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- The US economy is on a long-term descent
by Ivan Kitov in Economics as Classical Mechanics, 2022-09-23 12:55:00 UTC
The US economy was and is successful, as many people think. Such a view on the economy prevails because the long-term evolution is not discussed by the economic and financial authorities and mainstream experts. Here, I would like to present the US economic performance with the long-term trends in key economic parameters since 1960.� These parameters are the growth rate of the civilian noninstitutional population, CNP, the rate of real GDP growth, the rate of real GDP per capita growth,� the labor force growth rate, and the labor force participation rate. The population-related parameters are k [...]
- The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States
by Christian Zimmermann in NEP-DGE blog, 2022-09-23 03:10:41 UTC
By Andrew Atkeson, Jonathan Heathcote and Fabrizio Perri
The US net foreign asset position has deteriorated sharply since 2007 and is currently negative 65 percent of US GDP. This deterioration primarily reflects changes in the relative values of large gross international equity positions, as opposed to net new borrowing. In particular, a sharp increase in equity prices that has been US-specific has inflated the value of US foreign liabilities. We develop an international macro finance model to interpret these trends, and we argue that the r [...]
- No title
by maximorossi in NEP-LTV blog, 2022-09-20 20:27:25 UTC
Measuring Preferences for Competition By: Lina Lozano ; Ernesto Reuben (Division of Social Science)
Abstract:Recent research has found that competitive behavior measured in experiments strongly predicts individual differences in educational and labor market outcomes. However, there is no consensus on the underlying factors behind competitive behavior in these experiments. Are participants who compete more capable, more confident, and more tolerant of risk, or are they competing because they enjoy competition per se? In this study, we present an experiment designed to measure individualsâ€ [...]
- No title
by maximorossi in NEP-LTV blog, 2022-09-20 20:20:13 UTC
Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP & CONICET); Lucía Ramirez-Veira (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET)
Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin Americaâ€ s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We [...]
- Factor Network Autoregressions
by Francis Diebold in No Hesitations, 2022-09-18 22:10:00 UTC
�Check this out, by Barigozzi, Cavaliere, and Moramarco: http://d.repec.org/n?u=RePEc:arx:papers:2208.02925&r= Very cool methods for dynamic "multilayer networks".� In a standard N-dim net there's one NxN adjacency matrix.� But richer nets may have many kinds of connections, each governed by its own adjacency matrix.� (What a great insight -- so natural and obvious once you hear it.� A nice "ah-ha moment"!)� So perhaps there are K operative NxN adjacency matrices.� Then there is actually a grand 3-dim adjacency matrix (NxNxK) operative -- a cubic rather than a square matrix.� Parsimonious mode [...]
- Twitter peut-il prÃ©dire lâÃ©volution des marchÃ©s financiers ?
by Thomas Renault in Contrepoints, 2022-09-17 02:40:12 UTC
Par Thomas Renault
En 2015, un article publié par Les Échos intitulé « Comment Twitter est devenu la boule de cristal des marchés financiers » a fait un bon petit buzz sur les réseaux sociaux.
Réalisant ma thèse de doctorat sur ce sujet depuis maintenant près de trois ans, j’ai tendance à être assez psychorigide à propos de cette thématique, surtout que les mêmes mythes et les mêmes erreurs reviennent très souvent dans les articles de presse traitant de Twitter en tant qu’outil de First-Story Detection (détection d’événement) et d’analyse du sentiment des investisseurs.
Voici les quelques er [...]
- Women in the sports industry : Did Title IX make a difference?
by ? in FRED blog, 2022-09-15 13:00:00 UTC
This summer marked the 50th anniversary of the passage of the Education Amendments of 1972, which protect people from discrimination based on sex in education programs or activities that receive federal financial assistance. The well-known Title IX in this legislation made equal access to athletic programs mandatory, which resulted in more women playing sports while enrolled in school. But does a more-even playing field in high school and college athletics result in comparable employment in the sports industry?
The FRED graph above shows the number of men and women working as athletes, coach [...]
- Credit and Saving Constraints in General Equilibrium: A Quantitative Exploration
by Christian Zimmermann in NEP-DGE blog, 2022-09-12 16:49:18 UTC
By Catalina Granda-Carvajal, Franz Hamann and Cesar Tamayo
In this paper we build an incomplete-markets model with heterogeneous households and firms to study the aggregate effects of saving constraints and credit constraints in general equilibrium. We calibrate the model using survey data from Colombia, a developing country in which informal saving and credit frictions are pervasive. Our quantitative results suggest that reducing savings costs increases selection into formal saving, but the effect on aggregate outcomes and welfare is dwarfed by [...]
- Memories of Ted Anderson
by Francis Diebold in No Hesitations, 2022-09-03 21:35:00 UTC
Ted is among the very greatest statisticians/econometricians of the 20th-century.� I feel very close to him, as my former Penn colleague, Larry Klein, worked closely with him at Cowles in the 1940s, and another former colleague, Bobby Mariano, was his student at Stanford before coming to Penn around 1970.� I recall a Penn seminar he gave late in his career, on unit moving-average roots.� He started painfully slowly, defining, for example, things like "time series" and "covariance stationarity".� Some eyes were rolling.� Ten minutes later, he was far beyond the frontier.� No eyes were rolling.� [...]
