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2020-02-24

• The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence
  by Christian Zimmermann in NEP-DGE blog, 2020-02-24 21:23:51 UTC

  By Christopher Adam and Edward Buffie http://d.repec.org/n?u=RePEc:imf:imfwpa:20/23&r=dge We show that a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation in both the formal and (non-agricultural) informal sectors can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries. I am actually surprised that minimum wage laws have any bite in countries where the informal sector is substantial and easy to access. [...]

• A house divided against itself cannot stand : Explaining the composition effect in housing prices
  by ? in FRED blog, 2020-02-24 14:00:00 UTC

  Our recent post on women in the workforce included a lyric from Dolly Parton and an explanation of the composition effect . Here’s the formal definition: “The part of the observed between-group difference in the distribution of some economic outcome that can be explained by differences in the distribution of covariates.” That’s a doozy of a definition, so let’s use a picture that’s worth 1,000 words to explain it… The graph shows the year-to-year growth rate of average home prices in the United States (blue bars) and in its 20 largest metropolitan areas (red bars). The blue bars and red bars [...]

• Monetary Policy in the Next Recession?
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-02-24 13:58:30 UTC

  “…the new tools have been quite effective, providing substantial additional scope for monetary policy despite the lower bound for short-term interest rates.” Ben Bernanke, “ The New Tools of Monetary Policy ,” AEA Presidential Address, January 4, 2020. In many advanced countries, lowering the policy rate to zero will be insufficient to counter the next recession. In the United States, for example, with the target range for the federal funds rate at 1½ to 1¾ percent, there is little scope for the nearly 5 percentage-point easing that is typical in recent recessions  (see, for example, Kiley ). [...]

• Uppfattningar om invandringens storlek pÃ¥verkar röstandet
  by Niclas Berggren in Nonicoclolasos, 2020-02-24 05:03:08 UTC

  Det verkar finnas stöd i forskningen för att faktisk invandring påverkar hur väljare röstar; se t.ex. studien ”Invandring och väljarstödet för Sverigedemokraterna – lärdomar från flyktingkrisen 2015” . Nå, faktisk invandring är en sak – men kan det även vara så att uppfattad invandring påverkar väljarnas beteende? Ja, enligt den nya italienska studien ”Perceived Immigration and Voting Behavior” : Our results show that the increase in perceived exposure to arrivals significantly predicts the negative trend in turnout that Italian municipalities experienced in the last years. It also explains th [...]

2020-02-18

• Monetary Policy and Wealth Effects
  by Christian Zimmermann in NEP-DGE blog, 2020-02-18 14:56:48 UTC

  By Nicolas Caramp and Dejanir Silva http://d.repec.org/n?u=RePEc:cda:wpaper:337&r=dge This paper studies the role of wealth effects in the monetary transmission mechanism in New Keynesian models. We propose a decomposition of consumption that extends the Slutsky equation to a general equilibrium setting. Wealth effects, and their amplification in general equilibrium, explain a large fraction of the consumption and inflation response to changes in nominal interest rates in the standard equilibrium. In RANK, wealth effects are determined, generically, by the revaluation of public debt and the fi [...]

2020-02-17

• Some Unpleasant Gold Bug Arithmetic
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-02-17 13:22:19 UTC

  Most people care far more about the prices of things they purchase—food, housing, health care, and the like—than the price of gold. Not coincidentally, professional economists display a remarkably explicit consensus against forcing the central bank to adopt a policy that fixes the price of gold. Yet, there are still powerful people who think that the United States would benefit if the central bank’s sole purpose were to restore a gold standard. Senators Rand Paul and Ted Cruz are supporters, as is West Virginia Representative Alexander Rooney, who recently proposed legislation to “ define the [...]

2020-02-15

• Una lotería como experimento natural: performance escolar y Fe y Alegría
  by Pablo Lavado, Santiago Cueto, Gustavo Yamada y Micaela Wensjoe in Foco Económico, 2020-02-15 15:55:42 UTC

  Las colaboraciones entre el sector público y el sector privado están teniendo un rol cada vez más importante en la búsqueda de objetivos de política pública. De hecho, vemos ejemplos en el sector educativo en países en países en desarrollo (Angrist, Bettinger, Bloom, King y Kremer, 2002). Recientemente estudiamos uno de esos casos de colaboración: Fe y Alegría ( https://ideas.repec.org/p/iza/izadps/dp10431.html . ) El objetivo de nuestro estudio es estimar el impacto de Fe y Alegría sobre el aprendizaje de niños y niñas de bajos ingresos. Fe y Alegría es una entidad religiosa cuyo modelo se ba [...]

2020-02-12

• Desertores y rezagados en educación superior: ¿quién podrá defenderlos?
  by Sandra Garcia Jaramillo in Foco Económico, 2020-02-12 20:48:42 UTC

  En 2014 el gobierno nacional lanzó el programa Ser Pilo Paga con el fin de ampliar el acceso a educación superior de alta calidad a jóvenes que provienen de hogares económicamente vulnerables. Cerca de seis años después de iniciado el programa, la evidencia sugiere que el impacto ha sido positivo y grande: Londoño et al. (2017) mostraron que SPP duplicó la probabilidad de ingreso a educación superior entre jóvenes elegibles (ver resumen acá ).   Más aún, la probabilidad de ingresar a una institución de educación superior de alta calidad aumentó en 182% para los jóvenes “pilos” de familias de e [...]

• Housing Booms and the U.S. Productivity Puzzle
  by Christian Zimmermann in NEP-DGE blog, 2020-02-12 19:52:35 UTC

  By Jose Carreno http://d.repec.org/n?u=RePEc:cen:wpaper:20-4&r=dge The United States has been experiencing a slowdown in productivity growth for more than a decade. I exploit geographic variation across U.S. Metropolitan Statistical Areas (MSAs) to investigate the link between the 2006-2012 decline in house prices (the housing bust) and the productivity slowdown. Instrumental variable estimates support a causal relationship between the housing bust and the productivity slowdown. The results imply that one standard deviation decline in house prices translates into an increment of the productivi [...]

