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on Macroeconomics |
| By: | Sandra Eickmeier; Josefine Quast; Yves Schuler |
| Abstract: | We examine how natural disasters impact the US economy and financial markets using monthly data since 2000. Our analysis reveals large sustained adverse effects of disasters on overall economic activity, with significant implications across various sectors including labor, production, consumption, investment, and housing. Our findings suggest that these effects stem from heightened financial risk, increased uncertainty, declining confidence and heightened awareness of climate change, leading to negative repercussions on the economy. Additionally, consumer prices increase temporarily, likely due to rising energy and food costs. We find a decline in the monetary policy rate and an increase in government spending, which potentially mitigate the adverse macroeconomic effects. However, we also observe a prolonged rise in public debt relative to GDP and a decrease in r-star following the disasters. With climate change persisting, this could constrain the flexibility of monetary and fiscal policies in the future. Overall, our findings emphasize the urgency of combating climate change and, in tandem, enhancing economic and financial resilience. |
| Keywords: | climate change, natural disasters, transmission, local projections |
| JEL: | C22 E31 E32 E44 E52 E62 Q54 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2024-23&r=mac |
| By: | Heresi, Rodrigo |
| Abstract: | I study the welfare and macroeconomic implications of simple and implementable fiscal policy rules in commodity-dependent economies, where a large share of output, exports, and government revenues depend on exogenous and volatile commodity prices. Using a multisector New Keynesian model estimated for the Chilean economy, we find that the welfare-maximizing fiscal policy involves an actively countercyclical response to the tax revenue cycle and a mildly procyclical response to the commodity revenue cycle. Compared to a benchmark acyclical policy, the optimized rule minimizes GDP growth volatility while delivering welfare gains of 0.6% of lifetime consumption to non-Ricardian (financially constrained) households. Government consumption and especially public investment are particularly helpful in stabilizing GDP, while targeted social transfers are essential to smooth the consumption of financially constrained households. Implementing the optimized rule requires moderate additional volatility (fiscal activism) in government spending and public debt. |
| Keywords: | Fiscal Rules;Raw materials sector;Open economy macroeconomics |
| JEL: | E62 F41 Q32 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:13141&r=mac |
| By: | Bilbiie, F. O.; Kanzig, D. R. |
| Abstract: | Amidst the recent resurgence of inflation, this paper investigates the interplay of corporate profits and income distribution in shaping inflation and aggregate demand within the New Keynesian framework. We derive a novel analytical condition for profits to be procyclical and inflationary. Furthermore, we show that the cyclicality of profits is a key determinant of the propagation properties of these models under household heterogeneity, but there is a catch: for aggregate-demand fluctuations and inflation to be amplified by heterogeneity, profits have to be countercyclical—an implication that is at odds with the data. Adding physical capital investment to the model can resolve this conundrum, generating aggregate-demand amplification even under procyclical profits. However, the amplification works through an investment channel and not through profits, inconsistent with the narrative attributing elevated inflation to corporate greed. |
| Keywords: | Aggregate demand, income distribution, inflation, profits |
| JEL: | D11 E32 E52 E62 |
| Date: | 2023–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camjip:2313&r=mac |
| By: | Gunes Kamber; James Morley; Benjamin Wong |
| Abstract: | We revisit some popular univariate trend-cycle decomposition methods given the Covid-era data and find that only the output gap estimates from the Beveridge-Nelson filter remain both intuitive and reliable throughout the crisis and its aftermath. The real-time Hodrick-Prescott filter estimates for the output gap just prior to the pandemic are highly unreliable, although the estimated gap during the pandemic is reasonably similar to that of the Beveridge-Nelson filter. The Hamilton filter produces reliable estimates, but suffers from base effects that imply a purely mechanical spike in the output gap exactly two years after the onset of the crisis, in line with the filter horizon. Notably, unlike with the Beveridge-Nelson and Hodrick-Prescott filters, forecasts of the output gap for the Hamilton filter do not settle down to zero given plausible projected values of future output growth and display large spurious dynamics due to base effects given a simulated Covid-like shock in the projection. We also provide some refinements to the original Beveridge-Nelson filter that produce even more intuitive estimates of the output gap, while retaining the same strong revision properties. |
| Keywords: | Beveridge-Nelson decomposition, output gap, real-time reliability |
| JEL: | C18 E17 E32 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2024-24&r=mac |
| By: | Biagio Bossone |
