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on Macroeconomics |
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Issue of 2021‒08‒23
94 papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Andrade Philippe,; Galí Jordi,; Le Bihan Hervé,; Matheron Julien. |
| Abstract: | We address this question using an estimated New Keynesian DSGE model of the Euro Area with trend inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady-state real interest rate, r*, increases the probability of hitting the lower bound constraint, which entails significant welfare costs and warrants an adjustment of the monetary policy strategy. Under an unchanged monetary policy rule, an increase in the inflation target of eight tenth the size of the drop in the real natural rate of interest is warranted. Absent an increase in the inflation target, and assuming the effective lower bound prevents the ECB from implementing more aggressive negative interest rate policies, adjusting the monetary strategy requires considering alternative instruments or policy rules, such as committing to make-up for recent, below-target inflation realizations. |
| Keywords: | Inflation Target; Effective Lower Bound; Monetary Policy Strategy; Euro Area. |
| JEL: | E31 E52 E58 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:811&r= |
| By: | Le Bihan Hervé,; Marx Magali,; Matheron Julien. |
| Abstract: | A number of central banks in advanced countries use ranges, or bands, around their inflation target to formulate their monetary policy strategy. The adoption of such ranges has been proposed by some policymakers in the context of the Fed and the ECB reviews of their strategies. Using a standard New Keynesian macroeconomic model, we analyze the consequences of tolerance range policies, characterized by a stronger reaction of the central bank to inflation when inflation lies outside the range than when it is close to the target, ie the central value of the band. We show that a tolerance band should not be a zone of inaction: the lack of reaction within the band endangers macroeconomic stability and leads to the possibility of multiple equilibria; the trade-off between the reaction needed outside the range versus inside seems unfavorable: a very strong reaction, when inflation is far from the target, is required to compensate a moderately lower reaction within tolerance band; these results, obtained within the framework of a stylized model, are robust to many alterations, in particular allowing for the zero lower bound. |
| Keywords: | Monetary policy; inflation ranges; inflation bands; ZLB; endogenous regime switching. |
| JEL: | E31 E52 E58 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:820&r= |
| By: | William Chen (Department of Economics, Massachusetts Institute of Technology); Gregory Phelan (Department of Economics, Williams College) |
| Abstract: | Monetary policy can promote financial stability and improve household welfare. We consider a macro model with a financial sector in which banks do not actively issue equity, output and growth depend on the aggregate level of bank equity, and equilibrium is inefficient. Monetary policy rules responding to the financial sector are ex-ante stabilizing because their effects on risk premia decrease the likelihood of crises and boost leverage during downturns. Stability gains from monetary policy increase welfare whenever macroprudential policy is poorly targeted. If macroprudential policy is sufficiently well-targeted to promote financial stability, then monetary policy should not target financial stability. |
| Keywords: | Central bank mandate, Leaning against the wind, Fed Put, Macroprudential policy, Banks, Liquidity |
| JEL: | E44 E52 E58 G01 G12 G20 G21 |
| Date: | 2021–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2021-12&r= |
| By: | Hannah Seidl; Fabian Seyrich |
| Abstract: | In HANK, we show that fiscal policy is an appropriate macroeconomic stabilization tool at the ZLB. Fiscal policy achieves the same macroeconomic aggregates and the same welfare as hypothetically unconstrained monetary policy by replicating its transmission mechanism. Consumption taxes and labor taxes replicate the effects of monetary policy through the intertemporal substitution channel. Debt-financed lumpsum transfers and a permanent increase in the government debt level replicate the effects of monetary policy through the redistribution channel. |
| Keywords: | Unconventional fiscal policy, heterogeneous agents, incomplete markets, liquidity trap, sticky prices |
| JEL: | E12 E21 E24 E43 E52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1953&r= |
| By: | Biagio Bossone |
| Abstract: | This article speaks to post-Keynesian economists and their fundamental vision of monetary production economies. It focuses on the role of commercial banks as creators of money in monetary production economies and studies the rent-extraction power of banks in the form of "seigniorage." The article examines how the relative size of banks in the payment system combines with their capacity to determine quantities and prices in the market for demand deposits and gives them the power to extract seigniorage from the economy; it clarifies the distinction between seigniorage originating from commercial bank money creation and profits derived from pure financial intermediation; and analyzes how seigniorage affects the economy’s price level and resource distribution. The article draws political-economy and economic-policy implications. |
| Keywords: | Commercial banks; Interest rate; Money creation; Prices; Resource distribution; Seigniorage |
| JEL: | E19 E20 E31 E40 E52 E58 E62 G21 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2111&r= |
| By: | De Grauwe, Paul; Foresti, Pasquale |
| Abstract: | In this paper, we study the effects of government spending with a behavioral macroeconomic model in which agents have limited cognitive capabilities and use simple heuristics to form their expectations. However, thanks to a learning mechanism, agents can revise their forecasting rule according to its performance. This feature produces endogenous and self-fulfilling waves of optimistic and pessimistic beliefs (animal spirits). This framework allows us to show that the short-run spending multiplier is state dependent. The multiplier is stronger under either extreme optimism or pessimism and reduces in periods of tranquility. Furthermore, the more the central bank focuses on output gap stabilization, the smaller the multiplier. We also show that periods of increasing public debt are characterized by intense pessimism, while intense optimism occurs in periods of decreasing debt. This allows us to show that governments face a trade-off between the stabilization of the animal spirits and the stabilization of public debt. Then, we show that the existence of this trade-off has implications also for the stabilization of the output gap. |
| Keywords: | animal spirits; behavioral DSGE model; fiscal policy; policy state-dependent effects; public debt; spending multiplier |
| JEL: | E10 E32 E62 D83 |
| Date: | 2020–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103500&r= |
| By: | Punzo Chiara,; Rossi Lorenza |
| Abstract: | We analyse the redistribution channel of a money-financed versus debt-financed fiscal stimulus in a Borrower-Saver frammework. The redistribution channel is larger when we consider a money-financed fiscal stimulus. However, it generates also larger welfare losses than a debt-financed fiscal stimulus, particularly in a borrower-saver framework due to the additional presence of the consumption gap with respect to a representative agent model. |
| Keywords: | Borrowers-Savers; Fiscal Stimuli; Welfare; Fiscal Multipliers |
| JEL: | E3 E5 E62 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:818&r= |
| By: | Vadim Elenev; Tim Landvoigt; Patrick J. Shultz; Stijn Van Nieuwerburgh |
| Abstract: | Governments around the world have gone on a massive fiscal expansion in response to the Covid crisis, increasing government debt to levels not seen in 75 years. How will this debt be repaid? What role do conventional and unconventional monetary policy play? We investigate debt sustainability in a New Keynesian model with an intermediary sector, realistic fiscal and monetary policy, endogenous convenience yields, and substantial risk premia. When conventional monetary policy is constrained by the ZLB during an economic crisis, increased government spending and lower tax revenue lead to a large rise in government debt and raise the risk of future tax increases. We find that quantitative easing (QE), forward guidance, and an expansion in government discretionary spending all contribute to lowering debt/GDP ratio and reducing this fiscal risk. A transitory QE policy deployed during a crisis stimulates aggregate demand. |
| JEL: | E1 E12 E13 E2 E31 E32 E37 E4 E42 E43 E44 E6 E62 E63 G12 G18 G21 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29129&r= |
| By: | Mikhail Chernov; Lars A. Lochstoer; Dongho Song |
| Abstract: | We present evidence that the mix of transitory and permanent shocks to consumption is changing over time. We study the implications of this finding for asset prices. The uncovered dynamics of consumption implies modestly upward sloping real bond and equity curves, upward sloping nominal yield curve, and sign-switching correlation between equities and bonds consistent with the stylized facts. This is achieved without relying on the nominal channel too much. That is, as in the data, the variation of inflation in the model is under 40% as a fraction of variation in nominal yields. |
| JEL: | E32 E43 E44 G12 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29085&r= |
| By: | William Chen (Department of Economics, Massachusetts Institute of Technology); Gregory Phelan (Department of Economics, Williams College) |
| Abstract: | When financial intermediaries’ key characteristic is provision of liquidity through their liabilities, with financial frictions the financial sector in the aggregate is likely to over-accumulate equity, thus decreasing liquidity provision and household welfare. Aggregate household welfare is therefore decreasing in the level of aggregate intermediary equity even though the individual value of intermediaries is increasing in equity, which is why intermediaries over-accumulate equity. Subsidizing intermediary dividends can improve welfare by encouraging earlier payout and decreasing aggregate equity in the financial sector. This policy increases the likelihood that intermediaries provide more liquidity and improves the stability of the economy, even though asset prices fall. |
| Keywords: | Financial stability, Macroeconomic instability Macroprudential policy, Banks |
| JEL: | E44 E52 E58 G01 G12 G20 G21 |
| Date: | 2021–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2021-11&r= |
| By: | Jing Tian; Jan P.A.M. Jacobs; Denise R. Osborn |
| Abstract: | Multivariate analysis can help to focus on economic phenomena, including trend and cyclical movements. To allow for potential correlation with seasonality, the present paper studies a three component multivariate unobserved component model, focusing on the case of quarterly data and showing that economic restrictions, including common trends and common cycles, can ensure identification. Applied to seasonal aggregate gender employment in Australia, a bivariate male/female model with a common cycle is preferred to both univariate correlated component and bivariate uncorrelated component specifications. This model evidences distinct gender-based seasonal patterns with seasonality declining over time for females and increasing for males. |
| Keywords: | trend-cycle-seasonal decomposition, multivariate unobserved components models, correlated component models, identification, gender employment, Australia |
| JEL: | C22 E24 E32 E37 F01 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-72&r= |
| By: | Jang-Ting Guo (Department of Economics, University of California Riverside); Yan Zhang (Zhongnan University of Economics and Law) |
| Abstract: | In the context of a two-period non-monetary overlapping generations model with Cobb-Douglas preference and technological specifications, this paper explores the quantitative interrelations between equilibrium (in)determinacy versus (i) a progressive tax schedule on wage income and (ii) a balanced-budget rule with endogenous labor taxation. In sharp contrast to previous studies on a one-sector representative-agent macroeconomy, we find that both fiscal formulations are stabilizing instruments against cyclical fluctuations driven by agents' self-fulfilling beliefs. The key policy implication of our no-indeterminacy result is that depending on what is the underlying analytical environment, countercyclical income taxation may stabilize or destabilize the business cycle. |
| Keywords: | Tax Policy; Equilibrium Indeterminacy; Overlapping Generations Model. |
| JEL: | E32 E62 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ucr:wpaper:202112&r= |
| By: | Gauti B. Eggertsson; Cosimo Petracchi |
| Abstract: | This paper revisits and proposes a resolution to an empirical and theoretical controversy between Keynes and the “classics” (or monetarists). The controversy dates to Keynes’s General Theory (1936)—most famously formalized in Hicks’s (1937) classic Econometrica article, in which the IS-LM model is first formally stated. We first replicate empirical tests formulated in the late 1960s and ’70s and show that more recent data have more statistical power and resolve the empirical debate in favor of the Keynesians, at least according to the criteria of the literature at that time. We then show, using a simple dynamic stochastic general equilibrium (DSGE) model, that the empirical tests suffer from the Lucas (1976) critique, as the conclusion fundamentally depends upon the assumed policy regime. Nevertheless, we argue, this new empirical result is useful: it provides evidence for the existence of a “Keynesian policy regime” according to which traditional monetary expansion loses its impact in the absence of a policy regime change, in the sense of Sargent (1982). |
| JEL: | B0 B1 B22 E0 E12 E13 E4 E5 E50 E51 E52 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29158&r= |
| By: | Gebauer Stefan |
