nep-mac New Economics Papers
on Macroeconomics
Issue of 2023‒11‒27
23 papers chosen by
Daniela Cialfi, Universita' di Teramo

  1. Unconventional Policies in State-Contingent Liquidity Traps By William Tayler; Roy Zilberman
  2. Robust Real Rate Rules By Holden, Tom D.
  3. Easier said than done: Predicting downside risks to house prices in Croatia By Tihana Škrinjarić
  4. Wage and Employment Cyclicalities at the Establishment Level By Merkl, Christian; Stüber, Heiko
  5. Monetary shocks and house prices in Europe By Alexis Pourcelot; Alain Coen
  6. The Effects of Economic Measures on House Prices in Turkey During the Covid-19 By Gülnaz engül Güne; Sinan Güne; Daniel Oeter
  7. Further evidence on the determinants of REITs performance By Viktorija Cohen; Arnas Burinskas
  8. Time-Varying Vector Error-Correction Models: Estimation and Inference By Jiti Gao; Bin Peng; Yayi Yan
  9. Firming up price inflation By Lena Anayi; Nicholas Bloom; Philip Bunn; Paul Mizen; Gregory Thwaites; Ivan Yotzov
  10. Heterogeneous macroprudential policies and corporate financing decisions By Bakkar, Yassine; Machokoto, Michael
  11. Social Insurance against a Short Life: Ante-Mortem versus Post-Mortem Policies By Ponthiere, Gregory
  12. Curse and blessing: the effect of the dividend ban on euro area bank valuations and syndicated lending By Emiel Sanders; Mathieu Simoens; Rudi Vander Vennet
  13. Credit as an instrument for growth: A monetary explanation of the Chinese growth story By Bofinger, Peter; Geißendörfer, Lisa; Haas, Thomas; Mayer, Fabian
  14. The Plant-Level View of Korea's Growth Miracle and Slowdown By Lee, Munseob; Shin, Yongseok
  15. Measuring the sensitivity of bond, equity, gold and real estate investment returns to changes in the level of inflation By Rafal Wolski
  16. The effects of disability on households' economic livelihoods and poverty in Vietnam By Sean Kiely; Dorothee Buehler; Ute Rink; Kristin Kiesel
  17. China’s footprint in global financial markets By Lodge, David; Manu, Ana-Simona; Van Robays, Ine
  18. Strengths, weaknesses and paradoxes of Walras' monetary theory By Nicolas Piluso
  19. Individual Welfare Analysis: A tale of consumption, time use and preference heterogeneity By Tim Obermeier
  20. Bank Deposits as {\em Money Quanta} By Fabio Bagarello; Biagio Bossone
  21. Feminization U Curve: Structural Transformation Impact on Female Labour Force Participation in Asia By Hasibuana Laras Kinanti; Evi Noor Afifah
  22. Understanding Housing Affordability Challenges in African Countries: Insights from Principal Component Analysis By Abukar Warsame
  23. What growth strategies do citizens want? Evidence from a new survey By Baccaro, Lucio; Bremer, Björn; Neimanns, Erik

  1. By: William Tayler; Roy Zilberman
    Abstract: We characterize optimal unconventional monetary and fiscal-financial policies within a tractable New Keynesian model featuring a monetary policy cost channel. State-dependent deposit tax-subsidy interventions remove the zero lower bound constraint on the nominal interest rate, thereby minimizing output and price fluctuations following both supply-driven and demand-driven liquidity traps. Specifically, deposit subsidies circumvent the inflation-output trade-off arising from stagflationary shocks by enabling the implementation of negative nominal interest rates. Moreover, deposit taxes facilitate modest interest rate hikes to escape deflationary traps. Notably, discretionary and commitment policies with deposit taxes / subsidies deliver virtually equivalent welfare gains, rendering time-inconsistent forward guidance schedules unnecessary.