| Abstract: | This article shows that in highly internationally financially integrated ("globalized") economies, policymakers' ability to implement effective expansionary macroeconomic policies, referred to in the article as "Keynesian policy space, " is influenced by the portfolio decisions of a specific group of investors known as "Global investors." This conclusion arises from a two-country, open-economy model in which Global investors allocate capital internationally based primarily on their perception of the policy credibility of the countries where they invest their managed wealth. In countries that Global investors deem highly credible, expansionary macroeconomic policies prove effective in terms of stimulating output and resource employment. Conversely, in countries perceived as having weak credibility, the portfolio decisions of these investors may undermine the effectiveness of such policies. Consequently, the anticipated real effects of these policies may dissipate into domestic currency depreciation and higher inflation. Following the derivation and evaluation of this conclusion, the article explores various options for countries to establish and maintain Keynesian policy space. |
| Keywords: | credibility; exchange rate; financial integration; global investor; inflation; intertemporal budget constraint; macro-policies |
| JEL: | E31 E40 E50 E62 F31 G15 H30 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2405&r=mac |
| By: | Jalles, João Tovar (University of Lisbon) |
| Abstract: | This paper reviews the current discussions, methods, and practices surrounding the estimation of reasonable proxies for the underlying fiscal position, a useful anchor for fiscal policy. An empirical application to developing Asian economies is carried out. There is no one-size fits all type of approach and the sensitivity and discernment regarding specific economies are important in various stages. The choice of the filter to decompose trends from cycles matters. The way to adjust revenues and expenditures entering the cyclically adjusted balance also matters—choices regarding economy-specific vs. panel estimations or the use of static vs. time-varying approaches need to be made. To deal with one-off operations, a narrative-based approach can complement the suggested identification based on large changes in cyclically adjusted government capital transfers. A discussion of other important factors that can affect the estimates of structural balances such as asset and commodity prices is also provided. |
| Keywords: | budget elasticity; time-varying estimation; trend-cycle decomposition; cyclically adjusted balances; one-off fiscal operations |
| JEL: | C33 E62 H30 H60 O53 |
| Date: | 2024–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0719&r=mac |
| By: | Harashima, Taiji |
| Abstract: | In this paper, I numerically simulate the path of economy in an economic depression. It is not easy to perform a numerical simulation of the path to a steady state if households are assumed to behave by generating rational expectations. It is much easier, however, if households are assumed to behave according to a procedure based on the maximum degree of comfortability (MDC), where MDC indicates the state at which a household feels most comfortable with its combination of income and assets. The results of simulations under the supposition of this alternative procedure indicate that, if households do not strategically consider other households’ behaviors, consumption jumps upwards immediately after the shock. However, if households strategically select a Pareto inefficient path, large amounts of unutilized economic resources are generated, and the unemployment rate can rise to 30% or higher. These results seem to well match actual historical experiences during severe recessions such as the Great Depression and Great Recession. |
| Keywords: | Economic depression; Shock; Simulation; Recession; Unemployment; Unutilized economic resources |
| JEL: | E10 E17 E27 E32 E37 |
| Date: | 2024–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120508&r=mac |
| By: | Rodolfo G. Campos; Jesús Fernández-Villaverde; Galo Nuño Barrau; Peter Paz |
| Abstract: | We study a new type of monetary-fiscal interaction in a heterogeneous-agent New Keynesian model with a fiscal block. Due to household heterogeneity, the stock of public debt affects the natural interest rate, forcing the central bank to adapt its monetary policy rule to the fiscal stance to guarantee that inflation remains at its target. There is, however, a minimum level of debt below which the steady-state inflation deviates from its target due to the zero lower bound on nominal rates. We analyze the response to a debt-financed fiscal expansion and quantify the impact of different timings in the adaptation of the monetary policy rule, as well as the performance of alternative monetary policy rules that do not require an assessment of the natural rates. We validate our findings with a series of empirical estimates. |
| Keywords: | HANK models, natural rates, fiscal shocks |
| JEL: | E32 E58 E63 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1172&r=mac |
| By: | Sushant Acharya; Paolo Pesenti |
| Abstract: | We study international monetary policy spillovers and spillbacks in a tractable two-country Heterogeneous Agent New Keynesian model. Relative to Representative Agent (RANK) models, our framework introduces a precautionary-savings channel, as households in both countries face uninsurable income risk, and a real-income channel, as households have heterogeneous marginal propensities to consume (MPC). While both channels amplify the size of spillovers/spillbacks, only precautionary savings can change their sign relative to RANK. Spillovers are likely to be larger in economies with higher fractions of high MPC households and more countercyclical income risk. Quantitatively, both channels amplify spillovers by 30-60 percent relative to RANK. |
| Keywords: | monetary policy spillovers; incomplete markets; precautionary savings; real-income channel |
