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2021-11-29

• Bank branch density and economic development
  by ? in FRED blog, 2021-11-29 14:00:00 UTC

  An important component in the development of an economy is for the population to be “banked”—that is, to have a bank account to save money and participate in the payment system. One indicator of the amount of banked people in a location (e.g., a state or country) used to be the number of bank branches in that location. The FRED graph above shows this statistic for a non-random set of countries: Mongolia, the United States, and Nigeria. If this statistic is in some way representative of economic development, why is the number of bank branches in Mongolia so much higher than in the United State [...]

2021-11-27

• Democracy or Optimal Policy: Income Tax Decisions without Commitment
  by Christian Zimmermann in NEP-DGE blog, 2021-11-27 19:40:53 UTC

  By Youngsoo Jang http://d.repec.org/n?u=RePEc:pra:mprapa:110466&r=dge How do differences in the government’s political and commitment structure affect the aggregate economy, inequality, and welfare? I analyze this question, using a calibrated Aiyagari’s (1994) economy with wealth effects of labor supply wherein a flat tax rate and transfers are endogenously determined according to its political and commitment structure. I compare four economies: a baseline economy, an economy with the optimal tax with commitment in all steady states, an economy with the optimal tax without commitment, and a p [...]

2021-11-22

• Green technology policies versus carbon pricing. An intergenerational perspective
  by Christian Zimmermann in NEP-DGE blog, 2021-11-22 19:22:32 UTC

  By Sebastian Rausch and Hidemichi Yonezawa http://d.repec.org/n?u=RePEc:ssb:dispap:965&r=dge Technology policy is the most widespread form of climate policy and is often preferred over seemingly efficient carbon pricing. We propose a new explanation for this observation: gains that predominantly accrue to households with large capital assets and that influence majority decisions in favor of technology policy. We study climate policy choices in an overlapping generations model with heterogeneous energy technologies and distortionary income taxation. Compared to carbon pricing, green technology [...]

• Cancellation of rail projects in Northern England shows why fiscal rules with investment caps and debt targets just create short-termism
  by ? in Mainly Macro, 2021-11-22 11:29:20 UTC

    As Stephen Bush outlined here , and I foreshadowed here , the reason why the new high speed Northern Powerhouse Rail line has been cut, HS2 will no longer go to Leeds, and the less newsworthy cuts to Tfl infrastructure projects, is the government’s 3% cap on public investment, and its determination that government debt will be falling once the pandemic is over. [1] The excuse of long delivery periods for the cancelled projects does not wash when the government’s current scaled back plans also have the same long implementation period. Is there some reason why public investment should be held [...]

2021-11-19

• An Economy of Neural Networks: Learning from Heterogeneous Experiences
  by Christian Zimmermann in NEP-DGE blog, 2021-11-19 22:29:23 UTC

  By Artem Kuriksha http://d.repec.org/n?u=RePEc:arx:papers:2110.11582&r=dge This paper proposes a new way to model behavioral agents in dynamic macro-financial environments. Agents are described as neural networks and learn policies from idiosyncratic past experiences. I investigate the feedback between irrationality and past outcomes in an economy with heterogeneous shocks similar to Aiyagari (1994). In the model, the rational expectations assumption is seriously violated because learning of a decision rule for savings is unstable. Agents who fall into learning traps save either excessively or [...]

2021-11-17

• Firm Heterogeneity, Market Power and Macroeconomic Fragility
  by Christian Zimmermann in NEP-DGE blog, 2021-11-17 15:38:11 UTC

  By Alessandro Ferrari and Francisco Queirós http://d.repec.org/n?u=RePEc:sef:csefwp:627&r=dge We investigate how firm heterogeneity and market power affect macroeconomic fragility, defined as the probability of long-lasting recessions. We propose a theory in which the positive interaction between firm entry, competition and factor supply can give rise to multiple steady-states. We show that when firm heterogeneity is large, even small temporary shocks can trigger firm exit and make the economy spiral in a competition-driven poverty trap. Calibrating our model to incorporate the well-documente [...]

2021-11-15

• Why does risk matter more in recessions than in expansions?
  by Christian Zimmermann in NEP-DGE blog, 2021-11-15 16:41:15 UTC

  By Martin Andreasen, Giovanni Caggiano, Efrem Castelnuovo and Giovanni Pellegrino http://d.repec.org/n?u=RePEc:bof:bofrdp:2021_013&r=dge This paper uses a nonlinear vector autoregression and a non-recursive identification strategy to show that an equal-sized uncertainty shock generates a larger contraction in real activity when growth is low (as in recessions) than when growth is high (as in expansions). An estimated New Keynesian model with recursive preferences and approximated to third order around its risky steady state replicates these state-dependent responses. The key mechanism behind t [...]

2021-11-14

• The decline of economics
  by chris in Stumbling and Mumbling, 2021-11-14 12:31:39 UTC

  Edward Luce writes : Bill Clinton’s 1992 campaign watch phrase was “it’s the economy, stupid”. Today it would be “it’s the culture, idiot”. He’s right, but this poses the question: why did this change? The question of, course, applies to the UK as well as the US. One fact deepens the puzzle. It’s that trend growth in GDP per capita has halved since the 90s*. This should have made economic issues more important, because it’s much less obvious now that the economy can thrive without policy intervention. Back in the 90s, politicians might reasonably have thought “the economy will take care of i [...]

2021-11-12

• Ethics of Behavioural Science Policy: Nudge FORGOOD
  by Liam Delaney in Economics, Psychology and Policy, 2021-11-12 01:00:00 UTC

  This is one of a series of "living posts" that will updated periodically. See more examples on the right-hand side-bar of the blog.  The post below has been developed since 2015 to keep tabs on various discussions about ethical aspects of behavioural science and policy. I will continue to update this post through the next three years. The paper linked here (abstract below), co-authored with Leonhard Lades and published in Behavioural Public Policy, is an attempt to summarise what has become a very large literature on ethics into a framework that is useful for project development and training. [...]