• Wer hat, der erbt?
  by Marius Brülhart in BATZ.ch, 2020-02-12 07:56:05 UTC

  Marius Brülhart In der Schweiz wird doppelt so viel Geld über Erbschaften und Schenkungen umverteilt wie durch die AHV: Geschätzten 95 Erbschafts-Milliarden stehen 46 Milliarden an ausbezahlten AHV-Renten gegenüber. Während die AHV explizit darauf abzielt, Einkommensunterschiede zu reduzieren, werden Erbschaften gemeinhin als Treiber zunehmender wirtschaftlicher Ungleichheiten betrachtet. So sahen die Autoren der eidgenössischen Erbschaftssteuervorlage von 2015 ihre Idee als „ Gegensteuer “ zu einer immer ungleicheren Verteilung der Vermögen. Könnte es sein, dass die Initianten nicht nur mit i [...]

2020-02-10

• The Challenge of Child Malnutrition for Venezuela’s Future
  by Ignacio Jesús Sánchez Urdaneta in Caracas Chronicles, 2020-02-10 22:06:33 UTC

  Photo by: Rayner Peña. We’ve all heard, at least once, the scream of the gut echoing on an empty stomach, a thunder of hunger that breaks the silence of the closed mouth. For most of our readers, the roar is due to harmless neglect: skipping lunchtime to finish a project, or getting up late and not having time for breakfast. For 56.9% of children surveyed by NGO Caritas Venezuela in 2018, though, that thunder means a storm — up to the point where the cheap mango sold on the street (or even hanging on trees) is now dubbed the “stomach silencer”. Carita’s report confirms and expands on what the [...]

• Has P2P lending already hit the wall?
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-02-10 13:38:59 UTC

  “[I]f the market is competitive, there are two possibilities. The market may reach a stable equilibrium in which individuals are all rationed in the amount they can borrow, this ration being so severe that no one defaults. Alternatively, the market may oscillate in an unstable fashion, lenders entering and making short-run profits, but in the long run being forced to leave.” Dwight M. Jaffee and Thomas Russell, “Imperfect Information, Uncertainty, and Credit Rationing,” Quarterly Journal of Economics , Nov. 1976. The two biggest U.S. P2P lenders , Prosper and Lending Club, started operations i [...]

• Skyscraper Bottlenecks (Part I): The Elevator
  by Jason Barr in Skynomics Blog, 2020-02-10 13:28:15 UTC

  Jason M. Barr                 February 10, 2020 Note this is the first post in an intended series on the technological and economic barriers that need to be broken to construct the first mile-high skyscraper. The Illinois In 1956, Frank Lloyd Wright unveiled his design for a mile-high skyscraper (1.61 km)— The Illinois . It was to be built in Chicago and was to have 528 floors, with 12.3 million square feet (1.14 km 2 ) of office space for 123,000 people. Commuters could choose from 15,000 parking spots after they arrived by one of four feeder highways. Two helicopter landing decks could acco [...]

• Brent Gibbons’s journal round-up for 10th February 2020
  by brentgibbons in The Academic Health Economists' Blog, 2020-02-10 12:00:00 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 . Impact of comprehensive smoking bans on the health of infants and children . American Journal of Health Economics [ RePEc ] Published 15th January 2020 While debates on tobacco control policies have recen [...]

2020-02-07

• Friday assorted links
  by Tyler Cowen in Marginal Revolution, 2020-02-07 16:09:48 UTC

  1. Does the quality of blog comments deteriorate ? (MR post from 2008) 2. Is local news really dying ? 3. America’s favorite architecture ? 4. Africa has 1.2 billion people and only six labs that can test for coronavirus .  And “ We find that expansions of transportation networks have significant health costs in increasing the spread of viruses, and that propagation rates are pro-cyclically sensitive to economic conditions and increase with inter-regional trade. ” 5. Vulnerability to disgust does not predict social conservatism very well . 6. The Jill Lepore interviews Ezra Klein podcast is li [...]

• Measuring Urban Government Productivity Using Public Big Data
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-02-07 12:00:00 UTC

  In this Big Data age, what do we now know about urban government productivity?� Whether the city is Baltimore or Chicago or San Diego, when a city spends an extra dollar on public goods such as street safety or public transit, how much local public goods are produced?� This is a surprisingly difficult question to answer and in the next series of blog posts, I will argue that this "opacity" benefits several interest groups including the Mayor, the urban government and the public sector unions. Back in 2017, I co-authored a paper that was publis hed in the Journal of Public Economics that invest [...]

2020-02-06

• Two papers on the productivity slowdown
  by Christian Zimmermann in NEP-DGE blog, 2020-02-06 19:58:47 UTC

  What Is Driving The TFP Slowdown? Insights From a Schumpeterian DSGE Model By Marco Pinchetti http://d.repec.org/n?u=RePEc:pra:mprapa:98316&r=dge In this paper, I incorporate a Schumpeterian mechanism of creative destruction in a medium-scale DSGE framework. In the model, a sector of profit-maximizing innovators invests in R&D and endogenously generates productivity gains, ultimately determining the economy’s growth rate. I estimate the model using Bayesian methods on U.S. data of the last 25 years (1993q1-2018q4) in order to disentangle the key forces underlying the productivity slowdown exp [...]

• Possible pitfalls of a 1-in-X approach to financial stability
  by BankUnderground in Bank Underground, 2020-02-06 09:00:00 UTC

  Adam Brinley Codd and Andrew Gimber Meteorologists and insurers talk about the “1-in-100 year storm”. Should regulators do the same for financial crises? In this post, we argue that false confidence in people’s ability to calculate probabilities of rare events might end up worsening the crises regulators are trying to prevent. Sir Paul Tucker recently said he thought the public would want regulators to make sure financial crises like the one in 2008–2009 happened less than once every 75 years . And an approach called GDP (or growth) at risk – which has featured prominently in th [...]

• Can AI ever rival human creativity? Here’s what the science says
  by ? in Co.Exist, 2020-02-06 09:00:00 UTC

  AI probably won’t invent the next Post-it note or snowboard. But check back again in 50 years. The European Patent Office recently turned down an application for a patent that described a food container. This was not because the invention was not no [...]

