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2018-06-18

• Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity
  by Christian Zimmermann in NEP-DGE blog, 2018-06-18 14:23:25 UTC

  By Juan Dolado, Gergö Motyovszki and Evi Pappa http://d.repec.org/n?u=RePEc:iza:izadps:dp11494&r=dge In order to improve our understanding of the channels through which monetary policy has distributional consequences, we build a New Keynesian model with incomplete asset markets, asymmetric search and matching (SAM) frictions across skilled and unskilled workers and, foremost, capital-skill complementarity (CSC) in the production function. Our main finding is that an unexpected monetary easing increases labor income inequality between high and low-skilled workers, and that the interaction betwe [...]

• Inflation Policy
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-06-18 12:36:54 UTC

  “[T]he concept of monetary policy in the United States at its core involves crucial elements of risk management.” Former Federal Reserve Chairman Alan Greenspan, Remarks at Jackson Hole, August 29, 2003. Inflation in the United States remains at levels that most people don’t really notice. Overall, the consumer price index rose by 2.8 percent from May 2017 to May 2018 . And, when you look at core measures , the trend is still below 2 percent. With inflation and inflation expectations still so benign, it is no wonder that despite solid economic growth and the lowest unemployment rate in 50 year [...]

• Zoned Out: Building Regulations and Housing Affordability
  by Jason Barr in Building the skyline, 2018-06-18 12:34:50 UTC

  Jason M. Barr    June 18, 2018 Have you heard the old joke about gravity—it’s not just a good idea, it’s the law! Ignore the law—say by jumping off a cliff in an attempt to fly—and suffer the consequences.  The same can be said about supply and demand in economics—supply is not just a good idea, it’s the law. Evidently, when it comes to housing affordability, cities and nations world over are trying to ignore it at their own peril. Today, there is a giant disconnect between the sentiments of economists and the residents of cities. There is near universal agreement among those in the economics [...]

• Rita Faria’s journal round-up for 18th June 2018
  by Rita Faria in The Academic Health Economists' Blog, 2018-06-18 11:00:47 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Objectives, budgets, thresholds, and opportunity costs—a health economics approach: an ISPOR Special Task Force report . Value in Health [ PubMed ]  Published 21st February 2018 The economic evaluation world has [...]

2018-06-16

• Jobless Recovery, Liquidity Trap, Tight Monetary Policy and the Cost Channel
  by Christian Zimmermann in NEP-DGE blog, 2018-06-16 17:52:46 UTC

  By Lasitha R.C. Pathberiya http://d.repec.org/n?u=RePEc:qld:uq2004:591&r=dge In this study, I examine the robustness of an unconventional monetary policy in a cost channel economy. The unconventional monetary policy proposed by Schmitt-Grohé and Uribe (2017, American Economic Journal: Macroeconomics, SGU henceforth), recommends a tight monetary policy during a liquidity-trapped recession to stimulate the economy and to avoid jobless recovery. The results of my study show that the existence of the cost channel implies that the SGU policy induces sharp initial contractions in the employment rate [...]

2018-06-15

• Capital Income Taxation, Economic Growth, and the Politics of Public Education
  by Christian Zimmermann in NEP-DGE blog, 2018-06-15 11:57:20 UTC

  By Tetsuo Ono and Yuki Uchida http://d.repec.org/n?u=RePEc:osk:wpaper:1805&r=dge This study considers the politics of public education and its impacts on economic growth and welfare across generations. Public education is funded by taxing the labor income of the working generation and capital income of the retired. We employ probabilistic voting to demonstrate the politics of taxes and expenditure and show that aging results in a shift of the tax burden from the old to the young and a slowdown of economic growth. We then consider three alternative constraints that limit the choice of taxes and [...]

2018-06-11

• 314 – ADOPT goes online
  by David Pannell in Pannell Discussions, 2018-06-11 15:10:59 UTC

  ADOPT is the Adoption and Diffusion Outcome Prediction Tool. It is now available as an online version, replacing the spreadsheet that has over 1000 users. I’ve previous talked about how agricultural scientists, extension agents, policy makers and suppliers need to be able to predict how farmers will respond to a new practice or technology ( PD203 ). How many farmers will adopt the new practice, and how quickly will they do so? This knowledge can influence research priorities, reserach funding decisions, the design and emphasis of extension campaigns, and the effectiveness of agricultural polic [...]

