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- Monetary Policy and Wealth Effects
by Christian Zimmermann in NEP-DGE blog, 2020-02-18 14:56:48 UTC
By Nicolas Caramp and Dejanir Silva
This paper studies the role of wealth effects in the monetary transmission mechanism in New Keynesian models. We propose a decomposition of consumption that extends the Slutsky equation to a general equilibrium setting. Wealth effects, and their amplification in general equilibrium, explain a large fraction of the consumption and inflation response to changes in nominal interest rates in the standard equilibrium. In RANK, wealth effects are determined, generically, by the revaluation of public debt and the fi [...]
- Some Unpleasant Gold Bug Arithmetic
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-02-17 13:22:19 UTC
Most people care far more about the prices of things they purchase—food, housing, health care, and the like—than the price of gold. Not coincidentally, professional economists display a remarkably explicit consensus against forcing the central bank to adopt a policy that fixes the price of gold. Yet, there are still powerful people who think that the United States would benefit if the central bank’s sole purpose were to restore a gold standard. Senators Rand Paul and Ted Cruz are supporters, as is West Virginia Representative Alexander Rooney, who recently proposed legislation to “ define the [...]
- Housing Booms and the U.S. Productivity Puzzle
by Christian Zimmermann in NEP-DGE blog, 2020-02-12 19:52:35 UTC
By Jose Carreno
The United States has been experiencing a slowdown in productivity growth for more than a decade. I exploit geographic variation across U.S. Metropolitan Statistical Areas (MSAs) to investigate the link between the 2006-2012 decline in house prices (the housing bust) and the productivity slowdown. Instrumental variable estimates support a causal relationship between the housing bust and the productivity slowdown. The results imply that one standard deviation decline in house prices translates into an increment of the productivi [...]
- The Challenge of Child Malnutrition for Venezuelaâs Future
by Ignacio JesÃºs SÃ¡nchez Urdaneta in Caracas Chronicles, 2020-02-10 22:06:33 UTC
Photo by: Rayner Peña.
We’ve all heard, at least once, the scream of the gut echoing on an empty stomach, a thunder of hunger that breaks the silence of the closed mouth. For most of our readers, the roar is due to harmless neglect: skipping lunchtime to finish a project, or getting up late and not having time for breakfast. For 56.9% of children surveyed by NGO Caritas Venezuela in 2018, though, that thunder means a storm — up to the point where the cheap mango sold on the street (or even hanging on trees) is now dubbed the “stomach silencer”.
Carita’s report confirms and expands on what the [...]
- Has P2P lending already hit the wall?
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2020-02-10 13:38:59 UTC
“[I]f the market is competitive, there are two possibilities. The market may reach a stable equilibrium in which individuals are all rationed in the amount they can borrow, this ration being so severe that no one defaults. Alternatively, the market may oscillate in an unstable fashion, lenders entering and making short-run profits, but in the long run being forced to leave.” Dwight M. Jaffee and Thomas Russell, “Imperfect Information, Uncertainty, and Credit Rationing,” Quarterly Journal of Economics , Nov. 1976. The two biggest U.S. P2P lenders , Prosper and Lending Club, started operations i [...]
- Skyscraper Bottlenecks (Part I): The Elevator
by Jason Barr in Skynomics Blog, 2020-02-10 13:28:15 UTC
Jason M. Barr February 10, 2020
Note this is the first post in an intended series on the technological and economic barriers that need to be broken to construct the first mile-high skyscraper.
In 1956, Frank Lloyd Wright unveiled his design for a mile-high skyscraper (1.61 km)— The Illinois . It was to be built in Chicago and was to have 528 floors, with 12.3 million square feet (1.14 km 2 ) of office space for 123,000 people. Commuters could choose from 15,000 parking spots after they arrived by one of four feeder highways. Two helicopter landing decks could acco [...]
- Brent Gibbonsâs journal round-up for 10th February 2020
by brentgibbons in The Academic Health Economists' Blog, 2020-02-10 12:00:00 UTC
Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch .
Impact of comprehensive smoking bans on the health of infants and children . American Journal of Health Economics [ RePEc ] Published 15th January 2020
While debates on tobacco control policies have recen [...]
- Friday assorted links
by Tyler Cowen in Marginal Revolution, 2020-02-07 16:09:48 UTC
1. Does the quality of blog comments deteriorate ? (MR post from 2008)
2. Is local news really dying ?
3. America’s favorite architecture ?
4. Africa has 1.2 billion people and only six labs that can test for coronavirus . And “ We find that expansions of transportation networks have significant health costs in increasing the spread of viruses, and that propagation rates are pro-cyclically sensitive to economic conditions and increase with inter-regional trade. ”
5. Vulnerability to disgust does not predict social conservatism very well .
6. The Jill Lepore interviews Ezra Klein podcast is li [...]
- Measuring Urban Government Productivity Using Public Big Data
by Matthew E. Kahn in Environmental and Urban Economics, 2020-02-07 12:00:00 UTC
In this Big Data age, what do we now know about urban government productivity?� Whether the city is Baltimore or Chicago or San Diego, when a city spends an extra dollar on public goods such as street safety or public transit, how much local public goods are produced?� This is a surprisingly difficult question to answer and in the next series of blog posts, I will argue that this "opacity" benefits several interest groups including the Mayor, the urban government and the public sector unions. Back in 2017, I co-authored a paper that was publis hed in the Journal of Public Economics that invest [...]
- Two papers on the productivity slowdown
by Christian Zimmermann in NEP-DGE blog, 2020-02-06 19:58:47 UTC
What Is Driving The TFP Slowdown? Insights From a Schumpeterian DSGE Model
By Marco Pinchetti
In this paper, I incorporate a Schumpeterian mechanism of creative destruction in a medium-scale DSGE framework. In the model, a sector of profit-maximizing innovators invests in R&D and endogenously generates productivity gains, ultimately determining the economy’s growth rate. I estimate the model using Bayesian methods on U.S. data of the last 25 years (1993q1-2018q4) in order to disentangle the key forces underlying the productivity slowdown exp [...]
- Possible pitfalls of a 1-in-X approach to financial stability
by BankUnderground in Bank Underground, 2020-02-06 09:00:00 UTC
Adam Brinley Codd and Andrew Gimber
Meteorologists and insurers talk about the “1-in-100 year storm”. Should regulators do the same for financial crises? In this post, we argue that false confidence in people’s ability to calculate probabilities of rare events might end up worsening the crises regulators are trying to prevent.
Sir Paul Tucker recently said he thought the public would want regulators to make sure financial crises like the one in 2008–2009 happened less than once every 75 years . And an approach called GDP (or growth) at risk – which has featured prominently in th [...]
- In praise of trade frictions
by chris in Stumbling and Mumbling, 2020-02-05 13:57:21 UTC
Are restrictions on free trade a better idea than generally thought? I ask because, despite his lauding of it, it is reported that Johnson will impose customs checks upon goods imported from the EU. This lends credence to the estimate (pdf) by The UK in a Changing Europe that Johnson’s plan might eventually cut UK GDP by over six per cent.
But might this estimate miss an important mechanism and thus over-state the costs of us leaving the single market?
What follows cuts against all my instincts in favour of free trade and EU membership. My gut tells me to agree with Martin Wolf’s claim that Jo [...]
- On socially influenced preferences
by chris in Stumbling and Mumbling, 2020-02-02 13:06:32 UTC
Some ideas are both radical and conservative at the same time. This is a thought triggered by reading Robert Frank’s latest book, Under the Influence .
“Context shapes our choices to a far greater extent than many people realize” he writes. “In virtually every domain, evidence suggests that our consumption patterns tend to mirror those of others in our social circle.” He shows that behaviours such as smoking, becoming obese, committing crime (pdf) or even how many children we have are all heavily shaped by what our peers do.
This, he says, means that much of what we do imposes externalities u [...]