    Keywords: deposit tax-subsidy, cost channel, optimal policy, discretion vs. commitment, zero lower bound
    JEL: E32 E44 E52 E58 E63
    Date: 2023
  2. By: Holden, Tom D.
    Abstract: Central banks wish to avoid self-fulfilling fluctuations. Interest rate rules with a unit response to real rates achieve this under the weakest possible assumptions about the behaviour of households and firms. They are robust to household heterogeneity, hand-to-mouth consumers, non-rational household or firm expectations, active fiscal policy and to any form of intertemporal or nominal-real links. They are easy to employ in practice, using inflation-protected bonds to infer real rates. With a time-varying short-term inflation target, they can implement an arbitrary inflation path, including optimal policy. This provides a way to translate policy makers’ desired path for inflation into one for nominal rates. US Federal Reserve behaviour is remarkably close to that predicted by a real rate rule, given the desired inflation path of US monetary policy makers. Real rate rules work thanks to the key role played by the Fisher equation in monetary transmission.
    Keywords: robust monetary rules, determinacy, Taylor principle, inflation dynamics, monetary transmission mechanism
    JEL: E52 E43 E31
    Date: 2023
  3. By: Tihana Škrinjarić (Bank of England, United Kingdom Author-Name2: Maja Sabol Author-Name2-First: Maja Author-Name2-Last: Sabol Author-Email2: Author-Workplace-Name2: European Parliament)
    Abstract: House price dynamics are particularly interesting for macroprudential policymakers due to their effects on financial stability and future macroeconomic performance. As the main goal of macroprudential policy is to mitigate systemic risks, it is essential to monitor the central tendency of future house price growth dynamics and focus on downside risks and their possible materialization. This research, the first of its kind applied to the Croatian housing market, tries to identify and capture the main drivers of house price-at-risk (HaR) for the period between 2002Q1 and 2022Q3. It also predicts downside risks to future real house price growth. Based on the quantile regression results, we conclude that downside risks on housing market have increased in recent years. The approach is found to be insightful to monitor the uncertainty of the forecasts and decomposing the drivers to house price forecasting. Our results have implications for a range of policies that influence housing markets.
    Keywords: financial stability, macroprudential policy, quantile regression, growth at risk, house price dynamics, downside risks
    JEL: E32 E44 E58 G01 G28 C22
    Date: 2023–11–08
  4. By: Merkl, Christian; Stüber, Heiko
    Abstract: Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across establishments. Based on this heterogeneity, we estimate the relationship between employment cyclicality and wage cyclicality at the establishment level. We use this micro-estimate as a calibration target for a macro labor market flow model with heterogeneous wage dynamics that nests the standard search and matching model. Based on this micro-macro linkage, we provide a new quantitative benchmark for the role of wage rigidity in search and matching models. Furthermore, we show that acyclical and countercyclical wage establishments are key drivers for stronger labor market reactions in recessions than in booms.
    Keywords: Wage Cyclicality, Employment Cyclicality, Labor Market Flow Model, Labor Market Dynamics, Establishments, Administrative Data
    JEL: E32 E24 J64
    Date: 2023
  5. By: Alexis Pourcelot; Alain Coen
    Abstract: The purpose of this study is to investigate the effect of conventional and unconventional monetary policy shocks on housing price dynamics and the economy. We also examine the effect of a housing price shock on monetary policy and its implications for the economy. To do so, we implement an SVAR model for the six major European countries (France, Germany, Italy, Netherlands, Spain and the United Kingdom) and thirteen European markets (Paris, Lyon, Marseille, Berlin, Munich, Frankfurt, Amsterdam, Madrid, Barcelona, Seville, London, Birmingham and Manchester) for the last 20 years (2000-2020). We use impulse response functions to understand the effect of a policy rate and a balance sheet shock on housing prices. We also conduct a forecast error variance decomposition analysis to explore each shock’s effect on housing prices across markets. We find that a contractionary policy rate has a negative influence on house prices. Moreover, an expansionary balance sheet shock has a positive impact on housing prices in all countries, but the effect is heterogeneous according to markets. An unconventional monetary policy shock has greater explanatory power regarding housing prices than a conventional one except in the United Kingdom. The market-level analysis indicates that a conventional monetary policy shock explains a larger share of total housing price variance than an unconventional monetary policy shock in markets such as Paris, Lyon, Madrid, London, Birmingham, Manchester and Amsterdam whereas the opposite is true in the German markets, Barcelona and Seville. In Marseille, both policy types have the same explanatory power. Finally, we find that conventional and unconventional monetary policy shocks have a greater impact in more liberalized credit markets.