- Equal-weight HAR combination
by Francis Diebold in No Hesitations, 2022-09-03 16:52:00 UTC
This just blows me away. So full of great insight. Equal-weight combinations rule, in yet another context! See also my papers with Minchul Shin that clearly lead to equal weights for point and density forecasts, respectively: Diebold, F.X. and Shin, M. (2019) , " Machine Learning for Regularized Survey Forecast Combination: Partially-Egalitarian Lasso and its Derivatives ," International Journal of Forecasting , 35, 1679-1691. Diebold, F.X., Shin, M. and Zhang, B. (2022) , “On the Aggregation of Probability Assessments: Regularized Mixtures of Predictive Densities for Eurozone Inflation [...]
- Long memory and weak ID
by Francis Diebold in No Hesitations, 2022-09-03 16:42:00 UTC
I've thus far never been a big fan of the weak ID literature. Always seemed to me that if you wind up with weak ID, it's time to think harder about the underlying economics rather than fancier econometrics. But this opened my eyes and changed my mind. Totally cool. Weak Identification of Long Memory with Implications for Inference By: Jia Li (Singapore Management University); Peter C. B. Phillips (Cowles Foundation, Yale University, University of Auckland, Singapore Management University, University of Southampton); Shuping Shi (Macquarie University); Jun Yu (Singapore Management [...]
- Is the economy growing? Depends on how you measure it : GDP vs. GDI
by ? in FRED blog, 2022-09-01 13:00:00 UTC
One of the most watched U.S. economic indicators is the growth of real gross domestic product (GDP). A similar but lesser-known economic indicator has also been in the news lately—real gross domestic income (GDI). According to the Bureau of Economic Analysis , both real GDP and real GDI measure the real output of the U.S. economy. Real GDP measures the value of goods, while real GDI measures the income of employees and corporations. In theory, the growth rates of real GDP and real GDI should be equal.
Lately, this hasn’t been the case. The FRED graph above displays the compounded annual rate [...]
- Federal student loan forgiveness: Research to help journalists
by Denise-Marie Ordway in Journalist's Resource, 2022-09-01 12:23:00 UTC
As adults with federal student loans await new details about the widespread loan forgiveness program President Joe Biden announced Aug. 24, many journalists will be trying to answer questions such as:
How much will the program cost? Who will benefit most? What could be the unintended consequences?
To help, we’ve gathered and summarized a sampling of academic research and government reports that provide insights on Biden’s historic program, which offers adults earning less than $125,000 a year a one-time opportunity to erase up to $10,000 in f [...]
- In praise of Enough is Enough
by chris in Stumbling and Mumbling, 2022-08-30 12:47:08 UTC
One of the few silver linings to the cost of living crisis has been the re-emergence of trades union power and the start of the Enough is Enough campaign. These could potentially be the start of a new and better politics.
As Enough is Enough say :
We can’t rely on the establishment to solve our problems. It’s up to us in every workplace and every community.
This is a challenge to Labourism, in which as Ralph Miliband put it, the Labour party "have treated the voters not as potential comrades but as possible clients." It is a rejection of retail politics, in which people are victims of polic [...]
- Monetary policy in the open economy with digital currencies
by Christian Zimmermann in NEP-DGE blog, 2022-08-26 23:05:04 UTC
By Pietro Cova, Alessandro Notarpietro, Patrizio Pagano and Massimiliano Pisani
We assess the transmission of a monetary policy shock in a two-country New Keynesian model featuring a global private stablecoin and a central bank digital currency (CBDC). In the model, cash and digital currencies are imperfect substitutes that differ as to the liquidity services they provide. We find that in a digital-currency economy, where the stablecoin is a significant means of payment, the domestic and international macroeconomic effects of a monetary [...]
- The Complexity Principle (!)
by Francis Diebold in No Hesitations, 2022-08-24 22:25:00 UTC
Continuing the previous post, I'm sorry if I seem to be gushing over the recent Kelly et al. program (indeed I am), but it just blows me away.� The famous "parsimony" and "KISS (keep it sophisticatedly simple)" principles turned on their heads!� George Box and Arnold Zellner must be rolling in their graves... � The Virtue of Complexity Everywhere Bryan T. Kelly �(Yale SOM; AQR Capital Management, LLC; National Bureau of Economic Research (NBER));� Semyon Malamud �(Ecole Polytechnique Federale de Lausanne; Centre for Economic Policy Research (CEPR); Swiss Finance Institute);� Kangying Zhou �(Ya [...]
- Complexity in Prediction
by Francis Diebold in No Hesitations, 2022-08-19 13:54:00 UTC
Really glad to see that Kelly et al. are keeping at it, moving well into the "double dip" zone and adding regularization. The Virtue of Complexity in Return Prediction (2022) B ryan T. Kelly ; Semyon Malamud ; Kangying Zhou The extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in US e [...]
- Japanâs low inflation conundrum
by Gunther Schnabl in East Asia Forum, 2022-08-12 12:00:39 UTC
Author: Gunther Schnabl, Leipzig University
Inflation rates have risen far above the targets of many central banks around the world, reaching 9.1 per cent in the United States and 8.6 per cent in the euro area in June 2022. Yet Japan has bucked this phenomenon by maintaining surprisingly low inflation rates, sitting at 2.4 per cent in June 2022.
