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Blog aggregator for economics research

2019-10-14

• The Federal Home Loan Banks: Two Lessons in Regulatory Arbitrage
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-10-14 12:01:05 UTC

  There is an important U.S. government-sponsored banking system that most people know nothing about. Created by an act of Congress in 1932, the Federal Home Loan Banks (FHLBs) issue bonds that investors perceive as having government backing, and then use the proceeds to make loans to their members: namely, 6,800 commercial banks, credit unions, insurance companies and savings associations. As the name suggests, the mission of the (currently 11) regional, cooperatively owned FHLBs is “ to support mortgage lending and related community investment .” But, since the system was founded, its role as [...]

2019-10-12

• Interval Prediction
  by Francis Diebold in No Hesitations, 2019-10-12 19:16:00 UTC

  Last time I blogged on Serena's amazing presentation from Per's Chicago meeting, https://fxdiebold.blogspot.com/2019/10/large-dimensional-factor-analysis-with.html But I was equally blown away by Rina's amazing "Predictive inference with the jackknife+". Rina Foygel Barber∗ , Emmanuel J. Canes† , Aaditya Ramdas‡ , Ryan J. Tibshirani‡§ https://arxiv.org/pdf/1905.02928.pdf .  Correctly calibrated confidence intervals despite arbitrary model misspecification! But of course I'm left with lots of questions.  They have nice correct-coverage theorems. What about length?  We want shortest-length corre [...]

2019-10-10

• Health Risk, Insurance and Optimal Progressive Income Taxation
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 19:15:25 UTC

  By Juergen Jung and Chung Tran http://d.repec.org/n?u=RePEc:red:sed019:620&r=dge We study the optimal progressivity of personal income taxes in an environment where individuals are exposed to idiosyncratic shocks to health and labor productivity over the lifecycle. Our analysis is based on a large-scale overlapping generations general equilibrium model that is calibrated to the US economy. Our results indicate that the presence of health risk and health insurance has a strong effect on the amount of redistribution and social in- surance provided by progressive income taxes. In an environment w [...]

• Rational Inattention and Oversensitivity of Retirement to the State Pension Age
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 19:02:20 UTC

  By Jamie Hentall MacCuish http://d.repec.org/n?u=RePEc:red:sed019:336&r=dge This paper presents evidence that incorporating costly thought, modelled with rational inattention, solves two well-established puzzles in the retirement literature. The first puzzle is that, given incentives, the extent of bunching of labour market exits at legislated state pension ages (SPA) seems incompatible with rational expectations (e.g. Cribb, Emmerson, and Tetlow, 2016). Adding to the evidence for this puzzle, this paper includes an empirical analysis focusing on whether liquidity constraints can account for t [...]

• Heterogeneous Price Rigidities and Monetary Policy
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 18:42:51 UTC

  By Christopher Clayton, Andreas Schaab and Xavier Jaravel http://d.repec.org/n?u=RePEc:red:sed019:1480&r=dge This paper investigates the implications of heterogeneous price rigidities across sectors for the distributional and aggregate effects of monetary policy. First, we identify and characterize analytically a new set of earnings and expenditure channels of monetary policy that emerge in the presence of sectoral heterogeneity. Second, we establish empirically that (i) prices are more rigid in sectors selling to college-educated households, (ii) prices are more rigid in sectors employing col [...]

• Germany Versus the ECB
  by Hans-Helmut Kotz in Project Syndicate, 2019-10-10 13:45:54 UTC

  CAMBRIDGE – Over the past couple of months, the German debate over fiscal and monetary policy has taken an interesting turn. Old, deeply ingrained economic dogmas , including that the public sector must strive to generate a fiscal surplus regardless of macroeconomic conditions, are being reappraised , at least by some . The economic situation is changing rapidly for the worse. The German economy – long the engine of eurozone growth – is undeniably sputtering . Powerful underlying currents are contributing to the slowdown. As a result, there is a high probability of a typical German recession ( [...]

2019-10-09

• Should Creditors Pay the Price for Dubious Bonds?
  by Mitu Gulati in Project Syndicate, 2019-10-09 11:01:28 UTC

  DURHAM/GENEVA/CHAPEL HILL – In late October, Venezuela is likely to default on a $913 million payment on a key bond. Because the country has already defaulted on most of its debt, one might be tempted to regard another missed payment as no big deal. But this bond, issued by the national oil company Petróleos de Venezuela, S.A. (PDVSA), and referred to as PDVSA 2020, is backed by juicy collateral: a controlling stake in Venezuela’s economic crown jewel, United States-based refiner CITGO. Ordinarily, unpaid bondholders could tell the bond trustee to seize the collateral. But, given its dubious p [...]

2019-10-07

• Journal Round-up at the Academic Health Economists’ Blog
  by Jason Shafrin in Healthcare Economist, 2019-10-07 22:13:05 UTC

  Over at the Academic Health Economists’ (AHE) blog, I host this week’s journal round-up . The papers I cover include: Combined impact of future trends on healthcare utilisation of older people: a Delphi study . Health Policy [ PubMed ] [ RePEc ]  Published October 2019 The fold-in, fold-out design for DCE choice tasks: application to burden of disease . Medical Decision Making [ PubMed ]  Published 29th May 2019 The health and cost burden of antibiotic resistant and susceptible Escherichia coli bacteraemia in the English hospital setting: a national retrospective cohort study . PLoS O [...]

• 328 – Weitzman discounting
  by David Pannell in Pannell Discussions, 2019-10-07 15:08:25 UTC

  Martin Weitzman (1942-2019) was an environmental economist who thought laterally. He made important contributions to the field in at least three areas. Here I’ll explain one of his clever insights: that uncertainty about the discount rate has an impact on the effect of discounting. At a function in his honour in 2018, Weitzman said “I’m drawn to things that are conceptually unclear, where it’s not clear how you want to make your way through this maze,” and described how he “took a decisive step in that direction a few decades ago…getting into the forefront rather than…following everything that [...]

