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2023-02-21

• Anti-business
  by chris in Stumbling and Mumbling, 2023-02-21 13:07:57 UTC

  Rachel Reeves claims to be "pro-business." At risk of mistaking a vacuous cliche for a serious proposition, I'm not sure she should be. It's not obvious that business has intrinsic virtues. Yes, some businessmen are genuinely committed to virtues of excellence even if they don't use that MacIntyrean term, but equally business is a location of hierarchy, unfreedom, bullshit jobs and bullshit language. What's more, the single-minded pursuit of short-term profit often displaces such virtues. It can crowd out altruism or professional pride; incentivize managers to chase a quick buck through fraud [...]

2023-02-10

• Weird politicians
  by chris in Stumbling and Mumbling, 2023-02-10 12:55:20 UTC

  Our political system is dysfunctional. It selects for the incompetent, the dishonest and the downright deluded. So much is obvious to those who care to think about it. What's not so obvious is that there is a more subtle bias in politics which distorts and diminishes political debate. Recall that all institutions are selection devices: they select for some people and ideas and against others by filtering out some types and by disproportionately attracting others. Even if we had a well-functioning system which selected against crooks, fools, narcissists, egomaniacs and sociopaths our politici [...]

2023-01-30

• Money, e-money and consumer welfare
  by Christian Zimmermann in NEP-DGE blog, 2023-01-30 14:19:00 UTC

  By Francesco Carli and Burak Uras http://d.repec.org/n?u=RePEc:zbw:bofrdp:152022&r=dge We develop a micro-founded monetary model to inquire the role of a privately provided e-money instrument for household consumption smoothing and welfare. Different from fiat money, e-money users pay electronic transaction fees, but in turn e-money reduces spatial separation frictions and enables risk-sharing. We characterize the conditions that promotes e-money to be Pareto improving and the conditions when e-money reduces its users’ welfare – despite for the consumption-smoothing it induces. We calibrate ou [...]

2023-01-26

• Cycles in lending standards : Data from the senior loan officer opinion survey
  by ? in FRED blog, 2023-01-26 14:00:00 UTC

  FRED recently added more data from the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) . The survey, conducted by the Board of Governors, is currently sent to 124 domestic banks and US branches and agencies of foreign banks. The senior loan officers at those organizations answer a series of questions about their opinions on current lending practices. This qualitative information is used by monetary policymakers to gauge credit market and banking conditions. The FRED graph above shows the fraction of domestic banks that reported having tightened their lending standards min [...]

2023-01-24

• Job Ladder, Human Capital, and the Cost of Job Loss
  by Christian Zimmermann in NEP-DGE blog, 2023-01-24 18:13:03 UTC

  By Richard Audoly, Federica De Pace and Giulio Fella http://d.repec.org/n?u=RePEc:fip:fednsr:95392&r=dge High-tenure workers losing their job experience a large and prolonged fall in wages and earnings. The aim of this paper is to understand and quantify the forces behind this empirical regularity. We propose a structural model of the labor market with (i) on-the-job search, (ii) general human capital, and (iii) firm specific human capital. Jobs are destroyed at an endogenous rate due to idiosyncratic productivity shocks and the skills of workers depreciate during periods of non-employment. Th [...]

2023-01-17

• The Dynamics of the Racial Wealth Gap
  by Christian Zimmermann in NEP-DGE blog, 2023-01-17 16:46:36 UTC

  By Dionissi Aliprantis, Daniel Carroll and Eric Young http://d.repec.org/n?u=RePEc:hka:wpaper:2022-044&r=dge What drives the dynamics of the racial wealth gap? We answer this question using a dynamic stochastic general equilibrium heterogeneous-agents model. Our calibrated model endogenously produces a racial wealth gap matching that observed in recent decades along with key features of the current cross-sectional distribution of wealth, earnings, intergenerational transfers, and race. Our model predicts that equalizing earnings is by far the most important mechanism for permanently closing th [...]

• Homelessness
  by Christian Zimmermann in NEP-DGE blog, 2023-01-17 16:15:45 UTC

  By Ayşe İmrohoroğlu and Kai Zhao http://d.repec.org/n?u=RePEc:uct:uconnp:2022-17&r=dge This paper examines the effectiveness of several policies in reducing the aggregate share of homeless in a dynamic general equilibrium model. The model economy is calibrated to capture the most at-risk groups and generates a diverse population of homeless with a significant fraction becoming homeless for short spells due to labor market shocks and a smaller fraction experiencing chronic homelessness due to health shocks. Our policy experiments show housing subsidies to be more effective in reducing the agg [...]

2023-01-13

• China and the Sovereign-Debt Bomb
  by Anne O. Krueger in Project Syndicate, 2023-01-13 14:05:37 UTC

  WASHINGTON, DC – International capital flows have long been a major source of economic growth. Savings in higher-income countries have financed high-yielding investments in low-income countries, generating benefits for all. After World War II, capital flows under the Marshall Plan drove the rapid reconstruction of Europe, and after those countries recovered, they extended their own foreign aid and other official financial flows to the developing world. Private financing also increased substantially; by the 1990s, it accounted for over half of total capital flows to developing countries. Some [...]

• 51. Informes de la Asociación Euro-Americana 2023: Brasil y otros países americanos en 1960-2022
  by MCG Blogs de Economía in Asociación de Estudios Euro-Americanos: Desarrollo internacional de América, Europa y otras áreas, 2023-01-13 13:50:00 UTC

    Tabla 1. Evolución del PIB per cápita, 2012-2018 en 9 países de América (Dólares del año 2010 según paridades)                               2012 2018 Diferencia Estados Unidos 49518 54401 4883 Canada 41195 43430 2235 Argentina 19000 18829 -171 Brazil 14979 14026 -953 Chile 19846 21408 1562 Colombia 11707 13181 1474 Mexico 16004 17315 1311 Peru 10731 12169 1438 Venezuela 1473 [...]

