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2020-09-18

• Happy Birthday Credit Cards! Redux
  by bbatiz in The Cashless Society, 2020-09-18 21:56:56 UTC

  Photo by Paul Felberbauer on Unsplash For a long time, one of the pillars of the cashless economy has been the advent of bank-sponsored credit cards (at the time called universal payment cards). There are several books about it as well as academic papers, of these my favourite is that by Dave Stearns . You can also see a video by Lana Swartz discussing her book which touches on the genesis of Diner’s Club. Today (18.Sep.2020), David Birch reminds of the genesis of this payment medium in his column while celebrating the 58th anniversary to what was to become VISA. Throughout his writings [...]

2020-09-16

• The Skyline versus the Sprawl-line: CO2 Emissions and Building Types in New York City
  by Jason Barr in Skynomics Blog, 2020-09-16 12:35:23 UTC

  Jason M. Barr           September 16, 2020 Hong Kong on the Hudson? When we think of New York City, we think of Manhattan and its supertall skyscrapers. As a result, we believe that New York is one of the densest places on Earth: a Hong Kong on the Hudson. And yet, craning our necks upwards diverts our attention from another fact. New York is not very dense at all when you look towards the horizon. Once you get out of Manhattan and past the historical outer-borough neighborhoods, you will find a distinctly suburban city. The landscape comprises block after block of one- and two-family homes, s [...]

2020-09-14

• Structuring Mortgages for Macroeconomic Stability
  by Christian Zimmermann in NEP-DGE blog, 2020-09-14 23:24:18 UTC

  By John Y. Campbell, Nuno Clara and João F. Cocco http://d.repec.org/n?u=RePEc:nbr:nberwo:27676&r=dge We study mortgage design features aimed at stabilizing the macroeconomy. We model overlapping generations of mortgage borrowers and an infinitely lived risk-averse representative mortgage lender. Mortgages are priced using an equilibrium pricing kernel derived from the lender’s endogenous consumption. We consider an adjustable-rate mortgage (ARM) with an option that during recessions allows borrowers to pay only interest on their loan and extend its maturity. We find that this maturity extens [...]

• What difference did lockdowns make?
  by Michael Reddell in Croaking Cassandra, 2020-09-14 22:36:50 UTC

  I’ve written a couple of posts over the months drawing on work by Waikato economics professor John Gibson. Back in April there was this post , and then last month I wrote about an empirical piece Gibson had done using US county-level data suggesting that government-imposed restrictions in response to Covid may have made little consistent contribution to reducing death rates (in turn consistent with evidence suggesting that much of the decline in social contact, and economic activity, was happening anyway, in advance of government restrictions). Fascinating as I found that paper, I was [...]

• Rita Faria’s journal round-up for 14th September 2020
  by Rita Faria in The Academic Health Economists' Blog, 2020-09-14 11:00:07 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . PharmacoEconomics Volume 38, Issue 9 A couple of the papers caught my eye in the September issue of PharmacoEconomics . The first is by Paul Catchpole and Victoria Barrett, from the APBI, who suggest three topics for the ongoing review of the N [...]

2020-09-11

• The Hayek question
  by chris in Stumbling and Mumbling, 2020-09-11 13:09:36 UTC

  Thatcher was right. This is my reaction to reports that Dominic Cummings regards Brexit as a way of getting out of limits on state aid and so enabling the government to funnel cash towards the UK’s own future big tech companies. The problem with this is that, as Thatcher said, the state cannot pick winners. Corporate growth is largely unpredictable. “The stochastic element is predominant” concluded Alex Coad in one survey. “Corporate growth rates are random” found Paul Geroski in another (pdf) . “There is low predictability [of corporate earnings growth] even with a wide variety of predictor v [...]