• Jason Shafrin’s journal round-up for 7th October 2019
  by Jason Shafrin in The Academic Health Economists' Blog, 2019-10-07 11:00:35 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 . Combined impact of future trends on healthcare utilisation of older people: a Delphi study . Health Policy [ PubMed ] [ RePEc ] Published October 2019 Governments need to plan for the future. This is part [...]

2019-10-06

• An October Update on the 21st Century Cities Initiative at Johns Hopkins
  by Matthew E. Kahn in Environmental and Urban Economics, 2019-10-06 14:16:00 UTC

  The last few weeks have been exciting.� �On Wednesday October 2nd, I gave the Rice Lecture at NYU's Wagner School.�� � I spoke about the urban economics of climate change adaptation.� On Friday, October 4th I spoke at the Federal Reserve of Boston Conference o n the Geographic Divide in the United States.� � I spoke about quality of life inequality in the U.S.� I soon go to Washington DC and Philly to discuss my recent urban economics work.�� Over the last few weeks, I have released two high quality co-authored NBER papers with both related to urban economics issues.� Joe Tracy and I released [...]

2019-10-03

• Durables and Lemons: Private Information and the Market for Cars
  by Christian Zimmermann in NEP-DGE blog, 2019-10-03 23:13:54 UTC

  By Richard Blundell, Ran Gu, Soren Leth-Petersen, Hamish Low and Costas Meghir http://d.repec.org/n?u=RePEc:cwl:cwldpp:2197&r=dge We specify an equilibrium model of car ownership with private information where individuals sell and purchase new and second-hand cars over their life-cycle. Private information induces a transaction cost and distorts the market reducing the value of a car as a savings instrument. We estimate the model using data on car ownership in Denmark, linked to register data. The lemons penalty is estimated to be 18% of the price in the first year of ownership, declining wit [...]

2019-09-30

• 327 – Heterogeneity of farmers
  by David Pannell in Pannell Discussions, 2019-09-30 15:18:22 UTC

  Farmers are highly heterogeneous. Even farmers growing the same crops in the same region are highly variable. This is often not well recognised by policy makers, researchers or extension agents. The variation between farmers occurs on many dimensions. A random sample of farmers will have quite different soils, rainfall, machinery, access to water for irrigation, wealth, access to credit, farm area, social networks, intelligence, education, skills, family size, non-family labour, history of farm management choices, preferences for various outcomes, and so on, and so on. There is variation among [...]

2019-09-29

• The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom
  by Christian Zimmermann in NEP-DGE blog, 2019-09-29 01:05:34 UTC

  By Ben Broadbent, Federico Di Pace, Thomas Drechsel, Richard Harrison and Silvana Tenreyro http://d.repec.org/n?u=RePEc:cfm:wpaper:1916&r=dge” The UK economy has experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. This paper develops and estimates a small open economy model with tradable and non-tradable sectors to characterise these adjustments. We demonstrate that many of the effects of the referendum result can be conceptualised as news about a future slowdown in productivity growth in the tradable sector. Simulations s [...]

2019-09-26

• Malthus se baña en el Pacífico: el misterioso caso de la Isla de Pascua
  by David Cuberes in Nada Es Gratis, 2019-09-26 05:00:25 UTC

  Que los conquistadores jugaron un papel fundamental en el desplome de las poblaciones indígenas de las Américas no es noticia y no debería sorprender a nadie a estas alturas del partido. Sin embargo, la historia nos brinda un episodio en el que la población indígena prácticamente desapareció sin que anduviera cerca ningún colonizador con ansias de grandeza. Se trata de la Isla de Pascua, situada en el Pacifico, lejísimos (a unos 3.500 kilómetros) del país más cercano, Chile. Los estudios arqueológicos de los que disponemos revelan que a esta diminuta isla del tamaño de una cuarta parte de Meno [...]

2019-09-25

• Dynamic Programming with State-Dependent Discounting
  by Christian Zimmermann in NEP-DGE blog, 2019-09-25 22:14:42 UTC

  By John Stachurski and Junnan Zhang http://d.repec.org/n?u=RePEc:arx:papers:1908.08800&r=dge This paper extends the core results of discrete time infinite horizon dynamic programming theory to the case of state-dependent discounting. The traditional constant-discount condition requires that the discount factor of the controller is strictly less than one. Here we replace the constant factor with a discount factor process and require, in essence, that the process is strictly less than one on average in the long run. We prove that, under this condition, the standard optimality results can be reco [...]

• Six methods of unconventional monetary policy
  by Giulia Bellocchio in TVHE, 2019-09-25 20:00:13 UTC

  In a recent response to questions , The Reserve Bank of Australia has listed six options of unconventional monetary policy that is considered in an event of extreme policy implementation. Westpac economists have also talked about potential unconventional monetary policy tools applicable to the NZ case here  – this is worth a read, but is a different list! In this post I would like to outline the RBA’s options and hopefully make them easy to understand. As discussed in my post on uncertainty, investment, and monetary policy we are thinking about “unconventional” actions when the neut [...]

2019-09-24

• The Technology of Tall (Part II): The Need for Speed
  by Jason Barr in Building the skyline, 2019-09-24 12:04:54 UTC

  Jason M. Barr    September 24, 2019 Note this is Part II of an on-going series on the evolution of skyscraper technology. Part I can be read here . The Chicken or the Egg? What came first: building height or elevator speed? The history of skyscrapers brings us to a kind of chicken-and-egg conundrum. Does the drive to build tall come first and then fast elevators come next? Or do rapid elevators show what’s possible and then developers exploit them to go taller? While I don’t think there’s any way to answer this question, we can look at the history of the elevator to get a sense how this co-dep [...]