2023-01-11

• The full employment challenge
  by chris in Stumbling and Mumbling, 2023-01-11 13:44:09 UTC

  Many technocrats think the UK is at or around full employment. What they don't say is that this requires some radical thinking about economic policy. The Bank's chief economist Huw Pill recently said that the labour market so tight that higher interest rates might be needed to cut aggregate demand and inflation. And Sir Keir Starmer says : "We’re going to have to be fiscally disciplined." The only charitable reading of this is that it means he thinks he's going to inherit a reasonably tight labour market (albeit perhaps not as much so as now) and so a fiscal expansion would be inflationary. W [...]

2023-01-07

• Weekend reading links
  by noreply@blogger.com (Urbanomics) in Urbanomics, 2023-01-07 14:36:00 UTC

  1. Industrial policy in the US The chips and Science Act , a $280bn effort to shore up America’s microchips industry... the administration eventually compromised enough to overcome the resistance of Joe Manchin of West Virginia, often the swing Democrat in a 50-50 Senate, to pass a more modest, inaptly named Inflation Reduction Act , promising spending of $369bn over a decade. Its climate spending will be the most substantial in American history. Together with an infrastructure package passed in November 2021, the trio of bills will make for annual spending of nearly $100bn on industrial polic [...]

2022-12-26

• Long-Term Economic Implications of Demeny Voting: A Theoretical Analysis
  by Christian Zimmermann in NEP-DGE blog, 2022-12-26 17:11:29 UTC

  By Luigi Bonatti and Lorenza Alexandra Lorenzetti http://d.repec.org/n?u=RePEc:ces:ceswps:_10039&r=dge This paper places itself at the intersection between the literature on “Demeny voting” (the proposal of letting custodial parents exercise their children’s voting rights until they come of age) and the vast literature on formal models with endogenous fertility that address the problem of fiscal redistribution between young and old cohorts in the presence of an aging population. Linking these issues to the process of economic growth through a simple overlapping generations model, we show that [...]

• New indicators of perceived inflation in France based on media data
  by raphael.moncomble in Eco Notepad, 2022-12-26 14:31:41 UTC

  Published on 12/27/2022 By Jean-Charles Bricongne , Olivier de Bandt , Annabelle de Gaye, Julien Denes, Paul Hubert , Pierre-Antoine Robert The recent rise in inflation could affect households' and businesses' perception of inflation. This post describes new indicators of perceived inflation in France constructed from alternative data: newspaper articles and messages from the social network Twitter. The advantage of such data is that they are available at high frequency and in real time. Billet_299_VE.pdf Chart 1. Indicators of perceived inflation based on media data (standardised and re [...]

2022-12-23

• Optimal GDP-indexed Bonds
  by Christian Zimmermann in NEP-DGE blog, 2022-12-23 05:04:59 UTC

  By Yasin Kürsat Önder http://d.repec.org/n?u=RePEc:rug:rugwps:22/1056&r=dge I investigate the introduction of GDP-indexed bonds as an additional source of government borrowing in a quantitative default model. The idea of linking debt payments to developments in GDP resurfaced with the 1980s debt crisis and peaked with the COVID-19 outbreak. I show that the gains from this idea depend on the underlying indexation method and are highest if payments are symmetrically tied to developments in GDP. Optimized indexed debt can eradicate default risk, halve consumption volatility, and increase asset pr [...]

2022-12-18

• Annual Review 2022
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2022-12-18 02:45:00 UTC

  I've been doing these annual reviews since 2011. They're mainly an exercise for me to see what I accomplished and what I didn't in the previous year.    This was the second year since I have been back living in Canberra in 2007 that I spent the entire year in the Canberra region (extending to the coast) and the second year since 1991 that I didn't fly on a plane. I also haven't been outside of Australasia since 2018. It's pretty hard to travel for any length of time without taking the family and with two small children neither of us feels like traveling anywhere very far. I think we can finall [...]

2022-12-15

• Die Wirkunng der Besteuerung von Spitzeneinkommen und die Selektionstheorie der Lohnbildung
  by Ekkehart Schlicht in Funktionale Staatsfinanzen, 2022-12-15 16:56:00 UTC

  In einer interessanten Untersuchung gehen Daniel Keniston und  Abigail Peralta der Frage nach, ob hohe Steuern Superstars dazu veranlassen weniger zu arbeiten. Sie schreiben: Wir testen diese Hypothese anhand vollständiger Daten zum Arbeitsangebot von Hollywood-Filmstars von 1927 bis 2014. Änderungen der Grenzsteuersätze in hohen Steuerklassen haben keinen signifikanten Einfluss auf die Anzahl der Filme, die ein Filmstar pro Jahr dreht. In Jahren mit hohen Steuern produzieren die Stars jedoch mehr hoch bewertete Filme mit preisgekrönten Regisseuren, wobei sie möglicherweise prestigeträchtige F [...]

• Why economists need history
  by chris in Stumbling and Mumbling, 2022-12-15 09:25:06 UTC

  Should economists pay more attention to intellectual history? I'm prompted to ask by Jan Eeckhout's book, The Profit Paradox . His thesis is that, since the early 80s, many industries have become dominated by a handful of superstar companies whose increased market power allows them to enjoy higher profit margins. The result is higher prices than would otherwise be the case which in turn means lower output, lower demand for labour and lower real interest rates. It's not just workers who suffer from this but also smaller companies who face tougher competition from giant firms and higher costs fr [...]

2022-12-11

• Crisis Propagation in a Heterogeneous Self-Reflexive DSGE Model
  by Christian Zimmermann in NEP-DGE blog, 2022-12-11 16:20:33 UTC

  By Federico Guglielmo Morelli, Michael Benzaquen, Jean-Philippe Bouchaud and Marco Tarzia http://d.repec.org/n?u=RePEc:hal:journl:hal-03378921&r=dge We study a self-reflexive DSGE model with heterogeneous households, aimed at characterising the impact of economic recessions on the different strata of the society. Our framework allows to analyse the combined effect of income inequalities and confidence feedback mediated by heterogeneous social networks. By varying the parameters of the model, we find different crisis typologies: loss of confidence may propagate mostly within high income househo [...]