For many years, Japan’s inflation rate has been well below other industrialised countries even though the Bank of Japan’s balance sheet has grown much faster than the balance sheets of most other central banks.
Inflation is generally caused by centra [...]
- How India Can Sustain Rapid Economic Growth
by Barry Eichengreen in Project Syndicate, 2022-08-12 10:45:03 UTC
NEW DELHI – One country stands out from the gloomy overall tone of the International Monetary Fund’s recent update of its World Economic Outlook . Against the backdrop of tepid 3.2% global growth in 2022, the IMF expects India’s GDP to expand by 7.4%. This is the fastest growth of any large economy except Saudi Arabia, which is the incidental beneficiary of upward pressure on global oil prices from Russian President Vladimir Putin’s war against Ukraine. India may be buying Russian crude at a discount, but, as the world’s third largest oil importer, it is still burdened by high oil prices. O [...]
- Are we in a recession (yet)? : Consulting Chauvet and Pigerâs smoothed probabilities
by ? in FRED blog, 2022-08-08 13:00:00 UTC
It’s natural to want to know where you stand in the economy and get ahead of any big changes. It’s no surprise, then, that we’re hearing plenty of talk about whether the U.S. economy is in a recession.
As usual, we begin our inquiry with FRED data! The graph above displays, month after month, the estimated probabilities that the U.S. economy is in recession. These estimates are calculated from a set of economic statistics discussed in this article . The FRED graph also conveniently displays shaded bars when actual recessions occurred, as determined by the NBER business cycle dating committee. [...]
- Travel chaos, flight fees, and labor shortages could get even worse in October when airlines can start buying their own stocks again, according to the president of the flight attendants' union
by email@example.com (Juliana Kaplan) in Business Insider, 2022-08-01 16:06:46 UTC
Flight delays and cancellations will likely continue throughout the summer, analysts told Insider. James D. Morgan/Getty Images
Travel chaos has abounded this summer, as passengers deal with delays, cancellations, and lost luggage.
Sara Nelson, international president of the Association of Flight Attendants, warns that could get even worse.
In the fall, airlines can start buying their own stocks again — potentially leading to higher fees and fewer staff.
If you've even thought about boarding a plane this summer, you've probably heard the tales of travel chaos. Passengers are getting hit with d [...]
- Does purchasing power parity (PPP) hold in the long run? : A look at the franc/dollar exchange rate on the Swiss national holiday
by ? in FRED blog, 2022-08-01 13:00:00 UTC
Part of the “My favorite FRED graph” guest post series.
“Under the skin of any international economist lies a deep-seated belief in some variant of the PPP theory of the exchange rate.” — Dornbusch and Krugman (1976)
Most models in international macroeconomics assume purchasing power parity (PPP) holds in the long run. But what is PPP and what is the long run?
A good starting point is the law of one price (LOP), which states that the same good in different competitive markets must sell for the same price, when transportation costs and barriers between those markets are not important. Intuitiv [...]
- Transmission of Flood Damage to the Real Economy and Financial Intermediation: Simulation Analysis using a DSGE Model
by Christian Zimmermann in NEP-DGE blog, 2022-07-29 13:32:36 UTC
By Ryuichiro Hashimoto and Nao Sudo
This paper quantitatively assesses the indirect effect of floods on the real economy and financial intermediation in Japan by estimating a dynamic stochastic general equilibrium (DSGE) model that incorporates a mechanism through which floods cause the capital stock and the public infrastructure to depreciate exogenously, using the data on flood damage recorded in the Flood Statistics released by the Japanese government. The result of the analysis is twofold. First, flood shocks dampen GDP from the supply [...]
- Should the Federal Govt "split" its cloud computing contracts?
by firstname.lastname@example.org (Luke Froeb) in Managerial Econ, 2022-07-27 17:08:00 UTC
WSJ Reports : Amazon dominates the cloud-infrastructure industry with a 39% share of the 2021 global market ahead of Microsoft at No. 2 with a 21% share, according to research firm Gartner Inc. ... Microsoft has grown frustrated about its lack of progress selling its Azure cloud services to the U.S. federal government with its rival’s Amazon Web Services continuing to win most of those contracts, said some of the people familiar with its efforts. ... Microsoft Corp. is rallying other big name cloud-computing providers such as Alphabet Inc.’s Google and Oracle Corp. to [...]
- No title
by maximorossi in NEP-LTV blog, 2022-07-26 19:33:05 UTC
The role of unobservable characteristics in friendship network formation.
By: Pablo Brañas-Garza (Universidad de Loyola Andalucia); Lorenzo Ductor (Department of Economic Theory and Economic History, University of Granada.); Jaromir Kovarik (‡Universidad del País Vasco UPV/EHU and University of West Bohemia)
Abstract: Inbreeding homophily is a prevalent feature of human social networks with important individual and group-level social, economic, and health consequences. The literature has proposed an overwhelming number of dimensions along which human relationships might sort, without pr [...]
- The big idea: should we be using data to make lifeâs big decisions?
by ? in Science news, comment and analysis | theguardian.com, 2022-07-25 11:30:34 UTC
Faced with tough choices, people usually fall back on gut instinct or seek the advice of friends. Now, there’s an alternativeWhom should you marry? Where should you live? How should you spend your time? For centuries, people have relied on their gut instin [...]