    Keywords: Conventional and unconventional monetary policy; House Prices; SVAR model
    JEL: R3
    Date: 2023–01–01
  6. By: Gülnaz engül Güne; Sinan Güne; Daniel Oeter
    Abstract: The demand for housing in Turkey has been increasing in recent years to meet the need for shelter as well as an investment good. Especially during Covid-19, housing prices continued to increase in many regions of Turkey, similar to the development in many other countries around the globe. The Turkish government conducted various measures to counter the severe economic consequences of Covid-19, and several of these measures have had direct and indirect impacts on the housing markets, too. This study analyzes the effect of selected economic measures applied during the pandemic on Turkey's housing prices. Due to data availability, this study focuses on the main housing markets in Turkey: Istanbul, Ankara, and Izmir, which account for more than one quarter of the Turkish population. The conducted economic measures and other macroeconomic factors are assessed over the Central Bank Money Supply, Consumer Price Index, Unemployment Rate, and Housing Loan Interest Rate variables to analyze potential effects. Hereby, residential real estate prices are evaluated on a regional level to show the potential diverging impacts of the respective measures on local housing markets. Descriptive statistics and stationarity levels of the variables used in the study are examined with the Dickey-Fuller (ADF) test. In the study, a Vector Auto-Regressive (VAR) model is used to analyze the various variables’ impact on housing markets in Tukey. While already several studies analyzed the impact of economic measures on house prices in different countries, this study uniquely assesses the impact of such measures in Turkey during Covid-19. The study also evaluates the impact of multiple macroeconomic factors on house prices, providing a more comprehensive understanding of the factors that cause fluctuations in house prices in Turkey. The study can guide policy decisions and investment strategies by providing insights into the impact of economic measures and other macroeconomic factors on house prices.
    Keywords: COVID-19; House Prices; Residential Real Estate; Vector-autoregressive models
    JEL: R3
    Date: 2023–01–01
  7. By: Viktorija Cohen; Arnas Burinskas
    Abstract: Real estate investment trusts (REITs) are widely used as a part of investment diversification opportunities of physical assets among investors. A number of studies on macroeconomic determinants suggest certain commonalities in commercial property market returns, which are driven by macroeconomic factors. This paper extends the range of common macroeconomic factors of REITs introduced by the existing literature. This paper outspreads the perspective of REITs analysis by employing up to 17 indicators in total that include not only usually used variables (GDP growth, CPI, equity markets indicators) but also new ones (among them with more significant relationships: business cycle, bond yields, PPI, industry production, credit for the private sector, hourly earnings for manufacturing, construction volumes, and building permits). We combine OLS regression (including time lags) with Granger causality and ARDL analysis to obtain more robust results. In the latter case, we identify the short and long-run relationship between EPRA and extended macro drivers. Our results confirm well-established relationships between EPRA, equity price growth, CPI, bond yields, and GDP. They also suggest the countercyclical behavior of EPRA, its negative relationship with PPI, industry variables, credit for the private sector and hourly earnings for manufacturing. However, it demonstrates a positive correlation between construction and residential building permits. The same results are obtained for short- and long-term perspectives. Furthermore, we demonstrate that including these new variables in the model increases its forecasting accuracy. Overall, our research contributes to an existing methodology of forecasting REITs' performance broadening the list of important macroeconomic variables that should be included in estimation of REIT’s performance.
