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on Macroeconomics |
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Issue of 2024‒07‒29
twenty papers chosen by |
| By: | Michael T. Kiley |
| Abstract: | Activity shortfalls are more costly than strong activity. I consider optimal monetary policy under discretion with an asymmetric (activity shortfalls) loss function. The model satisfies the natural rate hypothesis. The asymmetric loss function and resulting optimal monetary policy exacerbates shortfalls in activity. The additional frequency of activity shortfalls arises from the adjustment of expectations implied by the natural rate hypothesis. The shortfalls asymmetry leads to an inflationary bias, similar to results in the time-consistency literature. Mandating a central bank objective with greater symmetry than the social loss function improves outcomes. Greater symmetry lowers the magnitude of activity shortfalls. Greater symmetry also reduces inflation bias. The model also implies that an optimal monetary policy does not accommodate fluctuations from aggregate demand shocks, as is standard in such models. As a result, the analysis implies that monetary accommodation of strength in economic activity likely requires justifications other than asymmetric costs of shortfalls. |
| Keywords: | Monetary Policy; Rules; Discretion; Symmetric loss function; Asymmetric loss function |
| JEL: | E52 E58 E37 |
| Date: | 2024–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-32&r= |
| By: | Joel P. Flynn; Karthik Sastry |
| Abstract: | We study the macroeconomic implications of narratives, defined as beliefs about the economy that spread contagiously. In an otherwise standard business-cycle model, narratives generate persistent and belief-driven fluctuations. Sufficiently contagious narratives can "go viral, " generating hysteresis in the model's unique equilibrium. Empirically, we use natural-language-processing methods to measure firms' narratives. Consistent with the theory, narratives spread contagiously and firms expand after adopting optimistic narratives, even though these narratives have no predictive power for future firm fundamentals. Quantitatively, narratives explain 32% and 18% of the output reductions over the early 2000s recession and Great Recession, respectively, and 19% of output variance. |
| JEL: | D84 E32 E70 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32602&r= |
| By: | Stancu, Stefania |
| Abstract: | This study investigates the effectiveness of fiscal policy in macroeconomic stabilization during the COVID-19 health crisis through a Dynamic Stochastic General Equilibrium (DSGE) model, incorporating financial frictions and using Romanian empirical data from 2007-2020. We analyse the impact of a consumption and labour demand shock similar to the ones occurring during the COVID-19 health crisis and explore how discretionary fiscal measures can modulate their effects. The findings suggest that increased government spending during the economic downturns of COVID-19 appears to mitigate some of the adverse effects, particularly on output and investment. While consumption does not seem to benefit significantly from fiscal stimulus, public spending helps to moderate declines in output and bolsters investment, especially in scenarios with a financial accelerator. |
| Keywords: | fiscal policy, DSGE model, COVID-19, financial accelerator |
| JEL: | E2 E62 H12 H3 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121322&r= |
| By: | Fares Bounajm; Jean Garry Junior Roc; Yang Zhang |
| Abstract: | We explore the drivers of the surge in inflation in Canada during the COVID-19 pandemic. This work is part of a joint effort by 11 central banks using the model developed by Bernanke and Blanchard (2023) to identify similarities and differences across economies. |
| Keywords: | Economic models; Inflation and prices; Labour markets |
| JEL: | E2 E24 E3 E31 E37 E5 E52 E6 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocsan:24-13&r= |
| By: | William F. Diamond; Tim Landvoigt; Germán Sánchez Sánchez |
| Abstract: | We analyze the impact of fiscal and monetary stimulus in an economy with mortgage debt, where inflation redistributes from savers to borrowers. We show theoretically that fiscal transfers without future tax increases cause a surge in inflation, increasing consumption demand and house prices. The power of fiscal stimulus grows when borrowers are more indebted. We then show quantitatively that transfers followed by easy monetary policy cause a surge in inflation which helps explain features of the post-Covid boom, including a boom in output and house prices. This boom comes with a longer-term contraction, since redistribution reduces borrower labor supply. |
| JEL: | E44 E52 E63 G51 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32573&r= |
| By: | Gazilas, Emmanouil Taxiarchis |
