nep-mac New Economics Papers
on Macroeconomics
Issue of 2021‒09‒20
84 papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. The cost channel of monetary policy: the case of the United States in the period 1959-2018 By Maria Chiara Cucciniello; Matteo Deleidi; Enrico Sergio Levrero
  2. Monetary and macroprudential policy: The multiplier effects of cooperation. By Federico Bassi; Andrea Boitani
  3. Efecto de la política fiscal sobre la transmisión de la política monetaria a través de la desigualdad en el ingreso By David Augusto Montoya Ruiz
  4. The Effects of Money-financed Fiscal Stimulus in a Small Open Economy By Okano, Eiji; Eguchi, Masataka
  5. Human frictions in the transmission of economic policy By D’Acunto, Francesco; Hoang, Daniel; Paloviita, Maritta; Weber, Michael
  6. Wage and Employment Cyclicalities at the Establishment Level By Christian Merkl; Heiko Stüber
  7. Macroeconomic stabilisation and monetary policy effectiveness in a low-interest-rate environment By Coenen, Günter; Montes-Galdón, Carlos; Schmidt, Sebastian
  8. Monetary Policy in in Russia in 2020 By Bozhechkova Alexandra; Trunin Pavel
  9. Помогают ли высокочастотные данные в прогнозировании российской инфляции? By Tretyakov, Dmitriy; Fokin, Nikita
  10. Italian Labour Frictions and Wage Rigidities in an Estimated DSGE By Josué Diwambuena; Raquel Fonseca; Stefan Schubert
  11. From He-Cession to She-Stimulus? The Labor Market Impact of Fiscal Policy Across Gender By Alica Ida Bonk; Laure Simon
  12. The Rushin Index: A Weekly Indicator of Czech Economic Activity By Tomas Adam; Ondrej Michalek; Ales Michl; Eva Slezakova
  13. Industry evidence and the vanishing cyclicality of labor productivity. By Zuzana Molnarova
  14. Asymmetric monetary policy rules for the euro area and the US By Maih, Junior; Mazelis, Falk; Motto, Roberto; Ristiniemi, Annukka
  15. Dating business cycles in France: A reference chronology. By Antonin Aviat; Frédérique Bec; Claude Diebolt; Catherine Doz; Denis Ferrand; Laurent Ferrara; Eric Heyer; Valérie Mignon; Pierre-Alain Pionnier
  16. The reform of the european Union’s fiscal governance Framework in a new Macroeconomic environment By Mario Alloza; Javier Andrés; Pablo Burriel; Iván Kataryniuk; Javier J. Pérez; Juan Luis Vega
  17. Holding the Economy by the Tail: Analysis of Short- and Long-run Macroeconomic Risks By Michal Franta; Jan Libich
  18. Italian Labour Frictions and Wage Rigidities in an Estimated DSGE By Josué Diwambuena; Raquel Fonseca; Stefan Schubert
  19. Payment Habits During COVID-19: Evidence from High-Frequency Transaction Data By Tatjana Dahlhaus; Angelika Welte
  20. The impact of heterogeneous unconventional monetary policies on the expectations of market crashes By Irma Alonso; Pedro Serrano; Antoni Vaello-Sebastià
  21. Tracking weekly state-level economic conditions By Christiane Baumeister; Danilo Leiva-León; Eric Sims
  22. Pension design and the failed economics of squirrels By Barr, Nicholas
  23. The Mortgage Cash Flow Channel of Monetary Policy Transmission: A Tale of Two Countries By Daniel H. Cooper; Vaishali Garga; Maria Jose Luengo-Prado
  24. ECB euro liquidity lines By Silvia Albrizio; Iván Kataryniuk; Luis Molina; Jan Schäfer
  25. Does the expansion of the service sector slow down productivity growth? An empirical assessment across eight developed economies By Adrián Rial
  26. Economía colombiana en medio del paro nacional 2021 y la recuperación postpandemia By División de Análisis Macroeconómico DAMAC
  27. Structural Change Ramifications of Consumer Credit Expansion in a Two Sector Growth Model By Esra Nur Ugurlu
  28. Trend inflation, asset prices and monetary policy By Kengo Nutahara
  29. What Can Stockouts Tell Us About Inflation? Evidence from Online Micro Data By Alberto Cavallo; Oleksiy Kryvtsov
  30. Monetary and fiscal complementarity in the Covid-19 pandemic By Chadha, Jagjit S.; Corrado, Luisa; Meaning, Jack; Schuler, Tobias
  31. Engendering Macroeconomic Policy for Gender Equality in sub-Saharan Africa By Ibrahim A. Adekunle; Toluwani G. Kalejaiye; Ayomide O. Ogunade; Sina J. Ogede; Caleb O. Soyemi
  32. Gender Inclusive Intermediary Education, Financial Stability and Female Employment in the Industry in Sub-Saharan Africa By Simplice A. Asongu; Yann Nounamo; Henri Njangang; Sosson Tadadjeu
  33. Monetary Policy is not about Interest Rates; the Liquidity Effect and the Fisher Effect By Greenwood, John
  34. Fiscal policy measures adopted since the second wave of the health crisis: the euro area, the United States and the United Kingdom By Daniel Alonso; Alejandro Buesa; Carlos Moreno; Susana Párraga; Francesca Viani
  35. Current Account Dynamics: On Income and Trade Balance By YOSHIDA Yushi; Weiyang ZHAI
  36. The Impact of Monetary Conditions on Bank Lending to Households By Gyozo Gyongyosi; Steven Ongena; Ibolya Schindele
  37. La reforma del marco de gobernanza de la política fiscal de la Unión Europea en un nuevo entorno macroeconómico By Mario Alloza; Javier Andrés; Pablo Burriel; Iván Kataryniuk; Javier J. Pérez; Juan Luis Vega
  38. Optimal capital ratios for banks in the euro area By Beau Soederhuizen; Bert Kramer; Harro van Heuvelen; Rob Luginbuhl
  39. Post-Keynesian vignettes on secular stagnation:From labor suppression to natural growth By Codrina Rada, Marcio Santetti, Ansel Schiavone, Rudiger von Arnim
  40. Adverse Working Conditions and Immigrants' Physical Health and Depression Outcomes: A Longitudinal Study in Greece By Drydakis, Nick
  41. Inflation in developing economies By Peter Skott
  42. Russia’s Fiscal Policy in 2020 By Arlashkin Igor; Barbashova Natalia; Belev Sergey; Leonov Elisei; Deryugin Alexander; Sokolov Ilya; Tishchenko Tatiana
  43. How Did the MSLP Borrowers Fare Before and During COVID-19? By Joshua Ballance; Melanie Qing; J. Christina Wang
  44. El impacto de la crisis del COVID-19 sobre la vulnerabilidad financiera de las empresas españolas By Roberto Blanco; Sergio Mayordomo; Álvaro Menéndez; Maristela Mulino
  45. The Federal Reserve’s Revised Monetary Policy Strategy and Its First Year of Practice By Loretta J. Mester
  46. Goodwin, Baumol & Lewis: How structural change can lead to inequality and stagnation By Codrina Rada, Ansel Schiavone, Rudiger von Arnim
  47. Measuring Inflation: Criticism and Solution By Laczó, Ferenc
  48. Shadow Banks and the Collateral Multiplier By Thomas R. Michl; Hyun Woong Park
  49. The Neoclassical Model and the Welfare Costs of Selection By Collard, Fabrice; Licandro, Omar
  50. Health Dynamics and Heterogeneous Life Expectancies By Richard Foltyn; Jonna Olsson
  51. Hooked on weight control: An economic theory of anorexia nervosa, and its impact on health and longevity By Strulik, Holger
  52. COVID-19 epidemic and generational welfare By Francesco Giuli; Giuseppe Ciccarone; Enrico Marchetti
  53. Predictability of Aggregated Time Series By Reinhard Ellwanger, Stephen Snudden
  54. What are the Poverty and Inequality Impacts of Fiscal Policy in Turkey? By P. Facundo Cuevas; Leonardo Lucchetti; Metin Nebiler
  55. Assessing the supply chain effect of natural disasters: Evidence from Chinese manufacturers By Längle, Katharina; Xu, Ankai; Tian, Ruijie
  56. A Behavioural Model of Investment Appraisal and its Implications for the Macroeconomy By Michelle Baddeley; Geoff Harcourt
  57. What do we teach in Macroeconomics? Evidence of a theoretical divide By François Courtoy; Michel de Vroey; Riccardo Turati
  58. Estimating macro models and the potentially misleading nature of Bayesian estimation By Meenagh, David; Minford, Patrick; Wickens, Michael
  59. The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study By Tansel, Aysit; Öztürk, Ceyhan; Erdil, Erkan
  60. The Financial Drivers of Populism in Europe By Luigi Guiso; Massimo Morelli; Tommaso Sonno; Helios Herrera
  61. Targeted interventions: Consumption dynamics and distributional effects By Chakrabarti, Anindya S.; Mishra, Abinash; Mohaghegh, Mohsen
  62. Evaluating forecast performance with state dependence By Florens Odendahl; Barbara Rossi; Tatevik Sekhposyan
  63. The Structural Outcomes of Investment Surges By Mateo Hoyos; Emiliano Libman; Arslan Razmi
  64. Does political polarization affect economic expectations?: Evidence from three decades of cabinet shifts in Europe By Luis Guirola
  65. ¿Más dinero es más desarrollo municipal? El caso de Colombia By Juan David Yépez Torrijos
  66. Impact of the COVID-19 crisis on Spanish firms’ financial vulnerability By Roberto Blanco; Sergio Mayordomo; Álvaro Menéndez; Maristela Mulino
  67. Life on the Edge: elites, wealth, and inequality in Sonora 1871-1910 By Diego Castañeda Garza; Alice Krozer
  68. The ideological shade of the constitutional order: public law and political economy in the Eurozone By Lokdam, Hjalte
  69. Market Operations in Fiscal 2020 By Financial Markets Department
  70. The ideological shade of the constitutional order: public law and political economy in the Eurozone By Lokdam, Hjalte
  71. The Global Logistic Chain Under Siege in a Post-Covid Era By Oxelheim, Lars; Randøy, Trond
  72. The multiplier effect of convertible local currencies : case study on two French schemes By Oriane Lafuente-Sampietro
  73. Temps difficiles pour les pays en développement : le financement des besoins de l’Afrique en question By Bertrand SAVOYE; Maxime TERRIEUX; Cécile VALADIER; Sylvain BELLEFONTAINE,; Cécile DUQUESNAY,; Marion HEMAR,; Benoît JONVEAUX,; Laura MARIE,; Emmanuelle MONAT,; Jules PORTE,; Meghann PULOC’H
  74. Identifying the Main Factors of Iran's Economic Growth using Growth Accounting Framework By Mohammadreza Mahmoudi
  75. Simple Matching Protocols for Agent-based Models. By Andrea Borsato
  76. Looking Back, Looking Forward: Central and Eastern Europe 30 Years After the Fall of the Berlin Wall By Vladimir Gligorov; Richard Grieveson; Peter Havlik; Gabor Hunya; Olga Pindyuk; Leon Podkaminer; Sandor Richter; Hermine Vidovic
  77. Using xtbreak to study the impacts of European Central Bank announcements on sovereign borrowing By Natalia Poiatti
  78. The Neoclassical Theory of Aggregate Investment and its Criticisms By Daniele Girardi
  79. Pression Fiscale Optimale et Croissance Economique en République Démocratique du Congo : 1990 -2020 By Elie Ndemba Tshilambu
  80. The Great Transition: Kuznets Facts for Family-Economists By Jeremy Greenwood; Nezih Guner; Ricardo Marto
  81. The Prerequisites for Increasing the R&D Activity of Companies in Finland By Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
  82. Construcción de una Matriz de Contabilidad Social para Argentina para el Año 2018 By Onil Banerjee; Martín Cicowiez
  83. Small and medium business amid coronacrisis By Barinova Vera; Zemtsov Tsepan; Tsareva Yulia
  84. Hard Times for Developing Countries: Africa’s Financing Needs in Question By Bertrand SAVOYE; Maxime TERRIEUX; Cécile VALADIER; Sylvain BELLEFONTAINE,; Cécile DUQUESNAY,; Marion HEMAR,; Benoît JONVEAUX,; Laura MARIE,; Emmanuelle MONAT,; Jules PORTE,; Meghann PULOC’H

  1. By: Maria Chiara Cucciniello (Roma Tre University); Matteo Deleidi (Roma Tre University); Enrico Sergio Levrero
    Abstract: In light of the literature on the ‘price puzzle’, this paper shows that a positive effect of a tightening of monetary policy on the level of prices should be considered a normal phenomenon rather than an ‘anomaly’ or a ‘specific regime phenomenon’ connected to passive behaviour of the Central Bank in response to changes in the inflation rate. In order to assess this effect of monetary policy on the level of prices, we estimate SVAR models based on US monthly data for the period 1959-2018. Alternative measures of price and inflation expectations are also taken into consideration to avoid feasible spurious correlation. Finally, all selected models are estimated along four different sub-samples to consider different monetary policy regimes. Our findings show that the ‘price puzzle’ exists irrespective of both the passive (active) behaviour of the Central Bank and the inclusion of price expectations.