2019-09-23

• 326 – 60-second videos about our research
  by David Pannell in Pannell Discussions, 2019-09-23 15:50:02 UTC

  My School at the University of Western Australia is having a competition amongst staff and students to produce a 60-second video that says something interesting and engaging about our research. I’ve put in two entries. The first one, about farmer adaptation to climate change, is the fun one. The second one, about water pollution, is more traditional, but I hope it’s still interesting. I’m also included in a third really creative entry that was put together by Maksym Polyakov. Wish us luck. The winner will be announced in December. Further reading Thamo, T., Addai, D., Kragt, M.E., Kingwell, [...]

• The Costs of Inefficient Regulation: The Volcker Rule
  by Kim Schoenholtz in Money, Banking and Financial Markets, 2019-09-23 12:54:49 UTC

  “Regulatory capital and liquidity requirements for market making are a more cost effective method of treating the associated systemic risk. […] Market making risks, and other risks taken by a bank, are unsafe whenever they are large relative to the capital and liquidity of the bank.” Darrell Duffie, “ Market Making Under the Proposed Volcker Rule ,” 2012. By creating a new regime to limit threats to the U.S. financial system—including heightened scrutiny for systemic intermediaries and a new resolution framework—the Dodd-Frank Act (DFA, passed in July 2010) has made the U.S. financial system [...]

2019-09-22

• Exchange Rate Pass-Through: A Competitive Search Approach
  by Christian Zimmermann in NEP-DGE blog, 2019-09-22 22:01:28 UTC

  By Beverly Lapham and Ayman Mnasri http://d.repec.org/n?u=RePEc:qed:wpaper:1418&r=dge We develop an open economy monetary model with heterogeneous households which is characterized by incomplete pass-through of exchange rate movements to import prices. Partial pass-through arises in our environment due to the presence of competitive search in international goods’ markets. Under competitive search, agents choose a sub-market in which to exchange goods, where different sub-markets are characterized by different price and trading probability combinations. Preference and policy shocks which induce [...]

2019-09-20

• L’università che non facilita la carriera delle mamme
  by Giovanni Abbiati e Alessandra Minello in La Voce, 2019-09-20 09:15:00 UTC

  La maternità è il momento più critico nella carriera delle donne e l’accademia non fa eccezione. Abbattere il “muro della maternità” è un obiettivo prioritario nella lotta per le pari opportunità. Le università potrebbero dare il buon esempio con quattro azioni. Le quote non bastano In ambito accademico ha fatto recentemente molto discutere la decisione della Eindhoven University of Technology di istituire “quote” indirizzate esclusivamente a candidate donne nel reclutamento di personale di ricerca a tempo indeterminato. Colmare il gap di genere e riparare precedenti discriminazioni sono i mot [...]

• Are QALYs #ableist?
  by Don Husereau in The Academic Health Economists' Blog, 2019-09-20 06:00:13 UTC

  As many of us who have had to review submitted journal articles, thesis defenses, grant applications, white papers, and even published literature know, providing feedback on something that is poorly conceived is much harder than providing feedback on something well done. This is going to be hard. Who is ValueOurHealth? The video above comes from the website of “ValueOurHealth.org” ; I would tell you more about them, but there is no “About Us” menu item on the website. However, the website indicates that they are a group of patient organizations concerned about: “The use of f [...]

2019-09-19

• Thesis Thursday: Andrea Gabrio
  by Chris Sampson in The Academic Health Economists' Blog, 2019-09-19 06:00:59 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Andrea Gabrio who has a PhD from University College London . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Full Bayesian methods to handle missing data in health economic evaluation Supervisors Gianluca Baio , Alexina Mason , Rachael Hunter Repository link http://discovery.ucl.ac.uk/10072087 What kind of assumptions about missing data are made in trial-based economic evaluations? In any analysis, assumptions [...]

2019-09-18

• Leuropa e Lapace: la parola alla scienza
  by Alberto Bagnai in Goofynomics, 2019-09-18 15:58:00 UTC

  (... mentre a Pontida i fascioleghisti si dedicavano al loro sport preferito, il linciaggio dei martiri della democrazia, dei non violenti , due fascioleghisti, caratterizzati, com'è noto, da un l ivello di istruzione insufficiente , si intrattenevano, scambiando fonemi gutturali accompagnati da un rude linguaggio gestuale, su un tema speculativo, e quindi per ciò stesso fuori dalla loro portata: è scientificamente fondato affermare che Leuropa ci abbia dato Lapace, così come si sente affermare comunemente nei dibattiti? Il riassunto di quella conversazione è nell'email che vi riporto, che uno [...]

• 3 or 7, truth or trust
  by K in Eight to Late, 2019-09-18 10:28:51 UTC

  “It is clear that ethics cannot be articulated.” – Ludwig Wittgenstein Over the last few years I’ve been teaching and refining a series of lecture-workshops on Decision Making Under Uncertainty . Audiences include data scientists and mid-level managers working in corporates and public service agencies. The course is based on the distinction between uncertainties in which the variables are known and can be quantified versus those in which the variables are not known upfront and/or are hard to quantify. Before going any further, it is worth explaining the distinction via a couple of examples: An [...]

2019-09-17

• El ciclo, el boom y el parón inmobiliario
  by Antonia Díaz in Nada Es Gratis, 2019-09-17 05:07:21 UTC

  de Antonia Díaz y Luis Puch Hasta la llegada de la crisis económica de 2008-2013 , uno de los consensos básicos entre los estudiosos del ciclo económico era que las fluctuaciones del PIB de la economía española presentaban una amplitud menor que las de otras economías desarrolladas. Esto se debía a que la balanza comercial era fuertemente contracíclica: los españoles, en conjunto, nos endeudamos en el exterior en épocas de vacas gordas y ahorramos en épocas de vacas flacas. Este comportamiento de la balanza comercial puede parecer contraintuitivo (deberíamos ahorrar en época de vacas gordas pa [...]