2020-02-05

• In praise of trade frictions
  by chris in Stumbling and Mumbling, 2020-02-05 13:57:21 UTC

  Are restrictions on free trade a better idea than generally thought? I ask because, despite his lauding of it, it is reported that Johnson will impose customs checks upon goods imported from the EU. This lends credence to the estimate (pdf) by The UK in a Changing Europe that Johnson’s plan might eventually cut UK GDP by over six per cent. But might this estimate miss an important mechanism and thus over-state the costs of us leaving the single market? What follows cuts against all my instincts in favour of free trade and EU membership. My gut tells me to agree with Martin Wolf’s claim that Jo [...]

• La subida del SMI y el empleo (II): Estimaciones varias
  by Juan José Dolado in Nada Es Gratis, 2020-02-05 06:07:22 UTC

  Juan J. Dolado Esta es la segunda parte de mi contribución sobre el impacto del salario mínimo en el empleo. Tras enumerar algunos argumentos teóricos que apuntan a que dicho impacto no siempre tiene por qué ser negativo en la primera parte , aquí comento algunas estimaciones que se han adelantado relativos a la subida del SMI que tuvo lugar en 2019 en España. Estimaciones recientes Muy poco tiempo después de que se acordara un aumento del 22,3% del SMI en octubre del 2018, algunas instituciones cifraron su impacto en una pérdida de más de 100 mil empleos respecto al nivel de empleo que se hub [...]

2020-02-04

• Los cambios recientes en la situación laboral de los jóvenes en Colombia (2008-2017)
  by Darío Maldonado in Foco Económico, 2020-02-04 22:07:35 UTC

  Basado en: Ham, A., Maldonado, D., & Guzmán-Gutiérrez, C. S. (2019). Tendencias recientes en la situación laboral de los jóvenes en Colombia: diagnóstico, desafíos y retos de política pública. Documentos de trabajo, Escuela de Gobierno-Universidad de los Andes, no. 66. https://ideas.repec.org/p/col/000547/017569.html   Uno de los problemas apremiantes de la sociedad colombiana es la necesidad de mejorar la inserción laboral de los jóvenes. De forma general, las oportunidades laborales están relacionadas con el nivel de bienestar individual y la dependencia de los individuos en las políticas as [...]

2020-02-02

• On socially influenced preferences
  by chris in Stumbling and Mumbling, 2020-02-02 13:06:32 UTC

  Some ideas are both radical and conservative at the same time. This is a thought triggered by reading Robert Frank’s latest book, Under the Influence . “Context shapes our choices to a far greater extent than many people realize” he writes. “In virtually every domain, evidence suggests that our consumption patterns tend to mirror those of others in our social circle.” He shows that behaviours such as smoking, becoming obese, committing crime (pdf) or even how many children we have are all heavily shaped by what our peers do. This, he says, means that much of what we do imposes externalities u [...]

2020-02-01

• The Rising Value of a Statistical Life in China and Risk Avoidance Associated with the Coronavirus
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-02-01 20:59:00 UTC

  Back in 2004, Dora and I published a paper documenting that from 1940 to 1990 the estimated value of a statistical life in the U.S grew faster than U.S per-capita GNP.� � Other studies from Taiwan and India have documented a similar result. These findings have implications for China today and risk regulation policy in the face of the contagion risk.� As China has grown richer, the value of risk avoidance rises.� There is a greater aggregate demand for safety.� The CCP thus has a strong incentive to deliver safety.� This same logic was at the heart of my work with Siqi Zheng on air pollution re [...]

2020-01-30

• Leder sämre ekonomi till politisk radikalisering?
  by Niclas Berggren in Nonicoclolasos, 2020-01-30 05:06:31 UTC

  Forskare och andra är ivriga att försöka förklara varför alltfler väljare i många länder i allt högre grad numera stödjer radikala partier. En vanlig hypotes är att försämrad ekonomi får dem att söka sig till populistiska partier som föreslår stora förändringar i opposition med beprövad och mer pragmatisk politik. Denna hypotes testas empiriskt med nederländska data i studien ”Do Changes in Material Circumstances Drive Support for Populist Radical Parties? Panel Data Evidence from The Netherlands during the Great Recession, 2007–2015” : [W]e examine whether individual-level changes in economic [...]

2020-01-28

• How business lost its influence on right wing parties
  by Mainly Macro in Mainly Macro, 2020-01-28 09:16:00 UTC

  This covers ground which others may be more knowledgeable about, so please let me know of any references or sources that I really should read that cover issues central to the discussion below. When Trump threatens governments that want to tax tech giants, most of which are based in the US, it seems like the familiar story of governments acting in the interest of business. But when Trump imposes tariffs on imports he may be favouring particular firms, but he is also acting against the interests of US trading firms in general. Brexit is a much more potent example. Brexit is clearly not in the [...]

2020-01-27

• Have you heard the news? News can affect markets : The effects of economic news on expectations of future financial performance
  by ? in FRED blog, 2020-01-27 14:00:00 UTC

  FRED’s all about data, which economists often use to conduct or test their research. So let’s look at some of that research… In a recent St. Louis Fed working paper , economists Maximiliano Dvorkin, Juan M. Sanchez, Horacio Sapriza, and Emircan Yurdagul study how the arrival of news affects emerging markets. They use a logic from a 2006 paper by Beaudry and Portier to identify news events—aka “shocks.” The idea is to compare a financial index that captures the expected future performance of the economy with a measure of current performance. They identify “good news” when the expected performa [...]

• Capital Income Taxation with Housing
  by Christian Zimmermann in NEP-DGE blog, 2020-01-27 04:15:30 UTC

  By Makoto Nakajima http://d.repec.org/n?u=RePEc:fip:fedpwp:86734&r=dge This paper quantitatively investigates capital income taxation in the general-equilibrium overlapping generations model with household heterogeneity and housing. Housing tax policy is found to affect how capital income should be taxed, due to substitution between housing and non-housing capital. Given the existing U.S. preferential tax treatment for owner-occupied housing, the optimal capital income tax rate is close to zero (1%), contrary to the high optimal capital income tax rate found with overlapping generations models [...]