| Abstract: | In this paper, I show that the existence of non-bank financial institutions (NBFIs) has implications for the optimal regulation of the traditional banking sector. I develop a New Keynesian DSGE model for the euro area featuring a heterogeneous financial sector allowing for potential credit leakage towards unregulated NBFIs. Introducing NBFIs raises the importance of credit stabilization relative to other policy objectives in the welfare-based loss function of the regulator. The resulting optimal policy rule indicates that regulators adjust dynamic capital requirements more strongly in response to macroeconomic shocksdue to credit leakage. Furthermore, introducing non-bank finance not only alters the cyclicality of optimal regulation, but also has implications for the optimal steady-state level of capital requirements and loan-to-value ratios. Sector-specific characteristics such as bank market power and risk affect welfare gains from traditional and NBFI credit. |
| Keywords: | Macroprudential Regulation, Monetary Policy, Optimal Policy, Non-Bank Finance,Shadow Banking, Financial Frictions. |
| JEL: | E44 E61 G18 G23 G28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:817&r= |
| By: | Тулеуов Олжас // Tuleuov Olzhas (National Bank of Kazakhstan); Багжанов Бекжан // Bagzhanov Bekzhan (National Bank of Kazakhstan); Жузбаев Адам // Zhuzbayev Adam (National Bank of Kazakhstan) |
| Abstract: | В настоящей работе произведена проверка соответствия ситуации в Казахстане фискальной теории цен путем ретроспективного анализа характера бюджетно-налоговой политики, её взаимодействия с денежно-кредитной политикой, а также эмпирической оценки воздействия фискальных параметров на инфляционные процессы. // In this study, the compliance of the situation in Kazakhstan with the fiscal theory of the price level was verified by means of a retrospective analysis of the nature of fiscal policy, its relationship with monetary policy as well as by an empirical assessment of the impact of fiscal parameters on inflationary processes. |
| Keywords: | FAVAR, VECM, денежно-кредитная политика, инфляционное таргетирование, инфляция, уровень цен, фискальная политика, фискальная теория цен, фискальная экспансия, фискальное доминирование FAVAR, VECM, monetary policy, inflation targeting, inflation, price level, fiscal policy, fiscal theory of the price level, fiscal expansion, fiscal dominance |
| JEL: | C32 C52 E17 E62 E63 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:aob:wpaper:20&r= |
| By: | José Dorich; Rhys R. Mendes; Yang Zhang |
| Abstract: | Since 1991, the Bank of Canada has had an inflation-targeting (IT) framework established by a joint agreement between the Bank and the Government of Canada. The framework is reviewed every five years as part of the process for renewing the inflation-control agreement. This discussion paper summarizes some interim results from Bank staff analysis done for the August 2020 workshop, “Towards the 2021 Renewal of the Bank of Canada’s Monetary Policy Framework.” The Bank will publish updated analysis later in 2021. The core of the current framework—the 2 percent inflation target—has remained unchanged since 1995. This fact reflects its success. Well-anchored inflation expectations contribute to macroeconomic stability while leaving monetary policy with greater flexibility. The 2021 renewal highlights two key challenges facing Canadian monetary policy: (1) the low neutral rate of interest; and (2) the low interest rates associated with a low neutral rate that may encourage excessive risk-taking and debt accumulation To address these challenges, Bank staff are running a “horse race” of alternative monetary policy frameworks (i.e., alternatives to the 2 percent IT framework). Their work evaluates these alternatives using a broad range of qualitative and quantitative criteria and focuses on the macroeconomic performance of the alternative frameworks. The interim results we report in this discussion paper suggest overall that no framework dominates on all margins. As a result, the ranking depends on the relative weight placed on different criteria. |
| Keywords: | Central bank research; Economic models; Inflation targets; Monetary policy; Monetary policy framework; Monetary policy transmission |
| JEL: | E58 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:21-13&r= |
| By: | International Monetary Fund |
| Abstract: | While the non-mining sector was severely impacted by the COVID-19 crisis, overall growth in Guinea remains strong, reaching 7 percent in 2020, driven by booming mining production. Inflation exceeded 12 percent as a result of COVID-related supply disruptions and the ongoing monetary and fiscal response. The already weak social indicators have deteriorated further. |
| Keywords: | authorities' intention; accommodative fiscal policy; Guinean authorities; near-term priority; value chain; money market rate; Mining sector; COVID-19; Debt sustainability analysis; Global; Africa; West Africa |
| Date: | 2021–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/146&r= |
| By: | Martin Ravallion |
| Abstract: | Thirty years of distributional data are used to study the short-term impacts of popular macroeconomic indicators on real household incomes from the poorest to the richest Americans. The appropriate weights on unemployment versus inflation vary across the distribution. The unemployment rate matters at all levels, but especially so for the poorest. Inflation rates matter at middle incomes, though Okun’s famous Misery Index only performs well for the top income groups. GDP growth matters at all levels and proportionately more for the poorest, though only via the unemployment rate. Recessions are poverty-increasing, and skewness-decreasing, but with ambiguous effects on overall inequality. |
| JEL: | D31 E31 E32 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29050&r= |
| By: | Den Haan, Wouter J.; Freund, Lukas; Kaerner Rendahl, Pontus |
| Abstract: | In search-and-matching models, the nonlinear nature of search frictions increases average unemployment rates during periods with higher volatility. These frictions are not, however, by themselves sufficient to raise unemployment following an increase in perceived uncertainty; though they may do so in conjunction with the common assumption of wages being determined by Nash bargaining. Importantly, option-value considerations play no role in the standard model with free entry. In contrast, when the mass of entrepreneurs is finite and there is heterogeneity in firm-specific productivity, a rise in perceived uncertainty robustly increases the option value of waiting and reduces job creation. |
| Keywords: | uncertainty; search frictions; unemployment; option value |
| JEL: | E24 E32 J64 |
| Date: | 2021–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111568&r= |
| By: | International Monetary Fund |
| Abstract: | Germany’s economy contracted by just under 5 percent in 2020, outperforming most European peers. But renewed waves of infections and associated lockdowns caused economic activity to plunge again in the first quarter of this year. While the pace of mass vaccination has picked up and the economy has started to reopen, the recovery path is beset with risks, particularly with respect to the progress of the pandemic and supply shortages in major industries. The authorities have maintained appropriately accommodative fiscal and financial policies, and most measures supporting households and firms have been extended through 2021. |
| Keywords: | money market rate; financial asset; investment initiative; government action; article IV consultation discussion; transparency policy; headline inflation; COVID-19; Income; Commercial banks; Cooperative banks; Global; Europe |
| Date: | 2021–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/153&r= |
| By: | Siena Daniele,; Zago Riccardo. |
| Abstract: | This paper shows that the change in the occupational composition of the labor market in favour of non-routine jobs -i.e. job polarization- flattens the price Phillips Curve (PC). Using data from the European Monetary Union and exploiting the fact that job polarization accelerates during recessions, we obtain two results. First, countries experiencing a bigger shift in the occupational structure during a downturn exhibit a flatter PC afterward. Second, the occupational shifts experienced during the Great Recession and the Sovereign Debt Crisis explain up to a forth of the flattening of the curve in the 2002-2018 period. We reconcile this evidence through a New Keynesian model with unemployment and search and matching frictions. Heterogeneity in the fluidity across segments of the labor market -i.e. differences in the separation and hiring rate across jobs- is the source of PC flattening. |
| Keywords: | Phillips Curve, Job Polarization, Occupational Composition, Monetary Policy,Labor Market Fluidity. |
| JEL: | E31 E32 J21 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:819&r= |
| By: | Kurmann, André (Drexel University); Lalé, Etienne (Université du Québec à Montréal); Ta, Lien (Drexel University) |
| Abstract: | The COVID-19 pandemic has led to an explosion of research using real-time establishment-level data. One key challenge when working with this data is how to take into account the effects of business openings and closings. In this paper, we address this challenge by matching small business establishment records from Homebase with information on business activity from Google, Facebook,and Safegraph to distinguish business closings and openings from other sample exits and entry. Weshow that this distinction is critical to benchmark the data to pre-pandemic administrative records and estimate the effects of the pandemic on small business activity. We find four key results: (1)employment of small businesses in four of the hardest hit service sectors contracted more severely in the beginning of the pandemic than employment of larger businesses, but small businesses also rebounded more strongly and have on average recovered a higher share of job losses than larger businesses; (2)closings account for 70% of the initial decline in small business employment, but two thirds of closed businesses have reopened and the annual rate of closings is just slightly higher than prior to the pandemic; (3) new openings of small businesses constitute an important driver of the recovery but the annual rate of new openings is only about half the rate one year earlier (4) small business employment was affected less negatively in counties with early access to loans from the Paycheck Protection Program(PPP) and in counties where Federal Pandemic Unemployment Compensation (FPUC) was more generous relative to pre-pandemic earnings of likely recipients, with business closings accounting for a large part of these two effects. The results dispel the popular notion that small businesses continue to suffer more from the pandemic than larger businesses. At the same time, our analysis suggests that PPP and FPUC helped to significantly mitigate the negative effects of the pandemic for small businesses by, respectively, alleviating financial constraints and stimulating demand for local services. |
| Keywords: | Small business activity; Sample turnover versus business openings/closings; Matchingrecords; COVID-19; Paycheck Protection Program; Federal Pandemic Unemployment Compensation |
| JEL: | E01 E24 E32 E60 |
| Date: | 2021–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2021_015&r= |
| By: | Jiranyakul, Komain |
| Abstract: | Contributing to the controversial issue on the impact of government spending on economic growth, this paper shows that government spending has long-run impact in stimulating aggregate output in Thailand during the floating exchange rate regime. The results reveal that the long-run relationship between aggregate output, government expenditures and private consumption is stable. Based on quarterly dataset during 1997Q3 to 2019Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime. Furthermore, the traditional version of the Wagner’s law is supported since an expansion in aggregate output causes government expenditure to increase. Therefore, the findings in this paper support both Keynesian hypothesis and the Wagner’s law. |
| Keywords: | Government expenditures, real GDP, cointegration, causality |
| JEL: | E62 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109054&r= |
| By: | Barbara Annicchiarico; Stefano Carattini; Carolyn Fischer; Garth Heutel |
| Abstract: | We study the relationship between business cycles and the design and effects of environmental policies, particularly those with economy-wide significance like climate policies. First, we provide a brief review of the literature related to this topic, from initial explorations using real business cycle models to New Keynesian extensions, open-economy variations, and issues of monetary policy and financial regulations. Next, we provide a list of the main findings that emerge from this literature that are potentially most relevant to policymakers, including the impacts of policy on volatility and how to design policy to adjust to cycles. Finally, we propose several important remaining research questions. |
| JEL: | E32 Q58 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29032&r= |
| By: | Jagjit Chadha; Hande Kucuk; Adrian Pabst |