• Measuring court output in the pandemic: evidence from India's largest commercial tribunal
  by Anurodh in Ajay Shah's blog, 2020-09-11 04:00:00 UTC

  by Anjali Sharma and Bhargavi Zaveri . Introduction A critical element of organisational planning is the ability to anticipate and manage risks. Many organisations worry about the risk of disruptions to their operations. They spend time and resources to anticipate such events, and put in place mechanisms to mitigate their impact. This is known as business continuity planning (BCP). It can range from keeping standby suppliers for raw materials, finding alternate delivery channels to reach customers, building redundancies along networks and so on. The objective of BCP is to ensure that business [...]

2020-09-10

• America’s Dire Inequality Demands a New Conceptual Framework. This Economist Has One.
  by Lynn Parramore in INET Blog, 2020-09-10 19:02:00 UTC

  In Lance Taylor’s new book, Macroeconomic Inequality from Reagan to Trump , the noted economist examines how and why the United States, starting in the 80s, started to break down into a sharply divided country of haves and have-nots. How it happened is hotly debated among experts. Is it the lofty rate of return on wealth enjoyed by the affluent? Or the impact of monopolistic corporations that can charge high prices for basic goods and services? What about globalization? Technological change? Taylor, Emeritus Professor of Economics at the New School [...]

• Patience vs FAIT: Which is key in the new FOMC strategy?
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-09-10 11:56:35 UTC

  “ This change implies that the Committee effectively will set monetary policy to […] not preemptively withdraw support based on a historically steeper Phillips curve that is not currently in evidence and inflation that is correspondingly much less likely to materialize.” Federal Reserve Governor Lael Brainard, “ Bringing the Statement on Longer-run Goals and Monetary Policy Strategy into Alignment with Longer-Run Changes in the Economy ,” Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, September 1, 2020. The Federal Open Market Committee’s (FOMC) policy strategy upd [...]

2020-09-08

• Cochrane on why debt matters
  by David Andolfatto in MacroMania, 2020-09-08 18:13:00 UTC

  The stock of national debt is now larger than our annual national income in the United States. Is this something to worry about? Does it matter how big the debt-to-GDP ratio gets? Is there any limit to how large it can grow and, if so, what is it this limit and what factors determine it? A lot of people have been asking these questions lately. John Cochrane is the latest to opine on these questions here: Debt Matters .� I'm not even sure where to begin. I suppose we can start with the famous debt clock pictured on the right. Whenever I look at the debt clock, I'm reminded of James Tobin who, i [...]

• Will coronavirus accelerate the move towards a cashless economy?
  by bbatiz in The Cashless Society, 2020-09-08 16:54:28 UTC

  Note: This was originally posted in The Economics Observatory . It is reblogged verbatim under the Creative Commons licence. The use of cash fell substantially in the early days of the Covid-19 pandemic with the acceleration in online shopping and contactless payments – but cash usage has bounced back as lockdown has eased. Long-term prospects for retail payments remain uncertain. It is still too early to tell whether Covid-19 and the public health interventions implemented in response will have permanent effects on retail payments in the UK. Initially, the hoarding of cash was overs [...]

2020-09-07

• How the Collapse of Communism Has Undermined Faith in American Capitalism
  by ? in Econlog, 2020-09-07 13:01:06 UTC

  A t their presidential campaign stops, U.S. Senators Bernie Sanders and Elizabeth Warren charged that American capitalism has, since the early 1970s, been “rigged” and “corrupted” by the rich and powerful for self-aggrandizement, to the detriment of middle- and lower-income Americans. 1 The drumbeat continues in the media: The root cause of American workers’ economic problems over the past half-century has been the “disastrous” policies of the U.S. government, including the diminishment of union bargaining power, suppression of real wages by corporate elites, destruction of the country’s [...]

• Chris Sampson’s journal round-up for 7th September 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-09-07 11:00:07 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . The European Journal of Health Economics Volume 21, Issue 7 The latest issue of EJHE manages to cover many of my research interests, with papers on mental health, valuing ‘dead’, and screening for diabetic retinopathy. There’s also plenty beyon [...]