    Keywords: Price Puzzle, Structural Vector Autoregressions, United States
    JEL: B22 E31 E43 E44 E52
    Date: 2021–07
  2. By: Federico Bassi; Andrea Boitani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: A BMW model is augmented with a credit market affected by banks’ balance sheet and used to assess the dynamic performance of an economy in the face of demand and financial shocks under different assumptions about the interactions between monetary and macroprudential policy. We show that the regulatory bank’s capital requirement has a multiplier effect that interferes with monetary policy, thus influencing the credit market and the output gap, and this multiplier effect varies according to the institutional arrangements in which macroprudential and monetary policies are embedded. In particular, we find that cooperation between monetary policy and macroprudential policy delivers the best overall stabilization outcomes in the face of both negative demand and bank equity shocks, if such shocks are not highly persistent. As shock persistence increases, non-cooperation or a simple leaning against the wind monetary policy outperform cooperation. However, adding countercyclical capital buffers in the macroprudential toolkit reinstates the original ranking of institutional arrangements with cooperation dominating overall.
    Keywords: Financial Frictions, Monetary Policy, Macroprudential Policy, Policy Coordination.
    JEL: E44 E52 E58 E61 G21 G28
    Date: 2021–09
  3. By: David Augusto Montoya Ruiz
    Abstract: Este documento analiza el impacto que tiene la política fiscal, a través de la fijación de impuestos, en la distribución del ingreso y cómo esta última afecta la transmisión de la política monetaria. Para entender este mecanismo, se propone un modelo neokeynesiano analítico de dos agentes en una economía con dos activos, restricciones de acceso a los mercados financieros e incertidumbre idiosincrática en donde el gobierno fija impuestos a los dividendos y al ingreso laboral. Se encuentra que el tipo de impuesto elegido por el gobierno afecta de forma diferenciada el comportamiento cíclico de la desigualdad en el ingreso. Cuando la desigualdad es procíclica con relación al ingreso agregado de la economía, se generan efectos de atenuación en la demanda agregada. Si es contracíclica, ello provoca efectos de amplificación. Esto obliga al banco central a ajustar su objetivo operativo de tasa de interés en una magnitud menor o mayor, respectivamente, con relación al Principio de Taylor para lograr la determinación del equilibrio. Se concluye que la política fiscal condiciona la política monetaria a través del tipo de esquema redistributivo adoptado.
    Keywords: desigualdad, política fiscal, política monetaria, redistribución, regla de Taylor.
    JEL: E21 E31 E43 E52 E58
    Date: 2021–09–01
  4. By: Okano, Eiji; Eguchi, Masataka
    Abstract: In this paper, we analyze the effects of money-financed (MF) fiscal stimulus and compare them with those resulting from a conventional debt-financed (DF) fiscal stimulus in a small open economy. We find that in normal times which is a period when a zero lower bound (ZLB) on the nominal interest rate is not applicable, MF fiscal stimulus is effective in increasing output. In a liquidity trap where the ZLB is applicable, even though the decrease in both consumer price index (CPI) inflation and output is more severe than in a closed economy when there is no fiscal response, MF fiscal stimulus is effective in stabilizing both. Accordingly, we show that even in an imperfect pass-through environment including a liquidity trap, an increase in government expenditure under MF fiscal stimulus is effective. In contrast, our policy implications concerning an increase in government expenditure under DF fiscal stimulus lie opposite to Gali, Jordi (2020), “The Effects of a Money-financed Fiscal Stimulus,” Journal of Monetary Economics, 115, 1-19, assuming a closed economy. In normal times, an increase in government expenditure under the DF scheme in a small open economy is more effective than in a closed economy, although Gali (2020) argues that it is much less effective. In a liquidity trap, an increase in government expenditure under the DF scheme is less effective, also in contrast to Gali (2020). We find that even in an imperfect pass-through environment, an increase in government expenditure under DF fiscal stimulus is not effective. Thus, in a small open economy, MF fiscal stimulus is not always essential in normal times, and in a liquidity trap, MF fiscal stimulus is more important than what Gali (2020) suggests because DF fiscal stimulus is not effective, irrespective of nominal exchange rate pass-through.
    Keywords: Fiscal Stimulus; Money Financing; Debt Financing; Zero Lower Bound; Imperfect Pass-through
    JEL: E31 E32 E52 E62 F41
  5. By: D’Acunto, Francesco; Hoang, Daniel; Paloviita, Maritta; Weber, Michael
    Abstract: Many consumers below the top of the distribution of a representative population by cognitive abilities barely react to monetary and fiscal policies that aim to stimulate consumption and borrowing, even when they are financially unconstrained and despite substantial debt capacity. Differences in income, formal education levels, economic expectations, and a large set of registry-based demographics do not explain these facts. Heterogeneous cognitive abilities thus act as human frictions in the transmission of economic policies that operate through the household sector and might imply redistribution from low- to high-cognitive ability agents. We conclude by discussing how our findings inform the microfoundation of behavioral macroeconomic theory.
    JEL: D12 D84 D91 E21 E31 E32 E52 E65
    Date: 2021–09–09
  6. By: Christian Merkl; Heiko Stüber
    Abstract: We document substantial cross-sectional heterogeneity of German establishments’ real wage cyclicality over the business cycle. While wages of the median establishment are moderately procyclical, 36 percent of establishments have countercyclical wages. We estimate a negative connection between establishments’ wage cyclicality and their employment cyclicality, thereby providing a benchmark for quantitative macroeconomic models. We propose and calibrate a labor market flow model to match various empirical facts and to perform counterfactual exercises. If all establishments behaved as the most procyclical ones, labor market amplification would drop by one-third. If all followed Nash bargaining, it would drop by more than two-thirds.
    Keywords: wage cyclicality, employment cyclicality, labor market flow model, labor market dynamics, establishments, administrative data
    JEL: E32 E24 J64
    Date: 2021
  7. By: Coenen, Günter; Montes-Galdón, Carlos; Schmidt, Sebastian
    Abstract: The secular decline in the equilibrium real interest rate observed over the past decades has materially limited the room for policy-rate reductions in recessions, and has led to a marked increase in the incidence of episodes where policy rates are likely to be at, or near, the effective lower bound on nominal interest rates. Using the ECB's New Area-Wide Model, we show that, if unaddressed, the effective lower bound can cause substantial costs in terms of worsened macroeconomic performance, as re ected in negative biases in in ation and economic activity, as well as heightened macroeconomic volatility. These costs can be mitigated by the use of nonstandard instruments, notably the joint use of interest-rate forward guidance and large-scale asset purchases. When considering alternatives to in ation targeting, wefind that make-up strategies such as price-level targeting and average-in ation targeting can, if they are well-understood by the private sector, largely undo the negative biases and heightened volatility induced by the effective lower bound.
    Keywords: Effective lower bound,monetary policy,asset purchases,forward guidance,make-up strategies
    JEL: E31 E32 E37 E52 E58
    Date: 2021
  8. By: Bozhechkova Alexandra (Gaidar Institute for Economic Policy); Trunin Pavel (Gaidar Institute for Economic Policy)
    Abstract: In 2020, the world economy was faced with a large-scale crisis caused by the coronavirus pandemic, a worsening situation in the global oil market, increasing global uncertainty, and capital outflows from emerging markets. The crisis phenomena were experienced, to a varying degree, by every sector of the economy and required the implementation of a set of urgent monetary policy measures. The Bank of Russia’s switchover to monetary policy easing became its key decision aimed at sustaining aggregate demand: in 2020, the regulator cut the key rate four times, from 6.25% per annum in February to 4.25% per annum in July, thus sinking it to its historic low.
    Keywords: Russian economy, monetary policy, money market, exchange rate, inflation, balance of payments
    JEL: E31 E43 E44 E51 E52 E58
    Date: 2021
  9. By: Tretyakov, Dmitriy; Fokin, Nikita
    Abstract: Due to the fact that at the end of 2014 the Central Bank made the transition to a new monetary policy regime for Russia - the inflation targeting regime, the problem of forecasting inflation rates became more relevant than ever. In the new monetary policy regime, it is important for the Bank of Russia to estimate the future inflation rate as quickly as possible in order to take measures to return inflation to the target level. In addition, for effective monetary policy, the households must trust the actions of monetary authorities and they must be aware of the future dynamics of inflation. Thus, to manage inflationary expectations of economic agents, the Central Bank should actively use the information channel, publish accurate forecasts of consumer price growth. The aim of this work is to build a model for nowcasting, as well as short-term forecasting of the rate of Russian inflation using high-frequency data. Using this type of data in models for forecasting is very promising, since this approach allows to use more information about the dynamics of macroeconomic indicators. The paper shows that using MIDAS model with weekly frequency series (RUB/USD exchange rate, the interbank rate MIACR, oil prices) has more accurate forecast of monthly inflation compared to several basic models, which only use low-frequency data.
    Keywords: инфляция; наукастинг; прогнозирование; высокочастотные данные; MIDAS модель
    JEL: E31 E37
    Date: 2020–08
  10. By: Josué Diwambuena; Raquel Fonseca; Stefan Schubert
    Abstract: This paper investigates how Italian labour market institutions influence business cycle fluctuations. We apply a DSGE model that features Italian labour market rigidities and we estimate the latter on Italian data using Bayesian techniques to assess the effects of demand, supply, and labour market shocks on the macroeconomy, and to measure their significance for economic fluctuations. Our results show: First, technology, time preference and wage bargaining shocks are key drivers of economic fluctuations across horizons. Second, matching efficiency and wage bargaining shocks are significant sources of unemployment and vacancies fluctuations but their role is limited for output fluctuations. Third, labour market relaxation policies have only marginally contributed to the reduction in unemployment. Last, accounting for wage rigidities influences labour market dynamics and helps the model to fit data well. We, therefore, urge policymakers to support additional changes in labour market institutions.
    Keywords: DSGE, Labour market frictions, Bayesian estimation, Italy.
    JEL: E24 E32 C51 C52
    Date: 2021
  11. By: Alica Ida Bonk; Laure Simon
    Abstract: Men, especially those that are young and less educated, typically bear the brunt of recessions because of the stronger cyclicality of their employment and wages relative to women's. We study the extent to which fiscal policy may offset or worsen these asymmetric effects across gender. Using micro-level data for the U.S. from the Current Population Survey, we find that the effects of fiscal policy shocks on labor market outcomes depend on the type of public expenditure. Women benefit most from increases in the government wage bill, while men are the main beneficiaries of higher investment spending. Our analysis further reveals that the fiscal component most efficient at closing gender gaps is least suitable for offsetting inequitable business cycle effects across other socioeconomic dimensions
    Keywords: Business fluctuations and cycles; Fiscal policy; Labour markets
    JEL: E32 E62 J21 J16
    Date: 2021–09
  12. By: Tomas Adam; Ondrej Michalek; Ales Michl; Eva Slezakova
    Abstract: We introduce the Rushin, a weekly index of Czech economic activity. The index is based on alternative, high-frequency indicators and standard, low-frequency macroeconomic data. Various information from the economy is aggregated to extract a signal about real-time dynamics in the real economy. Although the information on the GDP growth rate is not used directly in the construction of the index, the indicator fits GDP data well, particularly in turbulent times such as the global financial crisis and the COVID-19 crisis. Therefore, it can be used for the real-time monitoring of economic activity, nowcasting and identifying turning points in the economy. The name of the index alludes to the name of Czechoslovakia's first finance minister Alois Rasin and the timeliness (rush-) of the index (-in).
    Keywords: COVID-19 crisis, economic activity index, high-frequency indicators, nowcasting
    JEL: C32 C43 E01 E32
    Date: 2021–09
  13. By: Zuzana Molnarova
    Abstract: : Aggregate labor productivity used to be strongly procyclical in the United States, but the procyclicality has largely disappeared since the mid-1980s. This paper explores the industry-level evidence in order to discriminate between existing explanations of the vanishing procyclicality of the labor productivity. I document the change in the cyclical properties of productivity in the U.S. using industry-level data and focus on a particularly puzzling feature, namely that the correlations of the industry productivity with industry output and labor input remained on average much more stable before and after the mid-1980s compared to the aggregate correlations. In other words, there is little evidence for the vanishing cyclicality of labor productivity at the industry level. I construct a simple industry-level RBC model that nests two leading explanations of the vanishing cyclicality of productivity that have been proposed in the literature. I show that the two explanations have qualitatively di?erent predictions for the cyclical properties of industry-level variables. The mechanism based on a structural change in the composition of aggregate shocks is able to replicate the stability of industry-level moments across time. In contrast, the mechanism based on increased labor market ?exibility is less successful in matching the industry-level evidence.
