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on Macroeconomics |
| By: | Lydia Cox; Jiacheng Feng; Gernot J. Müller; Ernesto Pastén; Raphael Schoenle; Michael Weber |
| Abstract: | The jointly optimal monetary and fiscal policy mix in a multi-sector New Keynesian model with sectoral government spending and productivity shocks entails a separation of roles: Sectoral government spending optimally adjusts to sectoral output gaps and inflation rates—a policy supported by evidence from sectoral federal procurement data. Monetary policy optimally focuses on aggregate stabilization, but deviates from a zero-inflation target; in a model calibration to the U.S., however, it effectively approximates a zero-inflation target. Because monetary policy is a blunt instrument and government spending trades off stabilization against the optimal-level public good provision, the first best is not achieved. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1024 |
| By: | Fabio Milani |
| Abstract: | This paper estimates a New Keynesian model with heterogeneous agents to study the interactions among monetary policy, macroeconomic shocks, and the distribution of income between capital and labor. The model assumes two types of households: workers, who supply labor to firms and receive wage income, and capitalists, who own the firms and enjoy the corresponding profits. There are nominal rigidities in both the goods and labor markets. The structural model is estimated using Bayesian methods to match U.S. data on consumption, corporate profits, wages, inflation, and nominal interest rates, on a sample spanning more than six decades. The empirical results show that contractionary monetary policy and inflationary price-markup shocks lead to increases in inequality. Negative wage markup shocks, which proxy for declining workers' bargaining power, are major drivers of peaks in inequality over the sample; together with price markup shocks, they also account for a significant share of the changes in inequality after COVID. |
| Keywords: | Heterogeneous-Agent New Keynesian model, income distribution between capital and labor, monetary policy and inequality, inflation and inequality. |
| JEL: | E25 E31 E32 E52 E58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12065 |
| By: | William Du; Adrian Monninger; Xincheng Qiu; Tao Wang |
| Abstract: | We backcast subjective expectations on job finding and separation in the Survey of Consumer Expectations to 1978, and use real-time machine learning forecasting to proxy their objective counterparts. We document stickiness in job finding and separation expectations in reflecting changes in real-time job finding and separation risks and their substantial heterogeneity across observable and unobservable dimensions. Calibrating these facts into a heterogeneous-agent consumption-saving model reveals that belief stickiness attenuates the precautionary saving channel. As a result, workers under-insure during recessions, leading to a more sluggish recovery afterwards. The combination of high risk exposure and under-insurance due to belief stickiness operates as a novel amplification mechanism over the business cycle. |
| Keywords: | Business fluctuations and cycles; Labour markets; Monetary policy and uncertainty |
| JEL: | D14 E21 E71 G51 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:25-23 |
| By: | Klieber, Karin; Coulombe, Philippe Goulet |
| Abstract: | Local projections (LPs) are widely used in empirical macroeconomics to estimate impulse responses to policy interventions. Yet, in many ways, they are black boxes. It is often unclear what mechanism or historical episodes drive a particular estimate. We introduce a new decomposition of LP estimates into the sum of contributions of historical events, which is the product, for each time stamp, of a weight and the realization of the response variable. In the least squares case, we show that these weights admit two interpretations. First, they represent purified and standardized shocks. Second, they serve as proximity scores between the projected policy intervention and past interventions in the sample. Notably, this second interpretation extends naturally to machine learning methods, many of which yield impulse responses that, while nonlinear in predictors, still aggregate past outcomes linearly via proximity-based weights. Applying this framework to shocks in monetary and fiscal policy, global temperature, and the excess bond premium, we find that easily identifiable events—such as Nixon’s interference with the Fed, stagflation, World War II, and the Mount Agung volcanic eruption—emerge as dominant drivers of oftenheavily concentrated impulse response estimates. JEL Classification: C32, C53, E31, E52, E62 |
| Keywords: | climate, financial shocks, fiscal multipliers, local projections, monetary policy |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253105 |
| By: | Shalva Mkhatrishvili |