- The Rising Value of a Statistical Life in China and Risk Avoidance Associated with the Coronavirus
by Matthew E. Kahn in Environmental and Urban Economics, 2020-02-01 20:59:00 UTC
Back in 2004, Dora and I published a paper documenting that from 1940 to 1990 the estimated value of a statistical life in the U.S grew faster than U.S per-capita GNP.� � Other studies from Taiwan and India have documented a similar result. These findings have implications for China today and risk regulation policy in the face of the contagion risk.� As China has grown richer, the value of risk avoidance rises.� There is a greater aggregate demand for safety.� The CCP thus has a strong incentive to deliver safety.� This same logic was at the heart of my work with Siqi Zheng on air pollution re [...]
- How business lost its influence on right wing parties
by Mainly Macro in Mainly Macro, 2020-01-28 09:16:00 UTC
This covers ground which others may be more knowledgeable about, so please let me know of any references or sources that I really should read that cover issues central to the discussion below. When Trump threatens governments that want to tax tech giants, most of which are based in the US, it seems like the familiar story of governments acting in the interest of business. But when Trump imposes tariffs on imports he may be favouring particular firms, but he is also acting against the interests of US trading firms in general. Brexit is a much more potent example. Brexit is clearly not in the [...]
- Have you heard the news? News can affect markets : The effects of economic news on expectations of future financial performance
by ? in FRED blog, 2020-01-27 14:00:00 UTC
FRED’s all about data, which economists often use to conduct or test their research. So let’s look at some of that research…
In a recent St. Louis Fed working paper , economists Maximiliano Dvorkin, Juan M. Sanchez, Horacio Sapriza, and Emircan Yurdagul study how the arrival of news affects emerging markets. They use a logic from a 2006 paper by Beaudry and Portier to identify news events—aka “shocks.” The idea is to compare a financial index that captures the expected future performance of the economy with a measure of current performance. They identify “good news” when the expected performa [...]
- Capital Income Taxation with Housing
by Christian Zimmermann in NEP-DGE blog, 2020-01-27 04:15:30 UTC
By Makoto Nakajima
This paper quantitatively investigates capital income taxation in the general-equilibrium overlapping generations model with household heterogeneity and housing. Housing tax policy is found to aﬀect how capital income should be taxed, due to substitution between housing and non-housing capital. Given the existing U.S. preferential tax treatment for owner-occupied housing, the optimal capital income tax rate is close to zero (1%), contrary to the high optimal capital income tax rate found with overlapping generations models [...]
- Das Warns 'Prepare For Turbulence In Emerging Markets'
by Tyler Durden in Zero Hedge, 2020-01-27 01:55:00 UTC
Das Warns 'Prepare For Turbulence In Emerging Markets'
Authored by Satyajit Das, op-ed via Bloomberg.com,
Encouraging trends in emerging markets belie their volatility since the taper tantrum of 2013, when the Federal Reserve signaled it was pulling back on quantitative easing. Further turbulence is likely, despite the improving outlook for advanced economies, easing trade tensions and accommodative monetary policy.
The International Monetary Fund estimates that growth in developing countries fell to 3.7% last year, the slowest pace since 2009 and well below the IMF’s Jul [...]
- We don't want economic growth
by chris in Stumbling and Mumbling, 2020-01-26 13:40:47 UTC
In launching a new 50p coin to mark Brexit, Sajid Javid seems to be interpreting the role of Chancellor in the same spirit that Trigger regarded Del Boy’s request to talk about money: “I saw one of those old £5 notes the other day.” We might have hoped that his energies would be better directed towards improving the UK’s lamentable productivity performance.
In fact, though, we should not snark. Mr Javid has grasped an important point not understood by leftists and economists (two groups which increasingly overlap) – that the public do not want economic growth.
We know this because they have co [...]
- Pandemics and the economy
by Michael Reddell in Croaking Cassandra, 2020-01-24 02:04:40 UTC
Who knows quite what will happen with the current coronavirus. But experts in such matters seem pretty confident (resigned?) that one day there will be virus that really takes hold and causes significant infection, disruption, and probably loss of life across a wide range of countries. The 1918 flu outbreak is the (relatively) modern best known case – estimated to have infected 500 million people worldwide and killed anything up to 50 million people. In New Zealand, with a population then of little more than a million, almost 9000 people died. Rather milder flu outbreaks in 1957 and 196 [...]