2021-11-10

• 87. Informe de España y Europa 2021: salarios, productividad, calidad del sector público y satisfacción ciudadana
  by MCG Blogs de Economía in Economía y desarrollo de España y Galicia, 2021-11-10 14:05:00 UTC

    Desarrollo y calidad del Sector Público en España y Europa, 2021. INFORME DE ESPAÑA Y EUROPA 2021 La revista de investigación económica RSES, dedicada a los estudios económicos regionales y sectoriales de Europa, América y otras áreas, ha publicado en el Volumen 21-1 del año 2021 un interesante artículo, de la Profesora María-Carmen Guisán , Catedrática de universidad en el área de Economía Aplicada, que ha sido directora de 3 revistas de investigación económica incluidas en la prestigiosa base SCOPUS, y una de las autoras más destacadas por número de lectores en la base internacional Ideas- [...]

2021-11-09

• Will the Biden Administration's Trillion Dollar Investment in Infrastructure Unlock the Potential of Post-Industrial Cities?
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-11-09 21:31:00 UTC

    The Biden Administration is about to enact a new infrastructure law that will spend more than $1 trillion dollars on rebuilding America's infrastructure. Cities such as Baltimore, Cleveland, Detroit and St. Louis need new investment to boost the local economy, reduce local poverty, and increase the quality of life of children in these cities. My co-authored 2021 book; " Unlocking the Potential   of Post-Industrial Cities" explores the synergistic investments that are needed to help the many poor people who live in poor cities to achieve their own "American Dream". Unlike other urban books, o [...]

2021-11-08

• The Case for Chinese Foreign Aid
  by Nancy Qian in Project Syndicate, 2021-11-08 15:56:03 UTC

  CHICAGO – Since 2000, China has spent $843 billion on bilateral aid. That is around $39.5 billion per year, similar to the amount provided by the United States, the world’s largest donor of foreign aid. Although the two countries’ definitions of foreign aid differ, no one disputes the fact that China – which in the past two decades has financed 13,427 bilateral aid projects in 165 countries – is the biggest new player in this domain. Moreover, recent research is challenging outside observers’ often negative view of the country’s overseas development schemes. Critics accuse China of using ai [...]

• Working less
  by chris in Stumbling and Mumbling, 2021-11-08 13:52:00 UTC

  Many people believe we need to work less if we are to avoid catastrophic climate change. We must “dramatically reduce economic activity” says George Monbiot. “We should cut working hours to save the planet” agrees Simon Kuper. In truth, though, there are other reasons to work less, as Martin Hagglund argued in his brilliant This Life . Our most fundamental possession, he says, is time, and we can only be truly free if we can choose what to do with this scarce asset. For many of us, though, having to work long hours or for many years deprives us of this freedom. Which runs into the objection th [...]

2021-11-05

• La globalización deja perdedores, sí, pero muchos más ganadores: el Elefante de Milanovic tiene problemas metodológicos
  by Ancora Imparando in Elblogsalmon, 2021-11-05 12:42:39 UTC

  Toca hablar de desigualdad . Proclamado por muchos como el gráfico más importante de los últimos años, el Elefante de Milanovic no deja indiferente a nadie en el mundillo. Hoy, intentaremos rellenar sus lagunas más comunes. Vemos renta relativa en X (si, de cada 100, cobro más que 61 y menos que 37, seré el percentil 62) y su crecimiento en Y. De ahí el mote de "elefante": poco crecimiento en la cola, torso alto, caída en la curva de la trompa y repunte de megaricos. Spoiler: la globalización no afecta a todos por igual . La lectura habitual afirma que pobres y ricos se han b [...]

2021-11-04

• Impôts sur les multinationales : l’Irlande évite le coup de massue fiscale
  by Philippe Lacoude in Contrepoints, 2021-11-04 04:15:23 UTC

  Par Philippe Lacoude. Selon Bruno Le Maire, le G7 était, en mai dernier « à un millimètre d’un accord historique » sur une réforme de la fiscalité internationale. Cinq mois plus tard, sous l’énorme pression des pays les plus dépensiers, l’ Irlande aurait enfin capitulé et accepterait de relever son impôt sur les sociétés pour rejoindre l’accord mondial rêvé par les étatistes de tous les partis. Depuis quatre ans, je me bats pour mettre en œuvre une taxation internationale d’au moins 15% pour les entreprises multinationales. Ce soir, nous y sommes ! L’ensemble des pays du G20 empruntent la voi [...]

2021-10-29

• Lessons from the Marshall Plan for the European Recovery Plan
  by remi.alleman in Eco Notepad, 2021-10-29 14:27:57 UTC

  Published on 10/29/2021 By Jean-Baptiste Gossé , Aymeric Schneider and Roger Vicquéry The EU post-Covid recovery plan is the largest European-wide fiscal stimulus in 70 years. This post revisits the experience of the Marshall Plan by highlighting the role of structural effects, conditionality design, the need to prepare the plan exit, the influence of fundamentals and the importance of the plan’s success as a vector of European integration. billet_236_ve.pdf Chart 1: Marshall Plan and European plan by type of aid and size of investments financed (% of GDP of recipient countries) So [...]

• Les leçons du plan Marshall pour le plan de relance européen
  by nadine in Bloc-Notes Eco, 2021-10-29 14:06:03 UTC

  Publié le 29/10/2021 Par Jean-Baptiste Gossé , Aymeric Schneider et Roger Vicquéry Le plan européen post-Covid est la plus vaste initiative budgétaire sur le continent depuis 70 ans. Ce billet tire les leçons du plan Marshall en soulignant le rôle majeur des effets structurels induits par une conditionnalité adaptée au contexte, la nécessité de préparer la sortie du plan, l’influence des fondamentaux et l’importance du succès du plan comme vecteur d’intégration en Europe. billet_236_vf.pdf Graphique 1 : Plan Marshall et plan européen par type d'aide et taille des investissements financés [...]

2021-10-28

• My favorite FRED graph: Gasoline prices and consumer expenditures : A guest post from Carlos Asarta, University of Delaware
  by ? in FRED blog, 2021-10-28 13:00:00 UTC

  The FRED graph above shows gasoline prices and real personal consumption expenditures on motor vehicle fuels, lubricants, and fluids between 2006 and 2015. I use this graph when illustrating how changes in prices influence the quantity demanded of a good or service. The inverse relationship between these two variables is a foundational concept in introductory economics courses. This relationship is also used in econ courses to calculate the price elasticity of demand. But instead of using made-up figures or imaginary scenarios to illustrate the price elasticity of demand, I direct my students [...]