| Abstract: | The key function of banks in the real world is endogenously creating (inside) money. But they do so facing solvency, liquidity and maturity risks and being subject to regulatory and demand constraints. These five aspects, representing the eventual breaks on banks’ money-creation abilities, are tightly and nonlinearly interlinked. Yet, there is no tractable quantitative macro framework that models endogenous money creation while simultaneously addressing these interlinkages. In this paper we develop a tractable macro-banking model trying to fill this gap, emphasizing two key frictions: the capital adequacy constraint (generating a credit risk premium) and the central bank’s collateral base constraint (generating a liquidity risk premium). The model simulations produce conclusions, about both normal times as well as stress episodes, many of which were frequently overlooked. For instance, it shows how – within capital requirements – setting lower risk weights on secured loans may lead to an expansion of unsecured loans. It also reveals subtle interactions between capital and liquidity regulations. The model also creates a certain bridge between a money-centered view of the price level and the fiscal theory of the price level. |
| Keywords: | Endogenous Money Creation; Monetary Policy; Macroprudential Policy; Fiscal Theory of the Price Level; Macro-Banking Modeling |
| Date: | 2025–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/166 |
| By: | Bellifemine, Marco; Couturier, Adrien; Jamilov, Rustam |
| Abstract: | This paper develops a multi-country Heterogeneous-Agent New Keynesian (HANK) model of a monetary union with ex-ante heterogeneity in legacy public debt across member states. We calibrate the model to the euro area and show that, following symmetric aggregate shocks, the systematic monetary policy reaction induces heterogeneous national outcomes, driven by differences in fiscal space. This generates a trade-off between union-wide macroeconomic stabilization and cross-country synchronization of economic activity for the central bank. We characterize a possibility frontier between union-wide inflation stability and cross-country synchronization, which is traced out by varying the degree of the central bank's hawkishness towards inflation. We study the role of deficit caps, fiscal and political unions, and augmented Taylor rules as instruments to navigate the stabilization–synchronization trade-off. |
| Keywords: | fiscal space; fiscal union; heterogeneous agents; monetary union |
| JEL: | E52 F41 F42 |
| Date: | 2025–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128186 |
| By: | Despina Gavresi; Anastasia Litina |
| Abstract: | In an era marked by repeated crises and the growing traction of populist movements, understanding the deep-rooted factors shaping EU cohesion has become increasingly urgent. This paper investigates how lifetime exposure to economic recessions influences individual attitudes toward the European Union (EU). Resorting to rich micro-data from the European Social Survey (ESS) and the Eurobarometer, we construct a detailed measure of economic hardship experienced during lifetime, capturing not just isolated downturns but the accumulated burden of multiple recessions over time. Importantly, we distinguish between various types of shocks-including output contractions, unemployment surges, consumption drops, participation in IMF adjustment programs, and the asymmetry or symmetry of crises across EU member states. We show that individuals with greater lifetime exposure to these economic shocks are more likely to distrust EU institutions, oppose further integration, vote for Eurosceptic parties, and support exiting the EU. These patterns are especially pronounced for asymmetric shocks, which disproportionately affect specific regions or countries, in contrast to symmetric shocks, which appear to foster a sense of shared fate and solidarity. A series of robustness tests-including placebo checks, heterogeneity analyses, diverse shock types and designs exploiting EU institutional structure -confirms the persistent impact of economic trauma on EU attitudes, underscoring the need to address historical recessions to safeguard cohesion and democratic legitimacy in the context of the EU. |
| Keywords: | recessions, european integration, EU cohesion, trust, EU institutions, euroscepticism |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12082 |
| By: | Bartscher, Alina K.; Kuhn, Moritz; Schularick, Moritz; Steins, Ulrike I. |
| Abstract: | Using new household-level data, we study the secular increase in U.S. household debt and its distribution since 1950. Most of the debt were mortgages, which initially grew because more households borrowed. Yet after 1980, debt mostly grew because households borrowed more. We uncover home equity extraction, concentrated in the white middle class, as the largest cause, strongly affecting intergenerational inequality and life-cycle debt profiles. Remarkably, the additional debt did not lower households' net worth because of rising house prices. We conclude that asset-price-based borrowing became an integral part of households' consumption-saving decisions, yet at the cost of higher financial fragility. |
| Keywords: | Household debt, Home equity extraction, Inequality, Household portfolios |
| JEL: | G51 E21 E44 D14 D31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:324154 |