- Thailandâs plastic bag ban is an overdue step towards pragmatism
by Tim Forsyth in East Asia Forum, 2020-01-22 11:00:01 UTC
Author: Tim Forsyth, LSE
Thailand recently took an important step towards environmental protection when 75 leading retailers stopped issuing plastic bags to shoppers. This step continues a campaign started by environmentalists and local governments in Thailand to reduce urban waste and pollution. The long-term plan is to ban all single-use plastics by 2021.
Thai newspapers have shown customers responding in good faith to the ban. Many are taking wheelbarrows and buckets to supermarkets, and others are re-using sacks made for transporting sugar and rice.
But critics ask why it has taken so lon [...]
- Two papers on Chinese Growth
by Christian Zimmermann in NEP-DGE blog, 2020-01-20 20:44:55 UTC
Population Aging, Credit Market Frictions, and Chinese Economic Growth
By Michael Dotsey, Wenli Li and Fang Yang
We build a uniﬁed framework to quantitatively examine population aging and credit market frictions in contributing to Chinese economic growth between 1977 and 2014. We ﬁnd that demographic changes together with endogenous human capital accumulation account for a large part of the rise in per capita output growth, especially after 2007, as well as some of the rise in savings. Credit policy changes initially alleviate the capital m [...]
- 38. Selected Readings on World Development in journal AEID: America, 2001-2020
by MCG Blogs de EconomÃa in Euro-American Association: World Development, 2020-01-17 20:24:00 UTC
We include lists and links to some selected articles published in the period 2001-2020. Table 1 includes articles of the period 2001-2005 and table 2 corresponds to the period 2006-2020. Table 2. Articles on economic development of America, 2006-2020 Autores Título Banerjee, S., Chatterjee, B. 2020 Cities Versus Suburbs: The Post 2000 Dynamics Of Population And Employment In U.S. Metro Areas, Banerjee, S., Chatterjee, B. New* Husein, J., Pier, C. (2019) Long-Run Sustainability of Current Account Balance: Evidence from Twenty North and Latin American Economies, Huse [...]
- 37. Selected Readings on World Development in journal AEID 2001-2020: Europe and Eurasia
by MCG Blogs de EconomÃa in Euro-American Association: World Development, 2020-01-16 19:11:00 UTC
Here we include the lists and links (to the abstract and full text of the article) to some selected articles related with economic development of Europe and Eurasia, publised in AIED. Table 1 includes some articles of the period 2006-2020 and table 2 some articles of the period 2001-2005. Table 2: Some selected articles on Europe and Eurasia, published for the period 2001-2005 Authors Title Ogloblin, C. The Gender Earnings Differential in Russia After a Decade of Economic Transition. Abstract Cosar, N., Bildirici, M. (2005) Some Comparisons Between Turkey and OECD C [...]
- Great economics, bad politics
by chris in Stumbling and Mumbling, 2020-01-16 13:47:59 UTC
Non-economists (and quite a few trained economists too) often claim that mainstream economics is a simple-minded defence of free markets and inequality. Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times is a superb refutation of this.
They argue that:
It is unreasonable to expect markets to always deliver outcomes that are just, acceptable or even efficient.
A big reason for this is that the economy is “sticky” and that “resources do not always flow to their best use. Workers who are laid off because of international trade or technical change do not quickly move to decent job [...]
- Thesis Thursday: Koh Jun Ong
by Chris Sampson in The Academic Health Economists' Blog, 2020-01-16 07:00:00 UTC
On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Koh Jun Ong who has a PhD from the University of Groningen . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch.
Title Economic aspects of public health programmes for infectious disease control: studies on human immunodeficiency virus & human papillomavirus Supervisors Maarten Postma , Mark Jit Repository link http://hdl.handle.net/11370/0edbcfae-2a0c-4103-9722-fb8086d75cff
Which public health programmes did you consider [...]