2021-10-24

• Incorporating Local Public Health Dynamics into The Rosen/Roback Spatial Equilibrium Model
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-10-24 12:11:00 UTC

   Imagine if there is an infectious disease that spreads within cities but not across cities.   Throughout the COVID crisis, the city specific infection rate has varied across cities at each point in time.  In a city facing a rising infection rate, people can adapt by either engaging in costly self protection (self isolating) or through public health interventions --- such as vaccinating the local population.  In this case, public health substitutes for private health protection investments.  To be safe, one can either isolate and not be vaccinated or continue with life as usual and be vaccinat [...]

2021-10-21

• The Economist’s Guide to Parenting: 10 Years Later (Ep. 479)
  by Stephen J. Dubner in Freakonomics, 2021-10-21 03:00:42 UTC

  In one of the earliest Freakonomics Radio episodes (No. 39!), we asked a bunch of economists with young kids how they approached child-rearing. Now the kids are old enough to talk — and they have a lot to say. We hear about nature vs. nurture, capitalism vs. Marxism, and why you sometimes don’t tell your friends that your father is an economist. Listen and follow our podcast on Apple Podcasts , Spotify , Stitcher , or wherever you get your podcasts. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bo [...]

• The Environmental Kuznets Curve: 2021 Edition
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2021-10-21 02:50:00 UTC

  The second encyclopedia chapter. First one is here . Introduction  The environmental Kuznets curve (EKC) is a hypothesized relationship between various indicators of environmental degradation and countries’ gross domestic product (GDP) per capita. In the early stages of a country’s economic development, environmental impacts and pollution increase, but beyond some level of GDP per capita (which will vary for different environmental impacts) economic growth leads to environmental improvement. This implies that environmental impacts or emissions per capita are an inverted U-shaped function of GD [...]

• Energy and Development
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2021-10-21 02:29:00 UTC

  The first of two book chapters for Elgar encyclopedias I recently wrote. What is the Role of Energy in Economic Activity? The economic system must operate within the constraints determined by the laws of physics and human knowledge of technology. Production, including household production, requires energy to carry out work to convert materials into desired products and to transport raw materials, goods, and people. The second law of thermodynamics implies that energy cannot be recycled and that there are limits to how much energy efficiency can be improved. Therefore, energy is an essential fa [...]

2021-10-19

• Rethinking the Welfare State
  by Christian Zimmermann in NEP-DGE blog, 2021-10-19 17:05:09 UTC

  By Nezih Guner, Remzi Kaygusuz and Gustavo Ventura http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2021_2107&r=dge The U.S. spends non trivially on non-medical transfers for its working-age population in a wide range of programs that support low and middle-income households. How valuable are these programs for U.S. households? Are there simpler, welfare-improving ways to transfer resources that are supported by a majority? What are the macroeconomic effects of such alternatives? We answer these questions in an equilibrium, life-cycle model with single and married households who face idiosyncratic pr [...]

• People love the billionaire, but hate the billionaires’ club
  by ? in ScienceBlog.com, 2021-10-19 13:34:39 UTC

  Americans may respect and admire how individual billionaires – think Oprah Winfrey or Bill Gates – made their fortunes, even as they rage against the “top 1%” as a group, new research finds. In eight related studies, people tended to have fewer problems wi [...]

• People love the billionaire, but hate the billionaires’ club
  by ? in Science Blog, 2021-10-19 13:34:39 UTC

  Americans may respect and admire how individual billionaires – think Oprah Winfrey or Bill Gates – made their fortunes, even as they rage against the “top 1%” as a group, new research finds. In eight related studies, people tended to have fewer problems wi [...]

2021-10-18

• Productivity in late capitalism
  by ? in Stumbling and Mumbling, 2021-10-18 13:27:02 UTC

  In the debate about how to increase productivity, everybody seems to be making an assumption that I find questionable - that feasible policy changes can make a significant difference.We need some historical context here. My chart shows that big, sustained [...]

2021-10-14

• The house price puzzle
  by chris in Stumbling and Mumbling, 2021-10-14 13:49:07 UTC

  Everybody knows that the housing market has become financialized, as Josh Ryan-Collins among others has documented . But what kind of financial asset is housing? The answer is far from straightforward. In one sense, house prices are like share prices. Both are claims upon future incomes – profits in the case of equities and wages in the case of houses (it’s fair to assume rents are a stable fraction of wages). Both tend to fall in recessions. And both have over the years delivered a risk premium – though how great depends upon which time period you use, how you account for liquidity risk and s [...]

• The Decline in Capital-Skill Complementarity
  by Christian Zimmermann in NEP-DGE blog, 2021-10-14 04:34:05 UTC

  By Gonzalo Castex, Stanley Cho and Evgenia Dechter http://d.repec.org/n?u=RePEc:swe:wpaper:2021-06&r=dge We revisit the capital-skill complementarity hypothesis and examine whether and under what conditions this mechanism can explain the developments in wage inequality and labor share in the 1963-2016 period. Krusell, Ohanian, Rios-Rull, and Violante (2000) show that a model with capital-skill complementarity mechanism matches the data well and can account for the changes in wage inequality in the 1963-1992 period. We show that applying the model to the 1963-2016 period delivers a good fit for [...]

2021-10-12

• How Large is the Economy-Wide Rebound Effect in Middle Income Countries? Evidence from Iran
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2021-10-12 01:19:00 UTC

  � We have a new working paper in our rebound effect series. Previous papers reviewed the literature on the economy-wide rebound effect, estimated the economy-wide rebound effect for the United States, and estimated it for some European countries (as well as the United States). The new paper is about Iran. This is a middle income country with a resource intensive and quite regulated economy. Is it a lot different to the developed economies we have already looked at? The rebound effect is large in Iran too. A major difference between Iran and the developed economies is that energy intensity has [...]

2021-10-11

• Downward Interest Rate Rigidity
  by Christian Zimmermann in NEP-DGE blog, 2021-10-11 17:06:39 UTC

  By Grégory Levieuge and Jean-Guillaume Sahuc http://d.repec.org/n?u=RePEc:bfr:banfra:828&r=dge Empirical evidence suggests that bank lending rates are downward rigid: banks tend to adjust their rates more slowly and less completely to short-term market rates decreases than to increases. We investigate the macroeconomic consequences of this downward interest rate rigidity by introducing asymmetric bank lending rate adjustment costs in a macrofinance dynamic stochastic general equilibrium model. Calibrating the model to the euro area economy, we find that the difference in the initial response o [...]