    Keywords: ARDL model; EPRA index; Granger Causality; REITs
    JEL: R3
    Date: 2023–01–01
  8. By: Jiti Gao; Bin Peng; Yayi Yan
    Abstract: This paper considers a time-varying vector error-correction model that allows for different time series behaviours (e.g., unit-root and locally stationary processes) to interact with each other to co-exist. From practical perspectives, this framework can be used to estimate shifts in the predictability of non-stationary variables, test whether economic theories hold periodically, etc. We first develop a time-varying Granger Representation Theorem, which facilitates the establishment of asymptotic properties for the model, and then propose estimation and inferential methods and theory for both short-run and long-run coefficients. We also propose an information criterion to estimate the lag length, a singular-value ratio test to determine the cointegration rank, and a hypothesis test to examine the parameter stability. To validate the theoretical findings, we conduct extensive simulations. Finally, we demonstrate the empirical relevance by applying the framework to investigate the rational expectations hypothesis of the U.S. term structure.
    Keywords: cointegration, Gaussian approximations, Granger representation theorem, iterated time-varying functions, term structure of interest rates
    JEL: C14 C32 E44
    Date: 2023
  9. By: Lena Anayi; Nicholas Bloom; Philip Bunn; Paul Mizen; Gregory Thwaites; Ivan Yotzov
    Abstract: We use data from a large panel survey of UK firms to analyze the economic drivers of price setting since the start of the Covid pandemic. Inflation responded asymmetrically to movements in demand. This helps to explain why inflation did not fall much during the negative initial pandemic demand shock. Energy prices and shortages of labor and materials account for most of the rise during the rebound. Inflation rates across firms have become more dispersed and skewed since the start of the pandemic. We find that average price inflation is positively correlated with the dispersion and skewness of the distribution. Finally, we also introduce a novel measure of subjective inflation uncertainty within firms and show how this has increased during the pandemic, continuing to rise in 2022 even as sales uncertainty dropped back.
    Keywords: price setting, energy prices, labour shortages, Covid
    Date: 2023–05–15
  10. By: Bakkar, Yassine; Machokoto, Michael
    Abstract: Utilizing data from 31, 336 firms across 69 countries over the period 2011-2017, we find evidence suggesting macroprudential policies have a significant negative impact on corporate debt, particularly long-term debt. We further find that macroprudential policies have heterogeneous effects, with a greater impact observed among firms facing binding credit constraints and high market competition, as well as those operating in countries with less developed institutions. These findings underscore the importance of institutional factors in determining the effectiveness of macroprudential policies.
    Keywords: Capital structure, debt maturity, macroprudential policies
    JEL: G20 G30 G32
    Date: 2023
  11. By: Ponthiere, Gregory
    Abstract: Welfare States do not insure citizens against the risk of premature death, i.e., the risk of having a short life. Using a dynamic OLG model with risky lifetime, this paper compares two insurance devices reducing well-being volatility due to the risk of early death: (i) an ante-mortem age-based statistical discrimination policy that consists of an allowance given to all young adults (including the unidentified adults who will die early); (ii) a post-mortem subsidy on accidental bequests due to early death. Each policy is financed by taxing old-age consumption. Whereas each device can yield full insurance, the youth allowance is shown to imply a higher lifetime well-being at the stationary equilibrium. The marginal utility of consumption exceeding the marginal utility of giving when being dead, the youth allowances system is, despite imperfect targeting, a more effi cient mechanism of insurance against the risk of early death.
    Keywords: premature death, mortality risk, social insurance, inheritance, lifecycle models
    JEL: J10 J17 I31 E21 H55
    Date: 2023
  12. By: Emiel Sanders; Mathieu Simoens; Rudi Vander Vennet (-)
    Abstract: At the outbreak of the Covid-19 pandemic, the European Central Bank issued a strong recommendation towards banks to halt dividend payouts. The goal of this de facto dividend ban was to boost banks’ capital to ensure the supply of new credit. However, given the importance of dividends for stock market investors, this unprecedented measure is likely to have impacted bank valuations. Hence, banks may have chosen to preserve their higher capital buffers to boost payouts after the lifting of the ban, rendering the intended positive effect on credit supply a priori uncertain. We first investigate the effect of the dividend ban announcement on euro area banks’ valuations and find a significantly negative impact. Second, we assess the effect of the dividend ban on syndicated lending, including potential heterogeneity depending on the stock market reaction. We show that credit supply significantly increased, without counteracting effect of the negative stock market reaction.
