future.

With a government intent on suppressing important information, many Venezuelans are angry. As a native from Argentina —another Latin American country that lied about inflation in the past—I feel their pain. As an economist, I urge them to fuel their frustration into action.

Earlier this year, my colleagues and I started a project to measure inflation in Venezuela using a new and highly effective technique: crowdsourcing with mobile phones. My team developed a special app for android phones that allows people in the country to report the prices of everyday products and services. We then aggregate the data to estimate the level of inflation. Over the past five months, we have collected more than 3,000 observations from 1,000 products in 10 cities around the country.

Our data indicates that Venezuela’s inflation rate is about 25% on a monthly basis, which represents one of highest rates in the world.

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A live conversation with Chester Spatt and Deborah Lucas: Financial regulation–What Lies Ahead?

Former SEC Chief Economist and MIT Golub Center Senior Fellow Chester Spatt

Our latest installment of the MIT Sloan Experts Series includes a live conversation with former SEC Chief Economist and MIT Golub Center Senior Fellow Chester Spatt and Golub Center Director and Professor of Finance Deborah Lucas.

As the 10-year anniversary of the great financial crisis approaches, the program seeks to answer two questions: what have we learned? And have we made enough progress to prevent a repeat of something similar? Chester and Deborah will discuss financial regulation and housing market finance reform, and share their ideas for fostering stronger ties between the regulatory and the academic communities and what lies ahead

MIT Sloan Prof. and Golub Center Director Deborah Lucas

Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute also appears on the program to talk about the housing shortage and housing finance reform.

Watch the entire livestream here.

Making economic sanctions on North Korea work – Yasheng Huang

MIT Sloan Professor Yasheng Huang

MIT Sloan Professor Yasheng Huang

From Project Syndicate

China is the only country with the power to compel North Korea to change its nuclear policy. Convincing Chinese leaders to wield that power, by fully isolating the regime economically, must be the international community’s top priority.

Last week, in a brazen rebuff to tough new United Nations sanctions, North Korean leader Kim Jong-un’s regime fired a ballistic missile over the northern Japanese island of Hokkaido – its second launch over Japan in less than three weeks. But, far from indicating that sanctions don’t work, Kim’s move shows that they still aren’t tough enough.

The latest sanctions cap oil imports, ban textile exports, and penalize designated North Korean government entities. Following Kim’s response, sanctions should be tightened even further, to stop all trade with North Korea, including halting all fuel imports.

North Korea is one of the most insular countries in the world. That insularity is a curse for the long-suffering North Korean people, but an advantage for a sanction-based strategy, because only one country is needed to make it work: China.

From an economic perspective, China is the only country that really matters to North Korea, as it controls about 90% of the North’s foreign trade and supplies almost all of its fuel. Yet China’s economy would barely register the effect of new sanctions: North Korea’s annual GDP, at a meager $28 billion, constitutes little more than a rounding error for its giant neighbor.

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Has China’s coal use peaked? Hear’s how to read the tea leaves – Valerie J. Karplus

Assistant Professor Valerie Karplus

Assistant Professor Valerie Karplus

From The Conversation

As the largest emitter of carbon dioxide in the world, how much coal China is burning is of global interest.

In March, the country’s National Bureau of Statistics said the tonnage of coal has fallen for the second year in the row. Indeed, there are reports that China will stop construction of new plants, as the country grapples with overcapacity, and efforts to phase out inefficient and outdated coal plants are expected to continue.

A sustained reduction in coal, the main fuel used to generate electricity in China, will be good news for the local environment and global climate. But it also raises questions: what is driving the drop? And can we expect this nascent trend to continue?

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