| JEL: | E50 F41 F42 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:97955&r=mac |
| By: | Max Welz |
| Abstract: | In empirical science, many variables of interest are categorical. Like any model, models for categorical responses can be misspecified, leading to possibly large biases in estimation. One particularly troublesome source of misspecification is inattentive responding in questionnaires, which is well-known to jeopardize the validity of structural equation models (SEMs) and other survey-based analyses. I propose a general estimator that is designed to be robust to misspecification of models for categorical responses. Unlike hitherto approaches, the estimator makes no assumption whatsoever on the degree, magnitude, or type of misspecification. The proposed estimator generalizes maximum likelihood estimation, is strongly consistent, asymptotically Gaussian, has the same time complexity as maximum likelihood, and can be applied to any model for categorical responses. In addition, I develop a novel test that tests whether a given response can be fitted well by the assumed model, which allows one to trace back possible sources of misspecification. I verify the attractive theoretical properties of the proposed methodology in Monte Carlo experiments, and demonstrate its practical usefulness in an empirical application on a SEM of personality traits, where I find compelling evidence for the presence of inattentive responding whose adverse effects the proposed estimator can withstand, unlike maximum likelihood. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.11954&r=mac |
| By: | Rustam Jamilov; Tobias König; Karsten Müller; Farzad Saidi |
| Abstract: | We study the macroeconomic causes and consequences of bank runs in 184 countries over the period of 1800-2022. A new narrative chronology of bank run events coupled with a newly constructed historical dataset on banking sector deposits allows us to distinguish between systemic bank runs—those associated with substantial declines in aggregate deposits—and non-systemic episodes. We find that bank runs are typically associated with large contractions in deposits, credit, and output, as well as exchange rate crashes and sudden stops. Whether deposits contract during runs, in turn, predicts the severity of output declines, highlighting that bank runs are particularly costly when they are systemic in nature. Using several sources of historical and contemporary bank-level data, we show that systemic bank runs are associated with a wide dispersion in deposit growth rates and a flow of deposits from more leveraged to safer banks. Taken together, our analysis highlights a key role for the liability side of banks in financial crises, and our new quantitatively validated measure of bank runs provides unprecedented scope for studying such episodes. |
| Date: | 2024–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:1039&r=mac |
| By: | Gürtzgen, Nicole (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg) |
| Abstract: | "Since the introduction of temporary part-time work on 1 January 2019, employees have been entitled to reduce their contractual working hours for a limited period of time and then resume their originally agreed working hours. The results of this report show that the reform was not associated with major changes in part-time employment in companies whose employees were entitled to make use of such temporary working time reductions. In our analysis, we define establishments that were not affected by the reform as those that belong to companies with up to 45 employees, while affected establishments are part of companies with more than 45 and up to 200 employees. Establishments that are part of larger companies with more than 200 employees were also affected by the reform, but are not considered here for the sake of poorer comparability. A comparison of part-time rates in establishments that were affected by the reform and those that were not shows that over the entire observation period from 2014 to 2021, part-time rates in non-affected establishments were higher than in affected establishments. This pattern has not changed after the introduction of temporary part-time work came into force in 2019. With the onset of the Covid-19 recession, establishments experienced a slightly lower increase in part-time employment. The lower increase can be observed both in affected establishments (i.e., those belonging to companies with more than 45 and up to 200 employees) and in smaller establishments that are exempt from the regulations. However, the post-reform slow-down of the increase in part-time employment appears to have been slightly lower in affected establishments. A causal interpretation of these results if limited by the fact that, especially for the years 2020 and 2021, it is generally hard to disentangle reform-induced effects on part-time employment from Covid-19 related shocks. Overall, our findings suggest that for an establishment with 200 employees the increase in the number of part-time employees over the post-reform relative to the pre-reform period is on average 1 person higher than in establishments that were not affected by the reform. However, this increase is too small to help ensure that part-time shares in affected establishments can keep pace with the higher shares of non-affected establishments. A mandatory restriction, which stipulates an upper limit of temporary working time reductions in companies with more than 45 and up to 200 employees, cannot plausibly explain this small change. Another explanation could be that individual take-up is low as the current rules are perceived as too inflexible. For example, according to the current regulation employees can apply for temporary part-time work for a minimum of one year and for a maximum of 5 years. In addition, it is not possible to return to the originally agreed working hours during the requested period. Moreover, the negligible effects on part-time shares observed during the Covid-19 recession may also reflect that workers may have shown greater reluctance to reduce their working hours during this period. The question of whether the reform has increased the share of part-time work during the economic recovery after the recession is left for future research." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Bundesrepublik Deutschland ; IAB-Open-Access-Publikation ; Auswirkungen ; Beschäftigungseffekte ; Beschäftigungsentwicklung ; Rechtsanspruch ; Betriebsgröße ; Schwellenwert ; IAB-Betriebs-Historik-Panel ; IAB-Betriebs-Historik-Panel ; Reformpolitik ; IAB-Stellenerhebung ; IAB-Stellenerhebung ; Teilzeit- und Befristungsgesetz ; Teilzeitarbeit ; Arbeitszeitverkürzung ; 2014-2021 |
| Date: | 2024–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:202402&r=mac |
| By: | Jelena Reljic; Francesco Zezza |
| Abstract: | We contribute to the long-standing debate on the Italian North–South divide by assessing the impact of public spending on social infrastructure - including education, healthcare, childcare and social assistance - on the gender employment gap over the last two decades, using a P-SVAR analysis. These investments, while not explicitly targeting women, may increase both their labour supply - by reducing the unpaid care work burden - and pro-women labour demand through job creation in care sectors that predominantly employ women. Our research reveals a positive and long-lasting impact of social infrastructure expenditure on private investment, GDP and employment in all areas of the country. However, the reduction of the gender employment gap is detected only in the South and among high-skilled women. These results stress the need for targeted policies to fill the investment gaps in social infrastructure, aiming for a more inclusive labour market, particularly in Southern regions, which suffer from chronic underinvestment and structural challenges. |
| Keywords: | Social infrastructure; Gender inequality; Fiscal Policy; Panel SVAR; Italian regions |
| JEL: | C33 E24 H30 J16 J18 J21 R58 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp246&r=mac |
| By: | Misuraca, Roberta; Zimmermann, Klaus F. |
| Abstract: | A scarce literature deals with the consumption implications of cultural assimilation and integration, ethnic clustering and diasporas, the marginal propensity to consume, home production and allocation of time, ethnic consumption, migration, and trade, as well as native consumption responses. Consumption patterns reflect how migrants integrate into their new environment while preserving their cultural origins. The identity formation may also affect economic and societal relations between the involved countries. |
| Keywords: | ethnic identity, ethnic imports, ethnic niches, ethnic clusters, diaspora, ethnic goods, cultural assimilation, ethnosizer, consumption propensity, home production, allocation of time |
| JEL: | E21 J15 Z10 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1412&r=mac |
| By: | Ådne Cappelen; Aurora G. Hattrem; Thor O. Thoresen (Statistics Norway) |
| Abstract: | How taxation influences income mobility is largely a neglected topic. In this study we discuss the relationship between taxation and income mobility by analyzing both macro and micro data. Administrative register data based on income tax returns are used to produce individual and aggregate measures of income mobility from 1994 to 2021. Income mobility is explained in terms of marginal tax rates on both wage income and capital income. Estimation results are obtained from an autoregressive distributed lag model and a fixed effects linear probability model for the macro and micro data approaches, respectively. The macro and micro evidence point in the same direction — we find that income mobility is negatively influenced by higher marginal tax rates on both earnings and capital income, with the largest effect found for tax on capital income. |
| Keywords: | Income mobility; tax effects; administrative register data |
| JEL: | D31 H24 H30 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:1010&r=mac |
| By: | Emanuele Bacchiocchi; Andrea Bastianin; Graziano Moramarco |
| Abstract: | We estimate the short-run effects of severe weather shocks on local economic activity and assess cross-border spillovers operating through economic linkages between U.S. states. We measure weather shocks using a detailed county-level database on emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for the U.S. states. Impulse responses highlight significant country-wide macroeconomic effects of weather shocks hitting individual regions. We also show that (i) taking into account economic interconnections between states allows capturing much stronger spillover effects than those associated with mere spatial adjacency, (ii) geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and (iii) network effects amplify the local impacts of these shocks. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.10907&r=mac |
| By: | Leslie Root; Joshua Sanders; Amanda Stevenson; Katie Genadek |
| Abstract: | This technical note details the code necessary to generate the Census Bureau Linked Administrative Records for Fertility Estimation (CLAR-FE) rates at the national and state level by race/ethnicity. We generate three types of rates for 2000-2020 at the national and state levels by race/ethnicity: age-specific rates and both unconditional and conditional parity- and age-specific rates. |