• Das Warns 'Prepare For Turbulence In Emerging Markets'
  by Tyler Durden in Zero Hedge, 2020-01-27 01:55:00 UTC

  Das Warns 'Prepare For Turbulence In Emerging Markets' Authored by Satyajit Das, op-ed via Bloomberg.com, Encouraging trends in  emerging markets  belie their volatility since the taper tantrum of 2013, when the Federal Reserve signaled it was pulling back on quantitative easing. Further turbulence is likely, despite the improving outlook for advanced economies, easing trade tensions and accommodative monetary policy. The International Monetary Fund estimates that   growth in developing countries fell to 3.7%  last year, the slowest pace since 2009 and well below the IMF’s Jul [...]

2020-01-26

• We don't want economic growth
  by chris in Stumbling and Mumbling, 2020-01-26 13:40:47 UTC

  In launching a new 50p coin to mark Brexit, Sajid Javid seems to be interpreting the role of Chancellor in the same spirit that Trigger regarded Del Boy’s request to talk about money: “I saw one of those old £5 notes the other day.” We might have hoped that his energies would be better directed towards improving the UK’s lamentable productivity performance. In fact, though, we should not snark. Mr Javid has grasped an important point not understood by leftists and economists (two groups which increasingly overlap) – that the public do not want economic growth. We know this because they have co [...]

2020-01-24

• Pandemics and the economy
  by Michael Reddell in Croaking Cassandra, 2020-01-24 02:04:40 UTC

  Who knows quite what will happen with the current coronavirus.  But experts in such matters seem pretty confident (resigned?) that one day there will be virus that really takes hold and causes significant infection, disruption, and probably loss of life across a wide range of countries.  The 1918 flu outbreak is the (relatively) modern best known case –  estimated to have infected 500 million people worldwide and killed anything up to 50 million people.  In New Zealand, with a population then of little more than a million, almost 9000 people died.    Rather milder flu outbreaks in 1957 and 196 [...]

2020-01-22

• Thailand’s plastic bag ban is an overdue step towards pragmatism
  by Tim Forsyth in East Asia Forum, 2020-01-22 11:00:01 UTC

  Author: Tim Forsyth, LSE Thailand recently took an important step towards environmental protection when 75 leading retailers stopped issuing plastic bags to shoppers. This step continues a campaign started by environmentalists and local governments in Thailand to reduce urban waste and pollution. The long-term plan is to ban all single-use plastics by 2021. Thai newspapers have shown customers responding in good faith to the ban. Many are taking wheelbarrows and buckets to supermarkets, and others are re-using sacks made for transporting sugar and rice. But critics ask why it has taken so lon [...]

2020-01-20

• Two papers on Chinese Growth
  by Christian Zimmermann in NEP-DGE blog, 2020-01-20 20:44:55 UTC

  Population Aging, Credit Market Frictions, and Chinese Economic Growth By Michael Dotsey, Wenli Li and Fang Yang http://d.repec.org/n?u=RePEc:fip:fedpwp:86688&r=dge We build a unified framework to quantitatively examine population aging and credit market frictions in contributing to Chinese economic growth between 1977 and 2014. We find that demographic changes together with endogenous human capital accumulation account for a large part of the rise in per capita output growth, especially after 2007, as well as some of the rise in savings. Credit policy changes initially alleviate the capital m [...]

• ¿Afecta al rendimiento universitario el orden de los exámenes en cada convocatoria?
  by Juan Luis Jiménez in Nada Es Gratis, 2020-01-20 06:07:55 UTC

  Por Juan Luis Jiménez , Carmen Florido y Yaiza Navarro. La educación es uno de los leitmotiv de Nada es Gratis. Y dentro de esta, los factores que inciden sobre el rendimiento académico han supuesto diversas entradas. Por ejemplo, se han descrito efectos positivos en el uso de las becas , o en los aumentos de las  tasas académicas . También se ha analizado que los  estereotipos de género  afectan al desempeño del alumnado; o cómo el  consumo de cannabis  incide negativamente sobre los resultados académicos. Recientemente,  Marcos Vera  explicó el modelo de exámenes universitarios en Reino Uni [...]

2020-01-17

• 38. Selected Readings on World Development in journal AEID: America, 2001-2020
  by MCG Blogs de Economía in Euro-American Association: World Development, 2020-01-17 20:24:00 UTC

  We include lists and links to some selected articles published in the period 2001-2020. Table 1 includes articles of the period 2001-2005 and table 2 corresponds to the period 2006-2020. Table 2. Articles on economic development of America, 2006-2020 Autores Título Banerjee, S., Chatterjee, B. 2020 Cities Versus Suburbs: The Post 2000 Dynamics Of Population And Employment In U.S. Metro Areas,   Banerjee, S., Chatterjee, B.  New* Husein, J., Pier, C. (2019) Long-Run Sustainability of Current Account Balance: Evidence from Twenty North and Latin American Economies,  Huse [...]

2020-01-16

• 37. Selected Readings on World Development in journal AEID 2001-2020: Europe and Eurasia
  by MCG Blogs de Economía in Euro-American Association: World Development, 2020-01-16 19:11:00 UTC

  Here we include the lists and links (to the abstract and full text of the article) to some selected articles related with economic development of Europe and Eurasia, publised in AIED. Table 1 includes some articles of the period 2006-2020 and table 2 some articles of the period 2001-2005. Table 2: Some selected articles on Europe and Eurasia, published for the period 2001-2005 Authors Title Ogloblin, C. The Gender Earnings Differential in Russia After a Decade of Economic Transition. Abstract     Cosar, N., Bildirici, M. (2005) Some Comparisons Between Turkey and OECD C [...]

• Great economics, bad politics
  by chris in Stumbling and Mumbling, 2020-01-16 13:47:59 UTC

  Non-economists (and quite a few trained economists too) often claim that mainstream economics is a simple-minded defence of free markets and inequality. Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times is a superb refutation of this. They argue that: It is unreasonable to expect markets to always deliver outcomes that are just, acceptable or even efficient. A big reason for this is that the economy is “sticky” and that “resources do not always flow to their best use. Workers who are laid off because of international trade or technical change do not quickly move to decent job [...]