2019-09-16

• 325 – Ranking projects based on cost-effectiveness
  by David Pannell in Pannell Discussions, 2019-09-16 15:45:42 UTC

  Where organisations are unable or unwilling to quantify project benefits in monetary or monetary-equivalent terms, a common approach is to rank potential projects on the basis of cost-effectiveness. Just like ranking projects based on Benefit: Cost Ratio (BCR), this approach works in some cases but not others. To rank projects based on cost-effectiveness, you choose the metric you will use to measure project benefits, estimate that metric for each project, estimate the cost of each project, and divide the benefit metric by the cost. You end up with a cost-effectiveness number for each potentia [...]

• Should Students Borrow?
  by Kim Schoenholtz in Money, Banking and Financial Markets, 2019-09-16 12:30:13 UTC

  “ [Secretary of Education Betsy] DeVos issued the final repeal of an Obama-era rule aimed at holding low-quality education programs accountable by forcing them to prove their graduates were able to repay their student debt .” CNBC, July 1, 2019. As summer ends, 17 million students head to college. Nearly 40 percent are borrowing to do it. Over the past 15 years, the number of people with student loans nearly doubled and now stands at roughly 45 million―that’s about one in four adult Americans. Furthermore, the amount of debt has virtually tripled to just over $1.5 trillion, so the average loan [...]

• The Art of Winning a Peace Agreement: The Case of the FARC
  by ? in Political Violence at a Glance, 2019-09-16 12:00:53 UTC

  Guest post by Sally Sharif and Dayron Yegrail. Sunrise over mountains in Colombia. Photo via Magalie L’Abbé. Colombia’s peace agreement with the Revolutionary Armed Forces of Colombia—People’s Army (FARC-EP) was widely hailed as a diplomatic triumph. [...]

• David Mott’s journal round-up for 16th September 2019
  by David Mott in The Academic Health Economists' Blog, 2019-09-16 11:00:00 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 . Opening the ‘black box’: an overview of methods to investigate the decision‑making process in choice‑based surveys . The Patient [ PubMed ] Published 5th September 2019 Choice-based surveys using methods [...]

• Does Hollywood have a gender pay gap problem?
  by ? in Forum:Blog, 2019-09-16 10:42:09 UTC

  New research has highlighted the extent of the gender pay gap in Hollywood. [...]

2019-09-12

• Korruption och ekonomisk tillväxt
  by Niclas Berggren in Nonicoclolasos, 2019-09-12 04:40:16 UTC

  Sverige är relativt okorrumperat (även om vissa hävdar att det finns mer korruption än många tror). Andra länder är mer utsatta. Här illustreras den upplevda korruptionen i olika länder, enligt Transparency Internationals undersökning: Vilka är då de ekonomiska konsekvenserna av korruption? Det finns det som menar att korruptionen kan vara positiv för den ekonomiska utvecklingen om den undanröjer olika effektivitetssänkande hinder för investeringar. De flesta har dock funnit negativa effekter. En ny studie, ”Corruption and Economic Growth: New Empirical Evidence” , hävdar att tidigare studier [...]

2019-09-09

• Academic Health Economist’s Blog: Journal Round Up
  by Jason Shafrin in Healthcare Economist, 2019-09-09 21:01:11 UTC

  I hosted this week’s Academic Health Economist (AHE) blog journal round-up . Below is one of the papers reviewed, but do check-out the full article here . Price effects of a hospital merger: heterogeneity across health insurers, hospital products, and hospital locations . Health Economics [ PubMed ] [ RePEc ]  Published 1st July 2019 Most economics literature indicates that hospital mergers typically result in higher prices. But what does higher prices mean? Does it mean higher prices for all services? Higher prices for all health insurers? Many economic models assume that hospitals char [...]

• Jason Shafrin’s journal round-up for 9th September 2019
  by Jason Shafrin in The Academic Health Economists' Blog, 2019-09-09 11:00:23 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 . Price effects of a hospital merger: heterogeneity across health insurers, hospital products, and hospital locations . Health Economics [ PubMed ] [ RePEc ] Published 1st July 2019 Most economics literatur [...]

2019-09-08

• On Tory paradoxes
  by chris in Stumbling and Mumbling, 2019-09-08 12:58:39 UTC

  There are two great paradoxes about the Tory party. Paradox one is that whilst neoliberalism has triumphed, the Tories have lost their intellectual hegemony. Matthew Parris says Johnson is a symptom not a cause of the Tory meltdown. That echoes James Butler’s claim that “the Conservative Party is in a process of ideological decline” and Stian Westlake’s that the Tories “ have stopped talking and thinking about economics.” This week, 82 academics wrote to the FT defending Labour’s economic policies. It is difficult to imagine a similarly large and eminent group defending Tory policies. The Tori [...]

2019-09-03

• The Value of Dirt: Introducing the Astor Index
  by Jason Barr in Building the skyline, 2019-09-03 12:08:02 UTC

  Jason M. Barr         September 3, 2019 Astor’s Vision On his deathbed in 1848, John Jacob Astor—America’s first millionaire—reportedly quipped , “Could I begin life again, knowing what I now know, and had money to invest, I would buy every foot of land on the Island of Manhattan.” Astor came to America from Germany in 1783 with nothing but a few flutes to sell. He soon dived into the fur trade and other trading ventures. With his profits, he turned, in the second half of his life, to investing in land.  Astor is remembered an incredible visionary, since he was able to foresee the rise of Manh [...]

2019-09-01

• Credit, Default, and Optimal Health Insurance
  by Christian Zimmermann in NEP-DGE blog, 2019-09-01 22:14:59 UTC

  By Youngsoo Jang http://d.repec.org/n?u=RePEc:pra:mprapa:95397&r=dge How do defaults and bankruptcies affect optimal health insurance policy? I answer this question using a life-cycle model of health investment with the option to default on emergency room (ER) bills and financial debts. I calibrate the model for the U.S. economy and compare the optimal health insurance in the baseline economy with that in an economy with no option to default. With no option to default, the optimal health insurance is similar to the health insurance system in the baseline economy. In contrast, with the option t [...]