    JEL: E32 E24 E37
    Date: 2020–01
  14. By: Maih, Junior; Mazelis, Falk; Motto, Roberto; Ristiniemi, Annukka
    Abstract: We analyse the implications of asymmetric monetary policy rules by estimating Markov-switching DSGE models for the euro area (EA) and the US. The estimations show that until mid-2014 the ECB’s response to inflation was more forceful when inflation was above 2% than below 2%. Since then, the ECB’s policy can be characterised as symmetric, and we quantify the macroeconomic implications of this policy change. We uncover asymmetries also in the Fed’s policy, which has responded more strongly in times of crisis. We compute an optimal simple rule for the EA and the US in an environment with the effective lower bound and a low neutral real rate, and find that it prescribes a stronger response to inflation and the output gap when inflation is below target compared to when it is above target. We document its stabilisation properties had this optimal rule been implemented over the last two decades. JEL Classification: E52, E58, E31, E32
    Keywords: Bayesian Estimation, effective lower bound, Inflation targeting, Markov-switching DSGE, optimal monetary policy
    Date: 2021–09
  15. By: Antonin Aviat; Frédérique Bec; Claude Diebolt; Catherine Doz; Denis Ferrand; Laurent Ferrara; Eric Heyer; Valérie Mignon; Pierre-Alain Pionnier
    Abstract: This paper proposes a reference quarterly chronology for periods of expansion and recession in France since 1970, carried out by the Dating Committee of the French Economic Association (AFSE). The methodology used is based on two pillars: (i) econometric estimations from various key data to identify candidate periods, and (ii) a narrative approach that describes the economic background that prevailed at that time to finalize the dating chronology. Starting from 1970, the Committee has identified four economic recession periods: the two oil shocks 1974-75 and 1980, the investment cycle of 1992-93, and the Great Recession 2008-09 spawned by the Global Financial Crisis. The peak before the Covid-19 recession has been identified in the last quarter of 2019.
    Keywords: Business cycles, French economy, Dating, Narrative approach, Econometric modeling.
    JEL: E32 E37 C24 N14
    Date: 2021
  16. By: Mario Alloza (Banco de España); Javier Andrés (Universidad de Valencia); Pablo Burriel (Banco de España); Iván Kataryniuk (Banco de España); Javier J. Pérez (Banco de España); Juan Luis Vega (Banco de España)
    Abstract: The main proposals for the reform of the European Union’s fiscal policy framework affect three blocks of issues: (i) simplifying the rules to make them more transparent and flexible; (ii) incorporating new supranational risk-sharing instruments into the Economic and Monetary Union, in particular to facilitate the absorption of severe shocks; and (iii) the fiscal aspects necessarily being accompanied by reforms at the national (structural reforms) and supranational (e.g. pressing forward with the capital markets union) levels. Irrespective of their political feasibility, these proposals do not easily fit the current macroeconomic environment, which is far removed from that of the 1990s: structural trends, such as digitalisation, globalisation, the climate transition and population ageing, affecting the natural rates of interest and potential growth are emerging or taking hold. Also, after the Great Moderation, we have entered a period of severe global shocks. In this paper we argue that this setting calls for a paradigm shift in how the fiscal policy framework is designed, as opposed to the incremental reform approach of recent decades. This should include improved governance of fiscal rules, which should be simpler, more functional and more credible than the current ones, but it should also go a step further and incorpórate supranational risk-sharing components enabling the smooth operation of the monetary and fiscal policy mix, from a wider euro area perspective. We provide quantitative elements to illustrate several challenges with a bearing on any reform process in the current setting: (i) medium-term debt anchors should be adapted to the medium and long-term interest rate and potential growth expectations; (ii) economies may remain subject to very severe shocks, meaning that fiscal space must be recovered in the medium term; and (iii) realistic mechanisms for absorbing existing fiscal imbalances must be implemented.
    Keywords: fiscal policy, fiscal governance, fiscal rules, public debt, public deficit, interest rates
    JEL: E62 E63 H60 H61 H62 H63
    Date: 2021–08
  17. By: Michal Franta; Jan Libich
    Abstract: We put forward a novel macro-financial empirical modelling framework that can examine the tails of distributions of macroeconomic variables and the implied risks. It does so without quantile regression, also allowing for non-normal distributions. Besides methodological innovations, the framework offers a number of relevant insights into the effects of monetary and macroprudential policy on downside macroeconomic risk. This is both from the short-run perspective and from the long-run perspective, which has been remained unexamined in the existing Macro-at-Risk literature. In particular, we estimate the conditional and unconditional US output growth distribution and investigate the evolution of its first four moments. The short-run analysis finds that monetary policy and financial shocks render the conditional output growth distribution asymmetric, and affect downside risk over and above their impact on the conditional mean that policymakers routinely focus on. The long-run analysis indicates, among other things, that US output growth left-tail risk showed a general downward trend in the two decades preceding the Global Financial Crisis, but has started rising in recent years. Our examination strongly points to post-2008 unconventional monetary policies (quantitative easing) as a potential source of elevated long-run downside tail risk.
    Keywords: Downside tail risk, growth-at-risk, macroeconomic policy, macro-financial modeling, non-normal distribution, threshold VAR, US output growth
    JEL: C53 C54 E32
    Date: 2021–09
  18. By: Josué Diwambuena; Raquel Fonseca; Stefan Schubert
    Abstract: This paper investigates how Italian labour market institutions influence business cycle fluctuations. We apply a DSGE model that features Italian labour market rigidities and we estimate the latter on Italian data using Bayesian techniques to assess the effects of demand, supply, and labour market shocks on the macroeconomy, and to measure their significance for economic fluctuations. Our results show: First, technology, time preference and wage bargaining shocks are key drivers of economic fluctuations across horizons. Second, matching efficiency and wage bargaining shocks are significant sources of unemployment and vacancies fluctuations but their role is limited for output fluctuations. Third, labour market relaxation policies have only marginally contributed to the reduction in unemployment. Last, accounting for wage rigidities influences labour market dynamics and helps the model to fit data well. We, therefore, urge policymakers to support additional changes in labour market institutions. Cet article étudie comment les institutions du marché du travail italien influencent les fluctuations du cycle économique. Nous appliquons un modèle DSGE qui présente les rigidités du marché du travail italien et nous estimons ce dernier sur des données italiennes en utilisant des techniques bayésiennes afin d'évaluer les effets des chocs de demande, d'offre et du marché du travail sur la macroéconomie, et de mesurer leur importance pour les fluctuations économiques. Nos résultats montrent : Premièrement, les chocs liés à la technologie, à la préférence temporelle et à la négociation salariale sont les principaux moteurs des fluctuations économiques à travers les horizons. Deuxièmement, les chocs d'efficacité d'appariement et de négociation salariale sont des sources significatives de fluctuations du chômage et des postes vacants, mais leur rôle est limité pour les fluctuations de la production. Troisièmement, les politiques d'assouplissement du marché du travail n'ont que marginalement contribué à la réduction du chômage. Enfin, la prise en compte des rigidités salariales influence la dynamique du marché du travail et permet au modèle de bien s'ajuster aux données. Nous exhortons donc les décideurs politiques à soutenir des changements supplémentaires dans les institutions du marché du travail.
    Keywords: DSGE,Labour market frictions,Bayesian estimation,Italy, DSGE,frictions sur le marché du travail,estimation bayésienne,Italie
    JEL: E24 E32 C51 C52
    Date: 2021–09–09
  19. By: Tatjana Dahlhaus; Angelika Welte
    Abstract: We investigate how the COVID-19 pandemic has changed consumers’ payments habits in Canada. We rely on high-frequency data on cash withdrawals and debit card transactions from Interac Corp. and Canada’s Automated Clearing Settlement System. We construct daily measures of payment habits reflecting cash usage, average transaction values, and the share of transactions in which the customer or card holder and the acquiring machine (ATM or POS) are of the same bank. Using simple dummy regressions and local projection models, we assess how these indicators of payment habits have changed with the evolution of the COVID-19 pandemic. We find evidence that during the pandemic consumers adjusted their behaviour by avoiding frequent trips for cash withdrawals and point-of-sale purchases and making fewer transactions for higher amounts. They also made smaller-value cash withdrawals compared with the value of card payments, which could reflect a reduced use of cash for point-of-sale transactions. Consumers also made relatively more withdrawals from ATMs that are linked to their financial institution (on-us transactions). Finally, we highlight that estimates of economic activity based on card data alone could be biased if shifts in payment habits are not taken into account. We estimate that debit card payments might have overstated consumer expenditure growth by up to 7 percentage points over the course of the pandemic.
    Keywords: Coronavirus disease (COVID-19); Domestic demand and components; Payment clearing and settlement systems; Recent economic and financial developments
    JEL: C22 C55 D12 E21 E42 E52
    Date: 2021–09
  20. By: Irma Alonso (Banco de España); Pedro Serrano (Universidad Carlos III de Madrid); Antoni Vaello-Sebastià (Universitat des Illes Balears)
    Abstract: This article analyzes the impact of the unconventional monetary policies (UMPs) of four major central banks (the Fed, ECB, BoE and BOJ) on the probability of future market crashes. We exploit the heterogeneity of different UMP actions to disentangle their influence on reducing the ex ante perception of extreme events (tail risks) using the information contained in risk-neutral densities from the most liquid stock index options. The empirical findings show that the announcement of UMPs reduces the risk-neutral probability of extreme events across various horizons and thresholds, supporting the hypothesis of the risk-taking channel. Interestingly, foreign UMP actions also prove to be significant variables affecting domestic tail risks, mainly at longer horizons. These results reveal a cross-border effect of foreign UMPs on domestic tail risks. Finally, the dynamics of the UMPs are captured by a structural model that confirms a transitory impact of UMPs on market tail risk perceptions.
    Keywords: unconventional monetary policy, risk-neutral density, tail risk, event study, SVAR
    JEL: E44 E58 G01 G10 G14
    Date: 2021–08
  21. By: Christiane Baumeister (University of Notre Dame, University of Pretoria, NBER and CEPR); Danilo Leiva-León (Banco de España); Eric Sims (University of Notre Dame and NBER)
    Abstract: In this paper, we develop a novel dataset of weekly economic conditions indices for the 50 U.S. states going back to 1987 based on mixed-frequency dynamic factor models with weekly, monthly, and quarterly variables that cover multiple dimensions of state economies. We show that there is considerable heterogeneity in the length, depth, and timing of business cycles across individual states. We assess the role of states in national recessions and propose an aggregate indicator that allows us to gauge the overall weakness of the U.S. economy. We also illustrate the usefulness of these state-level indices for quantifying the main forces contributing to the economic collapse caused by the COVID-19 pandemic and for evaluating the effectiveness of federal economic policies like the Paycheck Protection Program.
    Keywords: local economic conditions, government policies, weekly indicators, state economies, cross-state heterogeneity, mixed-frequency dynamic factor model, economic weakness index, Markov-switching, recession probabilities
    JEL: C32 C55 E32 E66
    Date: 2021–08
  22. By: Barr, Nicholas
    Abstract: This paper explores the nature of reciprocity between workers and pensioners, starting from the observation that what pensioners consume has mostly to be produced by younger workers, and therefore reciprocity in some form is inherent. The opening section argues that a worker can try to arrange consumption in retirement by (a) storing current production or (b) building claims on future production. However, storing current production (the squirrels model) does not work well, so that the main vehicle is building claims on future production. There are two approaches to doing so – through promises (which lie at the core of Pay-As-You-Go (PAYG) plans), or by accumulating financial assets which can be exchanged for goods and services (the basis of funded plans). The second part of the paper establishes that a central element in assessing pension arrangements is the extent to which investment is in productive assets. The third part considers the durability of different pension regimes. The paper’s central conclusions are (a) that reciprocity is inherent in pension plans, (b) that the specifics of pension design are in many ways secondary, and (c) that what really matters are economic growth (increasing what is available to share between workers and pensioners) and good government (which will manage PAYG pensions responsibly and/or sustain the economic stability and regulatory capacity that underpin funded pensions).
    Keywords: pensions; funding; pay-as-you-go; reciprocity; social security; saving; investment
    JEL: D63 E21 E22 E24 J14 J18
    Date: 2021–09–06
  23. By: Daniel H. Cooper; Vaishali Garga; Maria Jose Luengo-Prado
    Abstract: We study the mortgage cash flow channel of monetary policy transmission under fixed-rate mortgage (FRM) versus adjustable-rate mortgage (ARM) regimes by comparing the United States with primarily long-term FRMs and Spain with primarily ARMs that automatically reset annually. We find a robust transmission of mortgage rate changes to spending in both countries but surprisingly a larger effect in the United States—and provide two explanations for this finding. First, there are channels of transmission other than the mortgage cash flow effect since other interest rates co-move with the mortgage rate. Second, while mortgage resets in Spain are automatic and typically small, mortgagors in the United States must actively refinance to lock in lower rates. As a result, the mortgage cash flow effect in Spain is homogeneous across mortgagors and symmetric for rate increases and decreases, whereas in the United States the effect is largest when rates decline, especially for households identified as likely refinancers.