• Banks and Money, Or Watch out What You Wish For
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-06-11 12:43:55 UTC

  “[S]overeign money is an unnecessary and dangerous experiment, which would inflict great damage on our country." Thomas Jordan, Chairman, Swiss National Bank,  Speech  at the Swiss Institute of Banking and Finance, 3 May 2018 On 10 June 2008, Switzerland held a vote on the proposal that all commercial bank demand deposits be held at the central bank. It failed by a 76% to 24% vote. This Vollgeld referendum was another incarnation of the justifiable public revulsion to financial crises and the bailouts that inevitably accompany them. Vollgeld proponents claimed that a system in which the centra [...]

2018-06-10

• Sankey Diagram for the 2018 FIFA World Cup Forecast
  by Achim Zeileis in R-bloggers, 2018-06-10 22:00:00 UTC

  (This article was first published on Achim Zeileis , and kindly contributed to R-bloggers) The probabilistic forecast from the bookmaker consensus model for the 2018 FIFA World Cup is visualized in an interactive Sankey diagram, highlighting the teams’ most likely progress through the tournament. Bookmaker consensus model Two weeks ago we published our Probabilistic Forecast for the 2018 FIFA World Cup : By adjusting quoted bookmakers’ odds for the profit margins of the bookmakers (also known as overrounds), transforming and averaging them, a predicted winning probability for each [...]

2018-06-08

• Should peer to peer lenders exist in theory?
  by bankunderground in Bank Underground, 2018-06-08 08:00:21 UTC

  John Lewis Walter Heller famously said that an economist is someone who sees something in practice and wonders if it would work in theory.  Economic theory says banks exist because they channel loanable funds more efficiently than individual savers and investors pairing up bilaterally.  Those informational, diversification and maturity transformation considerations imply that banks should be able to out-compete peer to peer (P2P) lenders .  The stylised fact that few P2P platforms have made a profit to date is in line with this theory.  If so, then P2P lenders face a difficult future and they [...]

2018-06-05

• Evaluating the Distinctive Economic Impact of Historical Female Migration in the United States
  by Fernando Arteaga in NEP-HIS blog, 2018-06-05 03:00:31 UTC

  A Woman’s Touch? Female Migration and Economic Development in the United States By Viola von Berlepsch ( London School of Economics ), Andrés Rodríguez-Pose ( London School of Economics ) and Neil Lee ( London School of Economics ), Abstract :  Does the economic effect of immigrant women differ from that of immigrants in general? This paper examines if gender has influenced the short- and long-term economic impact of mass migration to the US, using Census microdata from 1880 and 1910. By means of ordinary least squares and instrumental variable estimations, the analysis shows that a greater co [...]

2018-06-04

• Italeave: Mother of all financial crises
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-06-04 11:55:24 UTC

  Nearly a decade ago, Barry Eichengreen conjured a prescient scenario for the exit of Italy from the euro: “ Households and firms anticipating that domestic deposits would be redenominated into lira, which would then lose value against the euro, would shift their deposits to other euro area banks. In the worst case, a system-wide bank run could follow. Investors anticipating that their claims on the Italian government would be redenominated into lira would presumably shift into claims on other euro area governments, leading to a bond market crisis. If the precipitating factor was parliamentary [...]

2018-06-01

• Some Fairly Recent Must- and Should-Reads About Globalization
  by ? in Grasping Reality with the Invisible Hand, 2018-06-01 21:01:49 UTC

  Ken Schultz: "I’m not an IPE expert, but it seems like you must be doing tariffs wrong if they aren’t even supported by the labor union in the protected industry..." Paul Krugman: Oh, What a Stupid Trade War: "Even if tariffs were expansionary, that w [...]