| Keywords: | HHKEY, Numident |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:tnotes:24-02&r=mac |
| By: | Nobuaki Hamaguchi (Research Institute of Economics and Business Administration, Kobe University, JAPAN); Hiroyuki Hino (Office of Global Affairs, Duke University, U.S.A. and Research Institute of Economics and Business Administration, Kobe University, JAPAN); Charles Piot (Department of Cultural Anthropology, Duke University, U.S.A.); Jiahan Yin (Graduate School of Economics, Duke University, U.S.A.) |
| Abstract: | The informal economy in Africa has been considered both the cause and result of underdevelopment, and that dichotomous understanding of the formal-informal divide, simply based on a single criterion such as whether an enterprise is registered or not, is not satisfactory. In this paper, we propose Composite Informality Index (CII) as a continuous measure of informality enclosing multiple indicators of individual enterprise. We applied multiple correspondence analysis to quantify CII. We examined whether CII has explanatory power for firm size, sales and growth, and the degree of resiliency seen in shocks received from COVID-19 and recovery from them. We found that informality is associated with a smaller size of employment and sales, consistent with stylized facts of informality. However, CII is not directly related to sales growth, rejecting the general perception of linking informality to slower business growth. A business owner-operator mindset, rather than being more or less informal, determines business growth. The informality is associated with smaller revenue loss from COVID-19 shock, suggesting informal enterprises' higher absorptive capacity. We also found that business perspectives that appreciate the full control of their own business and the flexibility to innovate, which are also linked to higher sales growth, are associated with lower informality. Our method would be particularly useful for devising policies to boost owner-operators' motivation that would help African countries to enhance the dynamism of the microenterprise sector. |
| Keywords: | MCA; Sales growth; Resiliency |
| JEL: | O17 O55 Z13 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-13&r=mac |
| By: | Liu, Yi; Matsumura, Toshihiro |
| Abstract: | We formulate a duopoly model with international location choice in the presence of global common ownership. We theoretically examine how payoff interdependence caused by overlapping ownership such as common and cross ownership affects location and production choices, and resulting welfare. We find that positive payoff interdependence enhances international location diversification, which may improve global welfare. |
| Keywords: | Overlapping ownership; Transport costs; Welfare-improving production substitution; Spatial Cournot; Market-oriented location; Cost-oriented location |
| JEL: | F12 L13 R32 |
| Date: | 2024–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120495&r=mac |
| By: | Kohnert, Dirk |
| Abstract: | Jews in Africa have a long history. Africans have encountered Jewish myths and traditions in different forms and situations, leading to the development of a new Jewish identity linked to that of the Diaspora. Different groups of black Jews from western, central, eastern and southern Africa used and imagined their oral traditions and traditional practices to construct a distinct Jewish identity. The adoption of Judaism by black Africans was a form of liberation from Anglo-Christian authority. Blacks and Jews are the two marginalised and stigmatised minorities in Western culture. Since ancient times they have maintained a complex relationship of identification, cooperation and rivalry. The Igbo of Nigeria, for example, were at the forefront of a normative Jewish movement that included several other ethnic groups. The rhetoric of the Holocaust, Zionism and the external features of Judaism were exploited by the Biafran neo-secessionists for their own ends. The majority of African Jews live in South Africa. However, most of them are white. The South African Jewish community numbered more than 120, 000 in the mid-1970s. After several large waves of emigration at the end of the apartheid regime, the number fell to just over 50, 000. However, the Jewish claim to South African citizenship is controversial. The South African host society distinguishes between the Jewish diaspora and South African citizenship. Since the early 1990s, the second-largest Jewish community in sub-Saharan Africa has developed in Nigeria, which previously did not appear on any map of the Jewish world. Nine out of ten Nigerian Jews are Igbo. Estimates range from 3, 000 to 30, 000 Jews. Israel, however, refuses to recognise them as a Jewish population. In the DR Congo, a small Jewish community has held a special position since colonial times. Many Jews were among Leopold II's close advisers and agents in his Congo Free State (1885-1908). Jews also played an important role in Katanga Province in the 20th century, when the first mines were opened there and a railway line to South Africa was built. However, Mobutu's Zairisation (1973) and the looting of 1991 forced most Jewish entrepreneurs to leave the country. Ethiopia could be considered the cradle of Judaism, including the ancient kingdom of Sheba, mentioned in the Hebrew Bible and the Koran, and Beta Israel. Today, however, the harsh reality faced by Ethiopian Jewish immigrants in Israel reveals the racism that is deeply rooted in Israeli society. |