    Keywords: consumption; intertemporal household choice; monetary policy transmission; adjustable-rate mortgages; fixed-rate mortgages
    JEL: D15 E21 E52
    Date: 2021–08–01
  24. By: Silvia Albrizio (Banco de España); Iván Kataryniuk (Banco de España); Luis Molina (Banco de España); Jan Schäfer (CEMFI)
    Abstract: The use of central bank liquidity lines has gained momentum since the global financial crisis in order to provide liquidity in foreign exchange markets, while at the same time preventing threats to financial stability and negative spillbacks. US dollar swap lines are well studied, but much less is known about the effects of liquidity lines in euros. We use a difference-in-differences strategy to show that the announcement of ECB euro liquidity lines has a direct positive signalling effect since the premium paid by foreign agents to borrow euros in FX markets decreases up to 76 basis points relative to currencies not covered by these facilities. Additionally, the paper provides suggestive evidence that these facilities generate positive spillbacks to the euro area since domestic bank equity prices increase by 6.7% in euro area countries highly exposed via banking linkages to countries whose currencies are targeted by liquidity lines.
    Keywords: liquidity facilities, central banks swap and repo lines, spillbacks
    JEL: E44 E58 F33 G15
    Date: 2021–08
  25. By: Adrián Rial (Universidad Complutense de Madrid)
    Abstract: This study examines the impact of the expansion of the service sector on labour productivity growth in eight developed economies, reaching back to the late 1970s. To that end, I develop a shift-share decomposition formula that satisfactorily integrates both Kaldorian and Baumolian effects. Firstly, my decomposition does not assume that productivity growth at the industry level is exogenous but rather incorporates the Verdoorn coefficients that I previously estimated using system GMM. Secondly, consistent with the Baumolian framework, my decomposition includes the impact that arises from the cumulative changes that take place in terms of the nominal value added and employment shares. My results show that, on average, tertiarisation only slows down productivity growth in three economies, where labour shifts away from industries with increasing returns. However, the cumulative reallocation of employment and nominal output leads to a gradual decrease in the productivity growth rate in seven of the eight economies.
    Keywords: Structural change; Kaldor–Verdoorn Law; Baumol’s disease; Labour productivity growth; Shift-share analysis
    JEL: E24 L16 O47
    Date: 2021–05
  26. By: División de Análisis Macroeconómico DAMAC
    Abstract: Este documento de la División de Análisis Macroeconómico continúa analizando la respuesta de la economía colombiana a las condiciones de convivencia con la pandemia COVID-19 y a los choques presentados en el frente social con el Paro Nacional durante el segundo trimestre de 2021. Pese a que el proceso de recuperación enfrentó retos relevantes, la apertura establecida en las principales ciudades en junio mostró que la economía tiene una alta capacidad de adaptación y al final del segundo semestre volvió a los niveles de operación más fuertes desde la llegada de la pandemia. Los principales retos en el mediano plazo están en el mejoramiento de las condiciones de bienestar social, pues si bien la producción está reaccionando, los rezagos en el mercado laboral son mayores. *** This document from the Macroeconomic Analysis Division continues analyzing the response of the Colombian economy to the conditions of coexistence with the COVID-19 pandemic and to the shocks presented on the social front with the National Strike during the second quarter of 2021. Although the recovery process faced relevant challenges, the opening established in the main cities in June showed that the economy has a high capacity to adapt and at the end of the second semester it returned to the strongest operating levels since the arrival of the pandemic. The main challenges in the medium term are in the improvement of social welfare conditions, because although production is reacting, the lags in the labor market are greater.
    Keywords: análisis macroeconómico, COVID-19, impacto, cuarentena, aislamiento, crisis, Colombia, protestas
    JEL: E00 E01 E20 E23 E60
    Date: 2021–09–14
  27. By: Esra Nur Ugurlu (Department of Economics, University of Massachusetts Amherst)
    Abstract: This paper analyzes the structural change implications of consumer credit expansions in a dual-sector open economy growth model. Policy-induced increases in banks’ willingness and ability to lend result in new consumer lending, boosting consumption demand and average wages in the nontradable sector. Under the assumptions of fixed relative wages and mark-up pricing, wage pressures translate into inflationary pressures. The central bank, acting under the sole target of controlling inflation, raises the interest rate to contain inflationary pressures. This intervention causes a real exchange rate appreciation, followed by a loss of international competitiveness in the tradable sector. This way, the model illustrates that consumer credit expansions can trigger premature deindustrialization, shifting sectoral structure in favor of the nontradable sector. The formal model is inspired by the Turkish economy that experienced a notable expansion of consumer credit between 2002-2013.
    Keywords: Consumer credit, structural change, economic growth, inflation targeting, real exchange rate
    JEL: E58 F43 L16 O11 O41
    Date: 2021
  28. By: Kengo Nutahara
    Abstract: The main objective of this paper is to investigate monetary policy response to asset price in a sticky price economy where the trend inflation rate is non-zero. We find that monetary policy response to asset price is helpful for achieving equilibrium determinacy if the trend inflation is negative (i.e., deflation) and sufficiently low. If this is not the case, monetary policy response to asset price becomes a source of equilibrium indeterminacy. We also find that monetary policy response to asset price can be helpful for equilibrium determinacy even if the trend inflation is positive in the case where the nominal wage is also sticky, and the parameter values are consistent with recent micro evidence.
    Date: 2021–06
  29. By: Alberto Cavallo; Oleksiy Kryvtsov
    Abstract: We use a detailed micro dataset on product availability to construct a direct high-frequency measure of consumer product shortages during the 2020–2021 pandemic. We document a widespread multi-fold rise in shortages in nearly all sectors early in the pandemic. Over time, the composition of shortages evolved from many temporary stockouts to mostly discontinued products, concentrated in fewer sectors. We show that product shortages have significant but transitory inflationary effects, and that these effects can be associated with elevated cost of replenishing inventories.
    JEL: D22 E31 E37
    Date: 2021–09
  30. By: Chadha, Jagjit S.; Corrado, Luisa; Meaning, Jack; Schuler, Tobias
    Abstract: In response to the coronavirus (Covid-19) pandemic, there has been a complementary approach to monetary and fiscal policy in the United States with the Federal Reserve System purchasing extraordinary quantities of securities and the government running a deficit of some 17% of projected GDP. The Federal Reserve pushed the discount rate close to zero and stabilised financial markets with emergency liquidity provided through a new open-ended long-term asset purchase programme. To capture the interventions, we develop a model in which the central bank uses reserves to buy much of the huge issuance of government bonds and this offsets the impact of shutdowns and lockdowns in the real economy. We show that these actions reduced lending costs and amplified the impact of supportive fiscal policies. We then run a counterfactual analysis which suggests that if the Federal Reserve had not intervened to such a degree, the economy may have experienced a significantly deeper contraction as a result from the Covid-19 pandemic. JEL Classification: E31, E40, E51
    Keywords: Covid-19, monetary-fiscal interaction, non-conventional monetary policy, quantitative easing
    Date: 2021–09
  31. By: Ibrahim A. Adekunle (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Toluwani G. Kalejaiye (Ijagun, Ogun State, Nigeria); Ayomide O. Ogunade (Olabisi Onabanjo University, Ogun State, Nigeria); Sina J. Ogede (Olabisi Onabanjo University, Ogun State, Nigeria); Caleb O. Soyemi (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)
    Abstract: The social movement is inspiring meaningful conversation about the discriminatory practices that Africa women have long faced in every aspect of their lives. However, despite considerable improvement in the gender balance discourse, the worst cases of gender imbalances are still recorded in sub-Sahara Africa (SSA). Macroeconomic volatility, both as a source and a reflection of underdevelopment, is a fundamental concern for women in SSA. This paper leans empirical credence to the role of macroeconomic policies (fiscal and monetary policies indices) for gender equality in SSA from 1993 through 2017. We gathered panel data on the indices of macroeconomic policies and gender inequality in all 48 SSA countries. We employed the dynamic panel system generalised method of moments estimation procedure (dynamic system GMM) to establish a baseline level relationship between the variables of interest. We adjusted for heterogeneity assumptions inherent in ordinary panel estimation and found a basis for the strict orthogonal relationship among the variables. Our results suggest fluctuations in macroeconomic policies as a lead factor for gender equality in SSA countries. Efforts should be tailored towards balanced macroeconomic policies that can guarantee sustainable gender equality approaches to collective prosperity.
    Keywords: Macroeconomic Policy, Gender Equality, Dynamic GMM, Sub-Sahara Africa
    JEL: C33 E61 I18 J16
    Date: 2020–01
  32. By: Simplice A. Asongu (Yaounde, Cameroon); Yann Nounamo (University of Douala, Cameroon); Henri Njangang (University of Dschang , Cameroon); Sosson Tadadjeu (University of Dschang , Cameroon)
    Abstract: The study examines how financial stability modulates the effect of inclusive intermediary education on female employment in the industry for the period 2008-2018 in Sub-Saharan Africa. The empirical evidence is based on Tobit, Ordinary Least Squares (OLS) and Quantile regressions. There are positive interactive or conditional effects between inclusive intermediary education and financial stability in the Tobit, OLS and bottom quantiles estimations. A net positive (negative) effect is apparent in the 10 th quantitle (median) of female employment in the industry distribution. Implications are discussed.
    Keywords: inclusive education; financial sustainability, gender economic inclusion
    JEL: E23 F21 F30 L96 O55
    Date: 2021–01
  33. By: Greenwood, John (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The purpose of this paper is to clarify the relation between money and interest rates. In section 1, the author examines the empirical validity of Keynes’s claims for his liquidity preference theory by looking at the relation between changes in interest rates and changes in the quantity of money. In section 2, the author considers Irving Fisher’s findings. Fisher, whose studies had mostly preceded Keynes, had shown that over any longer-term horizon the relation between money and interest rates was exactly the reverse of Keynes’ hypothesis of short-term liquidity preference. A reconciliation is proposed that treats Keynes’ theory as a short-term, liquidity effect, and Fisher’s results, which incorporate the effect of inflation or inflation expectations, as the longer-term determinant of interest rates. In section 3, the author applies the resulting combined theory of the relation between money and interest rates to five case studies in recent decades: two from Japan, and one each from the Eurozone, the U.K. and the U.S. The conclusion is that interest rates are a highly misleading guide to the stance of monetary policy; it is invariably better to rely on the growth rate of a broad definition of money when assessing the stance of monetary policy
    Date: 2021–09
  34. By: Daniel Alonso (Banco de España); Alejandro Buesa (Banco de España); Carlos Moreno (Banco de España); Susana Párraga (Banco de España); Francesca Viani (Banco de España)
    Abstract: The persistence of the health crisis made it necessary for the main advanced economies to approve fresh fiscal measures or extend the terms of those that expired. This paper summarises the main actions taken since autumn 2020 in the main euro area economies (Germany, France, Italy and Spain), the United States and the United Kingdom, supplementing a previous paper (Cuadro-Sáez et al. (2020)) that focused on the measures approved in the first half of 2020. Also, the actions taken within the State aid temporary framework, adopted by the European Commission to provide direct support to the most affected firms and to limit trade and competition distortions in the internal market, are detailed. This set of actions has helped to mitigate the risks associated with an early withdrawal of fiscal stimulus. Notable among the new measures adopted is the additional support for firms in European countries, the direct assistance to households in the United States and the new employment support provisions in the United Kingdom.
    Keywords: health crisis, fiscal policy, State aid, grants, public loan guarantees, short-time work schemes
    JEL: E62 E65 H00 H81 J08
    Date: 2021–08
  35. By: YOSHIDA Yushi; Weiyang ZHAI
    Abstract: We investigate the dynamics of Japan's income and trade balance between 1996:Q1 and 2019:Q4 via a structural VAR model. The two most important constituents of the current account (trade balance and income balance) and seven other macroeconomic variables are entered in our VAR model. We implement a shadow rate for the measure of monetary policy under the unconventional monetary policy regime, including a zero lower bound interest rate. By using a standard SVAR model from the literature, we find that world shocks dominate and rule the dynamics of Japan's current account. Through additional short-run zero restrictions, we also find that exogenous exchange rate shocks affect the current account.
    Date: 2021–09
  36. By: Gyozo Gyongyosi (Leibniz Institute for Financial Research SAFE; Kiel Institute for the World Economy); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)); Ibolya Schindele (BI Norwegian Business School; Central Bank of Hungary)
    Abstract: We study how monetary conditions change the supply by banks of mortgage credit to households. We exploit the widespread presence of foreign currency mortgages in Hungary and study this country`s comprehensive credit registry. Changes in monetary conditions not only affect the supply of credit in volume, but also in its currency and risk composition. Hence, we establish a “bank‐lending‐to‐households” channel of monetary policy that is heterogeneous. While the availability of foreign currency mortgages weakens the domestic bank‐lending channel overall, weakly capitalized domestic banks relying on swap transactions for their foreign currency lending are more sensitive to changes in monetary conditions.