• Afghan women have a long history of taking leadership and fighting for their rights
  by ? in Christians, Conflict and Change – Religion News Service, 2021-10-11 15:35:50 UTC

  (The Conversation) — Two Afghan women scholars write about how Afghan women’s groups have been fighting for human rights, both now and historically. The post Afghan women have a long history of taking leadership and fighting for their rights appeared first [...]

2021-10-08

• The Neoclassical Model and the Welfare Costs of Selection
  by Christian Zimmermann in NEP-DGE blog, 2021-10-08 15:07:30 UTC

  By Fabrice Collard and Omar Licandro http://d.repec.org/n?u=RePEc:tse:wpaper:125924&r=dge This paper embeds firm dynamics into the Neoclassical model and provides a simple framework to solve for the transitional dynamics of economies moving towards more selection. As in the Neoclassical model, markets are perfectly competitive, there is only one good and two production factors (capital and labor). At equilibrium, aggregate technology is Neoclassical, but the average quality of capital and the depreciation rate are both endogenous and positively related to selection. At steady state, output per [...]

• L’innovation n’est pas liée à l’éducation mais à l’intelligence
  by Mises Institute in Contrepoints, 2021-10-08 02:30:26 UTC

  Par Lipton Matthews. Un article du Mises Institute. Les cercles politiques se lamentent de voir s’éloigner les vagues d’innovation. L’éminent économiste Robert Gordon affirme que l’époque des innovations transformatrices est révolue. Comme Peter Thiel , il est déçu par la nature incrémentale des inventions modernes. La thèse du déclin repose sur l’hypothèse que les innovations révolutionnaires comme la machine à vapeur, l’électricité et le téléphone deviennent excessivement rares. Il a été assez facile de trouver des preuves de cette observation, mais nous sommes moins habiles pour comprendre [...]

2021-10-05

• Optimizing the life cycle path of pension premium payments and the pension ambition in the Netherlands
  by Christian Zimmermann in NEP-DGE blog, 2021-10-05 13:49:27 UTC

  By Harry ter Rele, Carolijn de Kok, Nicoleta Ciurila and Peter Zwaneveld http://d.repec.org/n?u=RePEc:cpb:discus:421&r=dge Pension premium rates and pension benefits are independent of age or family situation in the second pillar of the Dutch pension system. In a life cycle model calibrated on Dutch data we investigate the optimal arrangement of pension premiums and benefits taking into consideration two factors: the fact that incomes generally rise with age and the presence of children in the early years of the household. Our analysis points out that due to these factors lifetime welfare can [...]

• Transizione ecologica è cercare un equilibrio fra sviluppo e ambiente
  by Segugio 1 in La Voce, 2021-10-05 09:43:13 UTC

  Il cambiamento climatico e l’impatto antropico sull’ambiente costringono a ripensare modelli di consumo e di produzione. Se il primo passo è misurare la relazione tra i fenomeni, occorre poi dare significato al concetto di transizione ecologica. La relazione tra sviluppo e tutela dell’ambiente Nel corso del tempo, il rapporto fra esseri umani e natura ha vissuto innumerevoli mutamenti, un continuo oscillare tra armonia e conflitto, senso di appartenenza e contrapposizione, scelta di assecondarne i ritmi e invece spinta a modificarne l’aspetto, fino a piegare l’ambiente circostante a [...]

2021-09-28

• The minimum wage dilemma
  by chris in Stumbling and Mumbling, 2021-09-28 13:29:01 UTC

  Should the national living wage rise to £15 an hour? For me, it’s a dilemma because there are two competing and powerful perspectives. The economic perspective is sceptical. Econ 101 says a higher price means lower demand, so a higher minimum will lead to job losses or – just as importantly but often overlooked – cuts in hours. Granted, Econ 101 might be wrong. Where employers have monopsony power, a higher minimum wage can lead to employment actually increasing . Which leads us to the thorny question of empirical evidence. Here, we have a problem. It’s possible that previous rises in the mini [...]

2021-09-27

• What Starmer misses: the C-word
  by ? in Stumbling and Mumbling, 2021-09-27 13:03:54 UTC

  One word is notably absent in Sir Keir Starmer’s recentessay– capitalism.Our most successful politicians have had something to say about this – whether it be Thatcher’s belief that capitalism needed low inflation and weak unions if it were to thrive, or Bl [...]

• Housing Gotham: The 21st Century So Far (Part I)
  by Jason Barr in Skynomics Blog, 2021-09-27 12:02:57 UTC

  Jason M. Barr ( @JasonBarrRU ) and Sean Franklin        September 27, 2021 The 1970s was New York’s darkest decade. The government nearly went bankrupt. A recession that began in 1969 triggered the loss of hundreds of thousands of manufacturing jobs. Between 1970 and 1980, Gotham’s population shrank by more than 800,000 people , while arsonists burned down entire neighborhoods. In those years, only a true visionary could have foreseen the city’s rebound. Yet starting in the early 1990s, New York began a dramatic resurgence. New service-based industries grew in place of the old factory jobs. Cr [...]

2021-09-23

• Monetary Policy over the Lifecycle
  by Christian Zimmermann in NEP-DGE blog, 2021-09-23 19:32:42 UTC

  By Anton Braun and Daisuke Ikeda http://d.repec.org/n?u=RePEc:ime:imedps:21-e-09&r=dge A tighter monetary policy is generally associated with higher real interest rates on deposits and loans, weaker performance of equities and real estate, and slower growth in employment and wages. How does a household’s exposure to monetary policy vary with its age? The size and composition of both household income and asset portfolios exhibit large variation over the lifecycle in Japanese data. We formulate an overlapping generations model that reproduces these observations and use it to analyze how househol [...]