| By: | Imad Bassite (Laboratoire de performance économique et logistique Faculté des Sciences Juridiques, Économiques et Sociales (FSJES) - Mohammedia Université Hassan II de Casablanca); Younes El Khattab (Enseignant chercheur - Laboratoire de performance économique et logistique Faculté des Sciences Juridiques, Économiques et Sociales (FSJES) - Mohammedia Université Hassan II de Casablanca) |
| Abstract: | This article examines the impact of monetary policy, inflation and the real effective exchange rate (REER) on the output gap in Morocco, in an economic context marked by recurring internal and external shocks. Using an ARDL model on annual data covering the period 1990-2023, the study distinguishes between the short-term and long-term effects of the main macroeconomic variables on the output gap. The results show that money supply has a significant short-term effect, reflecting the relative effectiveness of monetary policy in stimulating demand and mitigating cyclical gaps. In contrast, in the long term, only the TCER has a positive and significant influence, highlighting the crucial role of external competitiveness in reducing the output gap. Inflation, on the other hand, has no statistically significant impact, reflecting the caution of Moroccan monetary policy in the face of inflationary risks. The article recommends close coordination between monetary and exchange rate instruments, as well as a strengthening of structural policies, in order to ensure greater macroeconomic resilience. |
| Abstract: | Cet article examine l'impact de la politique monétaire, de l'inflation et du taux de change effectif réel (TCER) sur l'output gap au Maroc, dans un contexte économique marqué par la récurrence de chocs internes et externes. En mobilisant un modèle ARDL sur des données annuelles couvrant la période 1990–2023, l'étude distingue les effets à court et à long terme des principales variables macroéconomiques sur l'écart de production. Les résultats montrent que la masse monétaire a un effet significatif à court terme, traduisant l'efficacité relative de la politique monétaire pour stimuler la demande et atténuer les écarts conjoncturels. En revanche, à long terme, seul le TCER exerce une influence positive et significative, mettant en évidence le rôle crucial de la compétitivité externe dans la réduction de l'output gap. L'inflation, quant à elle, ne présente pas d'impact statistiquement significatif, ce qui reflète la prudence de la politique monétaire marocaine face aux risques inflationnistes. L'article recommande une coordination étroite entre les instruments monétaires et de change, ainsi qu'un renforcement des politiques structurelles, afin de garantir une meilleure résilience macroéconomique. |
| Keywords: | ARDL, Morocco, competitiveness, inflation, exchange rate, output gap, monetary policy, monetary policy output gap exchange rate inflation ARDL Morocco competitiveness |
| Date: | 2025–07–28 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05190487 |
| By: | Gregorio Impavido |
| Abstract: | This paper assesses the effectiveness of monetary policy in Kazakhstan using a small macro model and identifies alternative plausible economic structures consistent with priors on the sign of responses of macro variables to structural shocks. Monetary policy effectiveness has increased over time. |
| Keywords: | Monetary policy effectiveness; SVARs; parametric restrictions; sign restrictions |
| Date: | 2025–08–29 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/173 |
| By: | Sophia Kazinnik; Tara M. Sinclair |
| Abstract: | We develop a a multi-agent framework for modeling the Federal Open Market Committee (FOMC) decision making process. The framework combines two approaches: an LLM-based simulation and a Monte Carlo implementation of a generalized Bayesian voting model. Both begin from identical prior beliefs about the appropriate interest rate for each committee member, formed using real-time data and member profiles. In a simulation replicating the July 2025 FOMC meeting, both tracks deliver rates near the 4.25–4.50\% range's upper end (4.42\% LLM, 4.38\% MC). Political pressure scenario increases dissent and dispersion: the LLM track averages 4.38\% and shows dissent in 88\% of meetings; the MC track averages 4.39\% and shows dissent in 61\% of meetings. A negative jobs revision scenario moves outcomes lower: LLM at 4.30\% (dissent in 74\% of meeting), and MC at 4.32\% (dissent in 62\% of meeting), with final decisions remaining inside the 4.25-4.50\% range. The framework isolates small, scenario‑dependent wedges between behavioral and rational baselines, offering an \textit{in silico} environment for counterfactual evaluation in monetary policy. |
| Keywords: | Generative AI; Multi-Agent Systems; Large Language Models, Federal Open Market Committee; Monetary Policy; Simulations |
| JEL: | E52 E58 C63 D83 C73 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:gwc:wpaper:2025-005 |
| By: | Ken-Ichi Akao (School of Social Sciences, Waseda University.) |