    Keywords: Bank balance‐sheet channel, household lending, monetary policy, foreign currency lending.
    JEL: E51 F3 G21
    Date: 2021–09
  37. By: Mario Alloza (Banco de España); Javier Andrés (Universidad de Valencia); Pablo Burriel (Banco de España); Iván Kataryniuk (Banco de España); Javier J. Pérez (Banco de España); Juan Luis Vega (Banco de España)
    Abstract: Las principales propuestas de reforma del marco de política fiscal de la Unión Europea inciden en tres bloques de cuestiones: i) simplificación de las reglas, para dotarlas de mayor transparencia y flexibilidad; ii) incorporación de nuevos instrumentos supranacionales de compartición de riesgos en la Unión Económica y Monetaria, en particular para facilitar la absorción de perturbaciones de elevada intensidad, y iii) los elementos fiscales deben venir acompañados de reformas nacionales (reformas estructurales) y supranacionales (por ejemplo, avanzar en la unión del mercado de capitales). El encaje de estas propuestas en el entorno macroeconómico actual resulta complejo, independientemente del cálculo de su factibilidad política. Este entorno es muy diferente al vigente en los años noventa del siglo pasado: se están evidenciando o consolidando tendencias estructurales como la digitalización, la globalización, la transición climática o el envejecimiento poblacional, que afectan a los tipos de interés naturales y al crecimiento potencial. Asimismo, tras la era de la «gran moderación», se ha pasado a un período de perturbaciones globales de elevada intensidad. En el presente documento argumentamos que este contexto reclama un cambio de paradigma en el diseño del marco de política fiscal, frente a la aproximación de reforma incremental que se ha seguido en las últimas décadas. Este tendría que incorporar una gobernanza mejorada de las reglas fiscales, que deberían ser más simples, operativas y creíbles que las actuales, pero ir más allá, e incorporar elementos supranacionales de compartición de riesgos que permitan un funcionamiento adecuado del policy-mix entre las políticas monetaria y fiscal, con una visión conjunta del área del euro. Proporcionamos elementos cuantitativos para ilustrar varios retos que condicionan, en la situación actual, cualquier proceso de reforma: i) las anclas de deuda de medio plazo deben ajustarse a las expectativas de medio y largo plazo acerca de los tipos de interés y el crecimiento potencial; ii) las economías pueden seguir viéndose sujetas a perturbaciones muy intensas, lo que conlleva la necesidad de recuperar los márgenes de maniobra de la política fiscal en el medio plazo, y iii) resulta necesario desarrollar mecanismos realistas de absorción de los desequilibrios fiscales existentes.
    Keywords: política fiscal, gobernanza fiscal, reglas fiscales, deuda pública, déficit fiscal, tipos de interés
    JEL: E62 E63 H60 H61 H62 H63
    Date: 2021–08
  38. By: Beau Soederhuizen (CPB Netherlands Bureau for Economic Policy Analysis); Bert Kramer (CPB Netherlands Bureau for Economic Policy Analysis); Harro van Heuvelen (CPB Netherlands Bureau for Economic Policy Analysis); Rob Luginbuhl (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Capital buffers help banks to absorb financial shocks. This reduces the risk of a banking crisis. However, on the other hand capital requirements for banks can also lead to social costs, as rising financing costs can lead to higher interest rates for customers. In this research we make an exploratory analysis of the costs and benefits of capital buffers for groups of European countries. In this study, we estimate the optimal level of capital for banks in the euro area. As far as we know, we are the first to investigate this for the euro area. The optimal level results from a trade-off between the social costs and benefits of capital requirements. Depending on technical assumptions, we find an optimal capital buffer between 15 and 30 percent. Despite this considerable spread, the estimated optimum is in all cases higher than the current minimum requirements of Basel III. We also find significant heterogeneity in the optimum between euro area Member States. For Member States with a more stable economy and a banking sector that can easily attract funding we find lower optimal capital ratios.
    JEL: C33 C54 E44 G15 G21
    Date: 2021–09
  39. By: Codrina Rada, Marcio Santetti, Ansel Schiavone, Rudiger von Arnim
    Abstract: The stylized facts of neoliberalism include a decline in steady state rate of growth and labor share. Recent classical-Keynesian literature sees the latter as a cause for the former. A crucial element is the distinction between short and long run. The business cycle is profit-led and profit-squeeze, but the steady state features a wage led natural rate of growth. This paper presents simple macroeconomic models in this vein. Our starting point is to assume an adverse shock to real wage bargaining, which across all models depresses the labor share. We consider (i) a two-dimensional model in income-capital ratio and labor share, a (ii) three-dimensional model that adds the employment rate as state variable, and a (iii) four-dimensional model that furthermore endogenizes the savings propensity. Key results are that model (i) predicts an increase (decrease) in the warranted (natural) rate of growth, and thus does not generate balanced growth; (ii) resolves this problem and predicts stagnation in steady state, but implies a long run paradox of thrift; and (iii) allows for contextualization vis-a-vis ` the utilization controversy.
    Keywords: Goodwin theory; labor suppression; secular stagnation JEL Classification: E12, E25, E32, J50
    Date: 2021
  40. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: The study examines whether adverse working conditions for immigrants in Greece bear an association with deteriorated physical health and increased levels of depression during 2018 and 2019. Findings indicate that workers with no written contract of employment, receiving hourly wages lower than the national hourly minimum wages, and experiencing insults and/or threats in their present job experience worse physical health and increased levels of depression. The study found that the inexistence of workplace contracts, underpayment, and verbal abuse in the workplace may coexist. An increased risk of underpayment and verbal abuse reveals itself when workers do not have a contract of employment and vice versa. Immigrant workers without a job contract might experience a high degree of workplace precariousness and exclusion from health benefits and insurance. Immigrant workers receiving a wage lower than the corresponding minimum potentially do not secure a living income, resulting in unmet needs and low investments in health. Workplace abuse might correspond with vulnerability related to humiliating treatment. These conditions can negatively impact workers' physical health and foster depression. Policies should promote written employment contracts and ensure a mechanism for workers to register violations of fair practices.
    Keywords: adverse working conditions, physical health, depression, immigrants, refugees, minimum wages, written contracts of employment, threats in job, workplace precariousness
    JEL: J81 O15 E24 I14
    Date: 2021–08
  41. By: Peter Skott (Department of Economics, University of Massachusetts Amherst)
    Abstract: Phillips curves and natural rates of unemployment provide a poor foundation for analyzing inflation in developing economies. Structuralist alternatives have focused on distributional conflict and cross-sectoral interactions, but if the distributional claims are exogenous, the theory has formal similarities with mainstream analysis, generating a natural rate of underemployment. This paper outlines a modified structuralist model in which historically determined distributional claims eliminate this natural rate of underemployment. Economic development and structural transformation are not blocked by immutable distributional claims, but shocks to relative incomes can produce explosive inflation.
    Keywords: Phillips curve, underemployment, distributional conáict, structuralist model
    JEL: E31 O23
    Date: 2021
  42. By: Arlashkin Igor (Gaidar Institute for Economic Policy); Barbashova Natalia (Gaidar Institute for Economic Policy); Belev Sergey (Gaidar Institute for Economic Policy); Leonov Elisei (Gaidar Institute for Economic Policy); Deryugin Alexander (Gaidar Institute for Economic Policy); Sokolov Ilya (Gaidar Institute for Economic Policy); Tishchenko Tatiana (Gaidar Institute for Economic Policy)
    Abstract: The budget system revenues of the Russian Federation in 2020 shrank by Rb3.4 trillion in real terms compared to the previous year, or by 8.6% at constant prices (Table 6) on the back of reduced oil and gas revenues. For this reason, the proportion of oil and gas revenues in the total budget revenues of the enlarged government declined in 2020 to 13.1% against 20.9% in 2019. For non-oil and gas revenues, there is a slight increase of Rb118.0 bn or by 0.4% in constant prices, which was achieved during the crisis on the back of the transfer to the federal budget of the Bank of Russia profit obtained from the sale of equity stake in Sberbank (reflected under other income). In the total revenue side of the expanded government’s budget, the federal budget revenues decreased to 49.4% in 2020, compared to 51.1% in 2019.
    Keywords: Russian economy, intergovernmental relations, fiscal policy, budget system, revenues, expenditures, Bank of Russia
    JEL: E62 H5 H61 H62 H68 H7 H72 H77
    Date: 2021
  43. By: Joshua Ballance; Melanie Qing; J. Christina Wang
    Abstract: This policy brief uses Dun & Bradstreet (D&B) data to assess whether the Main Street Lending Program (MSLP) borrowers were in worse financial health than their peers before COVID-19 hit the economy hard in March 2020 or suffered worse deterioration afterward. The findings can help us better understand why these firms sought to obtain MSLP loans. We find that MSLP borrowers tend to be larger than their peer firms (that is, firms in the same industry and state). Within the same size group, MSLP borrowers are on average younger than their peers. Borrowers tended to have a slightly higher predicted risk of failure than their peers in March 2020. Their failure risk grew somewhat more than their peers' risk from March to the month when their MSLP loan request was submitted. These firms' relative performance in 2020 appears to be little correlated with their relative performance over the corresponding months in 2019. MSLP borrowers had worse actual delinquency records in March 2020, as well as more deterioration than their peers from March to the month of the MSLP loan submission. For the subset of borrowers with business spending data available from D&B, spending was on average higher in March 2020 than their peer companies' spending, and it fell somewhat less from March to the MSLP loan submission month. Taken together, our findings suggest that these firms borrowed from the MSLP because 1) their greater growth or survival potential, and hence relationship value, made lenders willing to lend to them, and 2) their higher credit risk made the MSLP attractive, as it enabled the borrowers to pay a lower price or obtain more credit than they would have otherwise.
    Keywords: Main Street Lending Program; Federal Reserve; COVID-19; Dun & Bradstreet firm-level data
    JEL: D22 E58 E63 E65
    Date: 2021–09–08
  44. By: Roberto Blanco (Banco de España); Sergio Mayordomo (Banco de España); Álvaro Menéndez (Banco de España); Maristela Mulino (Banco de España)
    Abstract: En este documento se analiza el impacto de la crisis del COVID-19 sobre la vulnerabilidad financiera del sector corporativo español. Las simulaciones realizadas muestran que la crisis habría elevado significativamente las necesidades de liquidez de las empresas en 2020, s bien las medidas adoptadas por las autoridades nacionales e internacionales facilitaron el acceso al crédito en condiciones favorables, lo que mitigó sustancialmente los riesgos de liquidez a corto plazo. Sin embargo, la fuerte caída de los niveles de rentabilidad, unida al crecimiento del endeudamiento, se habría traducido en un aumento notorio de la proporción de compañías vulnerables (es decir, aquellas con patrimonio neto negativo o con niveles de endeudamiento elevados), que habría sido más acusado dentro de las pymes y en los sectores más afectados por la pandemia. Las proyecciones para el período 2021-2023 anticipan una progresiva disminución de estos porcentajes, en línea con la reactivación prevista de la actividad. Los resultados también apuntan a que, como consecuencia de la crisis, se produciría un incremento de entre 2 puntos porcentuales (pp) y 3 pp de la proporción de empresas con riesgo de ser inviables por tener pérdidas continuadas hasta 2023, y de entre 3 pp y 4,7 pp en la de aquellas que seguirían siendo viables pero que tendrían dificultades para hacer frente a sus deudas con sus ingresos futuros esperados (empresas sobreendeudadas). Asimismo, las simulaciones realizadas muestran que la deuda no sostenible de las empresas que habrían pasado a encontrarse en esta última situación se situaría entre los 9 mm y los 18,6 mm de euros, según el escenario considerado, concentrándose la mayor parte de este importe en el segmento de las pymes.
    Keywords: COVID-19, necesidades de liquidez, rentabilidad, endeudamiento, crédito, solvencia, viabilidad
    JEL: E51 E52 G21
    Date: 2021–08
  45. By: Loretta J. Mester
    Abstract: The conference’s theme of new avenues for monetary policy is particularly relevant given the economic challenges presented by the global pandemic. But even before the pandemic hit, structural changes to the economy, in particular, lower estimates of the neutral real interest rate, presented challenges for monetary policymakers and suggested that new thinking was needed to ensure achievement of our monetary policy goals. Recently, both the Federal Reserve and the European Central Bank (ECB) have undertaken reviews of their monetary policy frameworks to determine whether changes were needed to increase the effectiveness of their policy strategies. The ECB released the outcome of its review in July. The Fed’s revised strategy is now about a year old. Today, I will discuss the Fed’s revised strategy, how the Federal Open Market Committee (FOMC) has put the strategy into practice, and based on that experience, what I believe are areas that would benefit from further clarification. As always, the views I will present are my own and not necessarily those of the Federal Reserve System or of my colleagues on the Federal Open Market Committee.