2022-11-30

• Credit Misallocation and Macro Dynamics with Oligopolistic Financial Intermediaries
  by Christian Zimmermann in NEP-DGE blog, 2022-11-30 22:04:48 UTC

  By Alessandro Villa http://d.repec.org/n?u=RePEc:fip:fedhwp:94920&r=dge Bank market power shapes firm investment and financing dynamics and hence affects the transmission of macroeconomic shocks. Motivated by a secular increase in the concentration of the US banking industry, I study bank market power through the lens of a dynamic general equilibrium model with oligopolistic banks and heterogeneous firms. The lack of competition allows banks to price discriminate and charge firm-specific markups in excess of default premia. In turn, the cross-sectional dispersion of markups amplifies the impac [...]

• QE with Chinese Characteristics?
  by Andrew Sheng in Project Syndicate, 2022-11-30 11:46:00 UTC

  HONG KONG – In 2020, Sebastian Mallaby of the Council on Foreign Relations announced the beginning of the “age of magic money,” in which advanced economies would “redefine the outer limits of their monetary and fiscal power.” By July 2022, Mallaby was predicting that this age was coming to an end. But, while most major central banks are now reversing quantitative easing (QE) and raising interest rates, China may need to head in the opposite direction. Observers often forget that QE was invented by the Bank of Japan in 2001 as a tool for dealing with balance-sheet deflation. Other tools incl [...]

2022-11-29

• Let the WTO Referee Carbon Border Taxes
  by Jeffrey Frankel in Project Syndicate, 2022-11-29 16:48:24 UTC

  CAMBRIDGE – Perhaps the most important task confronting the international order is enforcement of national limits on greenhouse-gas emissions, such as those that were negotiated in the 2015 Paris agreement. Carbon border adjustments could give these limits teeth, but fair application requires a revived World Trade Organization. Past attempts at curtailing carbon dioxide emissions have yielded limited results. China and other emerging and developing economies resist curbing their rapidly rising emissions, understandably arguing that the industrialized countries should go first because they cr [...]

2022-11-27

• Full-Information Estimation of Heterogeneous Agent Models Using Macro and Micro Data
  by Christian Zimmermann in NEP-DGE blog, 2022-11-27 16:00:33 UTC

  By Laura Liu and Mikkel Plagborg-Møller http://d.repec.org/n?u=RePEc:pri:econom:2022-21&r=dge We develop a generally applicable full-information inference method for heterogeneous agent models, combining aggregate time series data and repeated cross sections of micro data. To handle unobserved aggregate state variables that affect cross-sectional distributions, we compute a numerically unbiased estimate of the model-implied likelihood function. Employing the likelihood estimate in a Markov Chain Monte Carlo algorithm, we obtain fully efficient and valid Bayesian inference. Evaluation of the mi [...]

2022-11-25

• Quotation of the Day…
  by Don Boudreaux in Cafe Hayek, 2022-11-25 09:15:00 UTC

  (Don Boudreaux) Tweet … is from page 62 of Israel Kirzner’s March 1992 South African Journal of Economics paper, “ Subjectivism, Freedom and Economic Law ” as this paper is reprinted in Austrian Subjectivism and the Emergence of Entrepreneurship Theory , (Peter J. Boettke and Frédéric Sautet, eds., 2015), which is a volume in The Collected Works of Israel M. Kirzner : Physical realities and constraints have, of course, enormously important consequences for economic outcomes. But the subjectivist must insist that economic outcomes are not determined by any objective physical phenomena whate [...]

2022-11-24

• Optimal carbon pricing with fluctuating energy prices – emission targeting vs. price targeting
  by Christian Zimmermann in NEP-DGE blog, 2022-11-24 16:48:05 UTC

  By Alkis Blanz, Ulrich Eydam, Maik Heinemann and Matthias Kalkuhl http://d.repec.org/n?u=RePEc:pot:cepadp:51&r=dge Prices of primary energy commodities display marked fluctuations over time. Market-based climate policy instruments (e.g., emissions pricing) create incentives to reduce energy consumption by increasing the user cost of fossil energy. This raises the question of whether climate policy should respond to fluctuations in fossil energy prices? We study this question within an environmental dynamic stochastic general equilibrium (E-DSGE) model calibrated on the German economy. Our res [...]

• La transmission des hausses de taux de la BCE au marché monétaire
  by raphael.moncomble in Bloc-Notes Eco, 2022-11-24 15:42:45 UTC

  Publié le 25/11/2022 Par Benoît Nguyen et Miklos Vari Depuis le mois de juillet 2022, la BCE a relevé ses taux directeurs de 200 points de base au total, successivement 50 pb puis deux fois 75 pb, soit les hausses les plus fortes depuis sa création. Dans quelle mesure se sont-elles transmises au marché monétaire, première étape de la transmission de la politique monétaire ? Sur le marché non sécurisé (€STR), la transmission a été presque parfaite, mais sur le marché sécurisé (repo), elle est restée incomplète. billet_292_vf.pdf Graphique 1 : Variations des taux du marché monétaire en bla [...]

2022-11-23

• How well have ECB rate hikes been transmitted to the money market?
  by aurelie.dossantos in Eco Notepad, 2022-11-23 16:06:17 UTC

  Published on 11/25/2022 By Benoit Nguyen and Miklos Vari Since July, the ECB increased its key interest rates by 200 basis points in total (once by 50bps and twice by 75 bps). These are the largest single rate hikes of the ECB key interest rates. In this post, we examine to what extent these changes of policy rates passed through to the money market, the first step of monetary policy transmission. Transmission has been nearly complete in the unsecured market (e.g. on €STR) but subdued in the secured market (i.e. on repo transactions). billet_292_ve.pdf Graph 1: Changes for unsecured mone [...]

2022-11-21

• The macroeconomics of establishing a basic income grant in South Africa
  by Christian Zimmermann in NEP-DGE blog, 2022-11-21 16:27:17 UTC

  By Daan Steenkamp, Roy Havemann and Hylton Hollander http://d.repec.org/n?u=RePEc:pra:mprapa:114614&r=dge This paper quantifies the effect of fiscal transfers on the trade-off between social relief and debt accumulation, and discusses the economic growth and fiscal implications of different combinations of expanded social support and funding choices. Given South Africa’s already high level of public debt, the opportunity to fund a basic income grant through higher debt is limited. Using a general equilibrium model, the paper shows that extending the social relief of distress grant could be fis [...]