• Thesis Thursday: Koh Jun Ong
  by Chris Sampson in The Academic Health Economists' Blog, 2020-01-16 07:00:00 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 Koh Jun Ong who has a PhD from the University of Groningen . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Economic aspects of public health programmes for infectious disease control: studies on human immunodeficiency virus & human papillomavirus Supervisors Maarten Postma , Mark Jit Repository link http://hdl.handle.net/11370/0edbcfae-2a0c-4103-9722-fb8086d75cff Which public health programmes did you consider [...]

2020-01-15

• Minimum wages and employment
  by Eric Crampton in Offsetting Behaviour, 2020-01-15 02:32:00 UTC

  Stuff's Susan Edmunds asked me for comment on the employment effects of the latest round of minimum wage hikes. She chose the right quotes out of this more verbose missive I'd sent through, copied below.  “Minimum wage hikes always bring argument about the effects of those increases on jobs. MBIE regularly provides estimates of the number of job losses likely to be caused by different levels of increase; this time, MBIE expected that the increase to $18.90 would reduce employment by about 6,500 jobs, with some 242,400 workers overall being affected by the minimum wage increase. The employment [...]

2020-01-14

• No Vacancy? Why Housing Prices in New York City are So High
  by Jason Barr in Skynomics Blog, 2020-01-14 13:41:46 UTC

  Jason M. Barr            January 14, 2020 Note: This post is one of several about New York City. More posts can be read here . Costanza versus the Andria Doria In Season 8, Episode 10 of Seinfeld (“ The Andrea Doria ),” George Costanza, the neurotic buddy of Jerry Seinfeld, has found a fantastic Manhattan two-bedroom apartment with a huge bathroom and walk-in closet. The only rub—there’s competition for the unit. An older man who lives upstairs also wants it. He was a survivor on the ocean liner, The Andria Doria, which, in 1956, was struck by another vessel and sank off the coast of Nantucket [...]

2020-01-13

• The Unintended Consequences of Meritocratic Government Hiring
  by Christian Zimmermann in NEP-DGE blog, 2020-01-13 20:42:41 UTC

  By Athanasios Geromichalos and Ioannis Kospentaris http://d.repec.org/n?u=RePEc:cda:wpaper:335&r=dge In an attempt to mitigate the negative effects of clientelism, many governments around the world have adopted meritocratic hiring of public employees. This paper challenges the effectiveness of this common practice by showing that meritocratic government hiring can have unintended negative consequences on macroeconomic aggregates. In many countries, public employees enjoy considerable job security and generous compensation schemes; as a result, many talented workers choose to work for the publi [...]

2020-01-12

• The Urban Economics of Pre-K for All
  by Matthew E. Kahn in Environmental and Urban Economics, 2020-01-12 15:03:00 UTC

  This 2019 report describes which U.S cities now offer pre-K and the quality and attributes of their respective programs.� �The local public finance of these early human capital investment programs has not been sufficiently studied.� Both States and cities share the financing responsibilities.� Back in 2013,� Alan Krueger wrote (see page 188) �that the most interesting issue regarding Pre-K is the political economy of "who pays for it". In 2015, I wrote a NBER paper on the Political Economy of Pre-K.� The typical beneficiary of this program lives in the center city and is poor.� The typical tax [...]

2020-01-10

• PÃ¥verkar robotiseringen hur människor röstar?
  by Niclas Berggren in Nonicoclolasos, 2020-01-10 05:37:28 UTC

  Enligt den nya studien ”We Were The Robots: Automation and Voting Behavior in Western Europe” är svaret ja i 14 västeuropeiska länder 1993–2016: Higher exposure to robot adoption is found to increase support for nationalist and radicalright parties. Unveiling some potential transmission channels, higher robot exposure at the individual level leads to poorer perceived economic conditions and well-being, lower satisfaction with the government and democracy, and a reduction in perceived political self-efficacy. Är det inte invandringen så är det robotarna. [...]

2020-01-09

• Ekonomia behawioralna wzmocni emerytalne oszczędności
  by Dariusz Rostkowski in Obserwator Finansowy, 2020-01-09 02:00:57 UTC

  Narastanie tego problemu obserwujemy nie tylko w Polsce, ale również i w wielu rozwiniętych gospodarkach. Widok zbliżającego się „kryzysu emerytalnego” wywołuje wśród ekonomistów i polityków reakcje obronne. Powszechnie panuje zgoda, że należy podejmować działania w kierunku wpływania na wzrost świadomości społeczeństwa odnośnie sytuacji jaka będzie miała miejsce w systemie emerytalnym za kilka i kilkadziesiąt lat. Nie tylko zachęty finansowe Czy rząd może w efektywny sposób wpływać na wysokość oszczędności emerytalnych obywateli? Jednym z najczęściej stosowanych instrumentów są różne formy su [...]

2020-01-08

• Flexibility or certainty? The aggregate effects of casual jobs on labour markets
  by Christian Zimmermann in NEP-DGE blog, 2020-01-08 17:40:20 UTC

  By Rachel Scarfe http://d.repec.org/n?u=RePEc:edn:esedps:294&r=dge There is much debate about the extent to which governments should regulate labour markets. One discussion concerns casual jobs, where firms do not need to guarantee workers certain, fixed, hours of work and instead “call-up” workers as and when needed. These jobs, sometimes known as “zero-hours”, “contingent” or “on-demand, provide flexibility for firms to change the size of their workforce cheaply and quickly and for workers to choose whether to supply labour in every period. This flexibility comes at the expense of certainty [...]

• Education versus anti-vaxxers: evidence from Europe
  by Fa'izah Aishah Muhammad, Harold M Hastings in The Academic Health Economists' Blog, 2020-01-08 07:00:00 UTC

  Vaccine skepticism and hesitancy – the distrust and skepticism that some members of the public feel for vaccines, as well as for institutions that deliver and encourage vaccination – has emerged as a major threat to world health. Vaccine skepticism is not limited to any particular place; it has been observed across a range of countries, cultures, and levels of prosperity. Vaccine skeptics have made themselves known in Hollywood , led protests in Washington D.C. , and lashed out violently against vaccination in Pakistan and Northern Nigeria . Vaccine skepticism has truly gone global. Vaccin [...]

