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- East Asiaâs 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 [...]
- Chartbook #154 Who is going to vote for Italyâs 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
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 [...]
- 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 individualsâ€ [...]
- 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)
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 Americaâ€ s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We [...]
- 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 [...]
- 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 [...]
- 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
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 [...]
- 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 [...]
- 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
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 [...]
- In praise of Enough is Enough
by chris 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 Enough say :
We can’t rely on the establishment to solve our problems. It’s up to us in every workplace and every community.
This is a challenge to Labourism, in which as Ralph Miliband put it, the Labour party "have treated the voters not as potential comrades but as possible clients." It is a rejection of retail politics, in which people are victims of polic [...]
- 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
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 [...]
- 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 [...]
- 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 [...]
- Japanâs 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 [...]
- Are we in a recession (yet)? : Consulting Chauvet and Pigerâs 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. [...]
- 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 email@example.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 [...]
- 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
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 [...]
- Should the Federal Govt "split" its cloud computing contracts?
by firstname.lastname@example.org (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 [...]
- 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 [...]