| Abstract: | {Foreward by Jagjit Chadha) The National Institute of Economic and Social Research has focussed on furthering our understanding of fiscal policy throughout most of its life. And so I was delighted when the Nuffield Foundation gave us the opportunity to ask some hard questions about our current fiscal settlement. With the Covid-19 pandemic continuing to throw much of our normal loci completely off beam, it is a good time to consider the role of fiscal policy. Our work has been motivated by the simple observation that we need to re-examine carefully the objectives, instruments and framework guiding fiscal policy. Naturally, some aspects of our current fiscal settlement have involved worthwhile and probably enduring innovations, such as the establishment of the Office for Budget Responsibility in 2010. But it is abundantly clear that the fiscal settlement in the Long Expansion of 1992-2007 and in the period following the global financial crisis of 2007-8 need careful re-framing if we are to tackle the deep seated economic problems revealed by EU exit and the Covid-19 pandemic. Fiscal policy represents a complex, multifaceted attempt by the state to fill gaps in the market economy and encourage the private sector to locate productive practices. But to meet those objectives fiscal policies have to be both sufficiently flexible to respond to changing circumstances but also be guided by some form of principles or rules that allow progress to be judged and expectations formed about the likely path of public expenditure, taxes and debt. Too much fiscal policy operates by the smoke and mirrors of political surprise and partial leak rather than the more sober manner of timetabled meetings and clear, minuted decisions that characterise monetary policy, to name but one example. The large number of fiscal rules we have had to observe since 2010 alongside an increasing frustration with economic performance tell us that the post-2010 fiscal settlement has failed. It makes no sense to be in thrall to arbitrary rules that do not match society's broader demands for policy to be condoned by what I have called “Budgetarians†, who think it is sufficient to assess fiscal policy in terms of whether that arbitrary target will or will not be hit at some equally arbitrary date coincidental with a parliamentary term. The sad but obvious fact is that the demands of the economy cannot be folded into political horizons. In this Occasional Paper we have collected a number of views from a variety of experts. We have worked with two former central bankers to try and understand the meaning of fiscal space both from the supply side of debt issuance and the demand side of investment demand. Two former Chief Secretaries to the Treasury provide considerable details from their times in office. And a former Whitehall civil servant helps us understand the approaches to spending controls. We have commissioned an academic contribution on how to approach the current debt problem following Covid-19 but also an introspection from an academiccum-market participant on the value of debt. Original work from myself and colleagues at NIESR examines the political framework, the theory of monetary and fiscal interactions, how politicians seem to revise expenditure plans, how changes in economic prospects also matter for revision and then the case of issuing different types of debt. Finally, we are very grateful that two former Chancellors have agreed to write Forewords to this book and that the current Head of the Government Economic Service has supported our interest in developing more attention on fiscal policy. Obviously, none of them necessarily agree with any of the points made or conclusions drawn. It is our simple hope that our line of enquiry will motivate serious examination of our fiscal settlement. While what we say cannot necessarily be thought to be the Treasury View, it is certainly the view from Dean Trench Street. |
| Keywords: | Monetary policy, fiscal framework, macroprudential policy, central banks, fiscal policy |
| JEL: | E52 E58 E62 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesro:61&r= |
| By: | Philipp F. M. Baumann; Enzo Rossi; Alexander Volkmann |
| Abstract: | We analyze the forces that explain inflation using a large panel of 122 countries from 1997 to 2015. Models motivated by the economic theory are compared to a boosting algorithm, and non-linearities and structural breaks are explicitly considered. The boosting algorithm outperforms theory-based models. Further, we provide compelling evidence that the interaction of energy price and energy rents stand out among 37 explanatory variables. Other important determinants are demographic developments. Contrary to common belief, globalization and technology, public debt, central bank independence and transparency as well as countries’ political characteristics, are less relevant. Exchange rate arrangements are more important than inflation-targeting regimes. Moreover, GDP per capita is more relevant than the output gap and credit growth is generally superior to M2 growth. Many predictors exhibit a structural break since the financial crisis. In particular, credit growth has lost its grip on the inflation process. |
| Keywords: | Theories of inflation, longitudinal data, additive mixed models, model-based boosting, conditional Akaike criterion |
| JEL: | C14 C33 C52 E31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2021-12&r= |
| By: | Jonathan Benchimol (Bank of Israel); Sophia Kazinnik (Federal Reserve Bank of Richmond); Yossi Saadon (Bank of Israel) |
| Abstract: | Have the content, sentiment, and timing of the Federal Reserve (Fed) communications changed across communication types during the COVID-19 pandemic? Did similar changes occur during the global financial and dot-com crises? We compile dictionaries specific to COVID-19 and unconventional monetary policy (UMP) and utilize sentiment analysis and topic modeling to study the Fedâs communications and answer the above questions. We show that the Fedâs communications regarding the COVID-19 pandemic concern matters of financial volatility, contextual uncertainty, and financial stability, and that they emphasize health, social welfare, and UMP. We also show that the Fedâs communication policy changes drastically during the COVID-19 pandemic compared to the GFC and dot-com crisis in terms of content, sentiment, and timing. Specifically, we find that during the past two decades, a decrease in the financial stability sentiment conveyed by the Fedâs interest rate announcements and minutes precedes a decrease in the Fedâs interest rate. |
| Keywords: | Central bank communication, Unconventional monetary policy, Financial stability, Text mining, COVID |
| JEL: | C55 E44 E58 E63 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:boi:wpaper:2021.15&r= |
| By: | Hulya Saygili |
| Abstract: | This paper examines the significance of real and monetary integrations among countries on the inflationary dynamics of an emerging country, Turkey. The analysis accounts for 2-digit items of CPI inflation which can be broadly categorized as tradable/non-tradable and goods/services. The results show that fall in inflation gap between the partners is mainly related with the real integration while co-movement of inflation is prominently driven by the monetary policy co-movement. The product type analysis documents that inflation gap in tradable items shrinks and become more correlated with the convergence and co-movement of real variables. |
| Keywords: | Globalization, Inflation gap, Co-movement, CPI sub-items, Turkey |
| JEL: | E31 F14 F4 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2121&r= |
| By: | International Monetary Fund |
| Abstract: | Context and risks. The pandemic may have a long-lasting impact on CEMAC’s growth potential, which is already curtailed by structural, governance, and transparency issues. The policy response from national and regional authorities in 2020 helped mitigate the economic fallout. CEMAC, however, experienced a severe recession in 2020, fiscal and external deficits increased, and public debt rose with some countries having debt sustainability issues. The region is facing an increasing dilemma between internal and external stability, as external reserves fell sharply between mid-2020 and March 2021. A moderate recovery in economic growth is expected from 2021. Supported by lower than previously projected total external financing of €4.8 billion over 2021–23, international reserves build-up would be slower than pre-pandemic. This outlook is highly uncertain and contingent on the evolution of the pandemic and the vaccination program. Other significant risks include delayed implementation of the ongoing or possible new Fund-supported programs, uncertainties in filling large external financing needs, oil prices, and a possible deterioration in the security situation. |
| Keywords: | CEMAC member country; Policy recommendation; CEMAC authorities; fund emergency assistance; IMF's transparency policy; COVID-19; Fiscal stance; Monetary base; Global; Central Africa |
| Date: | 2021–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/148&r= |
| By: | Ferrari Massimo,; Pagliari Maria Sole, |
| Abstract: | 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 polluting production activities; ii) monetary policy should look through environmental objectives while standing ready to support the economy when the costs of the environmental transition materialize; iii) international cooperation is crucial to obtain a Pareto improvement under the proposed policies. We finally find that the objective of reducing emissions by 50%, which is compatible with the Paris agreement's goal of limiting global warming to below 2 degrees Celsius with respect to pre-industrial levels, would not be attainable in absence of international cooperation even with the support of monetary policy. |
| Keywords: | DSGE model, open-economy macroeconomics, optimal policies, climate modelling. |
| JEL: | F42 E50 E60 F30 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:815&r= |
| By: | International Monetary Fund |
| Abstract: | Singapore entered the COVID-19 pandemic with sizable policy space and robust economic policy frameworks, yet facing longer-term challenges. The economy has been severely impacted by the pandemic, but a bold, comprehensive, and coordinated policy package has helped cushion the economic fallout. Following a record contraction in the first half of 2020, activity has rebounded, and growth is projected to strengthen to 6 percent in 2021, underpinned by a recovery in domestic demand and a positive contribution from net exports. The uncertainty surrounding the outlook is larger than usual. |
| Keywords: | currency speculation; Singapore authorities; bond issuance; U.S. dollar; headline inflation; green finance market; COVID-19; Inflation; Financial soundness indicators; International investment position; Global |
| Date: | 2021–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/156&r= |
| By: | Luca Benati |
| Abstract: | Evidence from low-frequency regressions for 27 countries since the XVIII century suggests that the relationship between broad money growth and inflation has been mostly one-for-one, and largely invariant to changes in the monetary regime. There is little evidence that the relationship had been weaker under commodity standards than it has been under fiat standards. Only for the period since the mid-1980s, which has seen the introduction of monetary regimes in which inflation is directly targeted, the relationship appears to have materially weakened. Crucially, however, the slope relationship between the trends of money growth and inflation produced by time-varying parameters VARs has been near-uniformly one-for-one for all countries and sample periods, including the one following the end of the Great Inflation. This suggests that, although central banks’ targeting of inflation has weakened its relationship with money growth, time-series methods can still recover the one-for-one longhorizon relationship between the series. There is no evidence that, since WWII, inflation’s low-frequency relationship with credit growth has been stronger than with money growth. The relationship between money growth and nominal interest rates had been non-existent under commodity standards, and it has only appeared under fiat standards. |
| Keywords: | Quantity theory of money; Lucas critique; frequency domain; timevarying parameters VARs. Classification-JEL |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp2110&r= |
| By: | Nansha, Kevin |
| Abstract: | The issue of the interaction between economic growth, inflation and exchange rate in Kenya, has been the subject of this paper. So,SVAR and ARDL (with bounds test cointegration) models have been used in this study. On time series covering the kenyan economy (1960 to 2020), the Granger causality test has shown that no variable in our study, significantly improves the forecasts of the others. However, the SVAR model has indicated that with theoretical short-term restrictions, a significant depreciation of the kenyan local currency by 10% would cause the kenyan inflation rate to increase by 7.38%. The ARDL model with bounds test cointegration came to a controversial conclusion. In the short run, an appreciation of the kenyan local currency by 10% would lead to a 15.18% increase in the kenyan inflation rate. In the long run, however, a 10% increase in the exchange rate would lead to a small 7.01% increase in the inflation rate in Kenya. In addition, a 10% decrease in past values (lagged by one period) of the inflation rate would cause it to increase by 4.62 % at time "t". |
| Keywords: | Keywords: economic growth, inflation, exchange rate, SVAR, ARDL, Kenya |
| JEL: | C22 E01 E31 F62 O55 |
| Date: | 2021–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109246&r= |
| By: | Josep Ferret Mas (Department of Politics and International Relations, University of Reading); Alexander Mihailov (Department of Economics, University of Reading) |
| Abstract: | The present paper endorses an interdisciplinary approach to the complex and urgent issue of intergenerational climate justice, and proposes a rich menu of policy options, in particular some novel and unconventional ones, to resolve it immediately but flexibly. We incorporate the realistic features of economic growth, nominal interest, expected inflation, and the option for nonrepayment or partial repayment of public debt across generations as well as a central bank institution, or rather the global network of central banks, to implement climate mitigation policy in the stylized model proposed by Sachs (2015). Similarly, but even without repayment, we find such kind of policy, which we label 'green quantitative easing', or 'green QE', to be Pareto-efficient across generations. Differently, we argue that neither the present, nor future generations need to repay the novel greening compensatory transfers (GCTs) to households and firms we envisage to serve as a main financial instrument of central banks in triggering a decisive reversal in environmental deterioration right now, without further delay, given the emergency of the situation. Moreover, and in support of the economic considerations and incentives, we argue from philosophical, legal and political-theory grounds that such a financial scheme intermediated by central banks worldwide serves two types of principles of intergenerational climate justice: (i) principles that tell us to mitigate climate change now and avoid harm for future generations; and (ii) principles that tell us how to share mitigation costs fairly across generations. Our spectrum of suggested pragmatic green QE initiatives includes potential issuance by firms and households of super-long-term coupon bonds to be held by central banks over up to a century, possibly GCT-based only, and allows for much flexibility and complementarity in the practical solutions to be potentially chosen, with voluntary partial repayment or not of the mitigation costs across generations. |