• Back to School Reading
  by Dave Giles in Econometrics Beat: Dave Giles' Blog, 2019-09-01 13:40:00 UTC

  Here we are - it's Labo(u)r Day weekend already in North America, and we all know what that means! It's back to school time. You'll need a reading list, so here are some suggestions: Frances, Ph. H. B. F. , 2019. Professional forecasters and January. Econometric Institute Research Papers EI2019-25, Erasmus University Rotterdam. Harvey, A. & R. Ito , 2019. Modeling time series when some observations are zero. Journal of Econometrics , in press. Leamer, E. E. , 1978.  Specification Searches: Ad Hoc Inference With Nonexperimental Data. Wiley, New York. (This is a legitimate free download.) MacKin [...]

2019-08-30

• The Marriage Market, Inequality and the Progressivity of the Income Tax
  by Christian Zimmermann in NEP-DGE blog, 2019-08-30 21:23:05 UTC

  By Tim Obermeier http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_109&r=dge This paper studies how the progressivity of the income tax affects intra-household inequality and the marriage market. Tax progressivity increases the after-tax earnings of the lower earning spouse and improves their bargaining position in marriage. This mechanism reduces inequality in consumption and leisure within households. In addition, tax progressivity can change who is single and who marries whom. I study these effects in an equilibrium search and matching model with intra-household bargaining, labor supply [...]

2019-08-28

• Austerity in the Aftermath of the Great Recession
  by Christian Zimmermann in NEP-DGE blog, 2019-08-28 20:52:59 UTC

  By Christopher House, Christian Proebsting and Linda Tesar http://d.repec.org/n?u=RePEc:mie:wpaper:672&r=dge Cross-country differences in austerity, defined as government purchases below forecast, account for 75 percent of the observed cross-sectional variation in GDP in advanced economies during 2010-2014. Statistically, austerity is associated with lower GDP, lower inflation and higher net exports. A multi-country DSGE model calibrated to 29 advanced economies generates effects of austerity consistent with the data. Counterfactuals suggest that eliminating austerity would have substantially [...]

2019-08-27

• On money printing and bond issuance – Part 2
  by bill in Bill Mitchell - billy blog, 2019-08-27 01:47:09 UTC

  This is Part 2 (and final part) of my series on printing money, debt and power. The two-part series is designed to draw a line through all the misconceptions and errors that abound on the Internet about the Modern Monetary Theory (MMT) treats deficit spending and bond issuance. The social media debate about MMT is at time nonsensical, thriving on falsehoods and fantasy. I get many E-mails after some robust Twitter exchange between some self-proclaimed expert who has found the latest fatal flaw in our work. Often these characters have just stumbled across MMT for the first time and, full of dis [...]

2019-08-26

• Replacing LIBOR
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-08-26 12:22:06 UTC

  “ Come on feet don’t fail me now.” Edwin Starr et al, Twenty-Five Miles “[R]egardless of how you choose to transition, beginning that transition now would be consistent with prudent risk management and the duty that you owe your shareholders and clients.” FRB Vice Chair for Supervision Randal K. Quarles, Speech to the ARRC Roundtable at NYU Stern , June 3, 2019. Publication of LIBOR―the London Interbank Offered Rate―will likely cease at the end of 2021. This is the message U.K. Financial Conduct Authority (FCA) CEO Andrew Bailey sent in 2017 when he announced that, after 2021, the FCA would no [...]

• Rita Faria’s journal round-up for 26th August 2019
  by Rita Faria in The Academic Health Economists' Blog, 2019-08-26 11:00:18 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 . Vaccine hesitancy and (fake) news: quasi‐experimental evidence from Italy . Health Economics [ PubMed ] [ RePEc ] Published 20th August 2019 Has fake news led to fewer children being vaccinated? At least [...]

2019-08-24

• Bonus quotation of the day on how Asians disrupt and undermine the narrative of white privilege…. - Publications – AEI
  by Mark Perry in Carpe Diem, 2019-08-24 19:45:06 UTC

  AEI Bonus quotation of the day on how Asians disrupt and undermine the narrative of white privilege…. …. is from Vincent Harinam and Rob Henderson’s article in Quillette “ Why White Privilege Is Wrong—Part 1 “: What gives white privilege a patina of empirical credibility are its statistical comparisons between blacks and whites. However, these statistics are often decontextualized, omitting base rates and key group comparators. As Thomas Sowell points out, “The mere omission of one crucial fact can turn accurate statistics into traps that lead to conclusions that would be demonstrably false if [...]

• International Welfare Spillovers of National Pension Schemes
  by Christian Zimmermann in NEP-DGE blog, 2019-08-24 02:56:45 UTC

  By James and Olena Staveley-O’Carroll http://d.repec.org/n?u=RePEc:hcx:wpaper:1903&r=dge We employ a two-country overlapping-generations model to explore the international dimension of household portfolio choices induced by the asymmetric provision of government-run pensions. We study the resulting patterns of risk-sharing and the corresponding welfare effects on both home and foreign agents. Introducing the defined benefits pay-as-you-go system at home increases the welfare of all other agents at the expense of the home workers and improves the degree of intergenerational risk sharing abroad [...]

2019-08-23

• Government and central bank coordination in a low inflation world
  by Giulia Bellocchio in TVHE, 2019-08-23 20:17:54 UTC

  In my previous posts on the liquidity trap and about US Treasury bond purchases I have mentioned that central banks and governments should coordinate their policies as a part of unconventional monetary policy when the interest rates are near the zero lower bound and inflation is persistently low. However, there are costs and benefits associated with any coordination game. The benchmark coordination model and the restricted version of it are well described in English, Erceg, Lopez-Salido 2017 .  Here stimulus is given through a money-financed program, where the Treasury increases government sp [...]

