Pacific Investment Management Co. is the world’s largest bond fund ($1.2 trillion). Bill Gross, its founder, talks about Portugal.
Thursday, 13 January 2011
Teachers can be proud of PISA
Let's turn, just for a moment, to the long-term perspectives of the Portuguese economy, as described in the latest PISA results and as discussed before.
The figure above was taken from the OECD publication "PISA at a glance, 2009" (page 95). It indicates the percentage of students that agree with the statement "Most of my teachers really listen to what I have to say" (left) and the percentage of students that agree with the statement "If I need extra help, I will receive it from my teachers" (right).
The first percentage ("listening") increases from 75% to 82% between 2000 and 2009, placing Portugal in the 4th place out of 38 countries. The second percentage ("extra help") also goes up during the same period, from around 75% to 90%, placing the country in the second place. Moreover, the year differences in the percentages are both statistically significant, according to the OECD.
If one is willing to take the PISA results at face value, then the ambivalence of teachers towards the latest PISA results does not appear to be justified, given their contribution towards students' improved achievement, as suggested from the figure above (and simple analysis using the micro data). Despite teachers' grievances against the Education Department reforms, it appears that that did not affect their commitment towards students; if anything, it will have made them work harder.
On the other hand, and as before, the cynical explanation would be that the differences in these 2000 and 2009 results are driven instead by a change in the composition of students surveyed. Indeed, it may seem surprising to find that teachers were actually paying more attention to students at the same time that schools were apparently subject to so much disruption.
Good Old Times
"This paper offers a theory of conditionality lending in 19th-century international
capital markets. We argue that ownership of reputation signals by prestigious
banks rendered them able and willing to monitor government borrowing.
Monitoring was a source of rent, and it led bankers to support countries facing
liquidity crises in a manner similar to modern descriptions of “relationship”
lending to corporate clients by “parent” banks. Prestigious bankers’ ability to
implement conditionality loans and monitor countries’ financial policies also
enabled them to deal with solvency. We find that, compared with prestigious
bankers, bondholders’ committees had neither the tools nor the prestige required
for effectively dealing with defaulters. Hence such committees were far less
important than previous research has claimed." (link)
capital markets. We argue that ownership of reputation signals by prestigious
banks rendered them able and willing to monitor government borrowing.
Monitoring was a source of rent, and it led bankers to support countries facing
liquidity crises in a manner similar to modern descriptions of “relationship”
lending to corporate clients by “parent” banks. Prestigious bankers’ ability to
implement conditionality loans and monitor countries’ financial policies also
enabled them to deal with solvency. We find that, compared with prestigious
bankers, bondholders’ committees had neither the tools nor the prestige required
for effectively dealing with defaulters. Hence such committees were far less
important than previous research has claimed." (link)
on the news
the view from the economist
Main implication: not bad for the current moment, but not sustainable
the challenges remain largely untouched, not a clear sky yet, we need to keep working
Wednesday, 12 January 2011
Bank of Portugal - new bulletin
The Bank of Portugal issued a new bulletin. See the press release here.
According to my colleague Francesco Franco it is worth reading, it provides a balanced
view of the current situation.
A huge success
I am with Paul Krugman. Calling this last public debt auction a success, just shows how desperate we are. A few more of these successes and the debt burden will be insurmountable.
One thing that kind of insults my intelligence is the idea that the auction was a success because demand was 3 times higher than supply. These are specialized journalists. They are supposed to know that interest rates are inversely related to prices. If there is a huge demand for our debt at higher interest rates that means that this so called 'excess demand' was not interested in buying the debt at the price we were asking for. This is not excess demand.
When I was trying to sell my house at € 150 000, I received dozens of offers of € 100 000 or even less. Was I supposed to be happy because there was so much demand for my house? I ended up selling it for €120 000. What kind of excess demand is this that forces us to lower the prices instead of increasing them?
Tuesday, 11 January 2011
and the news are...
This morning started with a press conference by the Prime-Minister and Minister of Finance on the latest budget numbers.
Still preliminary, still only part of the picture, but it seems that something is actually moving: expenditure growing less, still positive though; revenues growing faster than predicted.
These are good news. They could be better? difficult, under the current situation; only expenditure if expenditure would be actually decreasing.
