nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒11‒09
three papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Sustainable Finance for Sustainable Development By Giovanni Ferri; Bonnie Annette Acosta
  2. Equal Opportunities for All? How Income Redistribution Promotes Support for Economic Inclusion By Ilona Reindl; Jean-Robert Tyran
  3. Let's Close the Gap: Revising Teaching Materials to Reflect How the Federal Reserve Implements Monetary Policy By Jane E. Ihrig; Scott A. Wolla

  1. By: Giovanni Ferri (LUMSA University); Bonnie Annette Acosta
    Abstract: The paper explores how ethical and sustainable oriented finance is key to reach sustainable development by tackling environmental risk through green finance and showing empirical evidence on the link between finance and inequality. The theory provided puts in the right mind frame to analyze markets, intermediaries and instruments with a sustainable lens to focus on the benefits that have brought to sustainable development. A discussion is presented between different intermediaries and highlights the benefits of cooperative banks especially the close relationship of customers and bank and the resilience it gives to Small and Medium Enterprises (SMEs) in difficult times. Different investments strategies are discussed walking through the evolution of Sustainable and Responsible Investing (SRI) funds and diving into the ESG analysis to use as criteria to allocate investments based on environmental, social and governance principles. Microfinance is introduced as a different market that has reached the people at the bottom of the pyramid and highlights the key role it will play to bring financial inclusion. Islamic finance and Fintech are also discussed. Different instruments are presented to understand the current landscape of how different investors are using innovative products to attack social and environmental problems. Finally, five different ways are presented on how policies can strengthen and support sustainable development arguing that the most important is by promoting sustainable footprint certification.
    Keywords: Sustainable Finance, SDGs, Green Bonds, Social Bonds, Fintech, Human Centered Business Model.
    JEL: G18 G24 G28 G38 M14 O35 P43 Q01 Q5 Q58
    Date: 2019–07
  2. By: Ilona Reindl (University of Vienna); Jean-Robert Tyran (Department of Economics, University of Copenhagen, Denmark)
    Abstract: We experimentally investigate how income redistribution shapes support for economic inclusion, i.e., a policy that creates equality of opportunity for income generation. We study a setting in which low-endowment subjects are excluded from investment opportunities unless those with high endowments transfer resources to the low-endowment subjects. We find that support for economic inclusion is stronger among high-endowment subjects if incomes are known to be redistributed in the future compared to a situation in which this is precluded by design. Income redistribution spreads both risks and returns of investments in the population which, in turn, induces a higher rate of profitable investments, and this prospect tends to foster support for economic inclusion. Income redistribution thus induces more equal and efficient outcomes by boosting popular support for economic inclusion.
    Keywords: laboratory experiment, income redistribution, economic inclusion, equality of opportunity, investment, risk taking
    JEL: C91 D31 D63 D81
    Date: 2020–10–26
  3. By: Jane E. Ihrig; Scott A. Wolla
    Abstract: The topic of the Federal Reserve’s (the Fed’s) implementation of monetary policy has a significant presence in economics textbooks as well as standards and guidelines for economics instruction. This presence likely reflects the fact that it is the implementation framework that helps ensure that the Fed’s desired level of its policy interest rate is transmitted to financial markets, which helps it steer the economy toward the Congressional dual mandate of maximum employment and price stability. Over the past decade or so, the Fed has purposefully shifted the way it implements monetary policy to an environment with ample reserves in the banking system, and it has introduced new policy tools along the way. This paper shows that, unfortunately, many teaching resources are not in sync with the Fed’s current framework. We review six, 2020 or 2021 edition, principles of economics textbooks, and we find they vary greatly in their coverage of the concepts associated with the way the Fed implements policy today and in the longer run. We provide recommendations on how the authors can improve the next editions of their textbooks. We also review standards and guidelines used by secondaryschool educators. All of these are out of date, and we provide proposals for how these materials can be updated.
    Keywords: Federal Reserve; Monetary policy; Economic education; Introductory economics; Macroeconomics
    JEL: E52 E43 A22 E58
    Date: 2020–10–23

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