2019-08-22

• Wages and Hours Laws: What Do We Know? What Can Be Done?
  by maximorossi in NEP-LTV blog, 2019-08-22 20:32:33 UTC

  By: Charles C. Brown ;  Daniel S. Hamermesh Abstract: We summarize recent research on the wage and employment effects of minimum wage laws in the U.S. and infer from non-U.S. studies of hours laws the likely effects of unchanging U.S. hours laws. Minimum wages in the U.S. have increasingly become a province of state governments, with the effective minimum wage now closely related to a state’s wage near the lower end of its wage distribution. Original estimates demonstrate how the 45-year failure to increase the exempt earnings level for salaried workers under U.S. hours laws has raised h [...]

• Wages, Experience and Training of Women over the Lifecycle
  by maximorossi in NEP-LTV blog, 2019-08-22 20:31:55 UTC

  By: Richard Blundell  (University College London);  Monica Costa Dias  (Institute for Fiscal Studies, Centre for Economics and Finance);  David Goll  (University College London);  Costas Meghir  (Yale University) Abstract: We investigate the role of training in reducing the gender wage gap using the UK-BHPS which contains detailed records of training. Using policy changes over an 18 year period we identify the impact of training and work experience on wages, earnings and employment. Based on a lifecycle model and using reforms as a source of exogenous variation we evaluate the role of fo [...]

• The welfare implications of addictive substances: a longitudinal study of life satisfaction of drug users
  by maximorossi in NEP-LTV blog, 2019-08-22 20:30:57 UTC

  By: Moschion, Julie ;  Powdthavee, Nattavudh Abstract: This paper provides an empirical test of the rational addiction model, used in economics to model individuals’ consumption of addictive substances, versus the utility misprediction model, used in psychology to explain the discrepancy between people’s decision and their subsequent experiences. By exploiting a unique data set of disadvantaged Australians, we provide longitudinal evidence that a drop in life satisfaction tends to precede the use of illegal/street drugs. We also find that the abuse of alcohol, the daily use of cannabis a [...]

• Commuting, Migration and Local Joblessness
  by maximorossi in NEP-LTV blog, 2019-08-22 20:29:10 UTC

  By: Michael Amior ;  Alan Manning Abstract: Britain suffers from persistent spatial disparities in employment rates. This paper develops an integrated framework for analyzing two forces expected to equalize economic opportunity across areas: commuting and migration. Our framework is applicable to any level of spatial aggregation, and we use it to assess their contribution to labor market adjustment across British wards (or neighborhoods). Commuting offers only limited insurance against local shocks, because commutes are typically short and shocks are heavily correlated spatially. Analogo [...]

• The Measurement of Health Inequalities: Does Status Matter?
  by maximorossi in NEP-LTV blog, 2019-08-22 20:27:34 UTC

  By: Costa-Font, Joan  (London School of Economics);  Cowell, Frank A.  (London School of Economics) Abstract: Approaches to measuring health inequalities are often problematic in that they use methods that are inappropriate for categorical data. The approach here focuses on “pure” or univariate health inequality (rather than income-related or bivariate health inequality) and is based on a concept of individual status that allows a consistent treatment of such data. We use several versions of the status concept and apply methods for treating categorical data to examine self-assessed healt [...]

• Discrimination in Hiring Based on Potential and Realized Fertility: Evidence from a Large-Scale Field Experiment
  by maximorossi in NEP-LTV blog, 2019-08-22 20:26:16 UTC

  By: Sascha O. Becker ;  Ana Fernandes ;  Doris Weichselbaumer Abstract: Due to conventional gender norms, women are more likely to be in charge of childcare than men. From an employer’s perspective, in their fertile age they are also at “risk” of pregnancy. Both factors potentially affect hiring practices of firms. We conduct a large-scale correspondence test in Germany, Switzerland, and Austria, sending out approx. 9,000 job applications, varying job candidate’s personal characteristics such as marital status and age of children. We find evidence that, for part-time jobs, married women [...]

• Education Quality and Teaching Practices
  by maximorossi in NEP-LTV blog, 2019-08-22 20:24:27 UTC

  By: Marina Bassi  (World Bank);  Costas Meghir  (Cowles Foundation, Yale University, NBER, IZA, CEPR, and Institute for Fiscal Studies);  Ana Reynoso  (Department of Economics, University of Michigan) Abstract: Improving school quality with limited resources is a key issue of policy. It has been suggested that instructing teachers to follow specific practices together with tight monitoring of their activities may help improve outcomes in under-performing schools that usually serve poor populations. This paper uses an RCT to estimate the e?ectiveness of guided instruction methods as imple [...]

2019-08-21

• Smart consumers. stupid voters
  by chris in Stumbling and Mumbling, 2019-08-21 13:02:52 UTC

  What do ordinary folk know about economics? This question has been revived by Simon, who argues that support for a no-deal Brexit is based upon “information failure” caused by our biased and inadequate media. This is in a similar spirit to Jason Brennan and Bryan Caplan , who argue in different ways that voters are irrational and/or misinformed. My chart offers a corrective to this view. It shows that the ratio of retail sales to share prices has been a fantastic predictor of equity returns since the current vintage of retail sales data began in 1996. The correlation between the ratio of retai [...]

2019-08-20

• Ramsey Tax Competition with Real Exchange Rate Determination
  by Christian Zimmermann in NEP-DGE blog, 2019-08-20 15:32:37 UTC

  By Paul Gomme http://d.repec.org/n?u=RePEc:crd:wpaper:19004&r=dge How should governments choose tax rates when they face competition from other jurisdictions? This questions is answered by solving for the Nash equilibrium of the game played between Ramsey planners in a two good, two country open economy macroeconomic model. It is shown, analytically, that the planers do not tax capital income in the long run. Short term results, obtained computationally, reveal that the government of the larger country manages the path of the real exchange rate in order to manipulates its smaller rival’s choic [...]

