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2019-10-14

• The Federal Home Loan Banks: Two Lessons in Regulatory Arbitrage
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-10-14 12:01:05 UTC

  There is an important U.S. government-sponsored banking system that most people know nothing about. Created by an act of Congress in 1932, the Federal Home Loan Banks (FHLBs) issue bonds that investors perceive as having government backing, and then use the proceeds to make loans to their members: namely, 6,800 commercial banks, credit unions, insurance companies and savings associations. As the name suggests, the mission of the (currently 11) regional, cooperatively owned FHLBs is “ to support mortgage lending and related community investment .” But, since the system was founded, its role as [...]

2019-10-12

• Interval Prediction
  by Francis Diebold in No Hesitations, 2019-10-12 19:16:00 UTC

  Last time I blogged on Serena's amazing presentation from Per's Chicago meeting, https://fxdiebold.blogspot.com/2019/10/large-dimensional-factor-analysis-with.html But I was equally blown away by Rina's amazing "Predictive inference with the jackknife+". Rina Foygel Barber∗ , Emmanuel J. Canes† , Aaditya Ramdas‡ , Ryan J. Tibshirani‡§ https://arxiv.org/pdf/1905.02928.pdf .  Correctly calibrated confidence intervals despite arbitrary model misspecification! But of course I'm left with lots of questions.  They have nice correct-coverage theorems. What about length?  We want shortest-length corre [...]

2019-10-10

• Health Risk, Insurance and Optimal Progressive Income Taxation
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 19:15:25 UTC

  By Juergen Jung and Chung Tran http://d.repec.org/n?u=RePEc:red:sed019:620&r=dge We study the optimal progressivity of personal income taxes in an environment where individuals are exposed to idiosyncratic shocks to health and labor productivity over the lifecycle. Our analysis is based on a large-scale overlapping generations general equilibrium model that is calibrated to the US economy. Our results indicate that the presence of health risk and health insurance has a strong effect on the amount of redistribution and social in- surance provided by progressive income taxes. In an environment w [...]

• Rational Inattention and Oversensitivity of Retirement to the State Pension Age
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 19:02:20 UTC

  By Jamie Hentall MacCuish http://d.repec.org/n?u=RePEc:red:sed019:336&r=dge This paper presents evidence that incorporating costly thought, modelled with rational inattention, solves two well-established puzzles in the retirement literature. The first puzzle is that, given incentives, the extent of bunching of labour market exits at legislated state pension ages (SPA) seems incompatible with rational expectations (e.g. Cribb, Emmerson, and Tetlow, 2016). Adding to the evidence for this puzzle, this paper includes an empirical analysis focusing on whether liquidity constraints can account for t [...]

• Heterogeneous Price Rigidities and Monetary Policy
  by Christian Zimmermann in NEP-DGE blog, 2019-10-10 18:42:51 UTC

  By Christopher Clayton, Andreas Schaab and Xavier Jaravel http://d.repec.org/n?u=RePEc:red:sed019:1480&r=dge This paper investigates the implications of heterogeneous price rigidities across sectors for the distributional and aggregate effects of monetary policy. First, we identify and characterize analytically a new set of earnings and expenditure channels of monetary policy that emerge in the presence of sectoral heterogeneity. Second, we establish empirically that (i) prices are more rigid in sectors selling to college-educated households, (ii) prices are more rigid in sectors employing col [...]

• Germany Versus the ECB
  by Hans-Helmut Kotz in Project Syndicate, 2019-10-10 13:45:54 UTC

  CAMBRIDGE – Over the past couple of months, the German debate over fiscal and monetary policy has taken an interesting turn. Old, deeply ingrained economic dogmas , including that the public sector must strive to generate a fiscal surplus regardless of macroeconomic conditions, are being reappraised , at least by some . The economic situation is changing rapidly for the worse. The German economy – long the engine of eurozone growth – is undeniably sputtering . Powerful underlying currents are contributing to the slowdown. As a result, there is a high probability of a typical German recession ( [...]