| Keywords: | Black African Jews; Jewish identity; Jewish mythology; Black Jews, Black Judaism; Jewish diaspora; History of the Jews in Africa; Uganda Scheme; Ethiopian Jews; Beta Israel; Lemba people; Igbo Jews; House of Israel (Ghana); List of Jews from Sub-Saharan Africa; Sub-Saharan Africa; South Africa; Nigeria; DR Congo; Ethiopia; |
| JEL: | F35 F52 F54 K37 N17 N37 N97 O15 O55 Z12 Z13 |
| Date: | 2024–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120512&r=mac |
| By: | pohit, sanjib; Bhattacharya, Anindya; Chaudhuri, Chetana; Beena, P.L.; Mathur, Somya; Pratap, Devender; Mallik, Hrushikesh; Meena, Mohit; Jain, Ritika; Thampi, Malavika |
| Abstract: | As India has embarked on the journey of fulfilling its net-zero emissions target by 2070, the states of India are steering up too to meet the target. The per capita emissions for Kerala are lower than the national average. The energy sector is the main contributor to GHG emissions in Kerala. A major share of 76 percent of electricity power is purchased from other states. When other states undergo an energy transition, the availability of imported electricity may be a challenge for Kerala. Hence, the State needs to harness its own potential for renewable energy sources and incorporate improved technologies leading to energy efficiencies in all sectors. Accordingly, this paper has undertaken integrated modelling (an approach with the primary objective of quantifying the gains and losses of low-carbon transitions and their financial implications). The integrated modelling approach involves soft linking of the macroeconomic top-down CGE model and bottom-up (Messageix) energy model. The integrated model is a recursive dynamic model with multiple periods of time. In this paper, we have undertaken a policy scenario in which (i) the imports of fossil-based electricity from other states of India are restricted to Kerala, (ii) 50 percent of the existing potential of renewable electricity by various modes is achieved in Kerala and the rest of India, and (iii) energy efficiency in all energy sectors is increased to the tune of 2.5 percent per annum along with 1 percent total productivity growth per annum in all sectors of the Kerala and India economies. Our results show that the reduced import of fossil fuel electricity without any policy intervention to strengthen the renewable energy sector would hamper growth. On the other hand, investment in renewable energy to facilitate a complete energy transition with self-reliance on energy for the state would expand the economy, increase the returns to the factors of production, and increase employment. The key message that comes out from our simulation is that the energy transition towards renewable energy will not take place without complementarity support polices towards this sector. Our observation is that energy transition may be a win‒win situation in the sense that growth and employment creation may be positive with suitable policy intervention. It must be mentioned that the paper focused only on the energy sector. The developed model may be used in the future to focus on the economic implications of other policies, such as carbon sequestration. |
| Keywords: | Low carbon pathway, Integrated Assessment model, Kerala, India, Energy transition |
| JEL: | Q42 Q43 Q47 |
| Date: | 2024–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120363&r=mac |
| By: | Allwein, Florian |
| Abstract: | ChatGPT, a chatbot based on a Large Language Model, has become one of the fastest-growing consumer software applications in history. Discussion of the tool and its use cases contains an element of hype as it appears that the technology's capabilities are sometimes exaggerated. Moreover, a critical perspective is often lacking in research and practice. This paper points out some significant downsides, risks and limitations of using ChatGPT, arguing for a critical view of the tool based on ethics, regulations and reflected use. This can be used as a guideline for decisions on whether and how to use ChatGPT, and can inform future research. |
| Keywords: | ChatGPT, AI, Ethics |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iubhit:287746&r=mac |
| By: | Aknouche, Abdelhakim; Almohaimeed, Bader; Dimitrakopoulos, Stefanos |
| Abstract: | This paper proposes a noisy GARCH model with two volatility sequences (an unobserved and an observed one) and a stochastic time-varying conditional kurtosis. The unobserved volatility equation, equipped with random coefficients, is a linear function of the past squared observations and of the past observed volatility. The observed volatility is the conditional mean of the unobserved volatility, thus following the standard GARCH specification, where its coefficients are equal to the means of the random coefficients. The means and the variances of the random coefficients as well as the unobserved volatilities are estimated using a three-stage procedure. First, we estimate the means of the random coefficients, using the Gaussian quasi-maximum likelihood estimator (QMLE), then, the variances of the random coefficients, using a weighted least squares estimator (WLSE), and finally the latent volatilities through a filtering process, under the assumption that the random parameters follow an Inverse Gaussian distribution, with the innovation being normally distributed. Hence, the conditional distribution of the model is the Normal Inverse Gaussian (NIG), which entails a closed form expression for the posterior mean of the unobserved volatility. Consistency and asymptotic normality of the QMLE and WLSE are established under quite tractable assumptions. The proposed methodology is illustrated with various simulated and real examples. |
| Keywords: | Noised volatility GARCH, Randon coefficient GARCH, Markov switching GARCH, QMLE, Weighted least squares, filtering volatility, time-varying conditional kurtosis. |