• Should the African lion learn from the Asian tigers? A comparison of FDI-oriented industrial policy in Ethiopia, South Korea and Taiwan
  by Jostein Hauge in Development Economics, 2019-08-20 11:00:05 UTC

  The Huajian shoe factory in the Eastern Industrial Zone in Ethiopia. Photo: UNIDO . Ethiopia is being hailed as one of the most successful growth stories in Africa. Because of the country’s rapid economic growth, the high degree of state intervention in the economy, and the state’s focus on industrialization, people have started to compare Ethiopia to the Asian ‘tigers’ ( Aglionby, 2017 ; Clapham, 2018 ; De Waal, 2013 , Hauge and Chang, 2019 ; Oqubay, 2015 ) — four countries in East Asia (Hong Kong, Singapore, South Korea and Taiwan) that underwent rapid industrialization and maintained except [...]

• Why did the UK become a failed state?
  by Mainly Macro in Mainly Macro, 2019-08-20 08:28:00 UTC

  ‘I should be the leader of a government of national unity’. ‘No you shouldn’t, someone else should’. I’m afraid if you were hoping I would write about this nonsense you will be disappointed. It seems to me right now nothing more than just another way for those who really dislike Corbyn to attack him and those who support Labour to attack everyone else. Rebel Tories will be hoping a crash out Brexit can be stopped another way, and if that fails or in the unlikely event that Johnson ignores parliament, who has the relatively unimportant job of leading a caretaker government will be decided days [...]

2019-08-19

• 321 – Communicating economics to policy makers
  by David Pannell in Pannell Discussions, 2019-08-19 15:47:19 UTC

  When it comes to communicating research results to policy makers, economists have some advantages over other disciplines. But economists commonly make a range of mistakes when trying to communicate to policy makers. Included amongst the advantages that economists have are that economics can be used to clarify the pro’s and cons of different decision options, and this is exactly what policy makers need in many cases. Secondly, a good economic analysis is holistic, bringing together all, or at least most, of the relevant elements, including social, biological, physical, financial, behavioural el [...]

• Chris Sampson’s journal round-up for 19th August 2019
  by Chris Sampson in The Academic Health Economists' Blog, 2019-08-19 11:00:02 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 . Paying for kidneys? A randomized survey and choice experiment . American Economic Review [ RePEc ] Published August 2019 This paper starts with a quote from Alvin Roth about ‘repugnant transactions’, of w [...]

2019-08-16

• Rethinking capital regulation: the case for a dividend prudential target
  by Christian Zimmermann in NEP-DGE blog, 2019-08-16 03:24:39 UTC

  By Manuel Muñoz http://d.repec.org/n?u=RePEc:srk:srkwps:201997&r=dge The paper investigates the effectiveness of dividend-based macroprudential rules in complementing capital requirements to promote bank soundness and sustained lending over the cycle. First, some evidence on bank dividends and earnings in the euro area is presented. When shocks hit their profits, banks adjust retained earnings to smooth dividends. This generates bank equity and credit supply volatility. Then, a DSGE model with key financial frictions and a banking sector is developed to assess the virtues of what shall be call [...]

2019-08-15

• Thesis Thursday: Elizabeth Lemmon
  by Chris Sampson in The Academic Health Economists' Blog, 2019-08-15 06:00:18 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Elizabeth Lemmon who has a PhD from the University of Stirling . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch . Title Essays on the provision of long term care to older adults in Scotland Supervisors David Bell , Alasdair Rutherford Repository link http://hdl.handle.net/1893/29369 What long term care provision is available to older people in Scotland? Long term care (LTC) in Scotland comprises both formal care and [...]

2019-08-13

• No, Wages Are Not Rising Because of Minimum Wage Laws
  by Adam Michel in The Foundry, 2019-08-13 15:32:38 UTC

  Before lawmakers left for August recess, the Democrat-controlled House voted to raise the federal minimum wage to $15 an hour. Such a move would backfire in a major way if passed into law. It would hurt lower-skilled individuals the most, including teenagers, immigrants, and those without a high school degree. And women, who hold more low-wage jobs than men, would be hurt the most, accounting for more than 60% of the resulting lay-offs. The push for new wage mandates comes at a puzzling time: We are in the midst of a record economic expansion in which workers in lower-wage jobs are see [...]

2019-08-12

• 320 – Fixed costs and input rates
  by David Pannell in Pannell Discussions, 2019-08-12 15:41:12 UTC

  Optimal input rates (e.g. of fertilizer to a crop) are not affected by fixed costs. I had an interesting discussion with a Canadian poultry farmer last month, who needed to be convinced of this fact. In Canada last month I gave a seminar at the Ontario Ministry of Agriculture, Food and Rural Affairs on water pollution from agricultural fertilizers, and how an understanding of the economics of fertilizer application can help identify cost-effective policy strategies for reducing pollution. One thing I talked about was the economics of applying too much fertilizer (more than would be in the farm [...]

• Chris Sampson’s journal round-up for 12th August 2019
  by Chris Sampson in The Academic Health Economists' Blog, 2019-08-12 11:00:31 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 . Developing open-source models for the US health system: practical experiences and challenges to date with the Open-Source Value Project . PharmacoEconomics [ PubMed ] Published 7th August 2019 PharmacoEco [...]

2019-08-09

• The Currency Manipulation Game
  by Jeffrey Frankel in Project Syndicate, 2019-08-09 15:15:43 UTC

  CAMBRIDGE – The trade war between the United States and China is heating up again, with US President Donald Trump abruptly announcing plans to impose a 10% tariff on the $300 billion worth of imports from China that he had so far left untouched. The Chinese authorities then allowed their currency, the renminbi, to fall below the symbolic threshold of CN¥7 per US dollar. The Trump administration promptly responded by naming China a “currency manipulator” – the first time the US had done that to any country in 25 years. Pundits declared a currency war, and investors immediately sent global stock [...]