    Date: 2021–09–10
  46. By: Codrina Rada, Ansel Schiavone, Rudiger von Arnim
    Abstract: This paper presents a classical-Keynesian one sector model of labor-constrained growth that explains secular stagnation as the result of structural change. Structural change is defined as an exogenous increase in the employment share of stagnant activities, which exhibit no or low labor productivity growth. We discuss two models: (i) a classical distributive cycle in employment rate and labor share, and (ii) a Keynes-Kalecki distributive cycle that adds the incomecapital ratio as state variable. Both versions consider labor productivity growth as endogenous to the labor share, reminiscent of induced technical change. Further, growth rates of labor productivity and real wages are assumed to respond negatively to structural change as proxied by the employment share of stagnant activities. Drawing on seminal theories of structural change, we label the positive (negative) difference between these effects dominant Lewis (Baumol) dynamics. In steady state, and across all model variants, the adverse effect of structural change on labor productivity leads to stagnation. However, only the Keynes-Kalecki version with dominant Lewis dynamics and a weak profit squeeze also exhibits a falling labor share.
    Keywords: Goodwin cycle; stagnation; structural change; reserve army JEL Classification: E12, E25, E32, O41
    Date: 2021
  47. By: Laczó, Ferenc
    Abstract: In this study the concept of commodities is formulated according to the utility theory; following the principle of price elasticity of demand, differences of uncompensated and compensated price changes will be clearly interpreted; as the uncompensated and compensated price changes have different averaging properties, so two different CPI formulas need to be defined; arbitrary price changes are broken down into uncompensated and compensated price change to obtain a complete, dual CPI formula.
    Keywords: Economic Value of a Commodity; Uncompensated vs. Compensated Price Change; Common Units in Measurements; Dual CPI Formula; Supply-Driven and Demand-Driven Economy
    JEL: E31
    Date: 2021–06–30
  48. By: Thomas R. Michl (Colgate University, Department of Economics); Hyun Woong Park (Denison University, Department of Economics)
    Abstract: With an emphasis on contributing to macroeconomic pedagogy we examine the collateral multiplier by comparing it to the traditional money multiplier in a simplified framework of traditional banking and shadow banking in which government bonds are the core assets. While the money multiplier is a measure of the ability of the banking system to intermediate sovereign debt by creating deposits, the collateral multiplier is a measure of the shadow banking system’s ability to inter- mediate sovereign debt by creating shadow money. It also measures the degree of re-use of sovereign debt as collateral. In this setup, the collateral multiplier is defined as the ratio between dealer banks’ matched book repo activity relative to their trading book. Using the New York Fed’s Primary Dealer Statistics data, we empirically estimate the collateral multiplier for U.S. Treasury repo collateral. Our model and empirical results shed light on the transmission mechanisms of monetary policy channeled through shadow banks and on the U.S. Treasuries market turmoil induced by COVID-19 in March 2020.
    Keywords: shadow banks, collateral multiplier, rehypothecation, Treasury bond, repo.
    JEL: A2 E51
    Date: 2021
  49. By: Collard, Fabrice; Licandro, Omar
    Abstract: This paper embeds firm dynamics into the Neoclassical model and provides a simple framework to solve for the transitional dynamics of economies moving towards more selection. As in the Neoclassical model, markets are perfectly competitive, there is only one good and two production factors (capital and labor). At equilibrium, aggregate technology is Neoclassical, but the average quality of capital and the depreciation rate are both endogenous and positively related to selection. At steady state, output per capita and welfare both raise with selection. However, the selection process generates transitional welfare losses that may reduce in around 60% long term (consumption equivalent) welfare gains. The same property is shown to be true in a standard general equilibrium model with entry and fixed production costs.
    Keywords: Firm dynamics and selection; Neoclassical model; Capital irreversibility, Investment distortions; Transitional dynamics, Welfare gains
    JEL: E13 E23 D6 O4
    Date: 2021–09–07
  50. By: Richard Foltyn; Jonna Olsson
    Abstract: Using biennial data from the Health and Retirement Study, we estimate age-dependent health dynamics and survival probabilities at annual frequency conditional on race, sex, and health. The health gradient in life expectancy is steep and persists after controlling for socioeconomic status. Moreover, even conditional on health and socioeconomic status, the racial gap in life expectancy remains large. Simulations show that this gap affects savings rates but does not play a major role in explaining the racial wealth gap. However, differences in mortality imply that black individuals on average can expect to receive 15% less in Social Security benefits in present value terms.
    Keywords: Life expectancy, health dynamics, racial life expectancy gap
    JEL: C23 E21 I14 J14
    Date: 2021–09
  51. By: Strulik, Holger
    Abstract: In this paper, I combine economic theories of health behavior and addiction in order to explain the phenomenon of anorexia nervosa and its impact on health and longevity. Individuals consume normal goods and foods and can work off excess calories with physical exercise. There exists a healthy body mass index and deviations from it increasingly cause health deficits due to obesity or underweight. There exists also a subjective target weight and being heavier than target weight causes a loss of utility from body image. Individuals for whom the utility loss from missing target weight is large exert more weight control, i.e. they eat less and exercise more. Anorexia is initiated in individuals who are particularly successful in weight control and prone to addiction. Addiction to weight control motivates anorexic individuals to perpetually adjust their target weight downwards and to eat less and exercise more. With declining weight, health deficits accumulate faster and mortality risk rises. I calibrate the model to a reference American with bmi 28. Due to weight loss addiction, the bmi gradually declines to a level of 15 and causes a loss of 21 years of life expectancy at the age of 20.
    Keywords: weight control,addiction,eating disorder,physical exercise,healthde cits,mortality
    JEL: D11 D91 E21 I10 I12
    Date: 2021
  52. By: Francesco Giuli; Giuseppe Ciccarone (Sapienza University of Rome); Enrico Marchetti (University of Naples Parthenope)
    Abstract: We study the effects of COVID-19, and the ensuing lockdown and scal policies, on the welfare of different age-groups within a life-cycle macroeconomic scheme, adapted from Gertler (1999), where the pandemic is represented as a shock to the mortality rate. We obtain two main results. First, we can show that lockdown policies have a negative impact on the dynamics of economic welfare of younger agents relative to that of older agents, thus providing analytical support to the idea that the management of the COVID-19 pandemic through lockdown policies has hit mainlythe young generations. Second, we show that expansionary scal policies aimed at supporting income after the lockdown a¤ect the relative welfare index of age-groups mainly through the repayment scheme of the consequent public debt; the more the repayment scheme entails a postponement of the debt repayment, the more older agents are favored (in relative terms).
    Keywords: Covid19, Generational Effects, Containment Policies
    JEL: E13 I18 H51
    Date: 2021–05
  53. By: Reinhard Ellwanger, Stephen Snudden (Wilfrid Laurier University)
    Abstract: Macroeconomic series are often aggregated from higher-frequency data. We show that this seemingly innocent feature has far-reaching consequences for the predictability of such series. First, the series are predictable by construction. Second, conventional tests of predictability are less informative about the data-generating process than frequently assumed. Third, a simple improvement to the conventional test leads to a sizeable correction, making it necessary to re-evaluate existing forecasting approaches. Fourth, forecasting models should be estimated with end-of-period observations even when the goal is to forecast the aggregated series. We highlight the relevance of these insights for forecasts of several macroeconomic variables.
    Keywords: Forecasting and Prediction Methods, Interest Rates, Exchange Rates, Asset Prices, Oil Prices, Commodity Prices
    JEL: C1 C53 E47 F37 G17 Q47
    Date: 2021
  54. By: P. Facundo Cuevas; Leonardo Lucchetti; Metin Nebiler
    Abstract: Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey’s fiscal policy to date. It analyzes the combined and individual incidence of direct and indirect taxes, transfers, and social spending and benchmarks Turkey’s achievements against peer countries. The results show that fiscal policy significantly reduces income inequality in Turkey, driven by social spending on education and health, and complemented by direct taxes and transfer schemes that countervail the inequality-increasing impact of indirect taxes. At the bottom of the income distribution, targeted transfers are insufficient to compensate for the effect of taxes, resulting in net increases in poverty. In the context of upper-middle-income countries, Turkey’s performance is below the median. This is driven by the relatively larger negative impacts of indirect taxes and the more limited positive impacts of direct transfers and taxes. From a policy perspective, the paper contributes to identifying entry points for improving the equity impact of the fiscal package. Among these, targeting the minimum subsistence allowance (AGI) program toward the poor could be an efficient way forward. More broadly, the study represents a platform to simulate the distributional implications of a variety of fiscal changes to inform stakeholders and the policy debate.
    Date: 2020–05
  55. By: Längle, Katharina; Xu, Ankai; Tian, Ruijie
    Abstract: This paper uses Chinese firm level data to detect the international propagation of adverse shocks triggered by the US hurricane season in 2005. We provide evidence that Chinese processing manufacturers with tight trade linkages to the United States reduced their intermediate imports from the United States between July and October 2005. We further show that the direct exposure to US supply shocks led to a temporary decline of firm exports between September and November 2005, although we do not find consistent evidence of international propagation of supply shocks along global value chains. Moreover, the paper finds that firms with more diversified suppliers tend to be less affected by the US hurricane disaster, pointing to firm sourcing diversification as a way to increase resilience to adverse shocks.
    Keywords: production networks,resilience,diversification,shock transmission,supply chains,natural disasters
    JEL: F12 F14 F15 F61 L14 E23
    Date: 2021
  56. By: Michelle Baddeley (University of Technology Sydney); Geoff Harcourt
    Abstract: Sub-optimal levels of investment in fixed capital are a pressing problem for modern economics. Behavioural economics provides some potential explanations, but behavioural economic insights are not commonly incorporated into standard capital investment models which capture neither the diversity of investment appraisal techniques used in practice, nor the range of decision-making styles used by real-world businesses. In filling these gaps, this paper brings together insights from capital investment theory with insights from behavioural economics to develop a behavioural economic model of investment appraisal, allowing for boundedly-rational investment decision-making. This model is applied in a macroeconomic analysis to show how the misapplication of investment appraisal criteria, especially under conditions of endemic uncertainty, is associated with sub-optimal levels of macroeconomic investment - with negative macroeconomic implications in terms of production, employment, productivity, wages and cyclical volatility.
    Keywords: investment; heuristics; bias; behavioural macroeconomics
    JEL: E29 E70 D22 D25 M21
    Date: 2021–08–01
  57. By: François Courtoy (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Michel de Vroey (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Riccardo Turati (Universitat Autonoma de Barcelona)
    Abstract: This paper studies the way in which macroeconomics is taught at the undergraduate and graduate levels. Based on two sources of information, the world’s largest network of library content and services, the WorldCat data base, and a survey of the textbooks used for teaching at leading universities across the world, the paper provides an up-to-date description of macroeconomics teaching. Our results show a clear methodological divide: whereas IS-LM/AS-AD modeling is the theoretical core of undergraduate textbooks, graduate ones have the RBC model as their baseline model.
    Keywords: macroeconomics, textbooks, IS-LM/AS-AD, RBC
    JEL: A22 A23 E00
  58. By: Meenagh, David (Cardiff Business School); Minford, Patrick (Cardiff Business School); Wickens, Michael (Cardiff Business School)
    Abstract: We ask whether Bayesian estimation creates a potential estimation bias as compared with standard estimation techniques based on the data, such as maximum likelihood or indirect estimation. We investigate this with a Monte Carlo experiment in which the true version of a New Keynesian model may either have high wage/price rigidity or be close to pure flexibility; we treat each in turn as the true model and create Bayesian estimates of it under priors from the true model and its false alternative. The Bayesian estimation of macro models may thus give very misleading results by placing too much weight on prior information compared to observed data; a better method may be Indirect estimation where the bias is found to be low.
    Keywords: Bayesian; Maximum Likelihood; Indirect Inference; Estimation Bias
    JEL: C11 E12
    Date: 2021–09
  59. By: Tansel, Aysit; Öztürk, Ceyhan; Erdil, Erkan
    Abstract: We examine the relationship between wealth and health through prominent growth indicators and cognitive ability. Cognitive ability is represented by nutritional status. In this study, the proxy variable for nutritional status is BMI since there is a strong relationship between cognitive ability and nutrition. We use the reduced form equation in the cubic specification of time preference rate to estimate this relationship. We assume that the time preference rate is one of the outputs of cognitive ability. The growth indicators utilized are GDP per capita, schooling, overall and manufacturing productivities, and savings. We estimate our models using the FE, GMM estimators, and long difference OLS and IV estimation through balanced panel data for 47 countries for the 1980-2009 period, which is a representative period of the neo-liberal and globalization economic policy implications. Furthermore, by using the 1980-2009 period, we may eliminate the ripple effects of the 2007-2009 financial crisis. Although there is ample evidence that the association between GDP per capita, overall and manufacturing productivities, and BMI could be cubic, we take the results of the long-difference quadratic specification into consideration and conclude that the relationship between all prominent growth indicators and BMI is inverse U-shaped. In other words, cognitive ability has a significant potential to progress growth and economic development only in a healthy status.