2021-09-20

• Some Microeconomics of Extreme Heat Exposure in the United States
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-09-20 23:12:00 UTC

  �The Biden Administration has made an announcement that it seeks to protect outdoor workers from extreme heat exposure.� �What does the theory of compensating differentials in real estate markets and labor markets teach us about exposure to high temperatures. I maintain two assumptions. Assumption #1:� The apartment rental market is perfectly competitive and an area's heat risk is common knowledge. If heat risk rises in a location, all market bidders are aware of this. Assumption #2:� The labor market for outdoor jobs is perfectly competitive and the job conditions (including heat exposure on [...]

2021-09-19

• Capitalism and the state
  by ? in Stumbling and Mumbling, 2021-09-19 11:27:34 UTC

  Greg Smith and Dehenna Davisonwrite:For many in left behind parts of the country, the reality is that the private sector is stifled by a bloated public sector that is almost Soviet-sized in some areas of the North.This seems to me to be a case of confusing [...]

2021-09-17

• Equidad de género en el trabajo: qué funciona y qué no
  by Hugo Ñopo, Sofia Hidalgo y Jerson Veliz in Foco Económico, 2021-09-17 21:26:34 UTC

  Son varios los indicadores relevantes del mercado de trabajo que acostumbramos a monitorear: participación laboral, desempleo, formalidad, ocupaciones, horas trabajadas, salarios y varios otros. Hay uno que de alguna manera sintetiza los anteriores, agregando todo ellos: la masa salarial. Una mirada a la composición de género de tal masa salarial da cuenta de un estancamiento en equidad de género: en el Perú las mujeres generan un tercio de la masa salarial del país, los otros dos tercios, los hombres. La serie que se construye a partir de la Encuesta Nacional de Hogares permite reportar que e [...]

2021-09-16

• The Neoclassical Model and the Welfare Costs of Selection
  by Christian Zimmermann in NEP-DGE blog, 2021-09-16 17:22:47 UTC

  By Fabrice Collard and Omar Licandro http://d.repec.org/n?u=RePEc:ces:ceswps:_9249&r=dge This paper embeds firm dynamics into the Neoclassical model and provides a simple framework to solve for the transitional dynamics of economies moving towards more selection. As in the Neoclassical model, markets are perfectly competitive, there is only one good and two production factors (capital and labor). At equilibrium, aggregate technology is Neoclassical, but the average quality of capital and the depreciation rate are both endogenous and positively related to selection. At steady state, output per [...]

• A Win for Devin Nunes in Lawsuit Over Journalist Ryan Lizza's Tweet
  by Elizabeth Nolan Brown in Hit & Run blog, 2021-09-16 13:41:02 UTC

  Tweeting article after Nunes called it defamatory could count as "actual malice," court says. In a disturbing ruling for fans of free speech, a federal court has partially sided with Rep. Devin Nunes (R–Calif.) in his lawsuit against journalist Ryan Lizza. Nunes has accused Lizza and Hearst Magazine Media, which publishes  Esquire , of defamation and conspiracy. Back in 2018, Esquire published an article by Lizza headlined "Devin Nunes's Family Farm Is Hiding a Politically Explosive Secret." The article suggested that Nunes [...]

2021-09-14

• No country is an island: International cooperation and climate change
  by Christian Zimmermann in NEP-DGE blog, 2021-09-14 15:00:18 UTC

  By Ferrari Massimo and Pagliari Maria Sole http://d.repec.org/n?u=RePEc:bfr:banfra:815&r=dge In this paper we explore the cross-country implications of climate-related mitigation policies. Specifically, we set up a two-country, two-sector (brown vs green) DSGE model with negative production externalities stemming from carbon-dioxide emissions. We estimate the model using US and euro area data and we characterize welfare-enhancing equilibria under alternative containment policies. Three main policy implications emerge: i) fiscal policy should focus on reducing emissions by levying taxes on pol [...]

2021-09-10

• Entrepreneurial Economies
  by Randall G. Holcombe in The Beacon, 2021-09-10 23:33:35 UTC

  Academic institutions increasingly are recognizing the importance of entrepreneurship to the performance of an economy, and in response, many (including my own institution, Florida State University) have established entrepreneurship programs to give students some skills that can help them succeed as entrepreneurs. I’m supportive of these efforts, but the degree to which individuals in an economy are entrepreneurial is affected more by an economy’s institutions than by characteristics of individual entrepreneurs. Some economies are more entrepreneurial than others. Entrepreneurial economies hav [...]

2021-09-09

• Residential segregation and redlining
  by ? in FRED blog, 2021-09-09 13:00:00 UTC

  In a recent post , the FRED Blog described how the Home Owners’ Loan Corporation (HOLC) created color-coded maps of 239 cities across the U.S. to indicate the riskiness associated with making mortgage loans in each neighborhood. This practice, adopted between 1935 and 1940, informed the supervisory work of the Federal Home Loan Bank Board over the lenders. Let’s recap the color codes for those maps: Grade A: “Best” (shaded green), where properties were expected to increase or maintain a high appraised value, posing the lowest default risk for mortgage lenders. Grade B: “Still desirable” (sha [...]

2021-09-08

• Dos determinantes de la inflación
  by Juan Herreño in Foco Económico, 2021-09-08 17:20:15 UTC

  La conducción de la política monetaria en Colombia está en la discusión pública, un lugar usualmente ocupado por la política fiscal. En mi lectura de la discusión en prensa, blogs, y Twitter, hay dos posturas bastante diferentes. La primera postura indica que los bancos centrales solo generan inflación, sin mayor beneficio en aumento de empleo. En la segunda postura, por el contrario, el banco central tiene un poder, casi que ilimitado para controlar la producción sin mayores efectos inflacionarios. En esta columna voy a tratar de proveer el marco conceptual más popular entre los macroeconomis [...]

2021-09-07

• Moneta rossa o moneta blu? Banche centrali alla prova delle valute digitali
  by Alessio Garau in La Voce, 2021-09-07 09:53:30 UTC

  Il successo delle criptovalute ha spinto molte banche centrali a progettare l’introduzione di una propria moneta digitale. Rischi e nuove sfide vanno affrontati attraverso il coordinamento internazionale, cercando di evitare “una rincorsa al digitale”. Il successo delle criptovalute Immaginiamo un’economia dove coesistono due monete : la moneta rossa, universalmente accettata, e la moneta blu, accettata solo da una porzione di individui. La coesistenza si può spiegare solo tramite una differenza in termini di benefici monetari (tasso di rendimento) e non. Possiamo immaginare, ad ese [...]