| Abstract: | The impact of labour market regulations on uninsured employment in Greece between 2014 and 2019 is a crucial exploration in response to the pervasive challenge of undeclared work. With the rise of globalization and evolving labour dynamics, understanding and addressing the complexities of uninsured employment by analysing data from the Greek Ministry of Labour and Social Affairs was the main purpose of this study. Employing a comprehensive examination of key indicators, the study sought to evaluate the effectiveness of these measures in curbing undeclared work. This paper meticulously analysed the pivotal strategies implemented by the Ministry of Labour and Social Affairs during the specified period using statistical analysis, focusing on high fines, reduced non-salary costs, the ERGANI information system, and a modernized fines framework. Statistical graphs were utilized to examine trends, providing a solid foundation for evaluating the impact of the implemented strategies. Additionally, qualitative assessments were employed to offer a nuanced understanding of the contextual factors influencing the outcomes. The findings reveal a positive trend, showcasing a significant reduction in undeclared workers and non-compliant businesses, underscoring the effectiveness of the implemented measures. In this research spanning 2014-2019, an examination of 237, 455 businesses in Greece revealed that 28, 044 entities (11.81%) employed undeclared workers. Among 812, 460 scrutinized employees, 44, 642 (5.49%) were identified as undeclared, leading to fines totalling €468, 997, 663 in efforts to address non-compliance with labour regulations. This study not only sheds light on the successful strategies adopted by the Greek government but also offers valuable practical lessons for policymakers globally. |
| Keywords: | government regulations, undeclared work, ARTEMIS plan, ministry of labour, labour economics, financial crisis |
| JEL: | E24 |
| Date: | 2024–01–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121311&r= |
| By: | Tianyu Du; Ayush Kanodia; Herman Brunborg; Keyon Vafa; Susan Athey |
| Abstract: | Many empirical studies of labor market questions rely on estimating relatively simple predictive models using small, carefully constructed longitudinal survey datasets based on hand-engineered features. Large Language Models (LLMs), trained on massive datasets, encode vast quantities of world knowledge and can be used for the next job prediction problem. However, while an off-the-shelf LLM produces plausible career trajectories when prompted, the probability with which an LLM predicts a particular job transition conditional on career history will not, in general, align with the true conditional probability in a given population. Recently, Vafa et al. (2024) introduced a transformer-based "foundation model", CAREER, trained using a large, unrepresentative resume dataset, that predicts transitions between jobs; it further demonstrated how transfer learning techniques can be used to leverage the foundation model to build better predictive models of both transitions and wages that reflect conditional transition probabilities found in nationally representative survey datasets. This paper considers an alternative where the fine-tuning of the CAREER foundation model is replaced by fine-tuning LLMs. For the task of next job prediction, we demonstrate that models trained with our approach outperform several alternatives in terms of predictive performance on the survey data, including traditional econometric models, CAREER, and LLMs with in-context learning, even though the LLM can in principle predict job titles that are not allowed in the survey data. Further, we show that our fine-tuned LLM-based models' predictions are more representative of the career trajectories of various workforce subpopulations than off-the-shelf LLM models and CAREER. We conduct experiments and analyses that highlight the sources of the gains in the performance of our models for representative predictions. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.17972&r= |
| By: | Jing Xie (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau) |
| Abstract: | Using hand-collected data on mutual funds’ securities lending activities, I find that funds that have benefited from securities lending are less likely to participate in proxy voting of their portfolio firms in the future. The negative effect of security lending on fund voting participation almost disappears during the 2008 short sale ban period when the lending business is forbidden by regulation. The negative effect is weaker if other funds in the same fund family are active voters, or if a fund holds a larger stake in the stock, especially poorly performing stocks. Overall, mutual funds view security lending income as an opportunistic cost of monitoring and become less willing to monitor a firm as the cost increases. |
| Keywords: | Securities lending; proxy voting; corporate governance; mutual funds; short selling |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202410&r= |
| By: | Ali Shirali; Rediet Abebe; Moritz Hardt |
| Abstract: | Algorithmic predictions are emerging as a promising solution concept for efficiently allocating societal resources. Fueling their use is an underlying assumption that such systems are necessary to identify individuals for interventions. We propose a principled framework for assessing this assumption: Using a simple mathematical model, we evaluate the efficacy of prediction-based allocations in settings where individuals belong to larger units such as hospitals, neighborhoods, or schools. We find that prediction-based allocations outperform baseline methods using aggregate unit-level statistics only when between-unit inequality is low and the intervention budget is high. Our results hold for a wide range of settings for the price of prediction, treatment effect heterogeneity, and unit-level statistics' learnability. Combined, we highlight the potential limits to improving the efficacy of interventions through prediction. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.13882&r= |
| By: | Fan, Xinxin; Lee, Yuanyao Stanley; Khanna, Madhu; Kent, Jeffery; Shi, Rui; Guest, Jeremy; Lee, DoKyoung |