    Keywords: Cognitive ability,time preference rate,BMI,productivity,health,schooling,growth,economic development
    JEL: E21 I15 I25 J24 O11 Q18
    Date: 2021
  60. By: Luigi Guiso; Massimo Morelli; Tommaso Sonno; Helios Herrera
    Abstract: This paper argues that the financial crisis was a watershed in the burst of populism both on the demand side (voters behaviour) and on the supply side (political parties behaviour). On the demand side, we provide novel results on the causal effect of the financial crisis on trust, turnout and voting choices via its effects on voters economic insecurity. Economic insecurity peaks during the financial crisis and extends to segments of the population untouched by the globalization and robotization shocks. To establish causality, we use a pseudo-panel analysis and instrument the economic insecurity of different cohorts leveraging on a new methodology designed to highlight the different sensitivity to financial constraints for people in different occupations. On the supply side, we trace from manifestos the policy positions of old and new parties showing that the supply of populism had the largest jump right after the financial crisis. The size of the jump is largest in countries with low fiscal space and for parties on the left of the political spectrum. We provide a formal rationalization for the key role of fiscal space, showing how the pre-financial crisis shocks enter the picture as sources of a shrinking fiscal space.
    Keywords: Demand and Supply of Populism; Financial Crisis; Fiscal Space; Age-Earning Profiles
    JEL: D72 D78 D14 H30
    Date: 2021
  61. By: Chakrabarti, Anindya S.; Mishra, Abinash; Mohaghegh, Mohsen
    Abstract: Income distribution-based targeted interventions are quite common in developing economies. However, often due to institutional frictions, identification of the recipients happens at a lower frequency than the frequency of movement across income groups, leading to mis-identification of true and false recipients. What are the general equilibrium effects of such interventions? To measure the effects, we develop a heterogeneous agent production economy where agents face uninsurable income risks and we calibrate it to a novel panel dataset on monthly household income and consumption in India. We study the effects of persistent (identity-based) shocks as opposed to the usual temporary (income-based) income shocks, the difference being that in persistent payments individuals are guaranteed a payment across periods, regardless of their income status in future. We find that temporary interventions have muted distributional effects, while identity-based stimulus of the same size give rise to more prominent effects. In particular, a persistent income shock to the poorest decile equivalent to 0.6% of GDP leads to a 0.543% increase in consumption.
    Date: 2021–09–13
  62. By: Florens Odendahl; Barbara Rossi; Tatevik Sekhposyan
    Abstract: We propose a novel forecast evaluation methodology to assess models' absolute and relative forecasting performance when it is a state-dependent function of economic variables. In our framework, the forecasting performance, measured by a forecast error loss function, is modeled via a hard or smooth threshold model with unknown threshold values. Existing tests either assume a constant out-of-sample forecast performance or use non-parametric techniques robust to time-variation; consequently, they may lack power against state-dependent predictability. Our tests can be applied to relative forecast comparisons, forecast encompassing, forecast efficiency, and, more generally, moment-based tests of forecast evaluation. Monte Carlo results suggest that our proposed tests perform well in finite samples and have better power than existing tests in selecting the best forecast or assessing its efficiency in the presence of state dependence. Our tests uncover "pockets of predictability" in U.S. equity premia; although the term spread is not a useful predictor on average over the sample, it forecasts significantly better than the benchmark forecast when real GDP growth is low. In addition, we find that leading indicators, such as measures of vacancy postings and new orders for durable goods, improve the forecasts of U.S. industrial production when financial conditions are tight.
    Keywords: State dependence, forecast evaluation, predictive ability testing, moment-based tests; pockets of predictability
    JEL: C52 C53 E17 G17
    Date: 2021–07
  63. By: Mateo Hoyos (Department of Economics, University of Massachusetts Amherst); Emiliano Libman (University of General San Martín); Arslan Razmi (Department of Economics, University of Massachusetts Amherst)
    Abstract: We study the extent to which countries undergo structural change during and after episodes of sustained investment surges. In particular, we explore the evolution of trade flows, considering (i) exports sophistication or complexity, (ii) exports diversification, and (iii) capital goods imports. Using the episodes identified by Libman et al. (2019), we document the heterogeneous nature of these episodes and find that, while imports of capital goods increase, they are not systematically related to changes in sophistication, complexity and diversification of exports, at least for the available sample of 130 episodes over the period 1962-2014. High investment may often be a necessary but not sufficient condition for structural change.
    Keywords: Capital accumulation, diversification, economic complexity, development.
    JEL: E22 F41 O11
    Date: 2021
  64. By: Luis Guirola (Banco de España)
    Abstract: Polarization can have economic effects if the hostility between political camps (i.e., affective polarization) shapes economic expectations. This paper shows that, in polarized contexts, agents disagree more over their expectations, and that partisan hostility – rather than differences in individual economic circumstances or beliefs about government policies – drives this disagreement. The causal impact of partisanship is identied from the discontinuity created by shifts in Prime Ministers’ cabinet. The study of 134 shifts between 1993 and 2019 in 27 European countries reveals that left and right supporters with identical circumstances and information sets update their expectations in opposite directions, evidencing a partisan bias. Its size ranges from 1.5 to 0 standard deviations across these cabinet shifts. The polarization of parties – measured by their left-right positions or their cooperation within coalitions – explains half this variation, and adverse economic conditions amplify it. The analysis points to affective polarization (rather than disagreements over the likely effects of government policy) as the driver of partisan bias. Partisan bias extends to variables unaffected by future policy and, even when parties have similar economic positions, bias increases withpolarization on non-economic dimensions. Overall, these findings suggest that political conflicts originally unrelated to economic matters could affect household behavior and policy debates and extend to the economic sphere.
    Keywords: expectations, polarization, political partisanship, motivated beliefs
    JEL: D14 D84 E71 F34 G01 H12
    Date: 2021–09
  65. By: Juan David Yépez Torrijos
    Abstract: En Colombia ha surgido una política con el acto legislativo no. 4 del 2007, donde se otorga un dinero extra para los municipios con menos de 25.000 habitantes por medio del SGP, al rubro de participación de propósito general. Este ingreso se distribuye por conceptos de pobreza y de ruralidad en el municipio. Partiendo de lo anterior, se construye un espacio ideal para el análisis de impacto, ya que la política permite abordar la idea de la asignación como un proceso cuasi aleatorio de experimentación. Entonces, por medio de la regresión discontinua, se analizó la relación que tiene esta política en el PIB (y sus derivados) en los municipios seleccionados por la política, tomando desde el 2008 hasta el 2017. Los resultados indicaron que no había nexo entre la política y el desarrollo municipal aun usando diferentes especificaciones y variables de resultado.
    Keywords: Política pública, Colombia, Regresión Discontinua, Municipios, Desarrollo Económico
    JEL: E61 G18 H83 H11 H76 O11
    Date: 2021–09–06
  66. By: Roberto Blanco (Banco de España); Sergio Mayordomo (Banco de España); Álvaro Menéndez (Banco de España); Maristela Mulino (Banco de España)
    Abstract: This paper analyses the impact of the COVID-19 crisis on the financial vulnerability of the Spanish corporate sector. The simulations conducted show that the crisis significantly increased firms’ liquidity needs in 2020, although the measures adopted by national and international authorities eased access to credit under favourable conditions, which substantially mitigated the short-term liquidity risks. However, the sharp fall in profitability levels, coupled with debt growth, appears to have resulted in a marked increase in the proportion of vulnerable firms (i.e. those with negative equity or high debt levels), which would be more pronounced among SMEs and the sectors hardest hit by the pandemic. The projections for the period 2021-2023 indicate a gradual decline in these percentages, in keeping with the expected recovery in activity. The results also suggest that, as a result of the crisis, the proportion of firms at risk of becoming non-viable on account of persistent losses through to 2023 would rise by between 2 pp and 3 pp, while the proportion of those that will remain viable but struggle to repay their debts out of their expected future earnings (overindebted firms) would rise by between 3 pp and 4.7 pp. In addition, the simulations show that the unsustainable debt of firms that have become overindebted but remain viable would stand between €9 billion and €18.6 billion, depending on the scenario considered, with the bulk of this amount accounted for by SMEs.
    Keywords: COVID-19, liquidity needs, profitability, indebtedness, credit, solvency, viability
    JEL: E51 E52 G21
    Date: 2021–08
  67. By: Diego Castañeda Garza (ITESM-CSF); Alice Krozer (El Colegio de México)
    Abstract: This paper’s contribution is a reconstruction of the distribution of wealth employing a sample of wills from El Colegio de Sonora database for the years 1871-1910. We show that the rapid industrialisation/modernisation process that ensued in northern Mexico during the late 19th and early 20th century lead to a continuous increment in wealth concentration at the top of the distribution, going from a Gini index measure of 0.48 in 1871 to 0.79 in 1910. Rather than a fundamental (kuznetsian) necessity, however, our data suggests a critical role played by the political economy at the time in a gerschenkronian fashion and highlight the importance of the control of natural resources on inequality dynamics. The paper hereby engages with and contributes to the ongoing discussion about the role of economic and political elites in inequality dynamics and their reproduction over time.
    Keywords: inequality, wealth inequality, elites, Mexico, wills, Sonora, social structure
    JEL: D63 E01 I3 N36 P16
    Date: 2020–07
  68. By: Lokdam, Hjalte
    Abstract: This paper argues that the Economic and Monetary Union (EMU) created at Maastricht conformed to the neoliberal theory of interstate federalism in seeking to constitute structural conditions that circumscribed the effective exercise of activist public authority at both the Member State and European level. A response to a perceived ‘crisis of governability,’ it was designed to address the problem of excessive, and ineffective, governmental interventions in economic matters. By separating monetary and fiscal policy, the EMU ensured that no single public authority at the Member State or European level could control all the main levers of economic government. The Eurozone Crisis challenged this construct by emphasising the need for a coherent and effective exercise of public authority. The problem was thus no longer an excess of government but the absence of effective governmental authority for the EMU as a whole. Eurozone Crisis reforms introduced a greater scope for federal interventions in the domestic affairs of Member States and such reforms have elicited a new constitutional imaginary, expressed by European elites, that emphasises the need to generate ‘European sovereignty.’ This imaginary departs radically from the original EMU by foreseeing an omnicompetent European governmental apparatus that is able to intervene in, and control, economic developments across the Union in accordance with political objectives. The constitutional imaginary of the EMU can thus no longer meaningfully be called neoliberal. The early response to the COVID-19 Crisis, furthermore, highlights that the objectives pursued under the reformed EMU may depart from the set of policies traditionally associated with neoliberalism. What it should be called instead, however, remains unclear.
    Keywords: Economic and Monetary Union; Eurozone Crisis; neoliberalism; federalism; economic constitution; law and political economy
    JEL: F3 G3
    Date: 2021–01–13
  69. By: Financial Markets Department (Bank of Japan)
    Date: 2021–09–09
  70. By: Lokdam, Hjalte
    Abstract: This paper argues that the Economic and Monetary Union (EMU) created at Maastricht conformed to the neoliberal theory of interstate federalism in seeking to constitute structural conditions that circumscribed the effective exercise of activist public authority at both the Member State and European level. A response to a perceived ‘crisis of governability,’ it was designed to address the problem of excessive, and ineffective, governmental interventions in economic matters. By separating monetary and fiscal policy, the EMU ensured that no single public authority at the Member State or European level could control all the main levers of economic government. The Eurozone Crisis challenged this construct by emphasising the need for a coherent and effective exercise of public authority. The problem was thus no longer an excess of government but the absence of effective governmental authority for the EMU as a whole. Eurozone Crisis reforms introduced a greater scope for federal interventions in the domestic affairs of Member States and such reforms have elicited a new constitutional imaginary, expressed by European elites, that emphasises the need to generate ‘European sovereignty.’ This imaginary departs radically from the original EMU by foreseeing an omnicompetent European governmental apparatus that is able to intervene in, and control, economic developments across the Union in accordance with political objectives. The constitutional imaginary of the EMU can thus no longer meaningfully be called neoliberal. The early response to the COVID-19 Crisis, furthermore, highlights that the objectives pursued under the reformed EMU may depart from the set of policies traditionally associated with neoliberalism. What it should be called instead, however, remains unclear.
    Keywords: Economic and Monetary Union; Eurozone Crisis; neoliberalism; federalism; economic constitution; law and political economy
    JEL: F3 G3
    Date: 2021–01–13
  71. By: Oxelheim, Lars (Research Institute of Industrial Economics (IFN)); Randøy, Trond (School of Business and Law)
    Abstract: Based on historical analogies, we emphasize a connection between financial crises and technological shifts where the shift calls for a structural economic transformation. We discuss how political pressures related to this structural transformation pave the way for the return of a new form of Mercantilism. This time it is the competition for high-tech jobs that drives politicians to be more nationalistic. Our conclusion is that the race for jobs in a period of technology shift, coupled with experimental efforts by central banks, will lead to the need for a post-covid 19 reorganization of international companies’ global logistics chain. The current pandemic will act as a catalyst to this very transformation.