• Protecting Customers’ Privacy Requires More than Anonymizing Their Data
  by Sachin Gupta in HBR Blog Network, 2018-06-01 14:00:49 UTC

  Becky Hayes/EyeEm/Getty Images Today, good marketing relies on having detailed and accurate customer data. And companies, not surprisingly, are eager to collect vast troves of it. For instance, Amazon continuously tracks the behaviors of its 100 million Prime members , an example of “first-party” data. And many companies have found that sharing their own customer information with other companies creates synergies for both parties, especially with the increasing availability of “internet of things” data (GPS sensors, smart utility meters, fitness devices, etc.). These are examples of “secon [...]

• Why the MPC needs experts
  by chris in Stumbling and Mumbling, 2018-06-01 13:33:58 UTC

  There’s no doubt that Jonathan Haskel is an excellent appointment to the MPC. What we should be asking is rather: isn’t he over-qualified? What I mean is that not much hangs upon interest rate decisions. The Bank’s own work estimates that a quarter-point rise reduces output only by around 0.15%. Granted, it’s possible that the economy might now be more sensitive than this to rate changes now. But even so, the cost of interest rate mistakes are small. Put it this way. For a monetary policy error to have had the same cost as fiscal austerity or Brexit, interest rates would have had to rise to we [...]

• Suggested Reading for June
  by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2018-06-01 12:49:00 UTC

  Colussi, T. , 2018. Social ties in academia: A friend is a treasure. Review of Economics and Statistics , 100, 45-50. Dette, H., K. Möllenhoff, S. Volgushev, & F. Bretz , 2018. Equivalence of regression curves. Journal of the American Statistical Association , online. Kumbhaker, S. C., C. F. Parmeter, & V. Zelenyuk , 2018. Stochastic frontier analysis: Foundations and advances. Working paper No. WP02/2018, Centre for Efficiency and productivity Analysis, School of Economics, University of Queensland. Morshed, A. A., E. Andreou, & O. Boldea , 2018. Structural break tests robust to regression mi [...]

2018-05-31

• Building Height and Greenhouse Gas Emissions: The Case of New York City
  by Jason Barr in Building the skyline, 2018-05-31 15:06:50 UTC

  Jason M. Barr      May 31, 2018 A growing body of research demonstrates that across the United States there is significant variation in household greenhouse gas emissions. [1] Regionally speaking, the “sweet spots” are those places with warm winters and cool summers , such as California. Within regions, however, CO 2 emissions have an inverted u-shape . Starting in the rural areas, household carbon production tends to be low or moderate. Moving toward suburban areas, emissions rise and then peak. They then fall in the densest central parts of the city. The reason is due first to income. Wealth [...]

2018-05-29

• ECB research provides a withering critique of mainstream macroeconomics
  by bill in Bill Mitchell - billy blog, 2018-05-29 03:30:31 UTC

  Although this blog post considers some very technical material its message is simple. Mainstream macroeconomic models that are used to determine policy choices by governments are deeply flawed and the evidence strongly supports a central thrust of Modern Monetary Theory (MMT) – that fiscal policy is powerful and that austerity will kill growth. In that sense, it helps us understand why various nations and blocs (such as the Eurozone) struggled after the onset of the GFC. It also explains why the deliberate attack on Greek prosperity by the Troika was so successful in demolishing any prospect o [...]

• The Economic Consequences of the Napoleonic Wars
  by guidoalfani in NEP-HIS blog, 2018-05-29 02:35:41 UTC

  The Napoleonic Wars: A Watershed in Spanish History? By Leandro Prados de la Escosura ( Carlos III University de Madrid ) and Carlos Santiago-Caballero ( Carlos III University de Madrid ). Abstract : The Napoleonic Wars had dramatic consequences for Spain’s economy. The Peninsular War had higher demographic impact than any other military conflict, including civil wars, in the modern era. Farmers suffered confiscation of their crops and destruction of their main capital asset, livestock. The shrinking demand, the disruption of international and domestic trade, and the shortage of inputs hampere [...]