| Abstract: | Under standard economic assumptions, the optimal paths in optimal growth models can be non-monotonic and, at times, extremely complex. In contrast, real-world policies are typically based on the assumption of a monotonic progression towards objectives. To address this discrepancy, this study investigates the characteristics and value loss associated with an alternative monotonic path when the optimal path is non-monotonic in discrete-time, one-state variable optimal growth models. We assume that the planner selects the best path from a class of monotonic paths (i.e., either monotonically increasing or decreasing paths). We show that if the optimal path is increasing (or decreasing), the corresponding monotonic path will also be increasing (or decreasing). Monotonic paths generically encounter time inconsistency when reaching their steady states. If the monotonic path is revised at this point, the transition from increasing to decreasing, or vice versa, in the monotonic path occurs in tandem with a similar transition in the associated optimal path. Distinct features of the monotonic paths compared to the optimal paths include time inconsistency and the finite time to reach the steady state. Moreover, the monotonic path with revision exhibits differences in the local stability of the common interior steady state compared to the optimal policy. Regarding value loss, in three models demonstrating chaotic optimal paths, the study finds that the upper bounds of the value loss ratios incurred by adopting monotonic paths without revision range from 10-5 to 10-13 relative to the optimal value function. We argue the potential generality of this marginal value loss. Furthermore, we discuss several implications of these findings, including a possible rationale for why complex solutions to optimization problems can describe human behavior that is not universally optimal. |
| Keywords: | Business Cycle, Chaotic Optimal Path, Monotonic Policy, Value Loss |
| JEL: | C61 E32 E60 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:was:dpaper:2401 |
| By: | Schmöller, Michaela; Goldfayn-Frank, Olga; Schmidt, Tobias |
| Abstract: | This paper provides novel empirical evidence on the impact of monetary policy on innovation investment using unique firm-level data. First, we document the ef- fect of a large, systematic monetary tightening (ECB rate increases from 0% to 4.5% during 2022-23), with average firm-level innovation cuts of 20%. These cuts persist over the medium term, indicating a sustained innovation slowdown. Second, we use the survey to identify elasticities of innovation expenditure to exogenous policy rate changes. Responses to hikes and cuts are significant and largely symmetric at the baseline rate (4.5%), though we detect potential state-dependent asymmetry due to the extensive margin. The financing channel emerges as one of the trans- mission channels, with more pronounced effects in firms with higher shares of bank loans and variable-rate loans. Crucially, we show that monetary policy transmits via aggregate demand, with stronger responses in firms with pessimistic demand expectations. Forward guidance provides substantial additional stimulus by re- ducing uncertainty about future rates, suggesting long-term, supply-side effects of announcements. These results challenge monetary long-run neutrality and are sug- gestive of policy endogeneity of R∗ operating through innovation-driven technology growth. |
| Keywords: | Monetary Policy Transmission, R&D, Endogenous Growth, ForwardGuidance, R∗ |
| JEL: | E52 E22 E24 O30 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:324662 |
| By: | Ken Miyahara |
| Abstract: | Building on canonical asset pricing and portfolio choice frameworks with illiquid durable goods (Grossman and Laroque (1990), Flavin and Nakagawa (2008), Stokey (2009)), I propose a heterogeneous agent portfolio choice model to assess the cyclicality of aggregate durable consumption responses. The model features idiosyncratic utility switching costs that allow it to match the distribution of durable adjustments sizes in PSID data. By leveraging a structural mapping between adjustment hazards and the cross-sectional distribution of wealth, the framework provides a robust method for estimating fundamental adjustment frictions directly from observed behavior. We find that the model predicts procyclical and non-linear durable demand responses and a disproportionate decline in upward adjustments during recessions. The main result demonstrates that policy, such as fiscal stimulus payments, is significantly more potent during economic booms than in recessions. This asymmetry highlights the state-dependent nature of stabilization policies and their varying effectiveness across the business cycle. |
| Keywords: | Lumpy adjustment, portfolio choice, generalized hazard function |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:apc:wpaper:210 |
| By: | Egemen Eren; Denis Gorea; Daojing Zhai |
| Abstract: | We study how firms respond to quantitative easing (QE) and quantitative tightening (QT) policies of the Federal Reserve. We construct a novel time series of maturity-specific central bank balance sheet shocks covering multiple QE and QT programs. In response to central bank purchases of government bonds, we find that, on average, firms adjust their debt maturity structure, reduce interest expenses and accumulate cash, while their total debt, capital and employment remain largely unchanged. The impact of these policies differs depending on the targeted maturity segment and the credit quality of firms. Policy transmission primarily runs via bond markets. There are positive spillovers to high-rated non-US firms. Our findings can inform the design of balance sheet policies. |