- The futility of economic policy debate
by chris in Stumbling and Mumbling, 2022-07-25 09:08:58 UTC
Sam Bowman writes on the divide between boosters and doomsters - those who believe we can boost economic growth and those who don't. He misses, however, an important point.
This is that economic policy is not made by Sam, nor by Giles Wilkes, Stian Westlake, Aaron Batani or Torsten Bell. Policy-making (at least in the UK now) is not a meritocracy in which the people with the best ideas get the most say. Nor of course is it a democracy in which we all have equal say.
Instead, a mere glance at the Tory leadership contest (and a mere glance is all any of us can stand) tells us that policy is made [...]
- Sunday assorted links
by ? in Marginal Revolution, 2022-07-24 17:33:30 UTC
1. Timothy Snyder’s argument that Russia is losing.
2. “We provide novel evidence that poor individuals born in countries with high consumption of meat are more likely to show soccer prowess.”
3. Are young people becoming more miserable r [...]
- Fertility and migration
by Christian Zimmermann in NEP-DGE blog, 2022-07-14 19:24:09 UTC
By Arianna Garofalo
Over the past three decades, the drop in fertility rates has been accompanied by high rates of migration in several developing countries. We argue that migration affects fertility negatively in the countries of origin. To analyze the effect of migration we build a fertility choice model, based on De La Croix (2014), with endogenous migration decisions. In this framework, when a member of the household migrates abroad, income increases due to remittances but at the same time, individuals left at home face a much higher opp [...]
- OECD data show less employment for older French folks : Assessing joie de vivre on Bastille Day
by ? in FRED blog, 2022-07-14 13:00:00 UTC
Part of the “My favorite FRED graph” guest post series.
It’s July 14th, Bastille Day! So the FRED Blog focuses on France, where the retirement age was a central issue in their recent elections.
France’s legal retirement age is 62, conditional on time worked. President Emmanuel Macron, who was re-elected in April, prefers raising it to 65. Jean-Luc Mélenchon campaigned on lowering it to 60 as part of the leftist coalition policy proposal. That political debate didn’t include a great deal of data, so we provide some here, including international comparisons.
The FRED graph above uses OECD data [...]
- Global Cultures and Global Variations in Obesity
by ? in ConscienHealth, 2022-07-09 10:00:52 UTC
Obesity prevalence is rising all over the world. But in different cultures and different countries, tremendous variations in obesity are striking. Countries of eastern Asia tend to have very low obesity prevalence. Japan, for example, has an obesity rate o [...]
- 3 examples of post-publication review (ecology, the underground economy, and âlockdownsâ)
by Andrew in Statistical Modeling, Causal Inference, and Social Science, 2022-07-05 13:34:22 UTC
1. Manuel Lerdau writes:
This might interest you as an example of a public post-publication review that will, I hope, make a difference. As a bonus, one of the key issues with the original paper is a statistical problem. We have this issue frequently in Ecology (the field, not, in particular, the journal), an over-emphasis on mean values and a corresponding underappreciation of the importance of variability.
2. Asher Meir writes:
This should warm your heart:
Uncovering errors on measuring the underground economy: Manuel A. Gómez and Adrián Ríos-Blanco uncover problems in the Journal of Mac [...]
- Measuring financial inclusion: how much do households participate in the formal financial system?
by x in Ajay Shah's blog, 2022-07-03 05:02:00 UTC
by Geetika Palta, Mithila A. Sarah and Susan Thomas .
Measuring the impact of financial inclusion
Households use financial instruments and financial markets to achieve their lifetime objectives. These include being able to smooth consumption over time, being able to withstand shocks, and pursue entrepreneurial opportunities to gain income mobility. Financial inclusion refers to such access to finance for a larger subset of the population (e.g. Rao, 2018 ). Financial policy makers have pursued financial inclusion for many decades. In recent years, the rise of ESG investors has bolstered p [...]
- No title
by maximorossi in NEP-LTV blog, 2022-06-28 21:07:05 UTC
- Optimal bank capital requirements: What do the macroeconomic models say?
by Christian Zimmermann in NEP-DGE blog, 2022-06-27 21:17:20 UTC
By Adam Gulan, Esa Jokivuolle and Fabio Verona
The optimal level of banks’ capital requirements has been a key research topic since at least the introduction of the Basel rules in the late 1980s. In this paper, we review the literature, focusing on recent findings from quantitative structural macroeconomic models. While dynamic stochastic general equilibrium models capture second-round (general equilibrium) effects such as the feedback effects from macroeconomic outcomes back to financial intermediation and the dynamic evolution of the econom [...]
- Oil and gas prices move together like rockets and feathers
by ? in FRED blog, 2022-06-23 13:00:00 UTC
In recent months, U.S. gasoline prices have risen significantly—because of both increased demand and increased production costs. Notably, but not surprisingly, oil prices have also increased. And although oil is a key input in the production of retail gasoline, oil and gas prices don’t always move in tandem.