• Consumption and Income Inequality across Generations
  by Christian Zimmermann in NEP-DGE blog, 2020-09-07 03:19:30 UTC

  By Giovanni Gallipoli, Hamish Low and Aruni Mitra http://d.repec.org/n?u=RePEc:hka:wpaper:2020-061&r=dge We characterize the joint evolution of cross-sectional inequality in earnings, other sources of income and consumption across generations in the U.S. To account for cross-sectional dispersion, we estimate a model of intergenerational persistence and separately identify the influences of parental factors and of idiosyncratic life-cycle components. We find evidence of family persistence in earnings, consumption and saving behaviours, and marital sorting patterns. However, the quantitative con [...]

2020-08-31

• Doubts about the Model and Optimal Policy
  by Christian Zimmermann in NEP-DGE blog, 2020-08-31 20:30:26 UTC

  By Anastasios Karantounias http://d.repec.org/n?u=RePEc:fip:fedawp:88478&r=dge This paper analyzes optimal policy in setups where both the leader and the follower have doubts about the probability model of uncertainty. I illustrate the methodology in two environments: a) an industry populated with a large firm and many small firms in a competitive fringe, where both types of firms doubt the probability model of demand shocks, and b) a general equilibrium economy, where a policymaker taxes linearly the labor income of a representative household in order to finance an exogenous stream of stocha [...]

• What’s happened so far with the return on safe and liquid assets?
  by ? in FRED blog, 2020-08-31 13:00:00 UTC

  Today, we use an assortment of FRED data to consider a straightforward question: What has happened to the returns on safe assets (in this case, Treasury securities) since the pandemic hit? We look especially at the possible contributions of inflation expectations and demand for liquidity. The FRED graph above shows nominal rates for the 1-year Treasury (dark blue) and the 5-year Treasury (red) the difference between the “instantaneous” 5-year-ahead Treasury rate and the 5-year, 5-year forward expected inflation rate (green) the difference between corporate bond yields and the 5-year Treasury [...]

2020-08-28

• Blackouts and Fires Caused by California’s Ineffective Green Policies
  by Joel Kotkin in The Foundry, 2020-08-28 20:47:02 UTC

  In the soft warmth of spring the swallows famously return to  Capistrano , but in recent years they are followed by what seems inevitable summer  power outages  and fires. This is not as pleasant an experience for Californians as the return of our favored feathered companions. Every summer, usually around this time of year, we get our inevitable heat waves. In the past, we used to endure them without fearing our lights–and computers–would be shut down, and our houses left in ruins. No more. Almost every year we do not just have a fire season, we have a conflagration. Millions of acres g [...]

2020-08-27

• How Transaction Costs Change the Analysis
  by ? in Econlog, 2020-08-27 19:11:32 UTC

  Hang around freedom-friendly circles long enough and you’ll eventually hear a claim like the following. “Under private ownership of roads, congestion would be eliminated through the implementation of market pricing.” Claims like this range the gamut of sophistication. In the more sophisticated, truly dynamic pricing would adjust in real time as cars enter and exit the roadway. A somewhat less sophisticated idea still improves on the current non-price means of allocation under public ownership: the private road owner charges a higher fee during hours when he anticipates more demand for the road [...]

• Climate Finance Intermediation: Interest Spread Effects in a Climate Policy Model
  by Christian Zimmermann in NEP-DGE blog, 2020-08-27 03:44:19 UTC

  By Kai Lessmann and Matthias Kalkuhl http://d.repec.org/n?u=RePEc:ces:ceswps:_8380&r=dge Interest rates are central determinants of saving and investment decisions. Costly financial intermediation distort these price signals by creating a spread between the interest rates on deposits and loans with substantial effects on the supply of funds and the demand for credit. This study investigates how interest rate spreads affect climate policy in its ambition to shift capital from polluting to low-carbon sectors of the economy. To this end, we introduce financial intermediation costs in a dynamic gen [...]