2021-09-06

• The Long-Term Effects of Capital Requirements
  by Christian Zimmermann in NEP-DGE blog, 2021-09-06 21:21:09 UTC

  By Gianni De Nicolo, Nataliya Klimenko, Sebastian Pfeil and Jean-Charles Rochet http://d.repec.org/n?u=RePEc:chf:rpseri:rp2152&r=dge We build a stylized dynamic general equilibrium model with financial frictions to analyze costs and benefits of capital requirements in the short-term and long-term. We show that since increasing capital requirements limits the aggregate loan supply, the equilibrium loan rate spread increases, which raises bank profitability and the market-to-book value of bank capital. Hence, banks build up larger capital buffers which (i) lowers the public losses in case of a [...]

2021-09-04

• Richard Murphy is not up to speed on banking.
  by Ralph Musgrave in Ralphonomics, 2021-09-04 02:36:00 UTC

    This article of his contains blunder after blunder.  It’s entitled “Positive Money and the Bank of England are completely wrong….”.  Apologies for the length of this article, but the sheer number of blunders will take time to address. In reference to Bank of England proposals on Central Bank Digital Currency (CBDC) he says in his second para: “Quite staggeringly they (Positive Money) are using this proposal to demand the end to the right of private banks to create money, and as I note below the Bank of England will not want to take on that role.”   Actually the Positive Money article to whic [...]

2021-09-03

• Monetary Policy and the Persistent Aggregate Effects of Wealth Redistribution
  by Christian Zimmermann in NEP-DGE blog, 2021-09-03 17:39:16 UTC

  By Martin Kuncl and Alexander Ueberfeldt http://d.repec.org/n?u=RePEc:bca:bocawp:21-38&r=dge We identify a sizable wealth redistribution channel which creates a monetary policy trade-off whereby short-term economic stimulus is followed by persistently lower output over the medium term. This trade-off is stronger in economies with more nominal household debt but weakened by a more aggressive monetary policy stance and underprice-level targeting. Given this trade-off, low-for-long episodes can lead to persistently depressed output. The medium-term implications of the wealth redistribution chann [...]

2021-09-02

• Residential redlining of U.S. neighborhoods
  by ? in FRED blog, 2021-09-02 13:00:00 UTC

  The FRED graph above shows home values for four classifications of neighborhoods from 1930 to 2010. The lowest values (and highest levels of risk) are shown by the red line, which was an intentional choice: Red is the color used in 1930s city maps to mark the residential neighborhoods where lenders deemed they were most likely to lose money when making mortgage loans. And that color gave rise to the term “redlining.” After the Great Depression (1929-1933), the federal government tasked the Home Owners’ Loan Corporation (HOLC), among several other agencies, with overseeing the work of resident [...]

• Sugli incentivi all’eolico il vento delle infiltrazioni mafiose
  by Alessio Garau in La Voce, 2021-09-02 09:00:41 UTC

  La produzione di energia eolica è stata ampiamente sussidiata, attirando l’interesse delle organizzazioni criminali. Lo dimostra il numero di turbine installate nei comuni ad alta criminalità organizzata. Cosa cambia con incentivi più competitivi. Breve storia degli incentivi sull’eolico Il Green Deal , lanciato dall’Unione europea nel dicembre del 2019, persegue l’obiettivo di raggiungere la neutralità climatica entro il 2050 e di sostenere le aziende nella produzione di energia pulita e tecnologie verdi. Non è la prima regolamentazione a sostegno di questo tipo di investimenti. [...]

2021-08-24

• Is there a “concrete wall” for women in Latin American Fintech?
  by bbatiz in The Cashless Society, 2021-08-24 17:40:14 UTC

  This was an original contriobution to Open Banking Excellence blog . Verbatim copy under creative commons licence. Bernardo Bátiz-Lazo (Newcastle Business School, Northumbria University, UK), and Ignacio González-Correa (Department of Economics, Universidad de Santiago, Chile) We initiated a project to explore the barriers women face to become fintech entrepreneurs in Latin America. Microfinance and then fintech start-ups have focused and helped women “at the base of the pyramid” (by reducing frictions and increasing financial inclusion), but what is the situation of others and particularl [...]

2021-08-18

• Emigration and Fiscal Austerity in a Depression
  by Christian Zimmermann in NEP-DGE blog, 2021-08-18 02:32:03 UTC

  By Guilherme Bandeira, Jordi Caballe and Eugenia Vella http://d.repec.org/n?u=RePEc:aue:wpaper:2035&r=dge This paper studies the role of emigration in a deep recession when the government implements fiscal consolidation. We build a small open economy New Keynesian model with search and matching frictions, emigration of the labour force, and fiscal details. Our simulations for the austerity mix during the Greek Depression show that fiscal austerity accounts for one third of the output drop and more than 10% of migration outflows, whereas the rest is attributed to the macroeconomic environment. [...]

2021-08-16

• The ECB's New Strategy: Codifying Existing Practice . . . plus
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2021-08-16 11:00:01 UTC

  “A long period of low price pressures, and years of repeated overprediction of the future path of inflation require that higher inflation prospects need to be visibly reflected in actual underlying inflation dynamics before they warrant a more fundamental reassessment of the medium-term inflation outlook.” Isabel Schnabel, Member of the Executive Board of the ECB, “ A new strategy for a changing world ,” July 14, 2021. When the ECB began operation in 1999, many observers focused on its differences from the Federal Reserve. Perhaps the most widely cited distinction is the one between the ECB’s [...]

2021-08-14

• Does It Matter How Central Banks Accumulate Reserves? Evidence from Sovereign Spreads
  by Christian Zimmermann in NEP-DGE blog, 2021-08-14 23:10:45 UTC

  By César Sosa-Padilla and Federico Sturzenegger http://d.repec.org/n?u=RePEc:aoz:wpaper:79&r=dge There has been substantial research on the benefits of accumulating foreign reserves, but less on the relative merits of how these reserves are accumulated. In this paper we explore whether the form of accumulation affects country risk. We first present a model of endogenous sovereign debt defaults, where we show that reserve accumulation through the issuance of debt contingent on local output reduces spreads in a way that reserve accumulation with foreign borrowing does not. We confirm this mode [...]