2018-05-28

• Dr. Krugman on Coal Miners and Coal Towns
  by Matthew Kahn in Environmental and Urban Economics, 2018-05-28 15:22:00 UTC

  San Francisco, New York, Boston, Los Angeles, Seattle, and Portland are booming.� Such areas offer great opportunities for our best young minds.� These progressive cities limit housing supply and this limits population growth, causes suburbanization, and contributes to sky high local real estate prices.� Moretti's local multiplier effect hypothesis posits that the booming local economy creates local opportunity for middle class people. We all know that other places are not doing well.� The geography of upward mobility and despair is a major research topic. Raj Chetty claims that "place" is cen [...]

• To Form a More Perfect Union
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-05-28 11:38:54 UTC

  “In a monetary union with the consequent financial integration, there are features like centralised supervision, deposit insurance and resolution of banks…that are necessary for the whole framework to function effectively.” ECB Vice President Vítor Constâncio, 17 May 2018 . On 31 May 2018, Vítor Constâncio completes 18 years on the Governing Council of the European Central Bank (ECB)—8 as Vice President and 10 as Governor of the Bank of Portugal before that. Ahead of his departure, Vice President Constâncio delivered a valedictory address setting out his views on what needs to be done to make [...]

• Alastair Canaway’s journal round-up for 28th May 2018
  by captaincanaway in The Academic Health Economists' Blog, 2018-05-28 11:00:22 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Information, education, and health behaviours: evidence from the MMR vaccine autism controversy . Health Economics [ PubMed ] Published 2nd May 2018 In 1998, Andrew Wakefield published (in the Lancet) his infamo [...]

2018-05-27

• Some Fairly Recent Must- and Should-Reads About: Political Economy
  by ? in Grasping Reality with the Invisible Hand, 2018-05-27 15:31:57 UTC

  David Glasner: Neo- and Other Liberalisms: "The point of neoliberalism 1.0 was to moderate classical laissez-faire liberal orthodoxy... Not quite true. It is what the Left New Dealers' consensus was. They had lost power in the U.S. But enough of them ma [...]

2018-05-26

• Saturday assorted links
  by Tyler Cowen in Marginal Revolution, 2018-05-26 15:54:18 UTC

  1. East Germans still buy fewer stocks . 2. New results about crypto and the stock market that neither Samir Varma nor I can quite bring ourselves to believe . 3. A somewhat off-base but still interesting thread on housing supply . 4. This is the kind of rhetorical and blah blah blah piece I don’t usually link to, yet the main point is correct and still underappreciated: there is a crisis of European weakness . 5.  Do Chinese communists fund Jacinda Ardern’s NZ Labour Party ? 6.  Jonathan Rauch replies to Rosser on happiness . The post Saturday assorted links appeared first on Marginal REVOLUT [...]

2018-05-24

• Are economists’ standard solutions part of the problem in fragile states?
  by Tobias Haque in Development Policy Blog, 2018-05-24 20:00:42 UTC

  Work to be done International development agencies are being asked to do more about conflict and fragility . In the wake of the Arab spring and the spread of conflict among middle-income countries, and with many of the poorest states continuing to experience protracted conflicts, the international community is calling on aid agencies to do more and spend more in conflict contexts. This call to action extends beyond humanitarian and peacebuilding interventions, and encompasses institutions with explicit economic development mandates, such as the World Bank and IMF. But what do those of us conce [...]

2018-05-22

• Are Macroprudential Tools as Caring and Forethinking as They Claim to Be? Financial Stability and Monetary Policy in the Long Run
  by chechurris in NEP-HIS blog, 2018-05-22 04:06:21 UTC

  An Historical Perspective on the Quest for Financial Stability and the Monetary Policy Regime By Michael D. Bordo ( Rutgers University ) Abstract: This paper surveys the co-evolution of monetary policy and financial stability for a n umber of countries across four exchange rate regimes from 1880 to the present. I present historical evidence on the incidence, costs and determinants of financial crises, combined with narratives on some famous financial crises. I then focus on some empirical historical evidence on the relationship between credit booms, asset price booms and serious financial cri [...]

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