    Keywords: Covid-19; dividend, euro area banks; market valuation; syndicated lending
    JEL: E51 G21 G28
    Date: 2023–11
  13. By: Bofinger, Peter; Geißendörfer, Lisa; Haas, Thomas; Mayer, Fabian
    Abstract: This study describes the Chinese growth model over the past 40 years. We show that China's growth model, with its dominant role of the banking system and "the banker", is a perfect illustration of the necessity and power of Schumpeter's "monetary analysis". This approach has allowed us to elaborate theoretically and empirically the uniqueness of the Chinese model. In our empirical analysis, we use a new dataset of Chinese provincial data to analyze the impact of the financial system, especially banks, on Chinese economic development. We also empirically assess the role of the financial system in Chinese industrial policy and provide case studies of the effects of industrial policy in specific sectors. Finally, we also discuss macroeconomic dimensions of the Chinese growth process and lessons that can be drawn from the Chinese experience for other countries.
    Keywords: Bank credit, Bank-led Growth, China, Economic development, Economic growth, Finance, Finance-growth nexus, Industrial Policy, Strategic Emerging Industries
    JEL: E
    Date: 2023
  14. By: Lee, Munseob (University of California, San Diego); Shin, Yongseok (Washington University, St. Louis)
    Abstract: We analyze the evolution of the plant size distribution, static allocative efficiency, and business dynamism of the Korean manufacturing sector during its growth miracle (1967–2000) and the subsequent slowdown since 2000. The average plant size has an inverse-U pattern over time, uncorrelated with the level or the growth rate of value-added per worker. The measure of static misallocation decreases modestly until 1983, consistent with the fast economic growth, but increases substantially afterwards, without a corresponding negative trend in manufacturing productivity. These results are seemingly at odds with existing cross-country evidence on the relationship between plant size and economic development, as well as the one between static allocative efficiency and development. In addition, business dynamism, measured by either churning or responsiveness to shocks, diminished significantly since 2000, coinciding with the slowdown in manufacturing productivity. Our findings call for more systematic research on how economic growth correlates with establishment/firm size distribution and with static and dynamic allocative efficiency.
    Keywords: size distribution, misallocaton, business dynamism
    JEL: O14 O47 O53
    Date: 2023–10
  15. By: Rafal Wolski
    Abstract: In times of accelerating inflation, financial instruments to protect capital against loss of value are becoming increasingly important. It is therefore an open question as to what to invest in in order to, if not outpace, then at least match the level of inflation in investment returns. This has raised the question of whether there are such opportunities in the market. However, according to some authors, this type of analysis is not easy and simple econometric methods are not able to demonstrate the relevant relationships. One example is real estate investments, which - especially in the short term - may not be an adequate hedge against the impact of inflation on capital values. (Fogler 1984) The idea therefore arose to test a modified beta coefficient, a measure of sensitivity, in addition to the commonly used methods of analysis, as a tool to assess the response of the profitability of investments in selected assets to changes in the level of inflation (Bampinas and Panagiotidis, 2015; Arnold and Auer, 2015). For the purpose of the research paper, the objective of the study was formulated: to demonstrate whether investments in the capital market are able to protect capital from depreciation caused by inflation. In order to realise the objective, a research hypothesis was formulated: investments in the bond, stock, gold and real estate markets are able to effectively protect the capital held against the negative impact of inflation. Research on the relationship between investments in different asset classes and inflation is abundant, although it mainly concerns periods in the economy when elevated levels of inflation were observed. During periods when inflationary processes lose their relevance, interest in protecting capital from loss of value fades. Meanwhile, the global economy is constantly changing and the knowledge from the 80s or 90s of the previous century is no longer satisfactory. New investment opportunities are emerging worldwide and access to assets of different classes is much easier for even small investors. Thus, the proposed research will fill a gap in the analysis of capital protection options against inflation. The research will be carried out in the markets of Central European countries. The author's study will use quarterly data including bond market indices, equity market indices, gold price indices and property indices, as well as quarterly inflation data. The study will use Spearman's correlation analysis (Spearman 1987), and cointegration analysis using the Engle - Granger test (Engle, Granger 1987) and sensitivity analysis using a modified beta coefficient (Sharpe 1964, Jensen 1968).