2022-11-18

• Useful Microeconomics
  by Francesc Trillas in Real Progress, 2022-11-18 16:31:00 UTC

   Microeconomics does not need to be a distant topic. My design of the Applied Microecnomics course  (taught jointly with Javier Asensio) at the Master in Applied Research in Economics and Business of my university combines theory and discussion of empirical papers in top journals. I paste the syllabus here. As we finish the current edition and we prepare the next one, I would most welcome suggestions of topics, references and discussion papers.  Objectives -Learn the basic skills to understand and be able to use the basic models and theories (old and new) in microeconomics, to better analyze b [...]

2022-11-16

• Can civic nationalism help reduce corruption? Insights from Solomon Islands
  by Grant Walton in Development Policy Blog, 2022-11-16 19:00:10 UTC

  In many parts of the world “nationalism” has earned itself a bad rap. Ethnic cleansing, war, genocide and other atrocities have been committed in its name. In recent years we’ve seen political leaders, like Donald Trump, whip up a toxic form of nationalist sentiment defined by race and a disdain for foreigners. On the other hand, nationalism can be a force for good; a devotion to one’s nation can encourage solidarity, pride and belonging. And for some practitioners, policymakers and academics, a certain type of nationalism – civic nationalism – has the potential to help address corruption in p [...]

• Some Links
  by Don Boudreaux in Cafe Hayek, 2022-11-16 16:00:57 UTC

  (Don Boudreaux) Tweet Phil Magness and Michael Makovi report on their important research showing that Karl Marx’s reputation was given a real boost by the ‘success’ of the Bolshevik revolution . A slice: In his classic book the Logic of Collective Action, Mancur Olson observed a peculiar feature about socialist political organizing. Marxist theory envisions itself as a manifestation of collective class interests, with the proletarian class being the most numerous. Yet as Olson noted, “the ‘Marxian’ revolutions that have taken place have been brought about by small conspiratorial elites tha [...]

2022-11-13

• Recent Behavioural Science and Policy Links November 13th
  by Liam Delaney in Economics, Psychology and Policy, 2022-11-13 20:01:00 UTC

  It is still very difficult to know fully what to do about posting on twitter. I have not deleted my account. I am not actively posting. I RT'd the happy announcement of one of our PhD students passing their viva on the basis that many people on my timeline know the student and would want to celebrate. My current mood with it is basically to see this as a transition phase before something new emerges.  I have continued to engage with mastodon ( link here ). It has been exciting to see various people and groups move there and I highly recommend trying it out but it is clearly still open as to wh [...]

• We accurately predicted the fall in the labor force participation rate since 2000 at a two-year horizon
  by Ivan Kitov in Economics as Classical Mechanics, 2022-11-13 15:24:00 UTC

  In 2008, we published a working paper titled " The driving force of labor force participation in developed countries"   in the ECINEQ (Society for the Study of Economic Inequality) Working Paper Series  also available at    Research Papers in Economics  (RePEc/IDEAS). In this paper we proposed a simple  model of the change in the labor force participation rate, dLFP/LFP, as a nonlinear function of the real GDP per capita, G:  N(t 2 ) = N(t 1 ){ 2[dG(t 1 -T)/G(t 1 -T) - A 2 /G(t 1 -T)] + 1}                                                (1 ) dLFP(t 1 )/LFP(t 1 ) = N(t 1 -T)/B + C                [...]

2022-11-02

• Recent behavioural science and policy links November 2nd
  by Liam Delaney in Economics, Psychology and Policy, 2022-11-02 13:22:00 UTC

  Like a lot of people, am thinking about how to proceed with social media. For now, am going to go back to basics and use the blog here to update on anything particularly interesting I see emerging in our areas.  1. Michael Muthukrishna points to a really useful new measure of cultural distance between regions.  2. From last year and open access, Nancy Cartwright's paper on rigour versus the need for evidential diversity is very thought-provoking. In general our literatures should engage more directly with her thinking in this regard.  3. New paper by Leo Lades and Federica Nova  Ethical Consid [...]

2022-11-01

• Poids de la dette et inflation : quelles leçons après l’épisode britannique ?
  by The Conversation in Contrepoints, 2022-11-01 04:10:35 UTC

  Par Éric Mengus et Guillaume Plantin.   Le 23 septembre au Royaume-Uni , l’annonce du mini-budget et les événements qui ont suivi jusqu’à l’annonce de la démission de la Première ministre Liz Truss , le 20 octobre, ont suscité un regain d’intérêt pour le risque de «  dominance budgétaire  », c’est-à-dire une situation dans laquelle la banque centrale abandonne son objectif de stabilité des prix pour aider le gouvernement à financer ses déficits. Mais dans quelle mesure cette séquence d’événements doit-elle nous pousser à repenser les relations entre les gouvernements, en charge de la politique [...]

2022-10-21

• ‘Sex Positivity,’ Porn May Be Keeping Young Men From Sex, Marriage
  by Marjorie Jackson in The Foundry, 2022-10-21 20:16:41 UTC

  “Young men aren’t having sex!” A  Twitter thread  that has been gaining traction resurfaced a 2019  Washington Post study , which found that young men are not having as much sex as they used to. Alexandra Hunt,  a former stripper  who  lost the 2022 Democratic congressional primary  in Philadelphia, wrote, “Nearly a third of men under 30 have not had sex. And a higher percent do not have as much sex as they’d like—not exactly surprising, but this kind of statistic is a sign of much deeper problems.” Hunt points to men’s declining mental health and low motivation to work as negative [...]

2022-10-17

• Spatial economic dynamics and transport project appraisal
  by Christian Zimmermann in NEP-DGE blog, 2022-10-17 20:33:57 UTC

  By James Lennox http://d.repec.org/n?u=RePEc:cop:wpaper:g-335&r=dge Transport infrastructure is costly to build and very long-lived. Major projects are expected to enhance accessibility, which over time, is likely to affect the distribution of population and employment. In a Dynamic Spatial Equilibrium (DSE) model, the timing and location of a project’s direct costs and benefits can be explicitly represented. Effects of both construction and operational phases are captured in a forward-looking spatial general equilibrium with costly adjustment. Not only are dynamic responses of direct interest [...]