2020-01-06

• Chris Sampson’s journal round-up for 6th January 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-01-06 12:00:00 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 . Child sleep and mother labour market outcomes . Journal of Health Economics [ PubMed ] [ RePEc ] Published January 2020 It’s pretty clear that sleep is important to almost all aspects of our lives and our [...]

2020-01-02

• Looking for a Faculty Position? Agricultural Economics vs Economics
  by Jayson Lusk in Jason Lusk, 2020-01-02 22:17:10 UTC

  ‘Tis the season for economics job hunters.  The annual ASSA meetings kick off tomorrow, brining together, for a few days, what is probably the largest collection of economists in the world (scary, I know!).  The meeting also marks the start of the job market for academic economists.  For a variety reasons, agricultural economics departments have increasingly moved hiring to coordinate with the ASSA meetings, and agricultural economics departments appear to be more apt these days to hire new faculty from general economics programs. There is ample advice for prospective job market candidates onl [...]

2020-01-01

• Wages vs social value
  by chris in Stumbling and Mumbling, 2020-01-01 15:24:31 UTC

  Today is the 23 rd anniversary of the death of Townes Van Zandt, who is now universally regarded as one of the greatest songwriters ever . And yet during his lifetime he made very little money. Even in his best years he got less than $100,000 from song-writing royalties, and for much of his life he might well have earned more from the oil drilling rights bequeathed by his rich family than from his music. Which vindicates a recent tweet from Cameron Murray: Actions that have social value only rarely coincide with actions that are monetarily compensated. In Van Zandt’s case, this was partly be [...]

2019-12-30

• Rita Faria’s journal round-up for 30th December 2019
  by Rita Faria in The Academic Health Economists' Blog, 2019-12-30 12:00:00 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 . Value in hepatitis C virus treatment: a patient-centered cost-effectiveness analysis . PharmacoEconomics [ PubMed ] Published 2nd December 2019 There have been many economic evaluations of treatments for [...]

2019-12-27

• China’s incomplete financial reform
  by Meijun Qian in East Asia Forum, 2019-12-27 23:00:05 UTC

  Author: Meijun Qian, ANU China has experienced phenomenal economic growth since 1978 when it opened up to the outside world. Fundamental changes have occurred in China’s economy, institutions and markets. Financial reforms have also been profound and have a unique relationship with China’s economic growth. The conventional finance–growth nexus suggests that a well-functioning financial system is necessary to finance investments and support economic growth. This pattern is seen in the United States, United Kingdom, Germany and Japan. The United States and the United Kingdom showcase a market- [...]

2019-12-25

• Annual Review 2019
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2019-12-25 00:24:00 UTC

  I've been doing these annual reviews since 2011. They're mainly an exercise for me to see what I accomplished and what I didn't in the previous year. This year continued to feel lke a struggle at times, so it's a good idea to remind myself of what I did manage to accomplish. It felt like I was just trying to finish things this year and not succeeding but we actually started new things too. The big personal news of the year is that our second child Isaac Daniel was born: As a result I didn't travel much. I gave seminars at Monash and Macquarie Universities and went to the Future of Electricity [...]

2019-12-23

• One EMU Fiscal Policy for the EURO
  by Christian Zimmermann in NEP-DGE blog, 2019-12-23 18:47:15 UTC

  By Alexandre Lucas Cole, Chiara Guerello and Guido Traficante http://d.repec.org/n?u=RePEc:pra:mprapa:97380&r=dge We build a two-country New-Keynesian DSGE model of a Currency Union to study the effects of fiscal policy coordination, by evaluating the stabilization properties and welfare implications of different fiscal policy scenarios. Our main findings are that a government spending rule which targets the net exports gap rather than the domestic output gap produces more stable dynamics and that consolidating government budget constraints across countries with symmetric tax rate movements pr [...]

2019-12-20

• Revisiting the P-star model
  by Lars Christensen in The Market Monetarist, 2019-12-20 17:27:57 UTC

  I read Milton Friedman’s book “Free to Choose” at an age of 16 years old and ever since then I have been more or less obsessed with monetary theory and particularly the equation of exchange: M•V=P•V My view of the world obviously has developed over the 32 years since I read “Free to Choose”, but I am still fully convinced that monetary policy failure historically has been the main cause of macroeconomic problems – whether it is inflation or recessions and depressions. In fact I am more so than ever. When I started studying economics at the University of Copenhagen in the early 1990s my obsessi [...]

• Waiting for the Prince Charming: Fixed-Term Contracts as Stopgaps
  by Christian Zimmermann in NEP-DGE blog, 2019-12-20 16:09:00 UTC

  By Normann Rion http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02331887&r=dge In this paper, I build a simple Mortensen-Pissarides model embedding a dual labor market. I derive conditions for the existence of an equilibrium with coexisting strongly protected open-ended contracts and exogeneously short fixed-term contracts. I also study dynamics after a reform on employment protection legislation. Temporary contracts play the role of fillers while permanent contracts are used to lock up high-productivity matches. High firing costs favor the emergence of a dual equilibrium. Employment protection [...]

2019-12-19

• Mining the Wind? The Economics of Wind Turbines on Skyscrapers
  by Jason Barr in Skynomics Blog, 2019-12-19 13:24:01 UTC

  Jason M. Barr             December 19, 2019 Swaying in the Wind In the early-1990s, my wife worked for WH Freeman and Co., a publisher of scientific and academic textbooks. Her office was on the 35 th floor at 41 Madison Avenue in Manhattan. The building, opened in 1974, is a 41-story modernist glass box designed by Emory Roth & Sons. On extremely windy days, she and her co-workers could feel the building sway—so much so that junior employees would claim motion sickness and request permission to go home. Doors and drawers would sometimes close on their own. Regarding the elevators, my wife rec [...]

• Thesis Thursday: Caroline Chuard
  by Chris Sampson in The Academic Health Economists' Blog, 2019-12-19 07:00:00 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 Caroline Chuard who has a PhD from the University of Zurich . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Three essays on the health effects of family policies Supervisors Hannes Schwandt , Josef Zweimüller Repository link https://www.zora.uzh.ch/id/eprint/172853/ Is there a strong health economics evidence base on family policies? The literature on parental leave and family health is relatively young. Thi [...]