When oil prices shoot upward, gas prices rise with them. And when oil prices fall, gasoline prices also fall; but they can fall at a slower rate. Economists refer to this market dynamic as “asymmetric pass-through.” A more colorful description of the phenomenon is “rockets and feathers.”
- The Poisson distribution: From basic probability theory to regression models
by Achim Zeileis in R-bloggers, 2022-06-22 22:00:00 UTC
[This article was first published on Achim Zeileis , and kindly contributed to R-bloggers ]. (You can report issue about the content on this page here )
Want to share your content on R-bloggers? click here if you have a blog, or here if you don't.
Brief introduction to the Poisson distribution for modeling count data using the distributions3 package. The distribution is illustrated using the number of goals scored at the 2018 FIFA World Cup, suitable for self-study or as a classroom exercise.
The Poisson distribution
The classic basic probability distribution e [...]
- The future of work 2 â working long and hard
by michael roberts in Michael Roberts Blog, 2022-06-22 14:34:52 UTC
In the first post of my Future of Work series , I looked at the impact of working from home and remote work which has mushroomed since the COVID pandemic.
In this second part, I want to consider the impact of work on people’s lives and health and how that will pan out over the next few decades. Marx once said “The less you eat, drink and buy books; the less you go to the theatre, the dance hall, the public house; the less you think, love, theorize, sing, paint, fence, etc., the more you save—the greater becomes your treasure which neither moths nor rust will devour—your capital. The less y [...]
- Financer le nuclÃ©aire sans argent public et sans dÃ©manteler EDFÂ : une solution existeÂ !
by FranÃ§ois Henimann in Contrepoints, 2022-06-21 02:50:13 UTC
Nous avons montré dans un précédent article que la stratégie énergétique 2050 annoncée par le président de la République relance insuffisamment le nucléaire, et que décarboner de façon compétitive et résiliente l’économie française à l’horizon 2050 nécessite de disposer à cette échéance d’une puissance installée nucléaire de l’ordre de 85 GW (60 à 65 % du mix électrique).
EDF est en grande difficulté financière, à cause de la sous-évaluation du prix de vente de l’ARENH (Accès Régulé à l’Électricité Nucléaire Historique), fixé à 42 euros/MWh en 2012, et surtout non réévalué depuis, malgré les c [...]
- Putinâs War and the German Economic Model
by Dalia Marin in Project Syndicate, 2022-06-13 12:55:42 UTC
MUNICH – Will Germany’s economic model survive Russian President Vladimir Putin’s war on Ukraine? As I noted in a recent talk at Harvard University, answering that question requires revisiting recent economic history.
Germany’s economy was transformed after the fall of communism in 1989. Liberalization of trade with the country’s eastern neighbors had three profound effects at home . First, it led to decentralized wage bargaining. Second, it had a flattening effect on hierarchical management in German firms. And third, it extended German production networks into Central and Eastern Europe. [...]
- Educational inequality
by maximorossi in NEP-LTV blog, 2022-06-02 20:14:05 UTC
By: Blanden, Jo (University of Surrey); Doepke, Matthias (Northwestern University); Stuhler, Jan (Universidad Carlos III de Madrid)
Abstract: This chapter provides new evidence on educational inequality and reviews the literature on the causes and consequences of unequal education. We document large achievement gaps between children from different socio-economic backgrounds, show how patterns of educational inequality vary across countries, time, and generations, and establish a link between educational inequality and social mobility. We interpret this evidence fr [...]
by maximorossi in NEP-LTV blog, 2022-06-02 20:03:59 UTC
By: Richard Layard
Abstract: As societies become richer, they do not become happier. This paradox has led to a growing interest in the science of wellbeing, and how policymakers can evaluate policies in terms of what will improve wellbeing. Economists investigate what is important for wellbeing and the influence of wellbeing on working life, education and health.
Keywords: Climate Change, Education, Employment, Health, Inequality, Unemployment, Wellbeing, Wages, Happiness, Public Policy
- Confidence Intervals for Recursive Journal Impact Factors
by email@example.com (David Stern) in Stochastic Trend, 2022-06-02 06:39:00 UTC
I have a new working paper coauthored with Johannes König and Richard Tol . It's a follow up to my 2013 paper in the Journal of Economic Literature , where I computed standard errors for simple journal impact factors for all economics journals and tried to evaluate whether the differences between journals were significant.* In the new paper, we develop standard errors and confidence intervals for recursive journal impact factors, which take into account that some citations are more prestigious than others, as well as for the associated ranks of journals. We again apply these methods to the all [...]
- Axel Leijunhufvud, Wide-Ranging Economist
by Lance Taylor in INET Blog, 2022-06-01 18:31:00 UTC
An obituary for Axel Leijunhufvud (Sept 6, 1933 - May 5, 2022)
Axel Leijunhufvud’s sad passing on May 5 th has rightly stimulated a round of tributes to a thinker of uncommon breadth. But there is perhaps reason to doubt how widely appreciated the diversity of his thinking really was. Leijunhufvud changed the colors of his economic reasoning in response to many strands of 20th-century discussion, repainting each one. He had an ample palette and his color mixes were always interesting – an artist of macroeconomics indeed. Never lacking confidence a [...]