2021-08-09

• The Birth and Growth of Modern Zoning (Part II): The FARsighted Great Depression
  by Jason Barr in Skynomics Blog, 2021-08-09 12:12:48 UTC

  Jason M. Barr ( @JasonBarrRU )    August 9, 2021 Preface Today, many cities worldwide regulate urban density by limiting the floor area ratio (FAR)—the amount of allowable building space relative to the lot size. Cities use FAR caps to reduce building bulk, preserve leafy residential neighborhoods, and maintain the historical feel of central cities. The FAR is one of the most important tools in urban planning. This is blog post #2 in a series about the birth and growth of the FAR. (Post #1 can be read here .) The View from Roaring Twenties Americans enjoyed themselves during the Roaring Twenti [...]

• Will Central Bank Digital Currencies Doom Dollar Dominance?
  by Barry Eichengreen in Project Syndicate, 2021-08-09 11:19:56 UTC

  BERKELEY – August 13-15 marks the 50th anniversary of “the weekend that changed the world,” when US President Richard Nixon suspended the dollar’s convertibility into gold at a fixed price and rung down the curtain on the Bretton Woods international monetary system. The subsequent half-century brought many surprises. From a monetary standpoint, one of the greatest was the dollar’s continued dominance as a vehicle for cross-border transactions. Under Bretton Woods, the dollar’s supremacy was readily explicable. America’s financial position coming out of World War II was impregnable. Changes [...]

2021-08-08

• Distributional Effects of Emission Pricing in a Carbon-Intensive Economy: The Case of Poland
  by Christian Zimmermann in NEP-DGE blog, 2021-08-08 16:24:31 UTC

  By Marek Antosiewicz; J. Rodrigo Fuentes; Piotr Lewandowski; Jan Witajewski-Baltvilks http://d.repec.org/n?u=RePEc:ioe:doctra:546&r=dge In this paper, we assess the distributional impact of introducing a carbon tax in Poland. We apply a two-step simulation procedure. First, we evaluate the economy-wide effects with a dynamic general equilibrium model. Second, we use a microsimulation model based on household budget survey data to assess the effects on various income groups and on inequality. We introduce a new adjustment channel related to employment changes, which is qualitatively different f [...]

2021-08-06

• Data for "Interfuel Substitution: A Meta-Analysis"
  by noreply@blogger.com (David Stern) in Stochastic Trend, 2021-08-06 04:13:00 UTC

  I've long thought that there was an error in the way I calculated the shadow elasticity of substitution (SES) in my 2012 paper on interfuel substitution in the Journal of Economic Surveys . This would have been a big problem as the paper carries out a meta-analysis of SESs. But no primary paper reported the results in terms of the SES. I computed all this data from the various ways results were presented in the original studies. I never got around to doing anything about it or even checking carefully whether there was a mistake. I suppose this is because I hate finding mistakes in my papers an [...]

2021-07-28

• Ma qualcuno pensa alle assunzioni?
  by Emiliano Mariotti in La Voce, 2021-07-28 11:50:29 UTC

  Si è discusso molto della salvaguardia di posti di lavoro spesso senza futuro e poco della necessità di recuperare il milione e mezzo di assunzioni mancate durante la pandemia. Che servirebbero anche a riassorbire gli inevitabili esuberi strutturali. Il dibattito sui licenziamenti Il confronto pubblico sul lavoro in Italia sembra concentrato soltanto sui licenziamenti. Del tutto ignorate le assunzioni. In realtà i licenziamenti sono stati molto contenuti durante il Covid e, come mostrato su lavoce , al momento non ci sono segni di accelerazioni dopo la fine del blocco dei licenziame [...]

2021-07-27

• El salario mínimo en Colombia: nueva evidencia empírica sobre sus efectos y algunas consideraciones económicas y éticas
  by Nicolás de Roux in Foco Económico, 2021-07-27 21:11:03 UTC

  El salario mínimo es uno de los temas de política pública más debatidos alrededor del mundo. Esto es particularmente cierto en Colombia, donde ronda un valor cercano al 90% del salario mediano, el valor más alto si se lo compara con el de otros países de la OECD o de Latino América ( Mondragón-Vélez et al. 2010 ). En este blog presento resultados de dos investigaciones recientes en cuya elaboración participé y que considero que son pertinentes para el debate sobre este tema. La primera de ellas encuentra un efecto causal negativo de aumentos del salario mínimo en el empleo de las industrias de [...]

2021-07-26

• The QE Ratchet
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2021-07-26 11:56:27 UTC

  “ [Quantitative easing] tends to be deployed in response to bad news, but isn’t reversed when the bad news ends. As a result, the stock of bonds held by central banks ratchets up, expanding their balance sheets into the longer term.” Former Bank of England Governor Mervyn King, Baron of Lothbury , July 20, 2021. When it comes to quantitative easing (QE), where you stand definitely depends on where you sit. That is among the conclusions of the important new report of the Economic Affairs Committee of the UK House of Lords . The report provides an excellent survey of how it is that central bank [...]

• Journal round-up: PharmacoEconomics – Open 5(2)
  by Rita Faria in The Academic Health Economists' Blog, 2021-07-26 06:00:01 UTC

  Our authors provide regular round-ups of the latest peer-reviewed journals. We cover all issues of major health economics journals as well as other notable releases. Visit our journal round-up log to see past editions organised by publication title. If you’d like to write a journal round-up, get in touch . This June issue has a bumper 18 articles from systematic reviews to cost-effectiveness analyses and many more. The systematic reviews are both on health economic evidence, one on point-of-care testing and the other on mantle cell lymphoma . There is also a protocol for a review on th [...]

2021-07-24

• Why China and the United States aren’t cooperating on COVID-19
  by Xirui Li in East Asia Forum, 2021-07-24 12:00:37 UTC

  Author: Xirui Li, NTU Intergovernmental cooperation between the United States and China was an important part of the fight against Severe Acute Respiratory Syndrome (SARS) in 2003. Yet serious collaboration to combat COVID-19 is yet to materialise. The state of US–China bilateral relations and the failure to cooperate has arguably worsened the pandemic. Despite similarities between the two initial outbreaks, COVID-19 seems to have deepened the antagonism and rivalry between the United States and China. Many attribute the lack of pandemic cooperation to a preoccupation with the ongoing trade a [...]