| Keywords: | quantitative easing, quantitative tightening, debt, maturity, real effects |
| JEL: | E44 G11 G12 G23 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1286 |
| By: | Ricardo Lagos |
| Abstract: | The well-known cashless-limiting result in Woodford (1998) has become the theoretical foundation for a large body of work that treats the costs and benefits of holding money as irrelevant for monetary transmission. I reexamine this result and find that it relies on a peculiar credit-market structure consisting of perfectly competitive, zero-interest deferred payment arrangements. I show that the result breaks down when the microstructure is generalized to allow for an endogenous interest rate and market power in credit intermediation. The tenuousness of this influential result should give pause to the widespread practice of basing monetary policy advice on models without money. |
| JEL: | E5 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34155 |
| By: | Lorie Logan |
| Abstract: | Dallas Fed President Lorie K. Logan delivered these remarks at the Conference on the Future of Central Banking at Banco de México. |
| Keywords: | monetary policy |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddsp:101539 |
| By: | Mrs. Marina Conesa Martinez |
| Abstract: | This paper analyzes how central banks' communication influences corporate financial decisions and instruments. Empirically, we find that more active central bank communication is associated with a rise in firms' green bond issuance. The effect seems to be particularly strong among commercial banks, firms closely monitoring central bank climate communication, and firms with higher exposure to weather-related risks and opportunities. This likely reflects strategic responses to anticipated regulatory and market shifts. |
| Keywords: | Central banking; Communication; Climate change; Green bonds; Sustainable finance; Natural language processing |
| Date: | 2025–08–29 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/169 |
| By: | Mingzhi Xiao; Takara Sakai; Daisuke Murakami; Yuki Takayama |
| Abstract: | While tourism is widely regarded as a catalyst for economic and urban transformation, its effects on land prices remain contested. This study examines tourism and land prices using a panel of 1, 724 Japanese municipalities from 2021 to 2024, with annual tourist arrivals as a proxy for tourism activity. Using mediation analysis and panel threshold regression, we show that sizable land price increases are concentrated in a small group of "superstar" cities, specifically those in the top 5.9 percent for tourist arrivals, while most municipalities experience little or no effect. The results highlight pronounced nonlinearities and spatial heterogeneity in tourism's economic impact across Japan. The potential mechanisms linking tourism to land price growth are mixed, with possible benefits for local residents as well as risks of increased burdens. These findings underscore the need for policies that promote inclusive growth and an equitable distribution of tourism-related gains. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04307 |
| By: | Shanyan Lai |
| Abstract: | This study investigates the pretrained RNN attention models with the mainstream attention mechanisms such as additive attention, Luong's three attentions, global self-attention (Self-att) and sliding window sparse attention (Sparse-att) for the empirical asset pricing research on top 420 large-cap US stocks. This is the first paper on the large-scale state-of-the-art (SOTA) attention mechanisms applied in the asset pricing context. They overcome the limitations of the traditional machine learning (ML) based asset pricing, such as mis-capturing the temporal dependency and short memory. Moreover, the enforced causal masks in the attention mechanisms address the future data leaking issue ignored by the more advanced attention-based models, such as the classic Transformer. The proposed attention models also consider the temporal sparsity characteristic of asset pricing data and mitigate potential overfitting issues by deploying the simplified model structures. This provides some insights for future empirical economic research. All models are examined in three periods, which cover pre-COVID-19 (mild uptrend), COVID-19 (steep uptrend with a large drawdown) and one year post-COVID-19 (sideways movement with high fluctuations), for testing the stability of these models under extreme market conditions. The study finds that in value-weighted portfolio back testing, Model Self-att and Model Sparse-att exhibit great capabilities in deriving the absolute returns and hedging downside risks, while they achieve an annualized Sortino ratio of 2.0 and 1.80 respectively in the period with COVID-19. And Model Sparse-att performs more stably than Model Self-att from the perspective of absolute portfolio returns with respect to the size of stocks' market capitalization. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.19006 |
| By: | Joel Saucedo |