2019-10-09

• Should Creditors Pay the Price for Dubious Bonds?
  by Mitu Gulati in Project Syndicate, 2019-10-09 11:01:28 UTC

  DURHAM/GENEVA/CHAPEL HILL – In late October, Venezuela is likely to default on a $913 million payment on a key bond. Because the country has already defaulted on most of its debt, one might be tempted to regard another missed payment as no big deal. But this bond, issued by the national oil company Petróleos de Venezuela, S.A. (PDVSA), and referred to as PDVSA 2020, is backed by juicy collateral: a controlling stake in Venezuela’s economic crown jewel, United States-based refiner CITGO. Ordinarily, unpaid bondholders could tell the bond trustee to seize the collateral. But, given its dubious p [...]

2019-10-07

• Journal Round-up at the Academic Health Economists’ Blog
  by Jason Shafrin in Healthcare Economist, 2019-10-07 22:13:05 UTC

  Over at the Academic Health Economists’ (AHE) blog, I host this week’s journal round-up . The papers I cover include: Combined impact of future trends on healthcare utilisation of older people: a Delphi study . Health Policy [ PubMed ] [ RePEc ]  Published October 2019 The fold-in, fold-out design for DCE choice tasks: application to burden of disease . Medical Decision Making [ PubMed ]  Published 29th May 2019 The health and cost burden of antibiotic resistant and susceptible Escherichia coli bacteraemia in the English hospital setting: a national retrospective cohort study . PLoS O [...]

• 328 – Weitzman discounting
  by David Pannell in Pannell Discussions, 2019-10-07 15:08:25 UTC

  Martin Weitzman (1942-2019) was an environmental economist who thought laterally. He made important contributions to the field in at least three areas. Here I’ll explain one of his clever insights: that uncertainty about the discount rate has an impact on the effect of discounting. At a function in his honour in 2018, Weitzman said “I’m drawn to things that are conceptually unclear, where it’s not clear how you want to make your way through this maze,” and described how he “took a decisive step in that direction a few decades ago…getting into the forefront rather than…following everything that [...]

• Jason Shafrin’s journal round-up for 7th October 2019
  by Jason Shafrin in The Academic Health Economists' Blog, 2019-10-07 11:00:35 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 . Combined impact of future trends on healthcare utilisation of older people: a Delphi study . Health Policy [ PubMed ] [ RePEc ] Published October 2019 Governments need to plan for the future. This is part [...]

2019-10-06

• An October Update on the 21st Century Cities Initiative at Johns Hopkins
  by Matthew E. Kahn in Environmental and Urban Economics, 2019-10-06 14:16:00 UTC

  The last few weeks have been exciting.� �On Wednesday October 2nd, I gave the Rice Lecture at NYU's Wagner School.�� � I spoke about the urban economics of climate change adaptation.� On Friday, October 4th I spoke at the Federal Reserve of Boston Conference o n the Geographic Divide in the United States.� � I spoke about quality of life inequality in the U.S.� I soon go to Washington DC and Philly to discuss my recent urban economics work.�� Over the last few weeks, I have released two high quality co-authored NBER papers with both related to urban economics issues.� Joe Tracy and I released [...]

2019-10-03

• Durables and Lemons: Private Information and the Market for Cars
  by Christian Zimmermann in NEP-DGE blog, 2019-10-03 23:13:54 UTC

  By Richard Blundell, Ran Gu, Soren Leth-Petersen, Hamish Low and Costas Meghir http://d.repec.org/n?u=RePEc:cwl:cwldpp:2197&r=dge We specify an equilibrium model of car ownership with private information where individuals sell and purchase new and second-hand cars over their life-cycle. Private information induces a transaction cost and distorts the market reducing the value of a car as a savings instrument. We estimate the model using data on car ownership in Denmark, linked to register data. The lemons penalty is estimated to be 18% of the price in the first year of ownership, declining wit [...]