| JEL: | C13 C22 C51 C58 |
| Date: | 2024–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120456&r=mac |
| By: | David Card; Jesse Rothstein; Moises Yi |
| Abstract: | We use detailed location information from the Longitudinal Employer-Household Dynamics (LEHD) database to develop new evidence on the effects of spatial mismatch on the relative earnings of Black workers in large US cities. We classify workplaces by the size of the pay premiums they offer in a two-way fixed effects model, providing a simple metric for defining “good” jobs. We show that: (a) Black workers earn nearly the same average wage premiums as whites; (b) in most cities Black workers live closer to jobs, and closer to good jobs, than do whites; (c) Black workers typically commute shorter distances than whites; and (d) people who commute further earn higher average pay premiums, but the elasticity with respect to distance traveled is slightly lower for Black workers. We conclude that geographic proximity to good jobs is unlikely to be a major source of the racial earnings gaps in major U.S. cities today. |
| JEL: | J31 R23 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32252&r=mac |
| By: | Alin Marius Andries (Alexandru Ioan Cuza University of Iasi; Romanian Academy - Institute for Economic Forecasting); Steven Ongena (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Nicu Sprincean (Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iași; National Institute for Economic Research, Romanian Academy) |
| Abstract: | We examine the association between sectoral credit dynamics and systemic risk. Contrary to most studies that only delve into broad-based credit development, we focus on sectoral credit allocation, specifically to households versus firms, and to the tradable versus non-tradable sector. Based on a global sample of 417 banks across 46 countries over the period 2000-2014, we find that lending to households and corporates in the non-tradable sector increases system-wide distress. Conversely, credit granted to corporations and to the tradable sector reduces banks’ systemic behavior. The findings emphasize critical policy implications considering sectoral heterogeneity. Authorities can intervene in the most systemic economic sectors and limit the accumulation of “bad credit” and preserve systemic resilience, while still benefiting from the positive impact of “good credit” on growth and financial stability. |
| Keywords: | systemic risk; sectoral credit; financial stability |
| JEL: | G21 G32 E51 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2423&r=mac |
| By: | Xiaoming Cai; Pieter Gautier; Ronald Wolthoff; Pieter A. Gautier |
| Abstract: | This paper considers a random search model where some locations provide sellers with better chances of meeting many buyers than other locations (for example popular shopping streets or the first page of a search engine). When sellers are heterogeneous in terms of the quality of their product and/or the probability that a given buyer likes their product, it is desirable that sellers of high-quality niche products sort into the best locations. We show that this does not always happen in a decentralized market. Finally, we allow for endogenous location distributions and show that more trades are realized when locations are similar (in which case the aggregate matching function is urn-ball) but that quality weighted trade can be higher when locations are heterogeneous. |
| Keywords: | search frictions, spatial equilibrium, sorting |
| JEL: | C78 D44 D83 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10978&r=mac |
| By: | Muhammad Faisal Ali (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | It is an undeniable reality that our reliance on technology for elections lags even in the 21st century, largely due to the 37.7 percent illiteracy in Pakistan[1]. Given the prevalence of high illiteracy rates in the country, symbols serve as a straightforward means to facilitate voting. Consequently, while ballot papers include candidate names, they also feature corresponding symbols. This allows voters to easily identify their preferred choice by placing a stamp on the corresponding symbol, underscoring the heightened significance of visual cues for recognition. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:pid:rrepot:2024:6&r=mac |
| By: | Yasumasa Morito (University of Wisconsin); Kenichi Ueda (University of Tokyo) |
| Abstract: | Using the bilateral international investment data across countries for 2009-2018, we find that the returns on international investments are lower for rich countries than for poor countries, seemingly consistent with the Lucas Paradox. However, when we look at the excess returns on international investments relative to domestic investments, rich countries are investing more wisely than poor countries. A puzzle arises: Why do poor countries invest mostly in rich countries where relative returns are negative? We investigate the effects of institutional qualities of investor countries, in addition to recipient countries’ characteristics, which the literature has been focusing on. We find that investor countries’ institutional qualities do matter for participating in a wider set of investment destinations, but that they do not affect return sensitivity in allocating funds across participating markets. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf581&r=mac |
| By: | Ivanova, Nevena; Vasileva, Elka |