- A new federal program goes local to accelerate regional innovation
by Mark Muro in The Avenue, 2022-05-31 18:43:12 UTC
By Mark Muro One of the most compelling developments of the Biden presidency has been the emergence of significant programs and policies targeted at helping places (and their residents) thrive, rather than people more generally. Proposed across numerous realms , “place-based” programs such as the Economic Development Administration’s Build Back Better Regional Challenge are encouraging bottom-up problem-solving in more and more places, even though the Senate blockage of the Build Back Better Act stymied multiple proposals last winter.
Now comes another impressive embrace of place-based policy— [...]
- Monetary Policy in Disaster-Prone Developing Countries
by Christian Zimmermann in NEP-DGE blog, 2022-05-23 21:19:06 UTC
By Chris Papageorgiou, Giovanni Melina, Alessandro Cantelmo and Nikos Fatouros
This paper analyzes monetary policy regimes in emerging and developing economies where climate-related natural disasters are major macroeconomic shocks. A narrative analysis of IMF reports published around the occurrence of natural disasters documents their impact on important macroeconomic variables and monetary policy responses. While countries with at least some degree of monetary policy independence typically react by tightening the monetary policy stance, i [...]
- The Persistence of Childhood Poverty in the US
by ? in Counter Punch, 2022-05-23 08:37:09 UTC
In the United States, children are more likely to experience poverty than people over 18. In 2020, about 1 in 6 kids, 16% of all children, were living in families with incomes below the official poverty line – an income threshold the government set that ye [...]
- Stealing a living
by chris in Stumbling and Mumbling, 2022-05-21 09:57:05 UTC
Now I am retired, I can safely make a confession: for years, I was stealing a living.
I say so because the general financial advice any retail investor needs is actually very simple :
- Minimize taxes and charges. Avoid expensive fund manager fees. Don’t trade very much . Make full use of Isa and Sipp allowances.
- Make the power of compounding work for you, not against you. Start investing as early as you can. And remember that fund managers’ fees compound horribly over time; an extra half percentage point in annual fees can easily add up to over £2000 for every £10,000 invested over twenty [...]
- Dynamic spatial general equilibrium
by Christian Zimmermann in NEP-DGE blog, 2022-05-17 02:55:29 UTC
By Benny Kleinman, Ernest Liu and Stephen Redding
We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in response to shocks. We apply our framework to the re-allocation of US economic activity from the Rust Belt to the Sun Belt from 1965-2015. We find slow convergence to steady-state, with US states closer to steady-state at the end of our sample period than at its beginning. We find su [...]
- Liquidity constraints and fiscal multipliers
by Christian Zimmermann in NEP-DGE blog, 2022-05-10 04:28:58 UTC
By Diogo Sá
Although recent studies identified the percentage of constrained agents as the crucial force driving many fiscal policy mechanisms, the values attained were purely the result of model calibrations. We make use of household-level data to estimate the fraction of hand-to-mouth households for several European countries. We calibrate an overlapping generations model with heterogeneous agents to match the net liquid wealth distribution and study the impact of credit constraints on the effectiveness of fiscal consolidation policies. Ou [...]
- House prices: who wins, who loses
by chris in Stumbling and Mumbling, 2022-05-09 12:55:19 UTC
I grow my own kale and never buy any from the shops. If the price of kale rises, do I therefore win or lose?
The answer is: neither. On the one hand, I could profit if I were to sell the kale I grow. But on the other, the cost of eating my own kale – the money I would make if I were to sell it – has also risen. Net, I’m neither better or worse off.
Some of you might not care very much about the kale-growers of Rutland. What’s true of kale, though, is true of something many of you do care about – house prices.
Just as I am self-sufficient in kale, so I’m self-sufficient in housing. As an owner- [...]
- Jordan Smith: Alito Was Wrong
by ? in Diane Ravitch's blog, 2022-05-08 13:00:00 UTC
The Intercept contains an article that is worth your time about the leaked Alito decision that overturns Roe v. Wade.
Jordan Smith writes:
AS A MATTER of fact, Supreme Court Justice Samuel Alito is wrong.
In a leaked draft of the court’s majorit [...]
- Dollar Invoicing, Global Value Chains, and the Business Cycle Dynamics of International Trade
by Christian Zimmermann in NEP-DGE blog, 2022-04-28 18:59:01 UTC
By Nikhil Patel and David Cook
Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks [...]
- Migrant Smuggling to Europe: a Matching Model
by Christian Zimmermann in NEP-DGE blog, 2022-04-27 04:09:39 UTC
By Olivier Charlot, Claire Naiditch and Radu Vranceanu
This paper develops a matching model à la Pissarides (2000) to analyze the migrant smuggling market, building on the empirical evidence related to the smuggling of migrants from the Horn of Africa and the Middle East to the European region in the last decade. The model allows us to determine the equilibrium numbers of smugglers and of incoming irregular migrants as well as the total migrant welfare. Most of the coercion-based measures targeting the smugglers achieve the reduction in th [...]
- What the Shanghai Lockdown Tells Us About Chinaâs Future
by Nancy Qian in Project Syndicate, 2022-04-22 14:20:48 UTC
CHICAGO – After signaling that it was moving to a more nuanced COVID-19 policy, Shanghai – a city of 26 million – was pressured by the central government to lock down in late March, and has only just started to ease restrictions after almost one month. The official reason for this drastic policy shift is that citywide testing had revealed high infection rates. Yet one is left wondering why the authorities didn’t opt for a less costly alternative to a complete lockdown.