| Keywords: | green quantitative easing, greening compensatory transfers, central banks, public finance, climate change mitigation policy, intergenerational climate justice, intergenerational social welfare |
| JEL: | D61 D63 D78 E21 E58 F55 G28 H23 O44 Q54 |
| Date: | 2021–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2021-16&r= |
| By: | Hilscher, Jens; Raviv, Alon; Reis, Ricardo |
| Abstract: | This paper proposes a new method for measuring the impact of inflation on the real value of public debt. The distribution of debt debasement is based on two inputs: the distribution of privately held nominal debt by maturity, for which we provide new estimates, and the distribution of risk-adjusted inflation dynamics, for which we provide a novel copula estimator using options data. We find that inflation by itself is unlikely to lower the U.S. fiscal burden significantly because debt is concentrated at short maturities and perceived inflation shocks have little short-run persistence and are small. |
| Keywords: | inflation; debt debasement; value at risk; inflation derivatives; debt maturity structure; financial repression; GG009759; GA682288; OUP deal |
| JEL: | F3 G3 E6 |
| Date: | 2021–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:107543&r= |
| By: | Mikkel Plagborg-Møller; Christian K. Wolf |
| Abstract: | Macroeconomists increasingly use external sources of exogenous variation for causal inference. However, unless such external instruments (proxies) capture the underlying shock without measurement error, existing methods are silent on the importance of that shock for macroeconomic fluctuations. We show that, in a general moving average model with external instruments, variance decompositions for the instrumented shock are interval-identified, with informative bounds. Various additional restrictions guarantee point identification of both variance and historical decompositions. Unlike SVAR analysis, our methods do not require invertibility. Applied to U.S. data, they give a tight upper bound on the importance of monetary shocks for inflation dynamics. |
| JEL: | C32 C36 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29044&r= |
| By: | Hory Marie Pierre,; Levieuge Grégory,; Onori Daria. |
| Abstract: | In this paper, we demonstrate that the size of the fiscal multiplier depends both on currency mismatch and home bias. Our demonstration is based on a real two-country dynamic stochastic general equilibrium model with incomplete and imperfect international financial markets, external debt and financial frictions. We show that if home bias is high, the terms of trade improve following a fiscal stimulus. This reduces the private real debt burden denominated in foreign currency, decreases the external finance premium born by firms, and stimulates investment. Thus, the larger the proportion of firms' debt denominated in foreign currency is, the higher the fiscal multiplier. In contrast, the terms of trade deteriorate when home bias is low. This increases the real debt burden and the external finance premium. Hence, in this case, the fiscal multiplier decreases as the share of firms' debt denominated in foreign currency increases. |
| Keywords: | Fiscal Multiplier, Terms of Trade, Currency Mismatch, DSGE Model, Financial Frictions. |
| JEL: | E62 F34 F41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:813&r= |
| By: | Serena Ng |
| Abstract: | The coronavirus is a global event of historical proportions and just a few months changed the time series properties of the data in ways that make many pre-covid forecasting models inadequate. It also creates a new problem for estimation of economic factors and dynamic causal effects because the variations around the outbreak can be interpreted as outliers, as shifts to the distribution of existing shocks, or as addition of new shocks. I take the latter view and use covid indicators as controls to 'de-covid' the data prior to estimation. I find that economic uncertainty remains high at the end of 2020 even though real economic activity has recovered and covid uncertainty has receded. Dynamic responses of variables to shocks in a VAR similar in magnitude and shape to the ones identified before 2020 can be recovered by directly or indirectly modeling covid and treating it as exogenous. These responses to economic shocks are distinctly different from those to a covid shock, and distinguishing between the two types of shocks can be important in macroeconomic modeling post-covid. |
| JEL: | C18 E0 E32 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29060&r= |
| By: | Alejandra Bellatin; Gabriela Galassi |
| Keywords: | Digital technologies have helped maintain economic activity while allowing people to remain physically distant throughout the COVID-19 crisis. This note shows that the number of online postings for jobs related to the production of digital technologies in Canada decreased less than the number for other jobs and recovered more quickly after lockdowns were lifted. |
| JEL: | E24 J2 J23 J63 J64 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocsan:21-18&r= |
| By: | Sacchetto, Camilla; Daniel, Egas; Danquah, Michael; Telli, Henry |
| Keywords: | coronavirus; Covid-19 |
| JEL: | N0 E6 |
| Date: | 2020–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111562&r= |
| By: | International Monetary Fund |
| Abstract: | The authorities responded quickly and decisively to the COVID-19 crisis and the economy is recovering. COVID-19 cases are well below the 2020 peak and vaccination is progressing. The exit from the remaining COVID-related policy support needs to be carefully managed and the Vision 2030 reform agenda continued. |
| Keywords: | Policy support measure; GDP estimate; policy support; totaling SDR; financial asset; employment support program; Oil; COVID-19; Oil prices; Fiscal stance; Income; Global; Europe; Asia and Pacific |
| Date: | 2021–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/149&r= |
| By: | André Kurmann; Étienne Lalé; Lien Ta |
| Abstract: | The COVID-19 pandemic has led to an explosion of research using real-time establishment-level data. One key challenge when working with this data is how to take into account the effects of business openings and closings. In this paper, we address this challenge by matching small business establishment records from Homebase with information on business activity from Google, Facebook, and Safegraph to distinguish business closings and openings from other sample exits and entry. We show that this distinction is critical to benchmark the data to pre-pandemic administrative records and estimate the effects of the pandemic on small business activity. We find four key results: (1) employment of small businesses in four of the hardest hit service sectors contracted more severely in the beginning of the pandemic than employment of larger businesses, but small businesses also rebounded more strongly and have on average recovered a higher share of job losses than larger businesses; (2) closings account for 70% of the initial decline in small business employment, but two thirds of closed businesses have reopened and the annual rate of closings is just slightly higher than prior to the pandemic; (3) new openings of small businesses constitute an important driver of the recovery but the annual rate of new openings is only about half the rate one year earlier (4) small business employment was affected less negatively in counties with early access to loans from the Paycheck Protection Program (PPP) and in counties where Federal Pandemic Unemployment Compensation (FPUC) was more generous relative to pre-pandemic earnings of likely recipients, with business closings accounting for a large part of these two effects. The results dispel the popular notion that small businesses continue to suffer more from the pandemic than larger businesses. At the same time, our analysis suggests that PPP and FPUC helped to signifocantly mitigate the negative effects of the pandemic for small businesses by, respectively, alleviating financial constraints and stimulating demand for local services. La pandémie de COVID-19 a donné lieu à une explosion des recherches utilisant des données en temps réel au niveau des établissements. L'un des principaux défis à relever lorsqu'on travaille avec ces données est de prendre en compte les effets des ouvertures et des fermetures d'entreprises. Dans cet article, nous relevons ce défi en faisant correspondre les enregistrements des établissements de petites entreprises de Homebase avec les informations sur l'activité commerciale de Google, Facebook et Safegraph afin de distinguer les fermetures et ouvertures d'entreprises des autres sorties et entrées de l'échantillon. Nous montrons que cette distinction est essentielle pour comparer les données aux dossiers administratifs pré-pandémie et estimer les effets de la pandémie sur l'activité des petites entreprises. Nous trouvons quatre résultats clés : (1) l'emploi des petites entreprises dans quatre des secteurs de services les plus durement touchés s'est contracté plus sévèrement au début de la pandémie que l'emploi des grandes entreprises, mais les petites entreprises ont également rebondi plus fortement et ont en moyenne récupéré une part plus importante des pertes d'emploi que les grandes entreprises ; (2) les fermetures représentent 70 % de la baisse initiale de l'emploi des petites entreprises, mais deux tiers des entreprises fermées ont rouvert et le taux annuel de fermetures est à peine plus élevé qu'avant la pandémie ; (3) les nouvelles ouvertures de petites entreprises constituent un moteur important de la reprise, mais le taux annuel de nouvelles ouvertures n'est que la moitié environ du taux enregistré un an plus tôt (4) l'emploi des petites entreprises a été moins affecté dans les comtés qui ont eu accès rapidement aux prêts du Programme de protection des salaires (PPP) et dans les comtés où l'indemnisation fédérale du chômage en cas de pandémie (FPUC) a été plus généreuse par rapport aux revenus des bénéficiaires probables avant la pandémie, les fermetures d'entreprises expliquant une grande partie de ces deux effets. Les résultats réfutent la notion populaire selon laquelle les petites entreprises continuent de souffrir davantage de la pandémie que les grandes entreprises. Dans le même temps, notre analyse suggère que le PPP et le FPUC ont contribué à atténuer de manière significative les effets négatifs de la pandémie pour les petites entreprises, respectivement en allégeant les contraintes financières et en stimulant la demande de services locaux. |
| Keywords: | Economics of small and medium enterprises,Labor turnover,Sampling bias,Matched data,COVID-19,Sector policies, Economie des petites et moyennes entreprises,Rotation de la main d’œuvre,Biais d’échantillonnage,Données appariées,COVID-19,Politiques sectorielles |
| JEL: | E01 E24 E32 E60 |
| Date: | 2021–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2021s-26&r= |
| By: | Andrés Fernández; Daniel Guzman; Ruy E. Lama; Carlos A. Vegh |
| Abstract: | To explain the fact that government spending and tax policy are procyclical in emerging and developing countries, we develop a model for the joint behavior of optimal tax rates and government spending over the business cycle. Our set-up relies on financial frictions, which have been shown to be critical features of emerging markets, captured by various degrees of asset market incompleteness as well as varying levels of debt-elastic interest rate spreads. We first uncover a novel theoretical result within a simple static framework: incomplete markets can account for procyclical government spending but not necessarily procyclical tax policy. Explaining procyclical tax policy also requires that the ratio of private to public consumption comoves positively with the business cycle, which leads to larger fluctuations in the tax base. We then show that the procyclicality of tax policy holds in a more realistic DSGE model calibrated to emerging markets. Finally, we illustrate how larger financial frictions, which amplify the business cycle through more procyclical fiscal policies, have sizeable Lucas-type welfare costs. |
| JEL: | F41 F44 H21 H30 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29149&r= |
| By: | Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger Mueller |
| Abstract: | This paper shows that local productivity spillovers propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we show that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, which belong to multi-region firms that are exposed to the local productivity spillover through one of their plants. To quantify the significance of plant-level networks for the propagation and amplification of local productivity shocks, we develop and estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Our model features heterogeneous regions, which interact through goods trade and labor markets, as well as within-location, across-plant heterogeneity in productivity, wages, and employment. Counterfactual exercises show that while knowledge sharing through plant-level networks amplifies the aggregate effects of local productivity shocks, it widens economic disparities between individual workers and regions in the economy. |
| JEL: | C51 C68 E23 E24 L23 O4 R12 R13 R3 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29084&r= |
| By: | Angelo M. Fasolo; Flávia M. Graminho; Saulo B. Bastos |
| Abstract: | Central bank communication is a key tool in managing ination expectations. This paper proposes a hierarchical Latent Dirichlet Allocation (hLDA) model combined with feature selection techniques to allow an endogenous selection of topic structures associated with documents published by Banco Central do Brasil's Monetary Policy Committee (Copom). These computational linguistic techniques allow building measures of the content and tone of Copom's minutes and statements. The effects of the tone are measured in different dimensions such as inflation, inflation expectations, economic activity, and economic uncertainty. Beyond the impact on the economy, the hLDA model is used to evaluate the coherence between the statements and the minutes of Copom's meetings. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:555&r= |