They could be worse? certainly.
Are we out of problems? no, but if the results prove to be robust in the final numbers, there is certainly hope of improvement.
Tomorrow will be an important test. Stay tuned to the news.
What else would we benefit from seeing published? any information that could verifiably (I repeat verifiably) show that economic growth could take off soon.
Portugal's puzzle
My guess is that the Portuguese macro story since 1986 (1992?) is prety much similar to that of Ireland during... 1973 to late 1980s: following opening up, there was quick destruction of the old, including textiles, electric appliances and the like, and slow creation of the new ICT manufacturing and service sectors (I have a 2008 paper somewhere on that). The current financial desequiliria comes mostly from slow growth, and not the other way round. And of course from the stimulus packages, which tend to be forgotten in many stories.
Sunday, 9 January 2011
What are we afraid of?
David Landes is a great economic historian and his The Wealth and Poverty of Nations provides a very interesting reading. Yet he does not have a theory for why Europe's periphery did not catch up to the forerunners, during the nineteenth or the twentieth centuries. He simply says that people there are different and behave differently: the North had great men that took the right decisions, either in governments or in business, whereas the South had lousy politicians and lousy entrepreneurs. This is clearly too simplistic. Isn't it? I tend to think so, and here are some reasons why - reasons that can certainly be extrapolated forwards.
Saturday, 8 January 2011
Broadband in schools and student achievement
This was the topic covered by one of the most interesting papers presented at a recent conference on the economics of education at ISEG. The authors are Rodrigo Belo, Pedro Ferreira and Rahul Telang (from Carnegie Mellon University, Instituto Superior Técnico and Universidade Católica). They study the relationship between student achievement in lower secondary schools in Portugal and the amount of broadband usage in those schools.
Since broadband was deployed across schools in Portugal from late 2005 to early 2006, they use achievement levels from 2004/2005 as a comparison point to the achievement levels in 2008 and 2009. Moreover, the authors also employ a clever statistical technique to take into account the possibility that variation in internet usage after the introduction of broadband is picking up the role of other variables that also affect achievement (e.g. schools that become better managed - leading to better student results - could also see their internet usage go up).
What are the results? Surprisingly - or not -, internet usage is found to decrease student achievement. According to the authors, the results suggest that "the introduction of this technology in the school environment must be complemented with policies aimed at embedding Internet in the education system", to promote "productive use of Internet that complements traditional study rather than broadband use for entertainment or leisure purposes."
Is Magalhães the same?
Since broadband was deployed across schools in Portugal from late 2005 to early 2006, they use achievement levels from 2004/2005 as a comparison point to the achievement levels in 2008 and 2009. Moreover, the authors also employ a clever statistical technique to take into account the possibility that variation in internet usage after the introduction of broadband is picking up the role of other variables that also affect achievement (e.g. schools that become better managed - leading to better student results - could also see their internet usage go up).
What are the results? Surprisingly - or not -, internet usage is found to decrease student achievement. According to the authors, the results suggest that "the introduction of this technology in the school environment must be complemented with policies aimed at embedding Internet in the education system", to promote "productive use of Internet that complements traditional study rather than broadband use for entertainment or leisure purposes."
Is Magalhães the same?
Friday, 7 January 2011
Wednesday, 5 January 2011
What explains the Portuguese PISA results?
The OECD released last month the 2009 PISA results. These tests assess the achievement of 15-year-olds along reading, maths and science, and are regarded by many as a key tool to monitor the quality of each country's education system.
The results for Portugal indicated a very sizable improvement, when compared to 2006 and earlier results (link). For instance, the reading score increased from 472 to 489, placing Portugal at the OECD mean - and above countries such as Spain, the Czech Republic, Slovakia or Austria. The government hailed these findings as vindication for all the reforms introduced since 2005; while many teacher blogs (link) raised questions about the validity of the results. These questions became more vocal when the education ministry refused to release the list of presumably randomly-selected schools in the survey (link).
As someone that has studied the effects of one of the reforms introduced by the former government - the new teachers' assessment and incentives structure -, I too am curious about the validity of these 2009 PISA results for Portugal. Especially, as I found evidence that those teacher reforms had a detrimental effect on student achievement (link). So to shed some light on this issue I analysed the PISA micro data (available from here) from 2006 and 2009 but splitting the weighted results between public and private schools and not simply looking at their mean.