2019-09-30

• 327 – Heterogeneity of farmers
  by David Pannell in Pannell Discussions, 2019-09-30 15:18:22 UTC

  Farmers are highly heterogeneous. Even farmers growing the same crops in the same region are highly variable. This is often not well recognised by policy makers, researchers or extension agents. The variation between farmers occurs on many dimensions. A random sample of farmers will have quite different soils, rainfall, machinery, access to water for irrigation, wealth, access to credit, farm area, social networks, intelligence, education, skills, family size, non-family labour, history of farm management choices, preferences for various outcomes, and so on, and so on. There is variation among [...]

2019-09-29

• The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom
  by Christian Zimmermann in NEP-DGE blog, 2019-09-29 01:05:34 UTC

  By Ben Broadbent, Federico Di Pace, Thomas Drechsel, Richard Harrison and Silvana Tenreyro http://d.repec.org/n?u=RePEc:cfm:wpaper:1916&r=dge” The UK economy has experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. This paper develops and estimates a small open economy model with tradable and non-tradable sectors to characterise these adjustments. We demonstrate that many of the effects of the referendum result can be conceptualised as news about a future slowdown in productivity growth in the tradable sector. Simulations s [...]

2019-09-25

• Dynamic Programming with State-Dependent Discounting
  by Christian Zimmermann in NEP-DGE blog, 2019-09-25 22:14:42 UTC

  By John Stachurski and Junnan Zhang http://d.repec.org/n?u=RePEc:arx:papers:1908.08800&r=dge This paper extends the core results of discrete time infinite horizon dynamic programming theory to the case of state-dependent discounting. The traditional constant-discount condition requires that the discount factor of the controller is strictly less than one. Here we replace the constant factor with a discount factor process and require, in essence, that the process is strictly less than one on average in the long run. We prove that, under this condition, the standard optimality results can be reco [...]

• Six methods of unconventional monetary policy
  by Giulia Bellocchio in TVHE, 2019-09-25 20:00:13 UTC

  In a recent response to questions , The Reserve Bank of Australia has listed six options of unconventional monetary policy that is considered in an event of extreme policy implementation. Westpac economists have also talked about potential unconventional monetary policy tools applicable to the NZ case here  – this is worth a read, but is a different list! In this post I would like to outline the RBA’s options and hopefully make them easy to understand. As discussed in my post on uncertainty, investment, and monetary policy we are thinking about “unconventional” actions when the neut [...]

2019-09-24

• The Technology of Tall (Part II): The Need for Speed
  by Jason Barr in Building the skyline, 2019-09-24 12:04:54 UTC

  Jason M. Barr    September 24, 2019 Note this is Part II of an on-going series on the evolution of skyscraper technology. Part I can be read here . The Chicken or the Egg? What came first: building height or elevator speed? The history of skyscrapers brings us to a kind of chicken-and-egg conundrum. Does the drive to build tall come first and then fast elevators come next? Or do rapid elevators show what’s possible and then developers exploit them to go taller? While I don’t think there’s any way to answer this question, we can look at the history of the elevator to get a sense how this co-dep [...]

2019-09-23

• 326 – 60-second videos about our research
  by David Pannell in Pannell Discussions, 2019-09-23 15:50:02 UTC

  My School at the University of Western Australia is having a competition amongst staff and students to produce a 60-second video that says something interesting and engaging about our research. I’ve put in two entries. The first one, about farmer adaptation to climate change, is the fun one. The second one, about water pollution, is more traditional, but I hope it’s still interesting. I’m also included in a third really creative entry that was put together by Maksym Polyakov. Wish us luck. The winner will be announced in December. Further reading Thamo, T., Addai, D., Kragt, M.E., Kingwell, [...]

• The Costs of Inefficient Regulation: The Volcker Rule
  by Kim Schoenholtz in Money, Banking and Financial Markets, 2019-09-23 12:54:49 UTC

  “Regulatory capital and liquidity requirements for market making are a more cost effective method of treating the associated systemic risk. […] Market making risks, and other risks taken by a bank, are unsafe whenever they are large relative to the capital and liquidity of the bank.” Darrell Duffie, “ Market Making Under the Proposed Volcker Rule ,” 2012. By creating a new regime to limit threats to the U.S. financial system—including heightened scrutiny for systemic intermediaries and a new resolution framework—the Dodd-Frank Act (DFA, passed in July 2010) has made the U.S. financial system [...]