| By: | Philippe Bacchetta; Rachel Cordonier; Ouarda Merrouche |
| Abstract: | An unintended consequence of loose US monetary policy is the increase in currency risk exposure abroad. Using firm-level data on corporate bond issuances in 17 emerging market economies (EME) between 2003 and 2015, we find that EME companies are more likely to issue bonds in foreign currency when US interest rates are low. This increase occurs across the board, including for firms more vulnerable to foreign exchange exposure, and is particularly strong for bonds issued in local markets. Interestingly, capital controls on bond inflows significantly decrease the likelihood of issuing in foreign currency and can even eliminate the adverse impact of low US interest rates. In contrast, macroprudential foreign exchange regulations tend to increase foreign currency issuances of non-financial corporates, although this effect can be significantly reduced using capital controls. |
| Keywords: | Foreign currency, corporate bonds, emerging markets, capital controls, currency risk |
| JEL: | G21 G30 E44 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2021-11&r= |
| By: | Fabio Ortega-Castro; Freddy Cepeda-López; Constanza Martínez-Ventura |
| Abstract: | En este documento se estudian las fuentes de liquidez que usan las entidades financieras que participan en el sistema de pagos de alto valor para cumplir con sus obligaciones diarias. Para este propósito, diseñamos e implementamos un algoritmo que descompone la unidad de caja de estas entidades en diferentes conceptos de fuente de liquidez, mediante reglas asociadas a los conceptos de pagos recibidos (fuentes) y enviados (usos). Los valores asignados por el algoritmo evidencian que a nivel agregado las fuentes preferidas son el ahorro de liquidez, la dinámica y los saldos overnight. A nivel de entidad, se observan diferencias en las preferencias que se pueden atribuir al tipo de negocio que realizan, a la disponibilidad (regulación y condiciones macroeconómicas) y a los costos de las fuentes. **** ABSTRACT: This document studies the sources of liquidity used by financial entities that participate in the large-value payment system to meet their daily obligations. For this purpose, we design and implement an algorithm that breaks down the cash unit of these entities into different concepts of liquidity source, through rules associated with the concepts of payments received (sources) and sent (uses). The values assigned by the algorithm show that at the aggregate level the preferred sources are liquidity savings, dynamics, and overnight balances. At the entity level, there are differences in preferences that can be attributed to the type of business they carry out, the availability (regulation and macroeconomic conditions) and the costs of the sources. |
| Keywords: | Fuentes de liquidez, usos de liquidez, liquidez intradía, sistema de pagos de alto valor, sources of liquidity, uses of liquidity, intraday liquidity, large-value payment system |
| JEL: | E42 E58 E70 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1166&r= |
| By: | Annika Camehl; Malte Rieth |
| Abstract: | We study the dynamic impact of Covid-19, economic mobility, and containment policy shocks. We use Bayesian panel structural vector autoregressions with daily data for 44 countries, identified through sign and zero restrictions. Incidence and mobility shocks raise cases and deaths significantly for two months. Restrictive policy shocks lower mobility immediately, cases after one week, and deaths after three weeks. Non-pharmaceutical interventions explain half of the variation in mobility, cases, and deaths worldwide. These flattened the pandemic curve, while deepening the global mobility recession. The policy tradeoff is 1 p.p. less mobility per day for 9% fewer deaths after two months. |
| Keywords: | Epidemics, general equilibrium, non-pharmaceutical interventions, structural vector autoregressions, coronavirus, Bayesian analysis, panel data |
| JEL: | C32 E32 I18 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1954&r= |
| By: | Gabriel Chodorow-Reich; Adam M. Guren; Timothy J. McQuade |
| Abstract: | With “2020 hindsight,” the 2000s housing cycle is not a boom-bust but rather a boom- bust-rebound at both the national level and across cities. We argue this pattern reflects a larger role for fundamentally-rooted explanations than previously thought. We construct a city-level long-run fundamental using a spatial equilibrium regression framework in which house prices are determined by local income, amenities, and supply. The fundamental predicts not only 1997-2019 price and rent growth but also the amplitude of the boom-bust-rebound and foreclosures. This evidence motivates our neo-Kindlebergerian model, in which an improvement in fundamentals triggers a boom-bust-rebound. Agents learn about the fundamentals by observing “dividends” but become over-optimistic due to diagnostic expectations. A bust ensues when over-optimistic beliefs start to correct, exacerbated by a price-foreclosure spiral that drives prices below their long-run level. The rebound follows as prices converge to a path commensurate with higher fundamental growth. The estimated model explains the boom-bust-rebound with a single fundamental shock and accounts quantitatively for cross-city patterns in the dynamics of prices and foreclosures. |
| JEL: | E32 G01 G4 R31 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29140&r= |
| By: | Phurichai Rungcharoenkitkul |
| Abstract: | This article provides an interim assessment of the macroeconomic consequences of the Covid-19 pandemic. Estimates suggest a median output loss of about 8 percent in 2020, a gap that is expected to narrow to around 4 percent of the pre-pandemic trend by the end of 2021. There is however a high dispersion of economic losses across economies, reflecting varying exposures to the pandemic and societies' responses. High-frequency indicators and epidemiological models provide some insights into the interactions between the pandemic evolution and societies' strategies of combating it, including the role of vaccination. The article draws lessons from experiences thus far and discusses challenges ahead. |
| Keywords: | Covid-19 pandemic, health-economic tradeoffs |
| JEL: | E00 I18 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:959&r= |
| By: | International Monetary Fund |
| Abstract: | Greece entered the pandemic with an unfinished recovery, but the country has demonstrated resilience in facing COVID-19. The economy contracted by 8.2 percent in 2020, better than expected given Greece’s high dependence on tourism and pre-existing vulnerabilities. The government provided among the largest on-budget fiscal stimuli in the euro zone and supervisory and ECB accommodation shielded the banking sector and kept financing conditions highly accommodative. Despite the pandemic, reforms progressed in a number of areas, albeit at a slower pace than in recent years. |
| Date: | 2021–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/154&r= |
| By: | International Monetary Fund |
| Abstract: | Macroeconomic performance and buffers were strong when the COVID-19 pandemic hit. Economic and social restrictions instituted in March 2020 helped slow new infections and mitigate negative health outcomes but triggered a deep decline in activity in Q2:2020. The slump was followed by a strong rebound in Q3 as the restrictions were eased. With the resurgence of the virus, pressures on the health system peaked in late-March 2021 and eased after a new round of restrictions. Going forward, the outlook is for a near-term economic recovery subject to large two-way risks. The strength and durability of the recovery hinges on the evolution of the health situation and the extent of economic scarring from the pandemic. |
| Keywords: | policy support; data provision; statistics database; policy buffer; Policy discussion; debt data; COVID-19; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial statistics; Global |
| Date: | 2021–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/160&r= |
| By: | Khouiled, Brahim; Sellami, Ahmed; Saheb, Oualid |
| Abstract: | This paper answers the problem of the existence of an inflation rate that stimulates economic growth in Algeria during the period 2000:1-2018:2. We use the TAR model with the brutal transition. The results showed that the rate of inflation stimulating economic growth in Algeria is between 1.688-4.08% annually, a threshold close to that of industrial countries. |
| Keywords: | Inflation; Economic Growth; Threshold Models; تضخم ; نمو اقتصادي ; نماذج العتبة |
| JEL: | E31 O49 |
| Date: | 2019–12–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109024&r= |
| By: | Sacchetto, Camilla; Logan, Sarah; Collier, Paul; Kriticos, Sebastian |
| JEL: | N0 E6 |
| Date: | 2021–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111560&r= |
| By: | International Monetary Fund |
| Abstract: | Although Timor-Leste has made considerable progress in many areas since its independence in 2002, it faces significant medium-term challenges. The nation has pressing development needs, young institutions, and is highly dependent on oil. Oil revenues from active fields, which have been the main source of funding for government spending, are drying up. The non-oil private sector economy remains underdeveloped and lack of good jobs and high youth unemployment are serious concerns. |
| Keywords: | Timorese authorities; oil GDP; WTI crude; government coalition; private sector development; Oil; Debt sustainability analysis; Global |
| Date: | 2021–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/152&r= |
| By: | Javidanrad, Farzad (University of Warwick) |
| Abstract: | Over the last four decades, the term “financialisation” has entered economics terminologies to explain the development of capitalist economies in which: a) the rate of profit in the production sector is falling or narrowing relative to that in the financial sector b) profit seeking through financial speculation has grown rapidly among the household and the production sectors; c) public and private debt is rapidly accelerating and its ratio to GDP is increasing swiftly; d) there is an independent and accelerated growth of the financial sector compared to that of the real sector. This paper is a theoretical attempt to shed light on these features through the lens of the paradox of monetary profit and its manifestation in the capitalist economy, i.e. the shortage of money in circulation. The aim of this paper is to show how the paradox of monetary profit provides a theoretical framework to analyse the mechanism by which the capitalist economies move towards financialisation. This theoretical argument shows the connection between the shortage of money in circulation and financialisation. The core idea proposed in this paper is that financialisation is the direct result of the shortage of money in circulation, and that this shortage can be explained through the paradox of monetary profit. |
| Keywords: | Capitalism, Paradox of Monetary Profit, Financialisation, Monetary production Economy, Marx JEL Classification: B11 ; E11 ; P10 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1365&r= |
| By: | Filippo Gusella; Anna Maria Variato |
| Abstract: | In recent years the names of Minsky and Piketty gained increasing notoriety to researchers because the two authors investigated issues of financial instability and income inequality, which represent both two unsolved macroeconomic problems of the new millennium, and evidence contradicting the long†run implications of mainstream macroeconomics. By combining these two names we set ourselves an ambitious goal, going beyond the technical aspects of the model presented in the paper. Indeed, not only we want to contribute directly to the debate meant at clarifying the controversial relationship between financial instability and income inequality; we also aim at addressing a broader issue which is the explanation of the reasons why a theoretical revolution in macroeconomics has not yet occurred, and why financial aspects still play a subordinate role to real factors in the explanation of growth and cycles. In this broader perspective Minsky and Piketty are assumed as extreme examples of the opposite poles of heterodoxy and orthodoxy. Both target and argumentative line of the contribution are quite unconventional, as usually financial instability and income inequality, are treated as separate if not independent issues of inquiry; and methodological reflection is no longer a customary explicit part of technical papers. We discuss possible reasons why these two circumstances happen. The theoretical framework proposed in this paper builds on Ferri (2016), who presents a class of demandled models in a medium†run time horizon. This class of models is not conventional too, though it belongs to “pedagogical models†, we consider especially relevant tool for macroeconomics. Among the different specifications investigated by the author, we select the nearest to possible comparison with Piketty (2014) and then we introduce corporate debt into the financial account of firms. Because of the non†linearity of the model, we explore its dynamic properties with numerical simulations. Such simulations are also performed to assess the parameters enabling to support the Financial Instability Hypothesis. Aiming at deepening the comprehension of robustness properties, we also consider analytic results from a linearized version of the model. Obviously, the criticism addressed to Piketty with respect to the definition and measurement of inequality can be extended to our model too, as we use the same expedient to check the evolution of inequality. This leads to emphasize the relevance of the issue of measurement as a critical one for future developments. Nevertheless, this does not impinge on the achievement of our purpose. Indeed, our analysis confirms the utility of pedagogical models. Furthermore, it underlines the need of a change of economic vision such that complexity comes as a substantial part of representation. In terms of future perspectives these considerations point out the need for macroeconomic epistemology to resume constructive dialectics: a mixture of plural narratives and foundations for new visions of economic policy. Those just proposed at the end of the paper differ from orthodox ones as they call for financial regulation, they underline qualitative aspects and heterogeneity; but such embryonal policy suggestions stem from the overall perspective described in the paper, a perspective rooted into Ferri’s notion of medium†run, and qualified by Minsky through an eclectic approach leading to networks of balance†sheets: two ways highly overlapping though not totally equivalent to represent the reality of and endogenously unstable capitalism lying at the edge of chaos. |