    Keywords: financial instruments; Inflation Hedging; investent; real estate
    JEL: R3
    Date: 2023–01–01
  16. By: Sean Kiely; Dorothee Buehler; Ute Rink; Kristin Kiesel
    Abstract: Could households be both more vulnerable and more resilient to shocks depending on the type of shock experienced and the overall circumstances in which they live? If so, what policy implications can be drawn from such findings? We investigate both the immediate effects of shocks on household’s income and assets, and the longer-term poverty dynamics of households with a disabled member (DH) and without a disabled member (NDH) in Vietnam. Additionally, we assess differences in behaviors and beliefs between these two household groups and the extent to which these differences can explain variations in the impact of shocks on their economic livelihoods. Our results indicate that DHs are more risk averse and believe they will face more health shocks than NDHs, but also experience a greater number of health shocks and total shocks. Examining the immediate impact of shocks, we find that DHs are more resilient in the face of health-related shocks, however, they face large income losses when confronted with weather and agricultural shocks. While these immediate effects may lead one to conclude that policies for DHs should address these natural shocks, our poverty dynamics analysis paints a different picture. Households with a disabled member that face one or more health shocks are significantly more likely to have experienced chronic or transitory poverty than households where a disability is not present. Yet, these households are no more likely to end up in poverty when faced with shocks outside of the health domain. This suggests that the greater number of cumulative shocks, primarily driven by more frequently experienced health shocks, makes them more vulnerable to natural shocks than NDHs and weakens their overall resiliency. Thus, the cumulative number of health shocks may be the strongest determinant of poverty in the long run for DHs, and policies aimed at reducing poverty need to account for the unique experiences of these households.
    Keywords: Poverty dynamics, Disability, Cumulative shocks, Risk preferences, Panel data, Vietnam
    JEL: D13 I32 I12
    Date: 2023–07
  17. By: Lodge, David; Manu, Ana-Simona; Van Robays, Ine
    Abstract: Using daily data since 2017, we disentangle China-specific structural shocks driving Chinese financial markets and examine spillovers across global markets. The novelty of this paper consists of simultaneously identifying China shocks with shocksemanating from the United States and shocks to global risk sentiment – two major forces driving global financial markets – to ensure that China spillover estimates do not reflect common factors. Our results show that shocks originating in China havematerial impacts on global equity markets, although spillovers are much smaller than those following shocks in the United States, or those triggered by shifts in global risk sentiment. By contrast, shocks from China account for a significant proportion of variation in global commodity prices, more on a par with those of the United States. Nevertheless, spillovers from China can be significantly amplified in an environment of heightened global volatility, or when the shocks are large. JEL Classification: E44, E52, G15
    Keywords: China shocks, commodities, global financial markets, spillovers
    Date: 2023–11
  18. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique, UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse)
    Abstract: The aim of this article is to study Walrasian money theory in the light of Cartelier's general criticism of standard theory, which justifies his direct monetary approach to the economy. We argue that Walras succeeded well before his successors in integrating money into the theory of value, avoiding many of the pitfalls into which many contemporary monetary theories fall. This work will highlight a paradoxical result: despite being a value theorist, Walras has an affinity with the monetary tradition, unlike most of his neoclassical successors. Nevertheless, Walras is not clear on the question of the nature of the money supply. This is the weakness of his model, which may well be open to Cartelier's criticism.