In the case of reading, this is what I found:
First, perhaps unsurprisingly, the results indicate that students in private schools appear to do better than students in public schools, both in 2006 and 2009. Second - and more important -, the gap between private and public schools remains virtually the same over the three-year period.
The results are very similar for sciences and maths:
According to my previous research, I actually expected the public-private gap to widen. On the other hand, it's difficult to reconcile the government view that the improvement in Portugal's PISA results was due to its reforms with the fact that private schools see their PISA scores increase by a similar level than public schools. For instance, and as far as I know, the teachers' assessment structure in private schools was not subject to the same adjustments as in public schools.
If one looks at the case of Spain, the pattern there is much more mixed - improvements in reading, as in Portugal, but stable results in sciences and maths, at both public and private schools:
To wrap up, I am not sure what explains this massive improvement in the perceived achievement of Portuguese students in the two types of schools. Some hypothesis are:
-successful reforms implemented by the government matched by equally successful reforms implemented by private schools, even if in a more decentralised manner;
-composition changes between private and public schools, in such way that both means improve over time;
-more generous marking.
It would be really important to clarify this - otherwise we can end up vindicating the wrong policies - or not vindicating the right ones...
The results for Portugal indicated a very sizable improvement, when compared to 2006 and earlier results (link). For instance, the reading score increased from 472 to 489, placing Portugal at the OECD mean - and above countries such as Spain, the Czech Republic, Slovakia or Austria. The government hailed these findings as vindication for all the reforms introduced since 2005; while many teacher blogs (link) raised questions about the validity of the results. These questions became more vocal when the education ministry refused to release the list of presumably randomly-selected schools in the survey (link).
As someone that has studied the effects of one of the reforms introduced by the former government - the new teachers' assessment and incentives structure -, I too am curious about the validity of these 2009 PISA results for Portugal. Especially, as I found evidence that those teacher reforms had a detrimental effect on student achievement (link). So to shed some light on this issue I analysed the PISA micro data (available from here) from 2006 and 2009 but splitting the weighted results between public and private schools and not simply looking at their mean.
In the case of reading, this is what I found:
First, perhaps unsurprisingly, the results indicate that students in private schools appear to do better than students in public schools, both in 2006 and 2009. Second - and more important -, the gap between private and public schools remains virtually the same over the three-year period.
The results are very similar for sciences and maths:
According to my previous research, I actually expected the public-private gap to widen. On the other hand, it's difficult to reconcile the government view that the improvement in Portugal's PISA results was due to its reforms with the fact that private schools see their PISA scores increase by a similar level than public schools. For instance, and as far as I know, the teachers' assessment structure in private schools was not subject to the same adjustments as in public schools.
If one looks at the case of Spain, the pattern there is much more mixed - improvements in reading, as in Portugal, but stable results in sciences and maths, at both public and private schools:
To wrap up, I am not sure what explains this massive improvement in the perceived achievement of Portuguese students in the two types of schools. Some hypothesis are:
-successful reforms implemented by the government matched by equally successful reforms implemented by private schools, even if in a more decentralised manner;
-composition changes between private and public schools, in such way that both means improve over time;
-more generous marking.
It would be really important to clarify this - otherwise we can end up vindicating the wrong policies - or not vindicating the right ones...
Tuesday, 4 January 2011
A German's view over the South
It has been around for a couple of months, but still worth remembering the view of H-W Sinn
Monday, 3 January 2011
A timely suggestion for our current troubles
"Sair do euro (5) Garantia dos Depósitos", by Pedro Braz Teixeira (Portuguese-version only).
Grand Challenges
Via Marginal Revolution, a series of "white papers" commissioned by the (American) National Science Foundation on the "grand challenges in the social and behavioral sciences" which will be used to "make plans to support future research". These were the papers submitted by economists and I'm afraid that (not a very good sign) I couldn't find anything similar at the APSA website. But there seems to be a lot of interesting stuff here and, as far as I can tell, many questions of common interest to economists and political scientists. And notice that one of the papers is authored by one of the contributors to this blog. Very nice.
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