| Abstract: | The standardization of sustainable management systems, processes and products can support and strengthen their transformational potential for implementing sustainable development goals. However, scientific research in this area is quite limited. Therefore, our study aims to identify the key sustainable management systems standards (SMSS) and to reveal the leading ISO standards in support of their better development in Bulgarian context. The results of SMSS mapping prove their role as a widely used tool for assessing and improving sustainability practices, in the context of organizational management. |
| Keywords: | Standards for sustainable management systems; mapping; ISO standards; Bulgaria |
| JEL: | M1 M10 Q5 Q59 |
| Date: | 2023–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120373&r=mac |
| By: | Elias Asproudis (Department of Economics, Swansea University); Eleftherios Filippiadis (University of Macedonia, Greece) |
| Abstract: | This document delves into the Command-and-Control framework, specifically examining the timing of environmental policymaking within the context of regulating oligopolistic firms to reduce emissions. The regulator faces a crucial decision of implementing technological standards before (ex-ante timing) or after (ex-post timing) firms make production decisions. Geographical considerations also play a role, with regions adopting asymmetric anti-pollution technology standards. An innovative aspect is the inclusion of green trade unions, advocating for environmental conservation during negotiations with firms. The document conducts a comparative analysis of two games employing ex-ante and ex-post approaches, evaluating outcomes across various dimensions. The study emphasizes the significant impact of regulatory timing on environmental and economic outcomes, showcasing the advantages of a proactive (ex-ante) approach in fostering less-polluting technologies, higher production levels, increased profits, elevated social welfare, and reduced environmental damage. These insights contribute to the discourse on environmental policymaking, providing valuable considerations for policymakers, industry stakeholders, and researchers. |
| Keywords: | Command-and-Control, timing of policy, environmental technology, emissions, oligopoly |
| JEL: | D43 L13 Q5 |
| Date: | 2024–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2024-04&r=mac |
| By: | Nazir, Khurram; Lodhi, Muhammad Saeed; Ahmad, Zia; Ahmad, Saba |
| Abstract: | Pakistan is one of the third-world countries where technological adaptation is in its initial stages, with several initiatives/projects in the pipeline and others awaited to accomplish for setting the benchmark in their respective areas. Similarly, to meet the dire need for time, the communication sector is also working on advancements and automation in transportation by implementing Intelligent Transportation System (ITS) along its major highways. However, shifting from traditional to modern practices in the transportation sector has shown minimal progress; it has proven a tiresome and laborious process, putting the interest of foreign investors at stack as well. This research, therefore, is meant primarily to elaborate on the Barrier factors hindering the Effectiveness and Development of the Intelligent Transportation System (ITS) Projects in Pakistan and their addresses prudently by measuring their impact in terms of system, function ability, and potential benefits. The analysis will be made using the Partial Least Square technique of the "Structural Equation Modeling" method (PLS-SEM) by constructing and analyzing the data collected from various sources with the help of a questionnaire; the reliability will be established using the Crone batch alpha technique. The results demonstrated remarkable dependence on the Effectiveness & Development (E&D) of ITS on the failure of Policy & Governance, Financial and Technical drought, lack of Exposure and Infrastructure integration, and Rapid urbanization. |
| Keywords: | Intelligent Transportation System, Green Mobility, Sound infrastructure, Smart Mobility, Geographic Information System, Internet of Things, Project Risks. |
| JEL: | R42 |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120367&r=mac |
| By: | Jean-Baptiste Bonnier (Université de Franche-Comté, CRESE, UR3190, F-25000 Besançon, France) |
| Abstract: | I devise a difference-in-differences design that accounts for the possibility that some treatment effect is split in the reactions to two or more events. At the intersection of settings with a single treatment and with multiple treatments, regression-based methods for this split-treatment design can be subject both to negative weights and contamination bias. I propose a simple solution, a first-difference regression with sample constraints in the spirit of Dube et al.’s (2023) LP-DiD, that allows to identify and estimate sensible causal parameters of interest. This estimator is efficient under random walk errors and unrestricted heterogeneity across groups and events. |
| Keywords: | Difference-in-differences, Heterogeneous treatment effects, Multiple treatments, Contamination bias. |
| JEL: | C21 C23 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2024-11&r=mac |
| By: | Stephan Luck; Matthew Plosser |
| Abstract: | In this post, we evaluate how deposits have evolved over the latter portion of the current monetary policy tightening cycle. We find that while deposit betas have continued to rise, they did not accelerate following the bank runs in March 2023. In addition, while overall deposit funding has remained stable, we find that the banks most affected by the March 2023 events are offering higher deposit rates and are growing their deposit funding relative to the broader banking industry. |
| Keywords: | deposit beta; deposits; banks; funding |
| JEL: | G21 |
| Date: | 2024–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97973&r=mac |