    Abstract: Cet article a pour objet d'étudier la théorie walrassienne de la monnaie à la lumière des critiques que Cartelier a formulées d'une manière générale contre la théorie standard et qui justifient son approche directement monétaire de l'économie. Nous soutenons que Walras a réussi bien avant ses successeurs l'intégration de la monnaie à la théorie de la valeur en échappant à nombre d'écueils dans lesquels s'engouffrent plusieurs théories monétaires contemporaines. Ce travail mettra en avant un résultat paradoxal : bien que théoricien de la valeur, Walras présente une affinité avec la tradition monétaire, à rebours de la plupart de ses successeurs néoclassiques. Néanmoins, Walras n'est pas clair sur la question de la nature de l'offre de la monnaie. C'est ce qui fait la faiblesse de son modèle qui prête possiblement le flanc à la critique de Cartelier.
    Keywords: division of labor, money, price, value, division du travail, monnaie, prix, valeur
    Date: 2023
  19. By: Tim Obermeier
    Abstract: How accurately does household income reflect the well-being of the individuals living within the household? Looking at household income does not take unequal consumption sharing within families, the value of time use (leisure and housework) and preference heterogeneity into account. I build a model of family decision-making and the marriage market which jointly captures these aspects and estimate the model based on British time use data. I use the estimated model to study poverty and inequality based on the individual-level Money Metric Welfare Index (MMWI). The main result is that only 59% of individuals who are poor in terms of the MMWI (a??welfare-poora??) are also income-poor, suggesting that the conventional focus on income misses a substantial fraction of the welfare poor. I find that accounting for unobserved preference heterogeneity is an important factor in assessing individual welfare. From an aggregate perspective, inequality within families accounts for 18% of overall welfare inequality, and heterogeneity in economies of scale across households account for 23% of welfare inequality. Finally, to illustrate the policy relevance of individual welfare measures, I study how minimum wage increases affect welfare-poverty in this framework. JEL classification: E21, I32, D13, D63
    Keywords: Individual Welfare, Preference Heterogeneity, Inequality, Marriage Market, Intra-Household Inequality, Minimum Wage
    Date: 2023–10–18
  20. By: Fabio Bagarello; Biagio Bossone
    Abstract: According to the Accounting View of Money (AVM), the money issued by commercial banks in the form of demand deposits features a hybrid nature, since deposits can be shown to consist of a share of deposits bearing the characteristics of debt (debt-deposits) and a share of deposits bearing the characteristics of equity (equity-deposits), in a mix that depends on factors that relate to the issuing banks and the environment where they operate and interact, which may change over time. Following this important finding of the AVM, it is only consequential to associate the hybrid nature of bank deposits with the dual nature of the objects which is typical in quantum physics, and to investigate whether and how the application of quantum analytical methods and ideas to a form of money showing dualistic features could be used to extract valuable economic information.
    Date: 2023–11
  21. By: Hasibuana Laras Kinanti (Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada); Evi Noor Afifah (Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada)
    Abstract: This research aims to observe the relationship between female labour force participation with economic development and to test Feminization U Curve (FEMU) hypothesis in Asian countries for the period 1990-2018. FEMU model is estimated with static model Fixed Effect as conducted in the initial research and elaborated with dynamic panel model Generalized Method of Moments (GMM). Overall, the static and dynamic model confirmed the U curve relationship between female labour force participation and economic development in accordance with FEMU hypothesis, thus female labour force participation decreases when the economy undergoes structural transformation from agricultural to industrial, and it will rise as the economy goes service sector. The hypothesis is also confirmed in the country-income categorized model. The U curve is more consistent in static model compared to the dynamic one. In addition to the structural changes that has been occurring, the dynamics of female labour force participation in Asia also can be explained with the decline in fertility rate and improvement of female tertiary education.