2021-07-23

• Esto es lo que pasa cuando crees que aciertas con el momento de vender las acciones en bolsa cuando ésta cae
  by Alejandro Nieto González in Elblogsalmon, 2021-07-23 08:01:47 UTC

  Llevamos unos días en los que las bolsas bajan . De hecho ya se habla de que ha llegado la corrección después de meses de subidas, y que es el momento de vender las acciones para esperar de nuevo a las subidas. Sin embargo, aunque puede parecer una estrategia adecuada (vender cuando empieza a caer y comprar cuando empieza a subir), no podemos predecir el futuro y posiblemente estaremos haciendo lo contrario . Los estudios empíricos dicen que no se acierta en el market timing Si la bolsa cae... mejor no hacer nada Imaginemos que somos unos expertos en acertar cuándo el merca [...]

2021-07-22

• Does emigration hurt businesses in migrant-sending countries?
  by Ryan Edwards in Development Policy Blog, 2021-07-22 20:00:31 UTC

  When people leave their countries to work abroad, firms, industry groups, and even policy-makers often raise concerns about so-called skills shortages and brain drain. I discussed this in detail in three earlier blogs ( here , here , and here ). These perceptions, whether valid or not, often lead to nationalistic policies that create barriers to labour mobility and economic integration, limiting the freedoms of citizens and broader economic and social progress. One key issue that has for a long time been neglected in the evidence on migration and brain drain is whether emigration actually has [...]

2021-07-20

• Evaluaciones recientes de los efectos del Salario Mínimo Interprofesional
  by ? in Nada es Gratis, 2021-07-20 05:00:06 UTC

  Por Juan Luis Jiménez y Ángel Martínez El Salario Mínimo Interprofesional es la cuantía mínima que, según el Gobierno de un país, debe percibir cualquier trabajador por cuenta ajena como retribución a su desempeño laboral. Este se aplica en muchos países ( [...]

• Jeff Bezos offers a vision of flying through space colonies with our own wings. But is that the best way to save the human race?
  by insider@insider.com (Abigail Higgins) in Business Insider, 2021-07-20 04:01:00 UTC

  Jeff Bezos unveiling the "Blue Moon" lunar lander on May 9, 2019. Jonathan Newton / The Washington Post via Getty Images In 2019, Jeff Bezos posed the question: "What happens when unlimited demand meets finite resources?" Bezos sees space as a place where the weather could be like "Maui on its best days" and, without gravity, where people would "fly with their own wings." Is the billionaire Amazon founder the best person to be lecturing about overconsumption in a world of finite resources? See more stories on Insider's business page . Jeff Bezos has been warning us for years that humans c [...]

2021-07-16

• Journal round-up: PharmacoEconomics 39(5)
  by Don Husereau in The Academic Health Economists' Blog, 2021-07-16 06:00:06 UTC

  Our authors provide regular round-ups of the latest peer-reviewed journals. We cover all issues of major health economics journals as well as other notable releases. Visit our journal round-up log to see past editions organised by publication title. If you’d like to write a journal round-up, get in touch . The May 2021 (Volume 39, Issue 5) issue of Pharmacoeconomics features two economic evaluations, two economic burden/resource utilization studies, two country-specific valuation studies, and two systematic reviews. The reviews provide syntheses of ‘societal costs’ in women with breast [...]

2021-07-12

• Trillions of Dollars of Retirement Wealth Have Been Mislaid
  by ? in Econlog, 2021-07-12 00:35:24 UTC

    And once they are accounted for, measured wealth inequality plummets.  One reason that the illiquid and non-market resources of DB [defined benefit] pensions and Social Security are typically excluded from studies of wealth concentration is that they are not directly available in household-level survey data. Our work addresses this issue by taking data from the Survey of Consumer Finances (SCF), estimating work histories to predict future Social Security income streams, and combining these results with estimated accrued DB assets and other market wealth holdings to form an expanded wealth me [...]

2021-07-11

• A Few Thoughts About Economic Growth as a Climate Change Adaptation Strategy
  by Matthew E. Kahn in Environmental and Urban Economics, 2021-07-11 13:32:00 UTC

   John Cochrane has posted an important blog post about adapting to climate change.   His piece mainly focuses on macroeconomic issues.  For decades, John was colleagues with Bob Lucas and those familiar with Robert Lucas's optimistic work on economic growth will see a correlation.  While John makes many points, his main point is;  "if a world's economy grows by 3% per year out to the year 2100 --- it will be rich enough to handle any of Mother Nature's shocks at that point or along the way".   He points to the growth of China's economy as an example.  John is optimistic about our future; "The [...]

• Podcast: uma conversa sobre Adam Smith e o iluminismo escocês
  by Hugo da Gama Cerqueira in Meu gabinete de curiosidades, 2021-07-11 13:08:00 UTC

    Há alguns dias comentei em redes sociais a respeito de um artigo sobre o contexto social e intelectual em que Adam Smith desenvolveu suas ideias, o Iluminismo escocês. O artigo estava completando 15 anos de publicação e, eu dizia, penso que "envelheceu bem".    Nesta semana, meu colega e amigo, Alexandre Mendes Cunha , me convidou para gravar o primeiro episódio de seu novo podcast, ipsis litteris , e a conversa girou justamente em torno daquele texto, das razões que me levaram a escrevê-lo e do porquê penso que continua tendo algum interesse.   A proposta do podcast é esta, a de apresentar [...]

• Challenging the Orthodoxy: Race, Racism and the Reconfiguration of Economics
  by stefanouma2443 in Development Economics, 2021-07-11 07:47:00 UTC

  Books abound on what is wrong with economics ( Chang 2014 ;  Keen 2011 ;  Nelson 2018 ,  Mazzucato 2018 ,  Raworth 2018 ,  Stanford 2015 ), and what we would have to do to change it. Given the little change we have seen in economics training and policy-effective economic thinking since  the global finance crisis  of 2007/08, and in light of the global environmental, inequality and health crises, it is to be seen whether these interventions can make any meaningful impact. What is good though: Half of these impactful books were written by female economists. Despite this ‘wind of change’ in [...]

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