| Keywords: | Economic Inequality, Financial Instability Hypothesis, Endogenous Cycles |
| JEL: | B41 D31 E32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2021_15.rdf&r= |
| By: | Brewer, Mike; Tasseva, Iva |
| Abstract: | We analyse the UK policy response to Covid-19 and its impact on household incomes in the UK in April and May 2020, using microsimulation methods. We estimate that households lost a substantial share of their net income of 6.9% on average. But policies protected household incomes to a substantial degree: compared to the drop in net income, GDP per capita fell by 18.9% between the first and second quarter of 2020. Earnings subsidies (the Coronavirus Job Retention Scheme) protected household finances and provided the main insurance mechanism during the crisis. Besides subsidies, Covid-related increases to state benefits, as well as the automatic stabilisers in the tax and benefit system, played an important role in mitigating the income losses. However, analysing the impact of a near-decade of austerity on the UK safety net, we find that, compared to 2011 policies, the 2020 pre-Covid tax-benefit policies would have been less effective in insuring incomes against the shocks. We also assess the potential distributional impact of introducing a Universal Basic Income (UBI) instead of the Covid emergency measures and find that a UBI would have supported the incomes of different vulnerable groups but would have provided less protection to those hit hardest by the labour market shocks. |
| Keywords: | Covid-19; coronavirus; earnings subsidies and tax-benefit policies; income distribution; Springer deal |
| JEL: | D31 E24 H24 |
| Date: | 2021–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:110512&r= |
| By: | Logan, Sarah; Isaac, Chris |
| JEL: | N0 E6 |
| Date: | 2021–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111561&r= |
| By: | Diego Alejandro Martínez-Cruz |
| Abstract: | Este documento describe la evolución de las condiciones de liquidez del mercado de deuda pública colombiano a través de una batería de herramientas que capturan diferentes aspectos de la liquidez. Adicionalmente, se propone un indicador que combina estas herramientas, incorporando un conjunto amplio de información relativa a la liquidez del mercado y que facilita su monitoreo y análisis. Los resultados indican una mejora sostenida en las condiciones de la liquidez de este mercado a lo largo del periodo analizado, y se destacan algunos escenarios en los cuales la liquidez se ha deteriorado y que coinciden con periodos de estrés del mercado financiero colombiano. **** ABSTRACT: This document describes the evolution of the liquidity conditions of the Colombian public debt market, using a set of tools that capture several liquidity characteristics or dimensions. An indicator is proposed, which combines all these tools incorporating a broad set of information related to market liquidity, and facilitates its oversight and analysis. The results of this work indicate a sustained improvement in the liquidity conditions of this market throughout the analyzed period, but identify some scenarios in which liquidity has deteriorated that coincide with periods of stress in the Colombian financial market. |
| Keywords: | liquidez de mercado, indicador combinado, análisis de componentes principales, deuda pública, TES. |
| JEL: | C43 E44 E65 H63 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1167&r= |
| By: | Marjit, Sugata; Mandal, Biswajit |
| Abstract: | In this paper we revisit the influential theory of monopolistic competition and optimum product variety as developed by Dixit and Stiglitz (1977) with applications in international trade by Krugman (1979,1980), by modeling fixed and variable costs of production in terms of underlying use of skilled and unskilled labor in a single good model. This is different from earlier work on multi sector variant of Krugman cum Heckscher-Ohlin-Samuelson model such as Helpman (1981) and others. In our structure factor endowment and factor intensities determine both number of varieties and output per variety in a closed economy mimicking the features of Heckscher-Ohlin-Samuelson model. Differences in factor endowments across countries determine the pattern of trade between varieties and output per variety, which is indeterminate in a standard single good Dixit-Stiglitz-Krugman model. Later we reflect on wage inequality and unemployment providing some interesting results. |
| Keywords: | Monopolistic Competition,Trade,Wage Inequality,Unemployment |
| JEL: | D43 F11 J31 E24 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:911&r= |
| By: | Alice Henriques Volz; Jeffrey P. Thompson |
| Abstract: | Most research measuring disparities in wealth by race relies on data that exclude resources that are disproportionately important to low-wealth and non-white families, namely defined benefit (DB) pensions and Social Security. This paper finds that once these resources are included, disparities in wealth between white families and Black and Hispanic families are substantially smaller and that they are not rising over time. The powerful equalizing roles of DB pensions and Social Security highlighted here are further motivation for maintaining their fiscal health. This paper also presents results on the wealth of Asian families—typically excluded from most research due to limited sample sizes. Including Asian families is important, however, because they are a rapidly growing segment of the population and they have become the highest-wealth racial group in the United States. |
| Keywords: | inequality; race; Social Security; pensions; saving; wealth |
| JEL: | D14 D31 D63 E21 G51 H55 H75 I31 J15 J18 J32 |
| Date: | 2021–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcq:92970&r= |
| By: | Ryo Kato; Tatsushi Okuda; Takayuki Tsuruga |
| Abstract: | Previous studies have stressed that inflation dynamics exhibit substantial dispersion across sectors. Using US producer price data, we present evidence that sectoral inflation persistence is negatively correlated with market concentration, which is difficult to reconcile with the prediction of the standard model of monopolistic competition. To better explain the data, we incorporate imperfect common knowledge into the monopolistic competition model introduced by Melitz and Ottaviano (2008). In the model, pricing complementarity among firms increases as market concentration decreases. Because higher pricing complementarity generates greater inflation persistence, our model successfully replicates the observed negative correlation between inflation persistence and market concentration across sectors. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1082r&r= |
| By: | Ilzetzki, Ethan; Reinhart, Carmen M.; Rogoff, Kenneth S. |
| Abstract: | On the twentieth anniversary of its inception, the euro has yet to expand its role as an international currency. We document this fact with a wide range of indicators including its role as an anchor or reference in exchange rate arrangements—which we argue is a portmanteau measure—and as a currency for the denomination of trade and assets. On all these dimensions, the euro comprises a far smaller share than that of the US dollar. Furthermore, that share has been roughly constant since 1999. By some measures, the euro plays no larger a role than the Deutschemark and French franc that it replaced. We explore the reasons for this underperformance. While the leading anchor currency may have a natural monopoly, a number of additional factors have limited the euro’s reach, including lack of financial center, limited geopolitical reach, and US and Chinese dominance in technology research. Most important, in our view, is the comparatively scarce supply of (safe) euro-denominated assets, which we document. The European Central Bank’ lack of policy clarity may have also played a role. We show that the euro era can be divided into a “Bundesbank-plus” period and a “Whatever it Takes” period. The first shows a smooth transition from the European Exchange Rate Mechanism and continued to stabilize German inflation. The second period is characterised by an expanding ECB arsenal of credit facilities to European banks and sovereigns. |
| JEL: | E50 F30 F40 N20 |
| Date: | 2020–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:104100&r= |
| By: | Dikau, Simon; Volz, Ulrich |
| Abstract: | This article examines how addressing climate-related risks and supporting mitigation and adaptation policies fit into central bank mandates. We conduct an analysis of mandates and objectives using the IMF's Central Bank Legislation Database and compare these to sustainability-related policies central banks have adopted in practice. Out of 135 central banks, only 12% have explicit sustainability mandates, while 40% are mandated to support the government's policy priorities, which mostly include sustainability goals. However, given that climate risks can directly affect central banks' traditional core responsibilities, all institutions ought to incorporate climate-related physical and transition risks into their policy frameworks to safeguard macro-financial stability. |
| Keywords: | central bank mandates; central banks; green finance; ES/R009708/1; UKRI fund |
| JEL: | F3 G3 |
| Date: | 2021–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:109302&r= |
| By: | Brendan Epstein; Miles S. Kimball |
| Abstract: | We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility—the process benefits and costs of work. Given secular increases in job utility, work hours per population can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects. |
| JEL: | J22 J24 J28 J31 O4 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29041&r= |
| By: | International Monetary Fund |
| Abstract: | An explosive volcanic eruption that began on April 9 is hitting St. Vincent and the Grenadines hard, creating an urgent balance of payments need and a humanitarian crisis as the country continues to deal with the fallout from the global pandemic. The economy is estimated to have contracted in 2020 by 3.8 percent as tourism activity fell 70 percent. Before the eruption, economic growth was expected to be flat in 2021, as the global pandemic continued, and tourism remained depressed. While there is considerable uncertainty about the evolution of the eruption, staff estimate the infrastructure damage to exceed 20 percent of GDP and for the economy to contract by 6.1 percent in 2021 with agriculture and related sectors severely affected. |
| Date: | 2021–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/157&r= |
| By: | Grupo de Estudios Fiscales y de Equidad; Grupo Contod@s; Centro de Pensamiento de Política Fiscal |
| Abstract: | Con el impacto de la implementación de las políticas contenidas en el proyecto de reforma tributaria Proyecto de inversión social en las condiciones de vida de los colombianos, surge la necesidad de analizar las implicaciones. En consecuencia, el presente documento revisa al detalle el proyecto de ley con un enfoque interseccional e interdisciplinario y presenta ciertas disposiciones deseables para un sistema progresivo y justo que podrían haber sido incluidas. *** From the impact of the implementation of the policies contained in the tax reform project Proyecto de Inversión Social on the living conditions of Colombians, the need to analyze the implications arise. Consequently, this document reviews the project in detail, with an intersectional and interdisciplinary approach and presents certain desirable provisions for a progressive and fair system that could have been included. |
| Keywords: | reforma tributaria, recuperación económica, progresividad |
| JEL: | E62 H25 H26 H50 |
| Date: | 2021–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:col:000176:019456&r= |
| By: | Papalexatou, Chrysoula |
| JEL: | E6 N0 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111526&r= |
| By: | Gerardin Mathilde,; Ranvier Martial. |
| Abstract: | In the context of the Banque de France’s monthly business survey, this document presents the main findings of the textual analysis of business leaders’ comments. First, the richness of these data is illustrated via an elementary sentiment index and the identification of the main social movements since 2009 by means of keywords. Then, the article presents two statistical applications whose reproducibility is discussed. The first one, applied to the 2018 yellow vests and the 2019 strikes, aims to estimate the impact on GDP of an event whose effect is unequivocal. The second, backed by the study of Brexit, aims to characterize, using a supervised learning model and word vectors, the effects of a complex event with multiple impacts. |
| Keywords: | Textual Analysis, Business Survey, Sentiment Index, Keywords, Word Vectors,Brexit, Social Movements. |
| JEL: | C21 C45 C52 E32 D22 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:821&r= |
| By: | Rui (Aruhan) Shi |
| Abstract: | This exercise offers an innovative learning mechanism to model economic agent’s decision-making process using a deep reinforcement learning algorithm. In particular, this AI agent is born in an economic environment with no information on the underlying economic structure and its own preference. I model how the AI agent learns from square one in terms of how it collects and processes information. It is able to learn in real time through constantly interacting with the environment and adjusting its actions accordingly (i.e., online learning). I illustrate that the economic agent under deep reinforcement learning is adaptive to changes in a given environment in real time. AI agents differ in their ways of collecting and processing information, and this leads to different learning behaviours and welfare distinctions. The chosen economic structure can be generalised to other decision-making processes and economic models. |