    Keywords: Feminization U Curve, female labour force participation, economic development, GMM dynamic model
    JEL: J01 J16 J21 L16 O11
    Date: 2023–08
  22. By: Abukar Warsame
    Abstract: Housing affordability remains a pressing challenge in numerous African countries due to rapid urbanization, population growth, and economic disparities. This study explores the multifaceted nature of affordability by considering variables such as GDP per capita, inflation rate, slum population percentage, female-headed households, unemployment rate, lending interest rate, maximum loan-to-value ratio, cheapest house price and size, and typical monthly rental. By combining and weighing these variables, a comprehensive affordability measurement is obtained. Utilizing Principal Component Analysis (PCA), the dataset's dimensionality is reduced, revealing key variables contributing to affordability. Our preliminary results demonstrate that distinct components, encompassing socio-economic development, inequality, urbanization, labor markets, housing conditions, construction processes, and economic and business environment, influence affordability differently across countries. Understanding these factors enables policymakers to design targeted interventions such as income redistribution, slum improvement initiatives, gender-specific housing programs, employment generation measures, interest rate regulations, and housing finance accessibility policies. The findings from PCA, combined with examinations of the Gini coefficient, Human Development Index, and World Bank DBI quality index, facilitate evidence-based decision-making and the development of effective policies to enhance housing affordability and socio-economic conditions.
    JEL: R3
    Date: 2023–01–01
  23. By: Baccaro, Lucio; Bremer, Björn; Neimanns, Erik
    Abstract: While research on the economic characteristics of growth models across countries is now extensive, research on the politics of growth models is still in its infancy, even though governments routinely pursue different strategies to generate growth. In particular, we lack evidence on (1) whether citizens have coherent preferences towards growth strategies, (2) what growth strategies citizens prefer, and (3) what shapes their preferences. We address these questions through a new survey of public opinion in Germany, Italy, Sweden, and the United Kingdom, which exemplify different models. We find that preferences for growth strategies are consistent with other policy preferences and are meaningfully structured by class and retirement status, and to a lesser extent by sector of employment. At the same time, differences across class and sector are small, and a large majority of respondents across countries favor wage-led growth. This suggests there is a "representation gap, " since this particular growth strategy is in crisis everywhere.
    Abstract: Es gibt mittlerweile umfassende Forschung zu den ökonomischen Eigenschaften von Wachstumsmodellen in verschiedenen Ländern. Politische Aspekte von Wachstumsmodellen sind dagegen bislang kaum erforscht, obgleich Regierungen unterschiedliche Wachstumsstrategien verfolgen, um Wirtschaftswachstum zu erzielen. Forschungslücken bestehen insbesondere zu den Fragen, 1) ob Bürgerinnen und Bürger kohärente Präferenzen zu Wachstumsstrategien haben, 2) welche Wachstumsstrategien sie befürworten und 3) welche Faktoren ihre Präferenzen beeinflussen. Wir adressieren diese Frage mithilfe einer neuen Meinungsumfrage für Deutschland, Italien, Schweden und das Vereinigte Königreich, welche unterschiedliche Wachstumsmodelle verkörpern. Unsere Ergebnisse zeigen, dass Präferenzen zu Wachstumsstrategien konsistent mit Präferenzen für andere Politikbereiche sind und dass die soziale Klassenzugehörigkeit und, in geringerem Maße, der Wirtschaftssektor des Beschäftigungsverhältnisses einen prägenden Einfluss auf diese Präferenzen haben. Zugleich sind aber die Unterschiede in den Präferenzen über Klassen und Sektoren hinweg relativ gering und es zeigt sich, dass eine große Mehrheit der Befragten über Länder hinweg lohngetriebenes Wachstum befürwortet. Dieser Befund suggeriert eine Repräsentationslücke, da sich diese Wachstumsstrategie überall in einem Krisenzustand befindet.
    Keywords: comparative capitalism, economic growth, growth models, macroeconomic policies, public opinion, unequal representation, makroökonomische Politik, öffentliche Meinung, ungleiche Repräsentation, vergleichende Kapitalismusforschung, Wachstumsmodelle, Wirtschaftswachstum
    Date: 2023

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