2019-09-22

• Exchange Rate Pass-Through: A Competitive Search Approach
  by Christian Zimmermann in NEP-DGE blog, 2019-09-22 22:01:28 UTC

  By Beverly Lapham and Ayman Mnasri http://d.repec.org/n?u=RePEc:qed:wpaper:1418&r=dge We develop an open economy monetary model with heterogeneous households which is characterized by incomplete pass-through of exchange rate movements to import prices. Partial pass-through arises in our environment due to the presence of competitive search in international goods’ markets. Under competitive search, agents choose a sub-market in which to exchange goods, where different sub-markets are characterized by different price and trading probability combinations. Preference and policy shocks which induce [...]

2019-09-20

• Are QALYs #ableist?
  by Don Husereau in The Academic Health Economists' Blog, 2019-09-20 06:00:13 UTC

  As many of us who have had to review submitted journal articles, thesis defenses, grant applications, white papers, and even published literature know, providing feedback on something that is poorly conceived is much harder than providing feedback on something well done. This is going to be hard. Who is ValueOurHealth? The video above comes from the website of “ValueOurHealth.org” ; I would tell you more about them, but there is no “About Us” menu item on the website. However, the website indicates that they are a group of patient organizations concerned about: “The use of f [...]

2019-09-19

• Thesis Thursday: Andrea Gabrio
  by Chris Sampson in The Academic Health Economists' Blog, 2019-09-19 06:00:59 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 Andrea Gabrio who has a PhD from University College London . If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch. Title Full Bayesian methods to handle missing data in health economic evaluation Supervisors Gianluca Baio , Alexina Mason , Rachael Hunter Repository link http://discovery.ucl.ac.uk/10072087 What kind of assumptions about missing data are made in trial-based economic evaluations? In any analysis, assumptions [...]

2019-09-18

• 3 or 7, truth or trust
  by K in Eight to Late, 2019-09-18 10:28:51 UTC

  “It is clear that ethics cannot be articulated.” – Ludwig Wittgenstein Over the last few years I’ve been teaching and refining a series of lecture-workshops on Decision Making Under Uncertainty . Audiences include data scientists and mid-level managers working in corporates and public service agencies. The course is based on the distinction between uncertainties in which the variables are known and can be quantified versus those in which the variables are not known upfront and/or are hard to quantify. Before going any further, it is worth explaining the distinction via a couple of examples: An [...]

2019-09-16

• 325 – Ranking projects based on cost-effectiveness
  by David Pannell in Pannell Discussions, 2019-09-16 15:45:42 UTC

  Where organisations are unable or unwilling to quantify project benefits in monetary or monetary-equivalent terms, a common approach is to rank potential projects on the basis of cost-effectiveness. Just like ranking projects based on Benefit: Cost Ratio (BCR), this approach works in some cases but not others. To rank projects based on cost-effectiveness, you choose the metric you will use to measure project benefits, estimate that metric for each project, estimate the cost of each project, and divide the benefit metric by the cost. You end up with a cost-effectiveness number for each potentia [...]

• Should Students Borrow?
  by Kim Schoenholtz in Money, Banking and Financial Markets, 2019-09-16 12:30:13 UTC

  “ [Secretary of Education Betsy] DeVos issued the final repeal of an Obama-era rule aimed at holding low-quality education programs accountable by forcing them to prove their graduates were able to repay their student debt .” CNBC, July 1, 2019. As summer ends, 17 million students head to college. Nearly 40 percent are borrowing to do it. Over the past 15 years, the number of people with student loans nearly doubled and now stands at roughly 45 million―that’s about one in four adult Americans. Furthermore, the amount of debt has virtually tripled to just over $1.5 trillion, so the average loan [...]

• David Mott’s journal round-up for 16th September 2019
  by David Mott in The Academic Health Economists' Blog, 2019-09-16 11:00:00 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 . Opening the ‘black box’: an overview of methods to investigate the decision‑making process in choice‑based surveys . The Patient [ PubMed ] Published 5th September 2019 Choice-based surveys using methods [...]

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