2022-10-16

• The optimal quantity of CBDC in a bank-based economy
  by Christian Zimmermann in NEP-DGE blog, 2022-10-16 16:45:20 UTC

  By Lorenzo Burlon, Carlos Montes-Galdón, Manuel Muñoz and Frank Smets http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222689&r=dge We provide evidence on the estimated effects of digital euro news on bank valuations and lending and find that they depend on deposit reliance and design features aimed at calibrating the quantity of CBDC. Then, we develop a quantitative DSGE model that replicates such evidence and incorporates key selected mechanisms through which CBDC issuance could affect bank intermediation and the economy. Under empirically-relevant assumptions (i.e., central bank collateral require [...]

2022-10-07

• Japan’s currency bursts its post-bubble economy
  by Gunther Schnabl in East Asia Forum, 2022-10-07 11:00:16 UTC

  Author: Gunther Schnabl, Leipzig University At more than 145 yen per dollar, the Japanese yen has slipped to a 24-year low. After the Bank of Japan (BoJ) signalled further depreciation would be tolerated, Finance Minister Shunichi Suzuki stated that ‘excessive, disorderly currency moves could negatively impact the economy and financial conditions’. The massive foreign exchange intervention that followed to strengthen yen could not reverse the depreciation pressure. That may signal that Japan’s post-bubble crisis management has reached its limits. The roots of the current policy dilemma go ba [...]

2022-10-06

• East Asia’s precautionary financing fix
  by Randall Henning in East Asia Forum, 2022-10-06 11:00:11 UTC

  Author: C. Randall Henning, American University Southeast Asian economies, like emerging markets and developing countries globally, are anticipating a rocky financial transition out of the COVID-19 pandemic. The rapid tightening of monetary policy in the United States and the economic fallout from Russia’s invasion of Ukraine are causing a global recession and threatening further capital outflows from emerging markets and developing countries. ASEAN+3 (China, Japan and South Korea) countries can help protect Southeast Asian economies and advance regional institutions by tapping their precauti [...]

2022-10-03

• 49. Actividades de la Asociacion Euro-Americana con América Latina: Años 2011-2022
  by MCG Blogs de Economía in Asociación de Estudios Euro-Americanos: Desarrollo internacional de América, Europa y otras áreas, 2022-10-03 12:12:00 UTC

            En la Entrada 19 de este Blog (del año 2011), hemos incluido varias actividades de colaboración de nuestra Asociación de Estudios Euro-Americanos de Desarrollo Económico con América Latina en el período 2011-2022. Ahora, en el año 2022, incluimos otras actividades desarrolladas en 2011-2022.             19. Actividades de la Asociación Euro-Americana con América Latina: Años 2001-2010 ,  25-3-11 (2644)            ACTIVIDADES DE COLABORACIÓN INTERNACIONAL EN 2011-2022                      Participación de la Profesora María-Carmen Guisán (Presidenta de la Asociación de Estudios Euro-A [...]

2022-09-30

• Mental health in the UK is about to get worse, and inequality will have a lot to do with it
  by ? in Whats New, 2022-09-30 14:49:36 UTC

  Credit: Hyejin Kang/Shutterstock The British government’s recent mini-budget has been widely criticized. The effect on stock markets, pensions and the value of the pound has hardly been out of the news. As a clini [...]

2022-09-23

• Chartbook #154 Who is going to vote for Italy’s right-wing coalition?
  by Adam Tooze in Adam Tooze, 2022-09-23 20:48:00 UTC

  Many of us had hoped that it would not come to this. In Sunday’s elections in Italy, triggered by the premature fall of Mario Draghi’s government, the right-wing coalition of Berlusconi’s Forza Italia, Matteo Salvini’s Lega and Giorgia Meloni’s Fratelli D’Italia, seem set to score a decisive victory. The center-left party PD is not polling badly. It will likely come in second in terms of share of the vote. But without an effective coalition, it is doomed to defeat. Leading in the polls by a decisive margin are the Fratelli d’Italia, who emerged as champions of the hard-right from the fa [...]

• The US economy is on a long-term descent
  by Ivan Kitov in Economics as Classical Mechanics, 2022-09-23 12:55:00 UTC

  The US economy was and is successful, as many people think. Such a view on the economy prevails because the long-term evolution is not discussed by the economic and financial authorities and mainstream experts. Here, I would like to present the US economic performance with the long-term trends in key economic parameters since 1960.� These parameters are the growth rate of the civilian noninstitutional population, CNP, the rate of real GDP growth, the rate of real GDP per capita growth,� the labor force growth rate, and the labor force participation rate. The population-related parameters are k [...]

• The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States
  by Christian Zimmermann in NEP-DGE blog, 2022-09-23 03:10:41 UTC

  By Andrew Atkeson, Jonathan Heathcote and Fabrizio Perri http://d.repec.org/n?u=RePEc:fip:fedmsr:94111&r=dge The US net foreign asset position has deteriorated sharply since 2007 and is currently negative 65 percent of US GDP. This deterioration primarily reflects changes in the relative values of large gross international equity positions, as opposed to net new borrowing. In particular, a sharp increase in equity prices that has been US-specific has inflated the value of US foreign liabilities. We develop an international macro finance model to interpret these trends, and we argue that the r [...]

2022-09-20

• No title
  by maximorossi in NEP-LTV blog, 2022-09-20 20:27:25 UTC

  Measuring Preferences for Competition By: Lina Lozano ; Ernesto Reuben (Division of Social Science) Abstract:Recent research has found that competitive behavior measured in experiments strongly predicts individual differences in educational and labor market outcomes. However, there is no consensus on the underlying factors behind competitive behavior in these experiments. Are participants who compete more capable, more confident, and more tolerant of risk, or are they competing because they enjoy competition per se? In this study, we present an experiment designed to measure individuals†[...]

• No title
  by maximorossi in NEP-LTV blog, 2022-09-20 20:20:13 UTC

  Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP & CONICET); Lucía Ramirez-Veira (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET) Abstract: Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin America†s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We [...]