After all, Omicron, which now accounts for almost all new cases globally, has only mild effects on vaccinated people. And w [...]
- Attention and Fluctuations in Macroeconomic Uncertainty
by Christian Zimmermann in NEP-DGE blog, 2022-04-18 14:46:30 UTC
By Yu-Ting Chiang
This paper studies a dispersed information economy in which agents can exert costly attention to learn about an unknown aggregate state of the economy. Under certain conditions, attention and four measures of uncertainty are countercyclical: Agents pay more attention when they expect the economy to be in a bad state, and their reaction generates higher (i) aggregate output volatility, (ii) cross-sectional output dispersion, (iii) forecast dispersion about aggregate output, and (iv) subjective uncertainty about aggregate out [...]
- Why the Buffalo Bills Stadium Deal is One of the Worst Ever Made
by ? in Counter Punch, 2022-04-18 07:50:59 UTC
After New York lawmakers blew past the deadline to approve the state budget, they finally came to an agreement on April 9, 2022, that included a US$850 million subsidy for a new stadium in Buffalo for the NFL’s Bills. As a sports economist who has studied [...]
- (In)Efficient Commuting And Migration Choices: Theory And Policy In An Urban Search Model
by Christian Zimmermann in NEP-DGE blog, 2022-04-16 21:49:42 UTC
By Luca Marchiori, Julien Pascal and Olivier Pierrard
We develop a monocentric urban search-and-matching model in which workers can choose to commute or to migrate within the region. The equilibrium endogenously allocates the population into three categories: migrants (relocate from their hometown to the city), commuters (traveling to work in the city) and home stayers (remaining in their hometown). We prove that the market equilibrium is usually not optimal: a composition externality may generate under- or over-migration with respect to th [...]
- Beyond Eurocentrism
by ? in AEON, 2022-04-15 10:00:00 UTC
If you really want decolonisation, go beyond cultural criticism to the deep structural insights of economist Samir Amin - by Ingrid Harvold Kvangraven Read at Aeon [...]
- Who Suffers the Most From Crime Wave?
by GianCarlo Canaparo in The Foundry, 2022-04-12 13:53:14 UTC
Violent crime, like the price of gas, is rising. Not everyone is experiencing this crime wave in the same way. For some, it’s a distant issue experienced by other people somewhere else. For others, it’s a daily life-threatening concern.
We parsed the FBI’s crime data from 2011 to 2020 (the most recent data available) and found that African Americans bear an increasingly large share of the harm from crime. African American offenders, meanwhile, are committing an increasingly large share of violent crimes.
For other racial groups, the numbers are either decreasing (in the case of both whi [...]
- Land is back, it should be taxed, it can be taxed
by Christian Zimmermann in NEP-DGE blog, 2022-04-07 19:10:20 UTC
By Odran Bonnet, Guillaume Chapelle, Alain Trannoy and Etienne Wasmer
Land is back. The increase in wealth in the second half of 20th century arose from housing and land. It should be taxed. We introduce land and housing structures in Judd’s standard setup: first best optimal taxation is achieved with a property tax on land and requires no tax on capital. With positive taxes on housing rents, a first best is still possible but with subsidies to rental housing investments, and either with differential land tax rates or with a tax on imp [...]
- Opportunity and Inequality across Generations
by Christian Zimmermann in NEP-DGE blog, 2022-03-30 22:04:04 UTC
By Winfried Koeniger and Carlo Zanella
We analyze how intergenerational mobility and inequality would change relative to the status quo if dynasties had access to optimal insurance against low ability of future generations. Based on a dynamic, dynastic Mirrleesian model, we find that insurance against intergenerational ability risk increases in the social optimum relative to the status quo. This implies less intergenerational mobility in terms of welfare but no quantitatively significant change in earnings mobility. Earnings mobility is thu [...]
- There Is No Saving the Case for Industrial Policy
by Don Boudreaux in Cafe Hayek, 2022-03-28 16:14:03 UTC
Tweet Mr. W__ alleges that my opposition to industrial policy “must be explained only by [my] dogmatic faith in the magic of imaginary free market forces.”
You write, in support of industrial policy, that “[t]here is no guarantee that we’ll get optimum comparative advantage under the free market.”
Of course not. Nothing in life, save death, is guaranteed. That standard is inappropriate because meeting it is impossible. The relevant question here is this: Under which policy – free markets or government direction – are individuals as producers most likely to discover [...]
- Video of My Presentation on Asymmetric Carbon Emissions
by firstname.lastname@example.org (David Stern) in Stochastic Trend, 2022-03-28 04:47:00 UTC
I recently gave a seminar in Italy (virtually) on our paper on asymmetric carbon emissions over the business cycle. Here is the video: [...]
- Minimum Wage Shocks in an Estimated DSGE Model with Underreporting
by Christian Zimmermann in NEP-DGE blog, 2022-03-25 23:35:13 UTC
By Alisher Tolepbergen
We build and estimate a New Keynesian DSGE model to analyze the macroeconomic effects of minimum wage shocks in an economy characterized by a high degree of wage underreporting. The estimation results suggest that the effect of the minimum wage shocks to all economic aggregates but employment is not significant. The impulse response analysis shows that a higher degree of underreporting results in less responsive dynamics to the minimum wage shocks. In addition, the magnitude of the responses is also affected by the share o [...]