2019-12-18

• Tax, cost of capital, and investment
  by Gulnara Nolan in TVHE, 2019-12-18 19:00:40 UTC

  Last time I discussed the relationship between the cost of capital and investment. Given that motivation, the goal of this post is to understand whether investment is responsive to changes in the UCC due to changes in tax settings. This does two things: Provides evidence regarding whether the capital stock will ultimately be influenced by corporate tax policy changes. Helps us understand how changes in the cost of capital can “shift” investment through time, thereby helping economic stabilisation. Note : The cost of capital varies with both taxes and interest rates, so this relates a [...]

• Are Estimates of Early Education Programs Too Pessimistic? Evidence from a Large-Scale Field Experiment that Causally Measures Neighbor Effects
  by maximorossi in NEP-LTV blog, 2019-12-18 13:44:34 UTC

  By: List, John ;  Momeni, Fatemeh ;  Zenou, Yves Abstract: We estimate the direct and spillover effects of a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States. We show that failing to account for spillover effects results in a severe underestimation of the impact. The intervention induced positive direct effects on test scores of children assigned to the treatment groups. We document large spillover effects on both treatment and control children who live near treated children. On average, spillover effects inc [...]

• What might explain today’s conflicting narratives on global inequality?
  by maximorossi in NEP-LTV blog, 2019-12-18 13:43:44 UTC

  By: Ravallion Martin Abstract: How unequal is the world today? Is global income inequality falling, as many economists claim, or is it rising, as one often hears?This paper reviews the arguments and evidence. A number of concerns about the underlying data are identified, with biases going in both directions. Conceptual issues further cloud the picture. The claim that global inequality has been falling since 1990 can be defended for a subset of the admissible parameter values, but only a subset.Global inequality is found to be rising if one or more of the following conditions holds: (i) o [...]

• Comparing global inequality of income and wealth
  by maximorossi in NEP-LTV blog, 2019-12-18 13:42:32 UTC

  By: Shorrocks Anthony ;  Davies James Abstract: This paper is the first to compare global trends in income and wealth inequality this century. It is based on large income and wealth microdata samples designed to be representative of all countries in the world.Measured by the Gini coefficient, inequality between countries accounts for about two-thirds of global income inequality, but noticeably less— around one half—of wealth inequality. Broadly similar results are found for different years and different inequality indices, bar the share of the top 1 per cent. Over time, changes in co [...]

• Crisis at Home: Mancession-induced Change in Intrahousehold Distribution
  by maximorossi in NEP-LTV blog, 2019-12-18 13:22:46 UTC

  By: Olivier Bargain  (GREQAM – Groupement de Recherche en Économie Quantitative d’Aix-Marseille – ECM – Ecole Centrale de Marseille – CNRS – Centre National de la Recherche Scientifique – AMU – Aix Marseille Université – EHESS – École des hautes études en sciences sociales);  Laurine Martinoty  (CES – Centre d’économie de la Sorbonne – UP1 – Université Panthéon-Sorbonne – CNRS – Centre National de la Recherche Scientifique) Abstract: The Great Recessions was essentially a ‘mancession’ in countries like Spain, the UK or the US, i.e. it hit men harder than women for they were disproportion [...]

• Understanding Trends in Alternative Work Arrangements in the United States
  by maximorossi in NEP-LTV blog, 2019-12-18 13:21:18 UTC

  By: Lawrence F. Katz ;  Alan B. Krueger Abstract: This paper describes and tries to reconcile trends in alternative work arrangements in the United States using data from the Contingent Worker Survey supplements to the Current Population Survey (CPS) for 1995 to 2017, the 2015 RAND-Princeton Contingent Work Survey (CWS), and administrative tax data from the Internal Revenue Service for 2000 to 2016. We conclude that there likely has been a modest upward trend in the share of the U.S. workforce in alternative work arrangements during the 2000s based on the cyclically-adjusted comparisons [...]

• The Impact of a Conditional Cash Transfer Program on Households’ Well-Being
  by maximorossi in NEP-LTV blog, 2019-12-18 13:18:52 UTC

  By: Daniela Del Boca  (University of Turin and Collegio Carlo Alberto);  Chiara Pronzato  (University of Turin, CHILD and Collegio Carlo Alberto);  Giuseppe Sorrenti  (University of Zurich) Abstract: We evaluate the impact of a conditional cash transfer (CCT) program that we designed on family well-being among low-income families with young children. Although most CCTs have been implemented in low-income countries, our research is in the context of a high-income country, Italy, where the recent economic crises have worsened the conditions of families with children, especially among immig [...]

2019-12-17

• Attention to the tail(s): global financial conditions and exchange rate risks
  by BankUnderground in Bank Underground, 2019-12-17 09:00:00 UTC

  Fernando Eguren-Martin and Andrej Sokol Asset prices tend to co-move internationally, in what is often described as the ‘global financial cycle’. However, one such asset class, exchange rates, cannot by definition all move in the same direction. In this post we show how the ‘global financial cycle’ is associated with markedly different dynamics across currencies. We enrich traditional labels such as ‘safe haven’ and ‘risky’ currencies with an explicit quantification of exchange rate tail risks. We also find that several popular ‘risk factors’, such as current account balances and inter [...]

2019-12-16

• Foreign Exchange Trading: 2019 Edition
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-12-16 14:10:10 UTC

  Every so often, new data provide us a glimpse of parts of the world that few people ever see. Last week, the BIS’s Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019 provided just such a view. The headline is that average daily foreign exchange (FX) turnover, adjusted for double counting, is $6.6 trillion per day. That is, nearly 8% of global GDP changes hands in FX markets every day! (For a summary, you can listen here .) Numbers of this magnitude raise a host of questions. In this post, we explore three: First, who is shifting such large [...]

• Ciclos Inmobiliarios y Desigualdad de la Riqueza
  by admin in Nada Es Gratis, 2019-12-16 14:00:30 UTC

  Por Clara Martínez-Toledano La evolución y los determinantes de la desigualdad de la riqueza están en el centro del debate académico y político en la actualidad. Este interés se debe, en primer lugar, al incremento del peso de la riqueza en relación a la renta nacional en los países avanzados en las últimas cuatro décadas ( Piketty y Zucman [2014] ). En segundo lugar, los niveles de concentración de la riqueza han divergido en el mismo periodo, creciendo por ejemplo mucho más rápido en EE.UU. que en Europa continental ( World Inequality Report [2018] ). Las interacciones entre la evolución de [...]