2020-08-25

• If only monetary policy in 2008 had been what it was in 2020.
  by Marcus Nunes in Historinhas, 2020-08-25 19:01:30 UTC

  Many like to compare the Covid19 contraction with the Great Depression. In addition to the nature of the two contractions being completely unrelated, while in the first two months of the Covid19 crisis (from the February peak to the April trough) RGDP dropped 15%, it took one year from the start of the Great Depression for RGDP to drop by that amount. Although the Covid19 shock has also no common element with the Great Recession, a comparison between the two is instructive from the monetary policy point of view. This is so because the Great Recession was the “desired outcome” of the Fed´s mone [...]

2020-08-24

• How Does the COVID Recession Compare?
  by Michael J. Boskin in Project Syndicate, 2020-08-24 14:00:36 UTC

  STANFORD – The historically deep COVID-19 recession appears to have turned the corner in most countries. But current private and official forecasts , if correct, imply that most economies will not return to their previous performance peaks until late 2022. Much will depend not only on the evolution of the pandemic and effective therapeutic and vaccine deployment, but also on the monetary, fiscal, trade, and regulatory policies that are pursued. Policymakers and commentators are thus examining previous episodes in search of an effective response. All recessions differ in terms of their proximat [...]

• Chris Sampson’s journal round-up for 24th August 2020
  by Chris Sampson in The Academic Health Economists' Blog, 2020-08-24 11:00:07 UTC

  Every Monday our authors provide a round-up of the latest peer-reviewed journal publications. We cover all issues of major health economics journals as well as some other notable releases. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . American Economic Journal: Economic Policy Volume 12, Issue 3 Of the 14 articles in the latest issue of AEJ:EP , there are three that focus on health care. A study from Taiwan estimates price elasticities to identify the impact of cost-shari [...]

• Average Inflation Targeting
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-08-24 10:57:02 UTC

  “To achieve buy-in by households and businesses, a comprehensible, credible, and actionable makeup strategy will need to be followed by years of central bank policy consistent with that strategy.” FRB Chair Jerome H. Powell, Opening Remarks at the Conference on Monetary Policy Strategy, Tools and Communications Practices,”  June 4, 2019.  The Federal Open Committee’s first-ever comprehensive monetary policy review looks to be coming to an end. Since the announcement on November 15, 2018, the Fed has focused on strategies, tools, and communications practices, and engaged the public through nume [...]

2020-08-20

• Thesis Thursday: Chris Sampson
  by captaincanaway in The Academic Health Economists' Blog, 2020-08-20 06:00:04 UTC

  On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Chris Sampson who has a PhD from the University of Nottingham . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Optimising the cost-effectiveness of risk-based screening for diabetic retinopathy Supervisors Marilyn James , David Whynes Repository link http://eprints.nottingham.ac.uk/60411/ Congratulations on finally finishing your PhD and thank you for acknowledging my ‘spiritual guidance’ in your thesis. First t [...]

• Macroeconomic effects of tariffs shocks: the role of the effective lower bound and the labour market
  by Christian Zimmermann in NEP-DGE blog, 2020-08-20 00:28:29 UTC

  By Pascal Jacquinot, Matija Lozej and Massimiliano Pisani http://d.repec.org/n?u=RePEc:ecb:ecbwps:20202434&r=dge We simulate a version of the EAGLE, a New Keynesian multi-country model of the world economy, to assess the macroeconomic effects of US tariffs imposed on one country member of the euro area (EA), and the rest of the world (RW). The model is augmented with an endogenous effective lower bound (ELB) on the monetary policy rate of the EA and country-specific labour markets with search-and-matching frictions. Our main results are as follows. First, tariffs produce recessionary effects [...]

2020-08-19

• Making the Treasury Market Resilient
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-08-19 11:50:39 UTC

  “ [A]ny significant disruption in the Treasury market would likely impact financial stability .” Treasury Market Practices Group, “ White Paper on Clear and Settlement in the Secondary Market for U.S. Treasury Securities ,” July 11, 2019. “Having pushed for the move to greater central clearing, global authorities have a responsibility to ensure that CCPs do not themselves become a point of failure for the system.” Then-FRB Governor Jerome H. Powell, Speech at the FRB Chicago Symposium on Central Clearing , June 23, 2017. Ensuring financial stability requires both resilient institutions and res [...]

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