Russia to wrap up!

Yesterday's research lounge session was historic, because it was the last one for the term. The talk was by Grigoriy Edel on "Russia. Transition to Market Economy and Antitrust Regulation". The last part of his presentation was from his Econometric project, and Gods, one thing is for sure - he will get full marks on his project. Congrats in advance, Grigoriy.

The turnout was fairly good, this being the last presentation, and because of the interesting topic. Those who didn't turn up, however, had good reasons:

1) They were knocked out by the looming assignment deadlines

2) They were knocked out by the Global Finance Test

3) They were knocked out by the wind. (those who went strolling on campus yesterday would realise what I    am talking about).

Anyway, here is a short introduction about Grigoriy - Before joining the M.Sc Economics at Warwick, Grigory graduated from the faculty of Economics of the Lomonosov Moscow State University. Besides, he was working as an intern at the Federal Antimonopoly Service of the Russian Federation for several months.

The presentation was hugely interesting right at the beginning, largely because of the following pictures. Let's see what you can make of them:

                              

                                 

Most people think of Russia as synonymous with these things. According to Grigoriy and the data he provided, these are actually misconceptions! 

The AK 47 obviously represents the crimes which are thought to be numerous in Russia - but, this was the case in 1990s, not now. 

Russia is not as cold as it is perceived to be. Moscow has actually experienced temperatures like 38.2 degrees Celsius in summer!

Russians don't consume alcohol all the time.The reason for this misconception is the amount of spirits consumed by them - 6.88 litres per person per week year. (this is the figure for 15+ years old people).

Russia is not only known for arts and balailaka (the musical instrument). It has made contributions to every field: space exploration, science, history, geography and sports.

Other known facts about Russia are as follows: it is the largest country in the world, and its population is falling (must be a spacious place to live in), and it is VERY close to the U.S.A, in terms of its proximity to Alaska (it is 300 m away from Alaska :O). Most of the economic progress that Russia has had is due to its dependence on the oil sector (80% of the economic growth is due to this sector), which has seen a substantial rise in prices. 

After this brief introduction, Grigoriy moved on to his topic - transition of the Russian industries from monopoly to oligopoly in 15 years. The Herfindahl-Hirschman Index (HHI) shows that in recent years, there has been high concentration - few firms hold large market shares in the industries. This doesn't imply that antitrust guidelines should be followed, and that "we should pack our things up and go home". There is scope for intermission. Before that, however, here is a look at antitrust in Russia:

The HHI is high in the Russian flat glass industry as compared to the EU. The fines imposed in EU on flat glass cartels come up to 486.9 million euros! Does this mean Russia should follow the same example?  "When was the last time you saw an economics presentation without mathematical equations?" Grigoriy asked, and used econometrics to find a possible answer. Sigh. How true.

I am unable to include the empirical model here - don't know what Blogger's problem is. If you want to have a look, contact Grigoriy for the slides. If you have a look, you will know why I said he will get full marks. :O

One of the possible explanations on the switching point is the Critical Concentration Ratio (CCR) theory.

The theory claims that at some level of concentration the firms collude so the profit rates, price-cost margins and prices rise to monopolistic level to Chamberlin (1948) and the first empirical test was conducted by Bain (1951)

At this point, he included an interesting picture where according to the CCR estimation, a concentration ratio beyond 1807 would imply switching from monopoly to oligopoly - here, he represented "beyond 1807" as "hell and far below 1807" as heaven.

On a concluding note, he provided the following suggestions:

-Academic theories can provide plausible insights

-Transition process can result in disruptive innovation adaptation

-CCR can be applied to transition countries, taking into account institutional differences

(I copy-pasted the suggestions from his slides).

He ended the presentation by showing the various landscapes of Russia to indicate the diversity in its climate and the resultant diversity in various other aspects influenced by climate.

The last session for the term, of course, ended in a group photo, and a generous return gift provided by Lukas to Ankita and me - glasses full of roasted, salted peanuts. Now that is another definition of heaven :D

Income Inequality Intricacies!

Students who attended the lounge today witnessed an amazing presentation by Justus Timmers on "Income Inequality in the U.K. and Beyond".

 

There was some pre-talk fun today that those who didn't attend the lounge missed. The door of the PG Hub refused to respond to our student card swipes, God knows why. All of us spent the first twenty minutes giving red carpet welcomes to the people who came. A second fun fact: All of us had arrived by 6.45 p.m, save one person - Justus! A totally trolling Grigoriy added to the fun by calling Justus and asking, "Are you coming to the research lounge.....since you are the speaker?" Whatte comic drama, I say. :P

 

Enough with the bantering. Now, a few words about Justus: Before joining the MSc in Behavioral Economics in Warwick, Justus studied Economics and Geography at UCL focusing on structural change, labour, development and inequality. At the height of the 2011 "Occupy London" protests, he was working in M&A at the Bank of America Merrill Lynch office, not more than a few meters from the core of the protest camp. Sorry, Carsten, I copied this from your introduction about him on Facebook. Thing is, his profile is very long (and hence impressive), which makes it tough to remember.

 

Today's presentation was on "Income Inequality in the U.K. and beyond". Justus started off by showing the pictures from the "Occupy London" protests (and oh, my, he was working pretty close to where it was happening :O). A puzzling fact is that when measured on a scale between 10 percentiles and 90 percentiles, income inequality seems to have reduced, but the popular metrics indicators (Gini, Atkinson and general entropy) show that inequality has increased! Oh, and the Gini index is based on the concept that if we pick two people at random, their income on average will differ by twice the Gini coefficient of the mean. General Entropy says where income is concentrated (at high or low levels), and the Atkinson index shows the welfare aspects.

Then the talk turned to the question of "equal outcomes vs. equal opportunities". And then at this point, Justus brought in quite an interesting diagram to represent these, and it had to be put in here:

Now we know why Justus said, "Sometimes, the conservative outlook makes me happier". :P

 

The "usual suspects" for causing income inequality are: gender discrimination, discrimination in terms of ethnicity, region, skills, and age. (Now that last one we can all identify ourselves with. Looking for a job on the web: "Oh, I match the description perfectly!"...but, when we scroll down, "Minimum five years experience needed.")

 

One more reason that all of us know is in line with Pogge's (1992) view (also Justus's favourite view) that "Our inequality is worsened by the lack of global accountability by politicians, and the fact that the financial elite have access to global diplomats".

 

Justus ended the discussion with "I need your opinion on income inequality. But, before, that, if you people know any rich people, please introduce me to them". :P

 

During the discussion that followed, an intersting point was brought to light by Grigoriy and clarified by Lukas in the following words - "I don't know how the rich people managed to keep their assets on track during the recent financial crisis, but they did." Lukas.

 

A moment of silence followed.



 

"Bailouts", came a voice, stating it as if it were obvious - that was Konrad. Seriously, people, how much can a person laugh? :D

 

On that note, the meeting ended with Lukas, on Abhinay's request, asking the audience to talk to each other and get "global exposure", so that students can receive more than just the course at Warwick.

 

The snacks, and drinks, of course, keep getting better with every week (it is the same snacks, they just seem to be getting better since we love them). As Lukas said, "Ah, thank you, Abhinay!" :)