2019-12-13

• Financial well-being: Measuring financial perceptions and experiences in low- and moderate-income households
  by Stephen Roll, Olga Kondratjeva, Michal Grinstein-Weiss in Up Front, 2019-12-13 18:08:23 UTC

  By Stephen Roll, Olga Kondratjeva, Michal Grinstein-Weiss Thirty-nine percent of U.S. adults reported lacking sufficient liquidity to cover even a modest $400 emergency without borrowing or selling an asset, and 60 percent reported experiencing a financial shock (e.g., loss of income or car repair) in the prior year. While facing precarious financial situations may leave households unable to manage essential expenses and plan for the future, the research also suggests that U.S. households report feeling optimistic about their finances. These disparate findings suggest a complex interplay betwe [...]

2019-12-12

• Risk-sensitive preferences and age-dependent risk aversion
  by Christian Zimmermann in NEP-DGE blog, 2019-12-12 16:50:20 UTC

  By Phitawat Poonpolkul http://d.repec.org/n?u=RePEc:een:camaaa:2019-86&r=dge People in different age groups have shown to differ in their degrees of risk aversion. This study investigates the macroeconomic implications of population aging when households are assumed to be increasingly risk-averse in future utility when they age. The model incorporates risk-sensitive preferences used in Hansen & Sargent (1995), which is the only recursive preferences that can separate risk aversion and intertemporal elasticity of substitution while being monotonic, into a 16-generation discrete-time OLG model [...]

2019-12-11

• Spuds still not got it, has he?
  by Tim Worstall in Tim Worstall, 2019-12-11 09:28:22 UTC

  Andrew says: December 10 2019 at 11:35 am This issue is a matter of substantial economic research, so with due deference to Prof Weeks, we don’t have to just take his word for it. What does the literature say? Certainly, when taxes on companies rise, then in the first instance, companies will just pay more tax on their profits, and the shareholders will suffer lower returns. But over time, shareholders will attempt to maintain a level of post-tax return on their capital, which will create pressures to decrease costs including wages paid to employees, and to increase prices charged to customers [...]

• Agent relationships and information asymmetries in public health
  by Bren Collins in The Academic Health Economists' Blog, 2019-12-11 07:00:00 UTC

  The agent relationship and information asymmetry are two features of healthcare economics – but how do they apply to public health policy around processed foods? Why is health different to other goods? Arrow’s 1963 seminal paper helped lay the foundations for health economics as a discipline. The Nobel-winning economist talks about what makes healthcare different to other types of market goods. Two of the principal things are agent relationship – that a clinician often makes choices on behalf of a patient (Arrow calls them a “controlling agent”); and information asymmetry – that a clini [...]

2019-12-10

• Mississippi improves — by failing students?
  by Joanne in Linking and Thinking on Education by Joanne Jacobs, 2019-12-10 18:45:12 UTC

  Mississippi made more progress than any other state on the National Assessment of Educational Progress . When it comes to reading, the state’s fourth graders “are now on par with the national average, reading as well or better than pupils in California, Texas, Michigan and 18 other states,” writes Emily Hanford in a New York Times op-ed. As part of Mississippi’s literacy push, the state is “making sure all of its teachers understand the science of reading, ” she writes. Mississippi is the fastest improving state in fourth-grade reading. Photo: Kim Palmer/Hechinger Report The Urban Institute’s [...]

• The Green Paradox
  by sense.sustainability@gmail.com (Jisung Park) in Sense and Sustainability, 2019-12-10 13:00:56 UTC

  When economists discuss climate change policies such as carbon taxes, cap-and-trade systems, and carbon intensity standards, effectiveness is a key question. Will these policies lead to the reductions in greenhouse gasses that we would like? The worst case scenario is usually thought of as an expensive policy that has zero effect on the global stock of gases, such as a tax that induces businesses to displace all the emissions they are “getting rid of” to other, untaxed regions. (The shifting of emissions across space like this is called carbon leakage ). So, we’re often considering whether cli [...]

2019-12-07

• Labor Market Frictions and Lowest Low Fertility
  by Christian Zimmermann in NEP-DGE blog, 2019-12-07 04:18:07 UTC

  By Nezih Guner, Ezgi Kaya and Virginia S�nchez Marcos http://d.repec.org/n?u=RePEc:iza:izadps:dp12771&r=dge The total fertility rate is well below its replacement level of 2.1 children in high- income countries. Why do women choose such low fertility levels? We study how labor market frictions affect the fertility of college-educated women. We focus on two frictions: uncertainty created by dual labor markets (the coexistence of jobs with temporary and open-ended contracts) and inflexibility of work schedules. Using rich administrative data from the Spanish Social Security records, we show that [...]

2019-12-05

• Science Demands a Sacrifice!
  by Vulgar Economics in Vulgar Economics, 2019-12-05 18:42:00 UTC

  So I've been pretty focused on the literature about fascists that I almost feel like I'm not an economist anymore. To combat that, I've decided to read more of the economic literature. Obviously, I'm still going to read what I'm interested in, but my research interests have gotten...weird. I combed through the American Economic Review until I found a title that interested me. It's about scientists dying. I picked the one about scientists dying. In Does Science Advance One Funeral at a Time? economists Pierre Azoulay, Christian Fons-Rosen, and Joshua S. Graff Zivin seek to answer the question [...]

2019-12-02

• Negative Nominal Interest Rates: A Primer
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-12-02 13:10:33 UTC

  Many people find negative interest rates confusing. Why should anyone pay a bank to make a deposit? Why should a bank pay someone to borrow? How can we value an asset with a future cash flow when the interest rate is negative? Policymakers also wonder whether the effects of negative interest rates on the economy are favorable or unfavorable. Do negative interest rates help central banks achieve price stability by stimulating economic activity? Do negative rates spur banks to make more good loans or to evergreen bad ones? Will borrowers and banks take on too much risk because they can fund inve [...]

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