| Keywords: | Resource/Energy Economics And Policy, Environmental Economics And Policy, Agricultural And Food Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343741&r= |
| By: | Agnès Helme-Guizon (CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes, UGA INP IAE - Grenoble Institut d'Administration des Entreprises - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, UGA - Université Grenoble Alpes) |
| Abstract: | Background: While the benefits of co-creation are well documented, the potential of online co-creation for marketing and social marketing, in particular, remains underexplored. Focus of the article: In this article, the author addresses the main challenges associated with online co-creation in social marketing. The author provides suggestions based on the literature on online research communities and her own experience. Importance to the social marketing field: Identifying challenges and providing solutions should facilitate the development of online co-creation. Recommendations for Research or Practice: Several recommendations are made to address the challenges raised by online co-creation process in social marketing, including choosing the digital platform, recruiting and initiating participation, crafting the co-creation journey, engaging and facilitating interactive participation, nurturing co-creation online, creating a unique experience, and evaluating the co-creation process. Limitations: The discussion presented here is purely based on the opinions and experiences of the author. |
| Keywords: | Co-Creation, Online Research Communities, Participation, Engagement |
| Date: | 2024–06–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04615939&r= |
| By: | Holzscheiter, Anna; Weickardt Soares, Maria |
| Abstract: | The negotiations on the Pandemic Agreement offered a key opportunity for the World Health Organization's (WHO) 194 Member States to address the weaknesses of existing international regulations governing global health - and to adopt a new legal instrument at the Seventy-seventh World Health Assembly in May 2024. However, Member States were not able to successfully conclude the negotiations. Between late 2021 and May 2024, an Intergovernmental Negotiating Board (INB) had been working on finding a postCOVID-19 consensus on a long list of issues related to pandemic preparedness, surveillance and response. Yet, the high hopes of many WHO Member States as well as non-state actors had given way to sober realism. The failure to reach a consensus, and to do so by the planned deadline, which was very ambitious, can be interpreted in various ways. From the point of view of diplomatic efforts as an 'investment', these efforts may be framed as a 'waste of time'. From the perspective of substantial controversies, the decision to prolong the debate may allow for the necessary space to adopt a widely endorsed international agreement. |
| Keywords: | pandemic preparedness, Covid-19, Pandemic Treaty, Pandemic Agreement, global health equity, health data, health data sharing, benefit sharing in health, international health law |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:299544&r= |
| By: | Bosco, Bruno; Bosco, Carlo Federico; Maranzano, Paolo |
| Abstract: | This paper uses the Italian income tax treatment of 2006/7 as a quasi-natural tax experiment to offer some fresh empirical evidence on how labour supply responds to exogenous income tax hikes. We adopt the identification strategy based on TWFE panel data Difference-in-Differences (DID) model to define the correct statistical framework of the study, and to benefit from the specific features of the above tax experiment, namely homogeneity and contemporaneity of the treatment. Results show that the extensive negative adjustments of various response variables measuring the supply of labour services offered by treated taxpayers are statistically significant, rapid, and strong but not long-time lasting. Not surprisingly, we also find that that treated families reduce in a similar manner their consumption with respect to families in the control groups. Analogous adjustment responses to tax hikes characterise the growth of per-capita regional GDP. The estimated aggregate effects of tax hikes are further compared with the spatial-temporal patterns observed for every response variable in treated and untreated regions. |
| Keywords: | Public Economics |
| Date: | 2024–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:343514&r= |
| By: | Mame Astou Diouf; Leonardo Pio Perez; Felix F. Simione; Arina Viseth; Jiaxiong Yao |
| Abstract: | The need for Sub-Saharan African (SSA) countries to diversify their economies is more urgent than ever. However, despite its established economic benefits, several challenges have precluded diversification in SSA. Against this backdrop, interesting initiatives to further adopt digital technologies, particularly during the COVID-19 pandemic, suggest that digitalization is a promising avenue to overcome barriers to diversification. Fast-paced advances in the diffusion of digital technologies and knowledge have the potential to transform SSA economies through several channels. By connecting people and facilitating the rapid diffusion of information, digitalization also promises to reshape the industrial structure of activities in new and unprecedented ways. Therefore, digitalization has the potential to promote diversification and growth in SSA by acting both as an enabler and driver of economic activities, helping support resilience. Yet, while the empirical literature on SSA suggests that digitalization can provide new opportunities for growth, employment, productivity, and inclusion, the impact on diversification has not been studied. This paper aims to fill this important gap in the literature. It also aims to strengthen IMF engagement with SSA policy makers by providing a conceptual policy framework, encompassing both horizontal and sectoral policies, on how to leverage digitalization to support diversification and boost resilience in a post-COVID world. |