2022-09-18

• Factor Network Autoregressions
  by Francis Diebold in No Hesitations, 2022-09-18 22:10:00 UTC

  �Check this out, by Barigozzi, Cavaliere, and Moramarco: http://d.repec.org/n?u=RePEc:arx:papers:2208.02925&r= Very cool methods for dynamic "multilayer networks".� In a standard N-dim net there's one NxN adjacency matrix.� But richer nets may have many kinds of connections, each governed by its own adjacency matrix.� (What a great insight -- so natural and obvious once you hear it.� A nice "ah-ha moment"!)� So perhaps there are K operative NxN adjacency matrices.� Then there is actually a grand 3-dim adjacency matrix (NxNxK) operative -- a cubic rather than a square matrix.� Parsimonious mode [...]

• Finally, we have evidence that hell is other people on social media | Torsten Bell
  by ? in Science news, comment and analysis | theguardian.com, 2022-09-18 08:30:08 UTC

  Seeing how much fun your peers are having is bad for your mental health, a study of students suggestsScrolling Twitter or refreshing Facebook definitely feels like it’s bad for you, as our attention spans rot and meaning is drained from our lives. Despite [...]

2022-09-17

• Twitter peut-il prédire l’évolution des marchés financiers ?
  by Thomas Renault in Contrepoints, 2022-09-17 02:40:12 UTC

  Par Thomas Renault   En 2015, un article publié par Les Échos intitulé « Comment Twitter est devenu la boule de cristal des marchés financiers » a fait un bon petit buzz sur les réseaux sociaux. Réalisant ma thèse de doctorat sur ce sujet depuis maintenant près de trois ans, j’ai tendance à être assez psychorigide à propos de cette thématique, surtout que les mêmes mythes et les mêmes erreurs reviennent très souvent dans les articles de presse traitant de Twitter en tant qu’outil de First-Story Detection (détection d’événement) et d’analyse du sentiment des investisseurs. Voici les quelques er [...]

2022-09-15

• Women in the sports industry : Did Title IX make a difference?
  by ? in FRED blog, 2022-09-15 13:00:00 UTC

  This summer marked the 50th anniversary of the passage of the Education Amendments of 1972, which protect people from discrimination based on sex in education programs or activities that receive federal financial assistance. The well-known Title IX in this legislation made equal access to athletic programs mandatory, which resulted in more women playing sports while enrolled in school. But does a more-even playing field in high school and college athletics result  in comparable employment in the sports industry? The FRED graph above shows the number of men and women working as athletes, coach [...]

2022-09-12

• Credit and Saving Constraints in General Equilibrium: A Quantitative Exploration
  by Christian Zimmermann in NEP-DGE blog, 2022-09-12 16:49:18 UTC

  By Catalina Granda-Carvajal, Franz Hamann and Cesar Tamayo http://d.repec.org/n?u=RePEc:rie:riecdt:92&r=dge In this paper we build an incomplete-markets model with heterogeneous households and firms to study the aggregate effects of saving constraints and credit constraints in general equilibrium. We calibrate the model using survey data from Colombia, a developing country in which informal saving and credit frictions are pervasive. Our quantitative results suggest that reducing savings costs increases selection into formal saving, but the effect on aggregate outcomes and welfare is dwarfed by [...]

2022-09-03

• Memories of Ted Anderson
  by Francis Diebold in No Hesitations, 2022-09-03 21:35:00 UTC

  Ted is among the very greatest statisticians/econometricians of the 20th-century.� I feel very close to him, as my former Penn colleague, Larry Klein, worked closely with him at Cowles in the 1940s, and another former colleague, Bobby Mariano, was his student at Stanford before coming to Penn around 1970.� I recall a Penn seminar he gave late in his career, on unit moving-average roots.� He started painfully slowly, defining, for example, things like "time series" and "covariance stationarity".� Some eyes were rolling.� Ten minutes later, he was far beyond the frontier.� No eyes were rolling.� [...]

• Equal-weight HAR combination
  by Francis Diebold in No Hesitations, 2022-09-03 16:52:00 UTC

  This just blows me away.  So full of great insight.  Equal-weight combinations rule, in yet another context!  See also my papers with Minchul Shin that clearly lead to equal weights for point and density forecasts, respectively: Diebold, F.X. and Shin, M. (2019) , " Machine Learning for Regularized Survey Forecast Combination: Partially-Egalitarian Lasso and its Derivatives ,"  International Journal of Forecasting , 35, 1679-1691.   Diebold, F.X., Shin, M. and Zhang, B. (2022) , “On the Aggregation of Probability Assessments: Regularized Mixtures of Predictive Densities for Eurozone Inflation [...]

• Long memory and weak ID
  by Francis Diebold in No Hesitations, 2022-09-03 16:42:00 UTC

  I've thus far never been a big fan of the weak ID literature.  Always seemed to me that if you wind up with weak ID, it's time to think harder about the underlying economics rather than fancier econometrics.  But this opened my eyes and changed my mind.  Totally cool.     Weak Identification of Long Memory with Implications for Inference By: Jia Li  (Singapore Management University);  Peter C. B. Phillips  (Cowles Foundation, Yale University, University of Auckland, Singapore Management University, University of Southampton);  Shuping Shi  (Macquarie University);  Jun Yu  (Singapore Management [...]

2022-09-01

• Is the economy growing? Depends on how you measure it : GDP vs. GDI
  by ? in FRED blog, 2022-09-01 13:00:00 UTC

  One of the most watched U.S. economic indicators is the growth of real gross domestic product (GDP). A similar but lesser-known economic indicator has also been in the news lately—real gross domestic income (GDI). According to the Bureau of Economic Analysis , both real GDP and real GDI measure the real output of the U.S. economy. Real GDP measures the value of goods, while real GDI measures the income of employees and corporations. In theory, the growth rates of real GDP and real GDI should be equal. Lately, this hasn’t been the case. The FRED graph above displays the compounded annual rate [...]

• Federal student loan forgiveness: Research to help journalists
  by Denise-Marie Ordway in Journalist's Resource, 2022-09-01 12:23:00 UTC

  Facebook Twitter LinkedIn Reddit Email As adults with federal student loans await new details about the widespread loan forgiveness program President Joe Biden announced Aug. 24, many journalists will be trying to answer questions such as: How much will the program cost? Who will benefit most? What could be the unintended consequences? To help, we’ve gathered and summarized a sampling of academic research and government reports that provide insights on Biden’s historic program, which offers adults earning less than $125,000 a year a one-time opportunity to erase up to $10,000 in f [...]