| Keywords: | expectation formation, exploration, deep reinforcement learning, bounded rationality, stochastic optimal growth |
| JEL: | C45 D83 D84 E21 E70 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9255&r= |
| By: | Charles I. Jones |
| Abstract: | The nonrivalry of ideas gives rise to increasing returns, a fact celebrated in Paul Romer's recent Nobel Prize. An implication is that the long-run rate of economic growth is the product of the degree of increasing returns and the growth rate of research effort; this is the essence of semi-endogenous growth theory. This paper interprets past and future growth from a semi-endogenous perspective. For 50+ years, U.S. growth has substantially exceeded its long-run rate because of rising educational attainment, declining misallocation, and rising (global) research intensity, implying that frontier growth could slow markedly in the future. Other forces push in the opposite direction. First is the prospect of "finding new Einsteins": how many talented researchers have we missed historically because of the underdevelopment of China and India and because of barriers that discouraged women inventors? Second is the longer-term prospect that artificial intelligence could augment or even replace people as researchers. Throughout, the paper highlights many opportunities for further research. |
| JEL: | E0 O4 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29126&r= |
| By: | Ulrike Malmendier |
| Abstract: | This article establishes four key findings of the growing literature on experience effects in finance: (1) the long-lasting imprint of past experiences on beliefs and risk taking, (2) recency effects, (3) the domain-specificity of experience effects, and (4) imperviousness to information that is not experience-based. I first discuss the neuroscientific foundations of experience-based learning and sketch a simple model of its role in the stock market based on Malmendier et al. (2020a,b). I then distill the empirical findings on experience effects in stock-market investment, trade dynamics, and international capital flows, highlighting these four key features. Finally, I contrast models of belief formation that rely on “learned information” with models accounting for the neuroscience evidence on synaptic tagging and memory formation, and provide directions for future research. |
| JEL: | D03 D8 D83 D87 D9 E17 E52 E7 G02 G4 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29074&r= |
| By: | Martin S. Eichenbaum; Sergio Rebelo; Mathias Trabandt |
| Abstract: | We argue that the Covid epidemic disproportionately affected the economic well-being and health of poor people. To disentangle the forces that generated this outcome, we construct a model that is consistent with the heterogeneous impact of the Covid recession on low- and high-income people. According to our model, two thirds of the inequality in Covid deaths reflect pre-existing inequality in comorbidity rates and access to quality health care. The remaining third, stems from the fact that low-income people work in occupations where the risk of infection is high. Our model also implies that the rise in income inequality generated by the Covid epidemic reflects the nature of the goods that low-income people produce. Finally, we assess the health-income trade-offs associated with fiscal transfers to the poor and mandatory containment policies. |
| JEL: | E1 H0 I1 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29063&r= |
| By: | Ibrahim A. Adekunle (Babcock University, Nigeria); Olumuyiwa G. Yinusa (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Tolulope O. Williams (Olabisi Onabanjo University, Ogun State, Nigeria); Rahmon A. Folami (Olabisi Onabanjo University, Ogun State, Nigeria) |
| Abstract: | While it is clear that financial depth and economic diversity are prerequisites for the realisation of growth and development objectives, heterogeneous factors that determines financial development remains imperfectly understood. This ambiguity in the structural relations between varied causative factors is more pronounced in Africa where conditions for growth and development remains inadequately met. Underexplored aspects such as geographic, political, economic and macroeconomic policy determinant of financial development in Africa could have culminated into the misalignment of the continent financialisation strategies. This paper takes the lead, diverse and holistic approach to assign numerical weights to these unobserved factors to reach conclusions that can redefine policy and research on Africa's financialisation objectives. We compared result along with the mean group (MG), common correlated effect mean group (CCEMG) and Augmented Mean Group (AMG) estimators but relied on the AMG results because of its high precision, relevance and superiority in addressing core issues of cross-sectional dependence and slope homogeneity of regressors.Based on the AMG results, we found geographic, economic and macroeconomic policy factors to lead to financial development in Africa. However, our political/institutional composite index inversely relate to financial development in Africa. This counter-intuitive outcome could be due to Africa, age-long weak institutional capacities. Policy implications were discussed. |
| Keywords: | Financial Development; Geography; Institutions; Macroeconomic Policy; Africa |
| JEL: | D02 G20 P34 Q56 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:21/054&r= |
| By: | Ibrahim A. Adekunle (Babcock University, Nigeria); Olumuyiwa G. Yinusa (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Tolulope O. Williams (Olabisi Onabanjo University, Ogun State, Nigeria); Rahmon A. Folami (Olabisi Onabanjo University, Ogun State, Nigeria) |
| Abstract: | While it is clear that financial depth and economic diversity are prerequisites for the realisation of growth and development objectives, heterogeneous factors that determines financial development remains imperfectly understood. This ambiguity in the structural relations between varied causative factors is more pronounced in Africa where conditions for growth and development remains inadequately met. Underexplored aspects such as geographic, political, economic and macroeconomic policy determinant of financial development in Africa could have culminated into the misalignment of the continent financialisation strategies. This paper takes the lead, diverse and holistic approach to assign numerical weights to these unobserved factors to reach conclusions that can redefine policy and research on Africa's financialisation objectives. We compared result along with the mean group (MG), common correlated effect mean group (CCEMG) and Augmented Mean Group (AMG) estimators but relied on the AMG results because of its high precision, relevance and superiority in addressing core issues of cross-sectional dependence and slope homogeneity of regressors.Based on the AMG results, we found geographic, economic and macroeconomic policy factors to lead to financial development in Africa. However, our political/institutional composite index inversely relate to financial development in Africa. This counter-intuitive outcome could be due to Africa, age-long weak institutional capacities. Policy implications were discussed. |
| Keywords: | Financial Development; Geography; Institutions; Macroeconomic Policy; Africa |
| JEL: | D02 G20 P34 Q56 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:21/054&r= |
| By: | Nicolae-Bogdan IANC; Adrian-Marius IONESCU |
| Keywords: | , CEECs, ECB, GVAR, unconventional monetary policy, balance sheet, LTRO, liquidity spread, yield spread |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:leo:wpaper:2898&r= |
| By: | Michael Barnett; William Brock; Lars P. Hansen |
| Abstract: | The design and conduct of climate change policy necessarily confronts uncertainty along multiple fronts. We explore the consequences of ambiguity over various sources and configurations of models that impact how economic opportunities could be damaged in the future. We appeal to decision theory under risk, model ambiguity and misspecification concerns to provide an economically motivated approach to uncertainty quantification. We show how this approach reduces the many facets of uncertainty into a low dimensional characterization that depends on the uncertainty aversion of a decision-maker or fictitious social planner. In our computations, we take inventory of three alternative channels of uncertainty and provide a novel way to assess them. These include i) carbon dynamics that capture how carbon emissions impact atmospheric carbon in future time periods; ii) temperature dynamics that depict how atmospheric carbon alters temperature in future time periods; iii) damage functions that quantify how temperature changes diminish economic opportunities. We appeal to geoscientific modeling to quantify the first two channels. We show how these uncertainty sources interact for a social planner looking to design a prudent approach to the social pricing of carbon emissions. |
| JEL: | D81 E61 G12 G18 Q51 Q54 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29064&r= |
| By: | International Monetary Fund |
| Abstract: | This report evaluates Honduras’s fiscal transparency practices in relation to the IMF Fiscal Transparency Code (FTC). Honduras’s score is similar to those of other Latin American countries and emerging market economies that have undergone the evaluation. In relation to the fiscal transparency principles, Honduran practices are considered basic in 15 areas; good in seven areas; and advanced in six areas. Fiscal transparency practices in the area of fiscal forecasting and budgeting are the strongest, while the fiscal risk analysis and management practices are the weakest. Finally, Honduras’s current fiscal transparency practices fall short of the FTC principles in eight areas. |
| Keywords: | Universidad Nacional Autónoma; Desarrollo de Honduras; Dirección General de Inversión Pública; employee pension administrator; accounts payable; Banco Nacional de Desarrollo Agrícola; budget index; control de los Recursos Públicos; Unidad de Planeamiento y evaluation de la Gestión; Budget planning and preparation; Macroeconomic and fiscal forecasts; Fiscal risks; Financial statements; Central America |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/150&r= |
| By: | Marcelo Randolfo da Costa Januário (LCA Consultores); Mauro Sayar Ferreira (UFMG) |
| Abstract: | We evaluate the presence of the J-curve and the Marshall-Lerner condition after recognizing that terms of trade respond endogenously to global demand and supply shocks, which we identify from a structural VAR estimated with Bayesian techniques for the Brazilian economy, a small open economy with a strong commodity sector. The J-curve is not observed for total trade, capital goods, or consumption goods, but it is verified for fuel, which Brazil exports and imports. The Marshall-Lerner condition is mostly verified, but the volume exported tends not to behave as expected considering its relation to terms of trade, since global income effect plays a major role for determining the quantum exported. The volume imported reacts as expected based on its relation to terms of trade and domestic GDP, with the last appearing to play the most prominent role. The expansion in the exported volume of capital and consumption goods following an improvement in terms of trade runs against the presence of the Dutch disease, at least in the business cycle frequency. |
| Keywords: | J-curve; Marshall-Lerner condition; terms of trade; global shocks; SVAR |
| JEL: | F14 F41 F62 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td635&r= |
| By: | Giancarlo Corsetti; Anna Lipínska; Giovanni Lombardo |
| Abstract: | Crises and tail events have asymmetric effects across borders, raising the value of arrangements improving insurance of macroeconomic risk. Using a two-country DSGE model, we provide an analytical and quantitative analysis of the channels through which countries gain from sharing (tail) risk. Riskier countries gain in smoother consumption but lose in relative wealth and average consumption. Safer countries benefit from higher wealth and better average terms of trade. Calibrated using the empirical distribution of moments of GDP-growth across countries, the model suggests significant quantitative effects. We offer an algorithm for the correct solution of the equilibrium using DSGE models under complete markets, at higher order of approximation. |
| Keywords: | international risk sharing, asymmetry, fat tails, welfare |
| JEL: | F15 F41 G15 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:958&r= |
| By: | Renee van Eyden (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Jacobus Nel (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Elie Bouri (School of Business, Lebanese American University, Lebanon) |
| Abstract: | The purpose of this paper is to determine the impact of rare disaster risks, captured by the El Nino-Southern Oscillation (ENSO) cycle, on the volatility of Treasury securities of the United States (US) involving 1- to 360-month maturities. We use a random coefficients panel-data-based heterogeneous autoregressive-realized variance (HAR-RV) model over the monthly period of 1961:06 to 2019:12, with the RV derived from the sum of squared daily changes in yield over a month. Our results show a positive and statistically significant (at the 1% level) impact of the ENSO cycle on RV, with the results being robust to alternative metrics of the ENSO, consideration of lagged impact, and decomposition of the ENSO cycle into El Nino and La Nina phases, with the former having a relatively stronger effect. With our panel estimation method using heterogeneous slope coefficients, we find that the effect on the entire term structure is positive, with higher impacts observed at the two-ends and the middle-part of the term-structure. Our results have important implications for investors in US Treasury securities. |
| Keywords: | Rare Disaster Risks, ENSO Cycle, Term-Structure Volatility, US Treasury Securities, Panel HAR-RV Model |