    Keywords: Global logistic chain; Post-Covid era; State aid; Technology shift; Job creation
    JEL: E58 F16 F23 F34 G01
    Date: 2021–09–15
  72. By: Oriane Lafuente-Sampietro (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Convertible local currencies are alternative monetary instruments issued by groups of citizens to circulate in a given territory. They are used by businesses and citizens who accept it as means of payments constituting, hence, a monetary community. Their impacts on economic activity are mainly related to their circulation within the user community. Businesses that have received local currency as payment must spend it with other members. A local currency, thus, acts as a constraint favoring the development of new commercial relations in the network and increasing the demand among local businesses involved in the scheme. In this article, we model the income circulation between convertible currencies users as a local multiplier, called the convertible local currency multiplier. By using the Local Multiplier 3 empirical approach (Sacks, 2002) on two convertible currencies transactions data, we compute an indicator summarizing the income generated for the monetary community by the change and expense of euros into a local currency. This new indicator enables not only consumers to estimate the impact of their actual consumption in local currency, but also potential public decision-makers to know the total effect of their expenses when they use local currency on their territory to finance some of their policies. For example, this indicator could be used to measure the direct and indirect effects of a subsidy paid in local currency to institutions, businesses or households. The computed multiplier is greater than two for both currencies, which is in the higher range of LM3 estimated in the literature.
    Keywords: Local multiplier,Local currency,Multiplier economics,Multiplicateur local,Monnaie locale alternative,Monnaie locale complémentaire
    Date: 2021–06–01
  73. By: Bertrand SAVOYE; Maxime TERRIEUX; Cécile VALADIER; Sylvain BELLEFONTAINE,; Cécile DUQUESNAY,; Marion HEMAR,; Benoît JONVEAUX,; Laura MARIE,; Emmanuelle MONAT,; Jules PORTE,; Meghann PULOC’H
    Abstract: Les numéos spéciaux « Panorama semestriel » de la collection Macrodev, rédigés par les analystes de l’AFD, présentent une synthèse d’analyses macroéconomiques et socioéconomiques de pays émergents et en développement (PED). Une section thématique accompagne les focus pays et apporte un éclairage sur les problématiques et grands enjeux conjoncturels et structurels des PED.
    Keywords: Afrique, Côte d'Ivoire, Tchad, Zambie, Équateur, Birmanie, Géorgie, Ouzbékistan, Sri Lanka, Trois Océans, Madagascar
    JEL: E
    Date: 2021–09–07
  74. By: Mohammadreza Mahmoudi
    Abstract: This paper aims to present empirical analysis of Iranian economic growth from 1950 to 2018 using data from the World Bank, Madison Data Bank, Statistical Center of Iran, and Central Bank of Iran. The results show that Gross Domestic Product (GDP) per capital increased by 2 percent annually during this time, however this indicator has had a huge fluctuation over time. In addition, the economic growth of Iran and oil revenue have close relationship with each other. In fact, whenever oil crises happen, great fluctuation in growth rate and other indicators happened subsequently. Even though the shares of other sectors like industry and services in GDP have increased over time, the oil sector still plays a key role in the economic growth of Iran. Moreover, growth accounting analysis shows contribution of capital plays a significant role in economic growth of Iran. Furthermore, based on growth accounting framework the steady state of effective capital is 4.27 for Iran's economy.
    Date: 2021–09
  75. By: Andrea Borsato
    Abstract: The main purpose of this article is to show how simple matching protocols suitable for agent-based models can be developed from scratch. Keeping the feature of the underlying economy at minimum, I develop, detail, and present the code for three matching processes. Their small size and flexibility may act as a stimulus to non-expert students to undertake such stream of literature and address a variety of research topics.
    Keywords: Agent-based Modelling, Matching Protocols, Computer Simulation, Linear Matrix Algebra, R.
    JEL: A20 C63 E10 O10 O30
    Date: 2021
  76. By: Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik; Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: To mark the 30th anniversary of the fall of the Berlin Wall, this paper aims to assess developments in Central, East and Southeast Europe (CESEE) over the past three decades, and to look forward to what the next 30 years might bring. First, we measure the convergence of per capita income, wages and life expectancy in CESEE with Western Europe since 1989, and examine demographic trends. We find that, after a difficult start, many countries have become significantly wealthier and their populations much healthier. However, for others, the outcomes of the first 30 years are less positive, and a large number of countries in CESEE have already experienced significant population decline. Second, our experts look back at the situation in 1989, and to what extent their expectations have played out, reflecting on both successes and disappointments. Third, we analyse current trends in the region, and attempt to project what will come next. Here, we focus on automation, digitalisation, institutions, demographics and geopolitics. We find evidence of institutional regression, demographic challenges, and a changing geopolitical backdrop that will have important implications for much of the region. However, we also see reasons for optimism, including the opportunities provided by digitalisation and automation, and an active civil society that could in time force positive change.
    Keywords: CESEE, Europe, Central and Eastern Europe, transition, convergence, demographics
    JEL: E00 E02 F02 J11 P20 P30 O52
    Date: 2019–11
  77. By: Natalia Poiatti (Instituto de Relações Internacionais - USP)
    Abstract: This paper investigates how the announcements of the European Central Bank have impacted the cost of sovereign borrowing in central and peripheral European countries. Using the xtbreak command (Ditzen, Karavias and Westerlund, 2021) in Stata, we tested whether the variations of European sovereign spreads can be explained by economic fundamentals in a model that allows for two structural breaks: the first, when investors realized the fiscal sustainability of the EMU should be understood in a decentralized fashion, when the ECB announced it would not bail out Greece; the second, when the ECB realized the existence of the euro was in check and announced it would be able to financial assist the countries in financial trouble. We show that a model that allows for structural breaks after the ECB announcements can explain most of the variations in European sovereign spreads.
    Date: 2021–09–12
  78. By: Daniele Girardi (Department of Economics, University of Massachusetts Amherst (USA))
    Abstract: This paper surveys the neoclassical theory of aggregate investment and its criticisms. We identify four main strands in neoclassical investment theory: (i) the traditional Wicksellian model; (ii) the Fisherian ‘array-of-opportunities’ approach; (iii) the Jorgensonian model; (iv) the now prevailing adjustment cost models. We summarize each approach, discuss the main conceptual issues, and highlight similarities and differences between them. We also provide a systematic summary and discussion of the main criticisms that have been leveled at each of these models and highlight some unresolved theoretical issues.
    Keywords: investment, neoclassical theory, adjustment costs
    Date: 2021
  79. By: Elie Ndemba Tshilambu (Université protestante au Congo - Université protestante au Congo)
    Abstract: L'objectif du présent article est d'analyser le rôle de la fiscalité et mesurer l'effet de celle-ci à travers son impact sur le capital public, dans la croissance économique en République Démocratique du Congo en s'appuyant sur le modèle de croissance endogène de Barro (1990) et à déterminer le taux optimal de pression fiscale à travers l'estimation du modèle de SCULLY. L'interaction entre la fiscalité et la croissance pourrait avoir une allure non linéaire, sous la forme d'une courbe de LAFFER, le test Hansen va servir à montrer l'effet de seuil dans la relation non linéaire entre la pression fiscale et la croissance économique. Un modèle ARDL a été estimé sur la période 1990-2020 pour analyser la dynamique de ces deux variables. Les résultats obtenus vont dans le sens d'une relation croissante entre la fiscalité et la croissance économique en RDC. Ainsi, à travers l'impôt, les ménages contribuent au financement du capital public qui conduit in fine à améliorer la croissance économique. Il en est ressorti de cette étude que les niveaux des composantes fiscales observés n'ont pas été efficients et optimaux par rapport aux taux de croissance économique observés en RDC durant la période 1990-2020. L'estimation du modèle de SCULLY révèle qu'avec un niveau de 23% de pression fiscale, on peut avoir une croissance économique soutenue.
    Keywords: Politique Budgétaire,Croissance économique,Pression fiscale Classification JEL : E62,E22,O40,C11
    Date: 2021–04–28
  80. By: Jeremy Greenwood (University of Pennsylvania); Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros); Ricardo Marto (University of Pennsylvania)
    Abstract: The 20th century beheld a dramatic transformation of the family. Some Kuznets style facts regarding structural change in the family are presented. Over the course of the 20th century in the United States fertility declined, educational attainment waxed, housework fell, leisure increased, jobs shifted from blue to white collar, and marriage waned. These trends are also observed in the cross-country data. A model is developed, and then calibrated, to address the trends in the US data. The calibration procedure is closely connected to the underlying economic logic. Three drivers of the great transition are considered: neutral technological progress, skilled-biased technological change, and drops in the price of labor-saving household durables.
    Keywords: Average weekly hours, blue-collar jobs, calibration, college premium, education, family economics, fertility, housework, Kuznets, leisure, market work, marriage, neutral technological progress, price of labor-saving household durables, skilled-biased technological change, white-collar jobs.
    JEL: D10 E13 J10 O10
    Date: 2021–09
  81. By: Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
    Abstract: Abstract This study focuses on factors affecting companies’ research and development (R&D), Finland as a location for R&D activities, and R&D intensity (R&D/GDP). According to our results, R&D investments are increasing in Finland but the R&D intensity will not reach 4 % target by 2030. Our results showed that Sweden, Estonia (and to some extent other Baltic countries), and Germany are Finland’s main competitors regarding the location of R&D investments. The key factors affecting R&D location are the availability of R&D personnel, and the geographical proximity to the companies’ other units and customers. We recommend comprehensive and long-term innovation policy which considers policy actions – not only affecting the increase of R&D and its impacts – but also the increase of capabilities. It should be noted, however, that rather than the ultimate target, R&D is a means to reach other goals.
    Keywords: R&D, Research, Development, Target, Location, Factors, Private, Company, Firm, Competition
    JEL: D22 D25 E22 F23 H25 O3 O32 O38
    Date: 2021–09–09
  82. By: Onil Banerjee (IDB); Martín Cicowiez (CEDLAS-IIE-FCE-UNLP)
    Abstract: En este trabajo, se describe el procedimiento que, utilizando los cuadros de oferta y utilización recientemente publicados por el INDEC, seguimos para la construcción de una Matriz de Contabilidad Social (MCS) para Argentina para el año 2018. La MCS resultante identifica 107 actividades, 223 productos, 11 factores de producción – incluyendo tres categorías de trabajo --y 6 hogares representativos. La MCS se construyó para ser utilizada como insumo para la calibración de IEEM (Integrated Economic-Environmental Modeling Platform), un modelo de equilibrio general computable extendido para considerar las interacciones, de ida y vuelta, entre la economía y el medio ambiente.
    JEL: E16 C68
    Date: 2021–09
  83. By: Barinova Vera (Gaidar Institute for Economic Policy); Zemtsov Tsepan (Gaidar Institute for Economic Policy); Tsareva Yulia (Gaidar Institute for Economic Policy)
    Abstract: The unprecedented scale of the COVID-19 epidemic created harsh environment for operation of small and medium-sized businesses: decline in household incomes and demand, shutdown of foreign markets and uncertainty of the economic situation. The lockdown introduced in April 2020, resulted in temporary suspension of activities of many enterprises providing services: thus, for instance, trade, catering, hotels, repair shops, hairdressers, etc. Activity of small businesses reduced to the values observed during the crisis of 2015. According to our estimates, the crisis affected more than 75% of SMEs, although about 11% of enterprises and 5.5 million employees2 are concentrated in the most affected industries. In March-April 2020, revenues in some industries fell by more than 90%. There was a high likelihood of closing millions of businesses and reducing the number of people employed in the SME sector by several million
    Keywords: Russian economy, small businesses, medium-sized enterprises, OVID-19, lockdown
    JEL: C53 E37 L21 L52 I18 I19
    Date: 2021
  84. By: Bertrand SAVOYE; Maxime TERRIEUX; Cécile VALADIER; Sylvain BELLEFONTAINE,; Cécile DUQUESNAY,; Marion HEMAR,; Benoît JONVEAUX,; Laura MARIE,; Emmanuelle MONAT,; Jules PORTE,; Meghann PULOC’H
    Abstract: Semestrial Panoramas are special issues of the MacroDev series written by AFD analysts; They present a synthesis of macronomic et socioeconomic analyses of emerging and developing countries. In addition to short, country-focused articles, a thematic section sheds light on broader economic and structural issues affecting these countries.
    Keywords: Afrique, Côte d'Ivoire, Tchad, Zambie, Équateur, Birmanie, Géorgie, Ouzbékistan, Sri Lanka, Trois Océans, Madagascar
    JEL: E
    Date: 2021–09–08

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