| Keywords: | digitalization; diversification; growth; industrial policy |
| Date: | 2024–06–21 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/123&r= |
| By: | Sulehri, Fiaz Ahmad; Ali, Amjad |
| Abstract: | Sustainable development is of great significance for present and future generations. This study examines the mediation role of economic growth on sustainable development through country risk. We have employed the structural equation modeling (SEM) technique to examine the direct and indirect effects of exogenous and endogenous variables. We conducted this analysis using a sample of 24 countries that contributed approximately 65% of global greenhouse gas (GHG) emissions from 2000 to 2019. The empirical analysis based on direct effects establishes that country risk reduces economic growth and sustainable development. Interestingly, the empirics of indirect effects reveal that country risk has a positive and significant indirect impact on sustainable development by using economic growth as a mediator. Moreover, the negative direct effect of country risk on sustainable development is greater than the total negative effect due to the positive indirect effect. Finally, policymakers should minimize country risk to promote economic growth, ensuring environmental, social, and economic sustainability for the safety of current and future generations. |
| Keywords: | Country Risk, Economic Growth, Sustainable Development, Structural Equation Model |
| JEL: | F30 O44 Q56 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121290&r= |
| By: | Max Brès; Philipp Kircher; David Koll |
| Abstract: | This paper provides causal evidence on the impact of subsidy re-allocation between high technology sectors and low-skill sectors on local labor markets. We exploit a policy targeting under-performing employment areas, France’s Aides à Finalité Régionale, which relaxes rules governing the allocation of firm subsidies while keeping their level constant. In response, policy makers re-allocate subsidies away from research and development to mainly low-skilled manufacturing and service sectors. It triggers a persistent improvement of employment, mainly through increased low-skilled manufacturing employment and at the expense of R&D related occupations. In the long term, though, labor income and productivity decrease. Finally, at the individual level, workers employed in manufacturing at the time of the treatment benefit on average of 2% higher hourly wage even 10 years after the policy was lifted. |
| Keywords: | subsidy allocation, place-based policies, manufacturing, R&D, employment and wages, underperforming areas |
| JEL: | H25 J21 J31 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_573&r= |
| By: | Qi, Tao; Kumar, Deepak; Zhu, Heng; Gupta, Anubhab; Kagin, Justin; Taylor, J. Edward; Krishnaswamy, Siddharth |
| Keywords: | International Development, Food Security And Poverty, Consumer/ Household Economics |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:344004&r= |
| By: | I. Etzo; R. Paci; C. Usala |
| Abstract: | Our study examines the relationship between university student mobility and local economic dynamics. Universities are pivotal in shaping societies and economies as hubs of knowledge creation, innovation, and cultural exchange. While recent research underscores the significant impact of university students on local development, there is a notable gap in understanding the distinct effects of mobile versus resident students on the local economy. Using data from 90 NUTS3 provinces in Italy between 2013 and 2019, we investigate the spatial inequalities generated by student mobility. Our focus is on secondlevel university students, who are closer to entering the labor market and thus have a more immediate impact on the local economy. Employing a standard fixed effects growth model, our findings reveal that incoming students significantly boost the economic growth of the destination province, particularly in the Center-North regions (brain gain). Conversely, the southern provinces suffer reduced growth due to the loss of talented students (brain drain). Thus, student mobility exacerbates the enduring spatial disparities in Italy contributing to uneven economic development across regions. |
| Keywords: | spatial disparities;brain drain;mobile university students;growth model |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202411&r= |
| By: | Hirvonen, Kalle; Machado, Elia Axinia; Simons, Andrew M. |
| Keywords: | International Development, Food Security And Poverty, Risk And Uncertainty |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343590&r= |
| By: | Banchenko, Denis; Burilova, Tatyana; Mutsalkhanova-Yushchenko, Olena; Prokofyeva, Olga; Nekhaev, Igor Nikolaevich; Lev, Shishkin |
| Abstract: | The article describes a new emerging market based on cutting-edge research and its funding mechanism through the use of NFT. |
| Date: | 2023–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:3k7tn&r= |