2022-08-30

• In praise of Enough is Enough
  by ? in Stumbling and Mumbling, 2022-08-30 12:47:08 UTC

  One of the few silver linings to the cost of living crisis has been the re-emergence of trades union power and the start of the Enough is Enough campaign. These could potentially be the start of a new and better politics.As Enough is Enoughsay:We can’t rel [...]

2022-08-26

• Monetary policy in the open economy with digital currencies
  by Christian Zimmermann in NEP-DGE blog, 2022-08-26 23:05:04 UTC

  By Pietro Cova, Alessandro Notarpietro, Patrizio Pagano and Massimiliano Pisani http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1366_22&r=dge We assess the transmission of a monetary policy shock in a two-country New Keynesian model featuring a global private stablecoin and a central bank digital currency (CBDC). In the model, cash and digital currencies are imperfect substitutes that differ as to the liquidity services they provide. We find that in a digital-currency economy, where the stablecoin is a significant means of payment, the domestic and international macroeconomic effects of a monetary [...]

2022-08-24

• The Complexity Principle (!)
  by Francis Diebold in No Hesitations, 2022-08-24 22:25:00 UTC

  Continuing the previous post, I'm sorry if I seem to be gushing over the recent Kelly et al. program (indeed I am), but it just blows me away.� The famous "parsimony" and "KISS (keep it sophisticatedly simple)" principles turned on their heads!� George Box and Arnold Zellner must be rolling in their graves... � The Virtue of Complexity Everywhere Bryan T. Kelly �(Yale SOM; AQR Capital Management, LLC; National Bureau of Economic Research (NBER));� Semyon Malamud �(Ecole Polytechnique Federale de Lausanne; Centre for Economic Policy Research (CEPR); Swiss Finance Institute);� Kangying Zhou �(Ya [...]

2022-08-19

• Complexity in Prediction
  by Francis Diebold in No Hesitations, 2022-08-19 13:54:00 UTC

  Really glad to see that Kelly et al. are keeping at it, moving well into the "double dip" zone and adding regularization.   The Virtue of Complexity in Return Prediction  (2022) B ryan T. Kelly ;  Semyon Malamud ;  Kangying Zhou The extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in US e [...]

2022-08-12

• Japan’s low inflation conundrum
  by Gunther Schnabl in East Asia Forum, 2022-08-12 12:00:39 UTC

  Author: Gunther Schnabl, Leipzig University Inflation rates have risen far above the targets of many central banks around the world, reaching 9.1 per cent in the United States and 8.6 per cent in the euro area in June 2022. Yet Japan has bucked this phenomenon by maintaining surprisingly low inflation rates, sitting at 2.4 per cent in June 2022. For many years, Japan’s inflation rate has been well below other industrialised countries even though the Bank of Japan’s balance sheet has grown much faster than the balance sheets of most other central banks. Inflation is generally caused by centra [...]

• How India Can Sustain Rapid Economic Growth
  by Barry Eichengreen in Project Syndicate, 2022-08-12 10:45:03 UTC

  NEW DELHI – One country stands out from the gloomy overall tone of the International Monetary Fund’s recent update  of its World Economic Outlook . Against the backdrop of tepid 3.2% global growth in 2022, the IMF expects India’s GDP to expand by 7.4%. This is the fastest growth of any large economy except Saudi Arabia, which is the incidental beneficiary of upward pressure on global oil prices from Russian President Vladimir Putin’s war against Ukraine. India may be buying Russian crude at a discount, but, as the world’s third largest oil importer, it is still burdened by high oil prices. O [...]

2022-08-09

• 48. La investigación económica en América Latina, Estados Unidos y España en 2001-2022: publicaciones destacadas y representación femenina
  by MCG Blogs de Economía in Asociación de Estudios Euro-Americanos: Desarrollo internacional de América, Europa y otras áreas, 2022-08-09 17:30:00 UTC

    En el Documento nº 125 de la Serie Economic Development del Equipo de Econometría de la Universidad de Santiago de Compostela, se ha publicado el siguiente estudio, disponible de forma gratuita en Ideas.Repec:  Guisán, M.C. (2021).   La Investigacion De Economía En España, América Latina Y Estados Unidos: Representación Femenina Y Publicaciones Destacadas. Documento nº 125 de la Serie Economic Development Próximamente resumiremos algunos de los datos más destacados de dicho estudio y también la lista de autores más destacados en Julio de 2022 en la base Ideas.Repec. [...]

2022-08-08

• Are we in a recession (yet)? : Consulting Chauvet and Piger’s smoothed probabilities
  by ? in FRED blog, 2022-08-08 13:00:00 UTC

  It’s natural to want to know where you stand in the economy and get ahead of any big changes. It’s no surprise, then, that we’re hearing plenty of talk about whether the U.S. economy is in a recession. As usual, we begin our inquiry with FRED data! The graph above displays, month after month, the estimated probabilities that the U.S. economy is in recession. These estimates are calculated from a set of economic statistics discussed in this article . The FRED graph also conveniently displays shaded bars when actual recessions occurred, as determined by the NBER business cycle dating committee. [...]

2022-08-01

• Travel chaos, flight fees, and labor shortages could get even worse in October when airlines can start buying their own stocks again, according to the president of the flight attendants' union
  by insider@insider.com (Juliana Kaplan) in Business Insider, 2022-08-01 16:06:46 UTC

  Flight delays and cancellations will likely continue throughout the summer, analysts told Insider. James D. Morgan/Getty Images Travel chaos has abounded this summer, as passengers deal with delays, cancellations, and lost luggage. Sara Nelson, international president of the Association of Flight Attendants, warns that could get even worse. In the fall, airlines can start buying their own stocks again — potentially leading to higher fees and fewer staff. If you've even thought about boarding a plane this summer, you've probably heard the tales of travel chaos. Passengers are getting hit with d [...]