2019-08-08

• Capital’s gain is lately labour’s loss : The global decline in the labour share of income
  by ? in FRED blog, 2019-08-08 13:00:19 UTC

  The GDP of a country reflects, among other things, the total payments to all factors of production. For a long time, the share of payments to labour* relative to total payments to all factors of production was relatively stable. In recent decades, the share of payments to labour has been trending down in many countries, which FRED can help us illustrate. The first graph shows that the share of labour compensation in GDP has been declining for several countries around the world. In the U.S., this share has declined by 5% between 1975 and 2017. The decline in other countries is even greater, wi [...]

2019-08-07

• Is there really a global decline in the (non-housing) labour share?
  by BankUnderground in Bank Underground, 2019-08-07 08:00:00 UTC

  Germán Gutiérrez and Sophie Piton Much has been written on the global decline of the corporate labour share (defined as the share of corporate value added going to wages, salaries and benefits). The IMF and OECD worry about this trend, linking it to decreasing wages and rising inequality. And economists are hard at work looking for an explanation: prominent hypotheses range from automation and ‘superstar’ firms to offshoring. But is there really a global decline in the non-housing/business labour share? Not if you properly exclude housing income and account for self-employment, as desc [...]

2019-08-06

• The Bedrock Myth and the Rise of Midtown Manhattan (Part II)
  by Jason Barr in Building the skyline, 2019-08-06 12:31:54 UTC

  Jason M. Barr         August 6, 2019 Note: This two-part series is adapted from chapters seven and eight of my book, Building the Skyline: The Birth and Growth of Manhattan’s Skyscrapers (OUP, 2016), which is based on research ( here and here ) performed with Troy Tassier of Fordham University. The Bedrock Myth An aerial view of Manhattan reveals the shape of its curious skyline: a cluster of skyscrapers Downtown and another one in Midtown, but few in between. The conventional wisdom is that skyscraper developers gravitated to these areas because access to bedrock near the surface made it easi [...]

2019-08-05

• 319 – Reducing water pollution from agricultural fertilizers
  by David Pannell in Pannell Discussions, 2019-08-05 15:18:43 UTC

  I gave a talk to the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) on July 16, 2019, exploring ways to reduce water pollution from agricultural fertilizers. Many methods have been proposed to reduce water pollution from agricultural fertilizers. The list includes use of nitrification inhibitors, land retirement, vegetation buffer strips along waterways, flood-plain restoration, constructed wetlands, bioreactors, cover crops, zero till and getting farmers to reduce their fertilizer application rates. Last year, while I was at the University of Minnesota for several months, I [...]

• Just say no to exchange rate intervention
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-08-05 12:19:24 UTC

  “ Just in the past week, we had a meeting with the president and the economic principals and we had ruled out any currency intervention ,” White House economic adviser Larry Kudlow , CNBC, July 26, 2019. “I could do that in two seconds if I want to. I didn’t say I’m not going to do something.” President Donald J. Trump, Washington Post , July 26, 2019 Whenever possible, policymakers should explore a broad set of options before responding to challenges they face. However, when the President and his advisers recently discussed foreign currency intervention, we hope everyone quickly concluded th [...]

• Chris Sampson’s journal round-up for 5th August 2019
  by Chris Sampson in The Academic Health Economists' Blog, 2019-08-05 11:00:57 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 . The barriers and facilitators to model replication within health economics . Value in Health Published 16th July 2019 Replication is a valuable part of the scientific process, especially if there are unce [...]

2019-08-04

• Real consequences of open market operations: the role of limited commitment
  by Christian Zimmermann in NEP-DGE blog, 2019-08-04 13:31:07 UTC

  By Francesco Carli and Pedro Gomis Porqueras http://d.repec.org/n?u=RePEc:pra:mprapa:94088&r=dge We study how limited commitment in credit markets affects the implementation of open market operations and characterize when they result in real indeterminacies and when they have real effects. To do so, we consider a frictional and incomplete market framework where agents face stochastic trading opportunities and limited commitment in some markets. When limited commitment does not constraint agents’ choices, we find necessary and sufficient conditions for the existence of a unique monetary equilib [...]

2019-08-03

• Trump, Kushner and Netanyahu are hellbent on destroying the two-state solution , Analysis
  by ? in Noozilla Top, 2019-08-03 15:35:03 UTC

  By Beth Oppenheim and Luigi Scazzieri This week, Donald Trump’s son-in-law Jared Kushner and his team have been touring the Middle East to push his new $50bn economic plan, unveiled in Bahrain last month. The proposals aim to open the West Bank... Topics: [...]

2019-08-01

• Är miljardförmögenheter ett problem?
  by Niclas Berggren in Nonicoclolasos, 2019-08-01 04:18:58 UTC

  Inte minst sedan Thomas Piketty publicerade Kapitalet i tjugoförsta århundradet har en intensiv debatt föregått i många länder om hur en liten andel av befolkningen har lyckats bli väldigt rik på senare år. Ofta framställs detta som mycket problematiskt. Frågan är vilka kriterier man ska använda för att utvärdera detta. Ett möjligt kriterium är lycka. I ”Billionaires, Millionaires, Inequality and Happiness” , som huvudsakligen rapporterar att antal korrelationer, återfinns följande figur: Tankeväckande. Det är självfallet inte härigenom på något sätt belagt att den förmögenhet som dollarmilja [...]

2019-07-31

• Misunderstanding the average impact of microcredit?
  by milfordbateman in Development Economics, 2019-07-31 10:30:21 UTC

  Photo: Peter Haden . Microfinance center leaders tally the week’s loan payments in India. By  Milford Bateman  and Maren Duvendack A recent article on the “ average impact of microcredit ” by Dr. Rachel Meager (LSE) has received much praise over the past few weeks. Meager deploys Bayesian hierarchical modelling to provide a new take on the argument in favour of a reformed system of microcredit. Her work builds on the data provided by six randomized control trials (RCTs) conducted by Abhijit Banerjee and colleagues (see Banerjee, Karlan and Zinman , 2015 ). Meager makes an attempt to exculpate [...]

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