- Worker-Firm Screening and the Business Cycle
by Christian Zimmermann in NEP-DGE blog, 2022-03-21 21:42:49 UTC
By Jake Bradley
There has been a substantial body of work modeling the co-movement of employment, vacancies, and output over the business cycle. This paper builds on this literature, and informed by empirical investigation, models worker and firm search and hiring behavior in a manner consistent with recent micro-evidence. Consistent with empirical findings, for a given vacancy, a firm receives many applicants, and chooses their preferred candidate amongst the set. Similarly, workers in both unemployment and employment, can evaluate many op [...]
- Other-Regarding Preferences and Redistributive Politics
by maximorossi in NEP-LTV blog, 2022-03-16 09:55:15 UTC
By: Fehr, Ernst (University of Zurich); Epper, Thomas (University of Lille); Senn, Julien (University of Zuri). Abstract:Increasing inequality and associated egalitarian sentiments have again put redistribution on the political agenda. Other-regarding preferences may also affect support for redistribution, but knowledge about their distribution in the broader population and how they are associated with political support for redistributive policies is still scarce. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributiv [...]
- Cuidado con aquellos que nos digan que hay que aprovechar las subidas recientes de bolsa para vender
by Alejandro Nieto GonzÃ¡lez in Elblogsalmon, 2022-03-16 08:01:27 UTC
Llevamos un inicio de año relativamente malo en cuanto a inversión bursátil se refiere . Ya veníamos de un final de año bajista, pero la invasión de Ucrania por parte de Rusia ha complicado todo aún más. Añade incertidumbre a la recuperación económica post-covid y esto hace que las valoraciones de las empresas sean menores.
Algunos anuncian que lo ideal es estar fuera del mercado y aprovechar alguna subida que ha habido recientemente para vender. Es decir, algunos analistas recomiendan intentar hacer market timing . [...]
- On the Inefficiency of Non-Competes in Low-Wage Labor Markets
by Christian Zimmermann in NEP-DGE blog, 2022-03-15 15:08:47 UTC
By Bart Hobijn, André Kurmann and Tristan Potter
We study the efficiency of non-compete agreements (NCAs) in an equilibrium model of labor turnover. The model is consistent with empirical studies showing that NCAs reduce turnover, average wages, and wage dispersion for low-wage workers. But the model also predicts that NCAs, by reducing turnover, raise recruitment and employment. We show that optimal NCA policy: (i) is characterized by a Hosios like condition that balances the benefits of higher employment against the costs of inefficient con [...]
- China's Hedge Against Geopolitical Shock
by Zhang Jun in Project Syndicate, 2022-03-14 15:35:55 UTC
SHANGHAI – In terms of geopolitical impact, nothing could be more important than the United States’ shift from strategic cooperation to strategic competition with China. This change has darkened many observers’ views of China’s economic prospects, as indicated by a Bruegel report released late last year. The assumption, it seems, is that China has no choice but to retreat from its successful development path and embark on a less prosperous path toward self-reliance, with the state exercising complete control over the economy to hedge against geopolitical shocks. But China’s efforts to bolster [...]
- Robots and Humans: The Role of Fiscal and Monetary Policies in an Endogenous Growth Model
by Christian Zimmermann in NEP-DGE blog, 2022-03-12 17:34:16 UTC
By Óscar Afonso, Elena Sochirca and Pedro Cunha Neves
In this paper we develop a dynamic general equilibrium growth model in which robots can replace unskilled labor and: i) the government uses tax revenues to invest in social capital and compensate those who do not work; ii) there is monetary policy with cash-in-advance restrictions that impact, for example, wages; iii) social capital increases skilled-labor productivity and facilitates the technological-knowledge progress. Our results confirm that by reducing the unskilled-to-skilled-labor r [...]
- Quotation of the Dayâ¦
by Don Boudreaux in Cafe Hayek, 2022-03-11 09:30:00 UTC
Tweet … is from page 73 of Israel Kirzner’s March 1992 South African Journal of Economics paper, “ Subjectivism, Freedom and Economic Law ” as this lecture is reprinted in Austrian Subjectivism and the Emergence of Entrepreneurship Theory , (Peter J. Boettke and Frédéric Sautet, eds., 2015), which is a volume in The Collected Works of Israel M. Kirzner :
The tendency of market outcomes to reflect, at least to some extent, the realities which surround the society of men, derives from the propensity of men shrewdly to size up these uncertainties and to act purposefully to d [...]
- Consumption taxation to finance pension payments
by Christian Zimmermann in NEP-DGE blog, 2022-03-10 17:08:47 UTC
By Kilian Ruppert, Mattias Schön and Nikolai Stähler
This paper assesses how a permanent shift from financing a public pay-as-you-go pension by direct (labour income) taxation towards financing it by indirect (consumption) taxation affects the economy and welfare. To this end, we use an overlapping-generations-augmented two-region general equilibrium framework with search frictions on the labour market. The analysed tax reform partially shifts the tax burden from domestic to foreign producers and lowers marginal costs of domestic production [...]