• Does purchasing power parity (PPP) hold in the long run? : A look at the franc/dollar exchange rate on the Swiss national holiday
  by ? in FRED blog, 2022-08-01 13:00:00 UTC

  Part of the “My favorite FRED graph” guest post series. “Under the skin of any international economist lies a deep-seated belief in some variant of the PPP theory of the exchange rate.” — Dornbusch and Krugman (1976) Most models in international macroeconomics assume purchasing power parity (PPP) holds in the long run. But what is PPP and what is the long run? A good starting point is the law of one price (LOP), which states that the same good in different competitive markets must sell for the same price, when transportation costs and barriers between those markets are not important. Intuitiv [...]

2022-07-29

• Transmission of Flood Damage to the Real Economy and Financial Intermediation: Simulation Analysis using a DSGE Model
  by Christian Zimmermann in NEP-DGE blog, 2022-07-29 13:32:36 UTC

  By Ryuichiro Hashimoto and Nao Sudo http://d.repec.org/n?u=RePEc:boj:bojwps:wp22e05&r=dge This paper quantitatively assesses the indirect effect of floods on the real economy and financial intermediation in Japan by estimating a dynamic stochastic general equilibrium (DSGE) model that incorporates a mechanism through which floods cause the capital stock and the public infrastructure to depreciate exogenously, using the data on flood damage recorded in the Flood Statistics released by the Japanese government. The result of the analysis is twofold. First, flood shocks dampen GDP from the supply [...]

2022-07-27

• Should the Federal Govt "split" its cloud computing contracts?
  by noreply@blogger.com (Luke Froeb) in Managerial Econ, 2022-07-27 17:08:00 UTC

  WSJ Reports :   Amazon  dominates the cloud-infrastructure industry  with a 39% share of the 2021 global market ahead of Microsoft at No. 2 with a 21% share, according to research firm  Gartner  Inc. ...   Microsoft has grown frustrated about its lack of progress selling its Azure cloud services to the U.S. federal government with its rival’s Amazon Web Services continuing to win most of those contracts, said some of the people familiar with its efforts.  ...     Microsoft  Corp.   is rallying other big name  cloud-computing providers  such as  Alphabet  Inc.’s   Google and  Oracle  Corp.  to [...]

2022-07-26

• No title
  by maximorossi in NEP-LTV blog, 2022-07-26 19:33:05 UTC

  The role of unobservable characteristics in friendship network formation. By: Pablo Brañas-Garza (Universidad de Loyola Andalucia); Lorenzo Ductor (Department of Economic Theory and Economic History, University of Granada.); Jaromir Kovarik (‡Universidad del País Vasco UPV/EHU and University of West Bohemia) Abstract: Inbreeding homophily is a prevalent feature of human social networks with important individual and group-level social, economic, and health consequences. The literature has proposed an overwhelming number of dimensions along which human relationships might sort, without pr [...]

2022-07-25

• The big idea: should we be using data to make life’s big decisions?
  by ? in Science news, comment and analysis | theguardian.com, 2022-07-25 11:30:34 UTC

  Faced with tough choices, people usually fall back on gut instinct or seek the advice of friends. Now, there’s an alternativeWhom should you marry? Where should you live? How should you spend your time? For centuries, people have relied on their gut instin [...]

• The futility of economic policy debate
  by ? in Stumbling and Mumbling, 2022-07-25 09:08:58 UTC

  Sam Bowmanwriteson the divide between boosters and doomsters - those who believe we can boost economic growth and those who don't. He misses, however, an important point.This is that economic policy is not made by Sam, nor by Giles Wilkes, Stian Westlake, [...]

2022-07-24

• Sunday assorted links
  by ? in Marginal Revolution, 2022-07-24 17:33:30 UTC

  1. Timothy Snyder’s argument that Russia is losing. 2. “We provide novel evidence that poor individuals born in countries with high consumption of meat are more likely to show soccer prowess.” 3. Are young people becoming more miserable r [...]

2022-07-14

• Fertility and migration
  by Christian Zimmermann in NEP-DGE blog, 2022-07-14 19:24:09 UTC

  By Arianna Garofalo http://d.repec.org/n?u=RePEc:ewp:wpaper:421web&r=dge Over the past three decades, the drop in fertility rates has been accompanied by high rates of migration in several developing countries. We argue that migration affects fertility negatively in the countries of origin. To analyze the effect of migration we build a fertility choice model, based on De La Croix (2014), with endogenous migration decisions. In this framework, when a member of the household migrates abroad, income increases due to remittances but at the same time, individuals left at home face a much higher opp [...]

• OECD data show less employment for older French folks : Assessing joie de vivre on Bastille Day
  by ? in FRED blog, 2022-07-14 13:00:00 UTC

  Part of the “My favorite FRED graph” guest post series. It’s July 14th, Bastille Day! So the FRED Blog focuses on France, where the retirement age was a central issue in their recent elections. France’s legal retirement age is 62, conditional on time worked. President Emmanuel Macron, who was re-elected in April, prefers raising it to 65. Jean-Luc Mélenchon campaigned on lowering it to 60 as part of the leftist coalition policy proposal. That political debate didn’t include a great deal of data, so we provide some here, including international comparisons. The FRED graph above uses OECD data [...]

2022-07-09

• Global Cultures and Global Variations in Obesity
  by ? in ConscienHealth, 2022-07-09 10:00:52 UTC

  Obesity prevalence is rising all over the world. But in different cultures and different countries, tremendous variations in obesity are striking. Countries of eastern Asia tend to have very low obesity prevalence. Japan, for example, has an obesity rate o [...]

2022-07-05

• 3 examples of post-publication review (ecology, the underground economy, and “lockdowns”)
  by Andrew in Statistical Modeling, Causal Inference, and Social Science, 2022-07-05 13:34:22 UTC

  1. Manuel Lerdau writes: This might interest you as an example of a public post-publication review that will, I hope, make a difference. As a bonus, one of the key issues with the original paper is a statistical problem. We have this issue frequently in Ecology (the field, not, in particular, the journal), an over-emphasis on mean values and a corresponding underappreciation of the importance of variability. 2. Asher Meir writes: This should warm your heart: Uncovering errors on measuring the underground economy: Manuel A. Gómez and Adrián Ríos-Blanco uncover problems in the Journal of Mac [...]

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