| JEL: | C33 E43 Q54 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202155&r= |
| By: | Ibrahim A. Adekunle (Babcock University, Nigeria); Abayomi T. Onanuga (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Ibrahim A. Odusanya (Olabisi Onabanjo University, Ogun State, Nigeria) |
| Abstract: | In this study, we examine the benefits of financial integrations in four of Africa regional trade blocs: COMESA, ECCAS, CEN-SAD and ECOWAS. We regress de-jure and de-facto indices of financial integration on growth outcome using the dynamic system generalised method of moment and pooled mean group estimation procedure. Findings revealed that total foreign asset and liabilities and foreign liabilities as a percentage of GDP are inversely related to growth outcomes in COMESA. In CEN-SAD, we found that foreign liabilities as a percentage of GDP hurts growth. In ECCAS, growth-financial integration relationship showed that foreign liabilities as a percentage of GDP inhibit real per capita GDP in the long run. In ECOWAS, foreign liabilities as a percentage of GDP is inversely related to real per capita GDP in the long run. Policy implications of our findings were discussed. |
| Keywords: | Financial Integration; Economic Growth; system GMM; Pooled Mean Group; Regional Trade Bloc; Africa |
| JEL: | F36 F43 O47 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:21/052&r= |
| By: | Ibrahim A. Adekunle (Babcock University, Nigeria); Abayomi T. Onanuga (Olabisi Onabanjo University, Ogun State, Nigeria); Ibrahim A. Odusanya (Olabisi Onabanjo University, Ogun State, Nigeria) |
| Abstract: | In this study, we examine the benefits of financial integrations in four of Africa regional trade blocs: COMESA, ECCAS, CEN-SAD and ECOWAS. We regress de-jure and de-facto indices of financial integration on growth outcome using the dynamic system generalised method of moment and pooled mean group estimation procedure. Findings revealed that total foreign asset and liabilities and foreign liabilities as a percentage of GDP are inversely related to growth outcomes in COMESA. In CEN-SAD, we found that foreign liabilities as a percentage of GDP hurts growth. In ECCAS, growth-financial integration relationship showed that foreign liabilities as a percentage of GDP inhibit real per capita GDP in the long run. In ECOWAS, foreign liabilities as a percentage of GDP is inversely related to real per capita GDP in the long run. Policy implications of our findings were discussed. |
| Keywords: | Financial Integration; Economic Growth; system GMM; Pooled Mean Group; Regional Trade Bloc; Africa |
| JEL: | F36 F43 O47 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:21/052&r= |
| By: | Scott R. Baker; Lorenz Kueng |
| Abstract: | The growth of the availability and use of detailed household financial transaction microdata has dramatically expanded the ability of researchers to understand both household decision-making as well as aggregate fluctuations across a wide range of fields. This class of transaction data is derived from a myriad of sources including financial institutions, FinTech apps, and payment intermediaries. We review how these detailed data have been utilized in finance and economics research and the benefits they enable beyond more traditional measures of income, spending, and wealth. We discuss the future potential for this flexible class of data in firm-focused research, real-time policy analysis, and macro statistics. |
| JEL: | C81 D14 G5 H31 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29027&r= |
| By: | Kekelidze, Lia |
| Abstract: | В настоящото изследване на инвестиционната среда и проблемите на придобиването на собственост върху недвижими имоти в Грузия от чуждестранни инвеститори разглеждаме важността на привличането на преки чуждестранни инвестиции и свързаните с това проблеми в грузинската икономика. Освен това анализираме преките чуждестранни инвестиции въз основа на статистически данни и доказваме важната роля на преките чуждестранни инвестиции за стимулиране на грузинската икономика. В изследването анализираме проблемните аспекти, които възпрепятстват привличането на инвестиции в Грузия. Също така разглеждаме начините и методите, насърчаващи притока на преки чуждестранни инвестиции в Грузия. Основният акцент на изследването е грузинската законодателна база. |
| Keywords: | инвестиционна среда, ПЧИ, собственост, правни норми, земя. |
| JEL: | E61 F21 F38 G11 Q15 R14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109051&r= |
| By: | Imane El Ouadghiri (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Remzi Uctum (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The goal of this paper is to investigate forecast heterogeneity and time variability in the formation of expectations using disaggregated monthly survey data on macroeconomic indicators provided by Bloomberg from June 1998 to August 2017. We show that our panel of forecasters are not rational and are moderately heterogeneous and thus confirm that previously well-established results on asset prices hold for macroeconomic indicators. The estimation of our flexible hybrid forecast model-defined at any time as a combination of the extrapolative, regressive, adaptive and interactive heuristics-using the Bai and Perron (1998) methodology reveals a significant timedependence in the structural model with some inertia in extrapolative and adaptive profiles. Changes in the formation of expectations are triggered mostly by financial shocks, and uncertainty is dealt with by using complex processes in which the fundamentalist component overweighs chartist activity. Forecasters whose models combine different relevant rules and display high temporal flexibility provide the most accurate forecasts. Authorities can then stabilize the domestic markets by encouraging fundamentalists' forecasts through increased transparency policy. |
| Keywords: | dynamic heterogeneity,flexible forecast model,formation of expectations,individual survey data,macroeconomic indicators |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03319091&r= |
| By: | Askandarou Diallo,; Jacolin Luc,; Isabelle Rabaud. |
| Abstract: | This paper investigates the relationship between FDI and private investment in Sub-Saharan Africa (SSA), using a sample of 40 countries over 1980-2017. To disentangle short term from long-term dynamics, our empirical analysis is based on Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Full Effects (DFE) models. We find that FDI has little effect on private investment in the short run but significant crowding-in effects in the long-run: a one percentage point increase of the share of FDI in GDP leads to a 0.29% rise in private investment, in the long run. Our results also show that FDI interacts with public domestic investment to boost these positive effects. Finally, we show that the impact of FDI on domestic private investment is stronger in non-natural resource exporting diversified countries as opposed to non-diversified commodity exporters. |
| Keywords: | Financial Development, Domestic Investment, FDI, Crowding-in/Crowding-out Effects. |
| JEL: | G11 O11 O16 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:816&r= |
| By: | Bardt, Hubertus; Diermeier, Matthias; Grömling, Michael; Hüther, Michael; Obst, Thomas |
| Abstract: | Verschiedene Branchen beklagen sich nach Ende der ersten Lockdowns über empfindliche Lieferengpässe und Preissteigerungen bei Vorleistungsgütern. Teils mag dies den steigenden Energiekosten geschuldet sein, teils sind in den unterschiedlichen Industrien preistreibende Sondereffekte zusammengekommen, die Teuerungen mit unterschiedlicher Fristigkeit hervorrufen. Zum einen ergeben sich Corona-Echoeffekte aus dem plötzlichen Hochfahren der Weltwirtschaft aus der globalen Stillstandsökonomie im Frühjahr 2020. Insbesondere die Logistikbranche steht so vor großen Herausforderungen. Ähnlich stellen sich die pandemiebedingten Anpassungen von Angebot und Nachfrage in unterschiedlichen Märkten dar. Auch diese werden sich voraussichtlich in der mittleren Frist wieder einruckeln. Zum anderen ist zu erwarten, dass der Strukturwandel hin zur Klimaneutralität, der die Produktion von spezifischen Kuppelprodukten der Mineralölwirtschaft beschränkt, sowie der noch immer vorherrschende Protektionismus im Systemkonflikt wesentlich nachhaltiger auf die Preisentwicklung einwirken. In diesem Kontext hat das Institut der deutschen Wirtschaft rund 2.000 Unternehmen befragt, welche Faktoren kurz- und mittelfristig ihre Preisentwicklung bestimmen. Zudem wurden die Firmen danach gefragt, in welchem Ausmaß sie höhere Produktionskosten an ihre eigenen Kunden durchreichen können. Für rund 80 Prozent der befragten Unternehmen haben teurere Rohstoffe und knappe Vorleistungen einen starken oder einen mittleren Effekt auf die eigene Preisentwicklung. Auch die Verteuerung von Energie sorgt derzeit bei rund 70 Prozent der Firmen für einen starken beziehungsweise mittleren Preisauftrieb. |
| JEL: | E31 D22 F4 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkrep:272021&r= |
| By: | Bardt, Hubertus; Hüther, Michael; Klös, Hans-Peter |
| Abstract: | Die deutsche Wirtschaft steht vor umfangreichen Modernisierungsherausforderungen, die mit neuen Technologien, neuen Geschäftsmodellen und den notwendigen Investitionen bewältigt werden müssen. Während in der Automobilindustrie mit ihrer starken Innovations-und Investitionsperformance bereits eine erhebliche Transformationsdynamik zu erkennen ist, stehen energieintensive Branchen vor größeren Herausforderungen. Hier fehlt es insbesondere an den adäquaten staatlichen Unterstützungsmaßnahmen, um die notwendigen Investitionen in Klimaneutralität am Standort Deutschland tätigen zu können, die bisher noch nicht wirtschaftlich betrieben werden können. Auch in der Digitalisierung hat ein Aufholprozess eingesetzt, damit aus der Verbindung von industrieller Stärke und digitaler Innovation eine starke Wettbewerbsposition für die nächsten Dekaden entstehen kann. Während es nach wie vor an den infrastrukturellen Voraussetzungen mangelt, gehen die staatlichen Initiative in die richtige Richtung. Für die Wirtschaftspolitik sind mit der notwendigen Modernisierung drei Kernaufgaben verbunden: Die Voraussetzungen für private Investitionen in Deutschland müssen durch Standortpolitik und Transformationsunterstützung gestärkt werden, die komplementären öffentlichen Investitionen müssen getätigt werden und das Staatswesen mit seinen langwierigen Planungs-und Entscheidungsprozessen muss modernisiert und auf eine Zeit des Agierens unter Unsicherheit vorbereitet werden. |
| JEL: | E60 H54 L53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkrep:n222021&r= |
| By: | Eswar Prasad |
| Abstract: | This paper provides a broad analytical overview of how technological changes are likely to affect the practice of central banking. While the advent of decentralized cryptocurrencies such as Bitcoin has dominated the headlines, a broader set of changes wrought by advances in technology are likely to eventually have a more profound and lasting impact on central banks. |
| Date: | 2020–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000566:019463&r= |
| By: | Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Roman Römisch (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | A high level of public services in housing, transport, education and health care is essential for liveability in urban centres, as shown in this report, with the help of European data for large cities. Inhabitants of larger cities, where the housing market is heavily commercialised in terms of the share of homeownership, and where little social housing exists, have to save on consumption items that offer a higher quality of life, such as in Italy. On the opposite side, for instance, cities in Austria, the Netherlands, Sweden and France have housing markets that are much less commercialised and where a lot of social housing exists. These are exactly the urban centres that achieve the top rankings in our new Urban Public Services and Liveability Index (UPSLIde), with Austria in first place. Over time, UPSLIde trends downward, with the ratio of expenditure on the finer things in life relative to obligatory consumption items influenced by public services provision sliding from around 70% in the late 1980s to less than 50% in the 2010s. In order for this negative trend to be reversed, public services provision needs to be stepped up and, in particular, rising housing rental costs need to be countered by more social housing construction. |
| Keywords: | Housing policy, transport policy, education policy, health policy, public services, urban well-being, index ranking, household expenditure, cities, Europe |
| JEL: | C43 D12 E21 R38 R48 H44 H51 H52 H53 H54 H75 H76 I18 I28 I38 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:wii:pnotes:pn:52&r= |
| By: | Marla Ripoll |
| Abstract: | Official recession figures ignore the costs associated with the loss of human life due to COVID-19. This paper constructs full recession measures that take into account the death toll. Our model features tractable heterogeneity, constant relative risk aversion to mortality risk, and age-specific survival rates. Using an estimated one-year death toll of 500 thousand people and a 3.5% recession, we find that the corresponding full recession is 24% on average across individuals, 13% for a median voter, and 7% for planner with moderate inequality aversion. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:7143&r= |
| By: | Otegui Banno, Santiago; Calá, Carla Daniela |
| Abstract: | Este trabajo tiene como objetivo descomponer el cambio en el empleo en una región durante los períodos de expansión en tres componentes: Un componente nacional, es decir cuál sería el aumento del empleo si la región y cada actividad económica dentro de ella se comportara igual que la media nacional; Un componente industrial, es decir, en qué medida la región gana o pierde empleo por tener mayor o menor proporción del empleo en ramas dinámicas; Un componente regional o de competitividad, es decir cuánto más (o menos) crece el empleo en cada actividad económica de esa región en comparación con lo que sucede con esa misma actividad a nivel país. |
| Keywords: | Recesión Económica; Resiliencia; Recuperación Económica; Estructura Industrial; Competitividad; |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:nmp:nuland:3465&r= |