| Abstract: | This investigation establishes a formal equivalence between the generalized Black-Scholes equation under a Quadratic Normal Volatility (QNV) specification and the stationary Schr\"odinger equation for a hyperbolic P\"oschl-Teller potential. A sequence of canonical transformations maps the financial pricing operator to a quantum Hamiltonian, revealing the volatility smile as a direct manifestation of diffusion on a hyperbolic manifold whose geometry is classified by the discriminant of the QNV polynomial. We perform a complete spectral analysis of the financial Hamiltonian, deriving its discrete and continuous spectra and constructing the pricing kernel from the resulting eigenfunctions, which are given by classical special functions. This analytical framework, grounded in a gauge-theoretic perspective, furnishes a non-trivial benchmark for derivative pricing and provides a fundamental geometric interpretation of market anomalies. Future research trajectories toward integrable systems and formal field-theoretic analogies are identified. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.12501 |
| By: | Luca Gavril Denes (Aurel Vlaicu University of Arad, Romania) |
| Abstract: | Throughout the centuries, as the Church—united with the state—strayed further and further from the truth of the Holy Scriptures, various groups of Christians strove to remain faithful to the pure teachings of the New Testament. Thus, God never remained without His people, people who confessed Him both by their lives and with their mouths, even at the risk of their lives. Among these groups, the Donatists, Waldensians, and Anabaptists are particularly noteworthy. Subjected to savage persecution by the Western Church, harassed everywhere, tortured, slaughtered, and largely massacred, these people "did not love their lives, even unto death." As the author of the Epistle to the Hebrews says: "...some, in order to obtain a better resurrection, did not want to receive the deliverance that was offered to them and were tortured. Others suffered mockery, beatings, chains, and imprisonment; they were stoned, sawed in two, tortured; they died by the sword; they went about in sheepskins and goatskins, destitute, afflicted, mistreated—of whom the world was not worthy—wandering in deserts and mountains, in caves and holes in the ground" (Hebrews 11:35-38). This study aims to explore these spiritual awakenings and the courageous communities and individuals behind them, showing how their convictions and sacrifices helped pave the way for the Protestant Reformation. |
| Keywords: | spiritual awakenings, Protestants, religious reforms, Waldensians, mystics, Wycliffe, Hus |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:0547 |
| By: | Lukas B. Freund; Lukas F. Mann |
| Abstract: | Who will gain and who will lose as AI automates tasks? While much of the discourse focuses on job displacement, we show that job transformation—a shift in the task content of jobs—creates large and heterogeneous earnings effects. We develop a quantitative, task-based model where occupations bundle multiple tasks and workers possessing heterogeneous portfolios of task-specific skills select into occupations by comparative advantage. Automation shifts the relative importance of tasks within each occupation, inducing wage effects that we characterize analytically. To quantify these effects, we measure the task content of jobs using natural language processing, estimate the distribution of task-specific skills, and exploit mappings to prominent automation exposure measures to identify task-specific automation shocks. We apply the framework to analyze automation by large language models (LLMs). Within highly exposed occupations, like office and administrative roles, workers specialized in information-processing tasks leave and suffer wage losses. By contrast, those specialized in customer-facing and coordination tasks stay and experience wage gains as work rebalances toward their strengths. Our findings challenge the common assumption that automation exposure equates to wage losses. |
| Keywords: | AI, labor markets, inequality, skills, technological change |
| JEL: | J01 E00 J23 J24 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12072 |
| By: | Domnisoru, Ciprian (Aalto University); Malinovskaya, Anna (Yale University); Taylor, Evan J. (University of Arizona) |
| Abstract: | We quantify the effect of education on mortality using a linkage of the full count 1940, 2000, and 2010 US census files and the Numident death records file. Our sample is composed of children aged 0-18 in 1940, observed living with at least one parent, for whom we can construct a rich set of parental and neighborhood characteristics. We estimate effects of educational attainment in 1940 on survival to 2000, as well as the effects of completed education, observed in 2000, on 10-year survival to 2010. The educational gradients in longevity that we estimate are robust to the inclusion of detailed individual, parental, household, neighborhood and county covariates. Given our full population census sample, we also explore rich patterns of heterogeneity and examine the effect of mediators of the education-mortality relationship. The mediators we consider in this study explain more than half of the relationship between education and mortality. We further show that the mechanisms underlying the education-mortality gradient might be different at different margins of educational attainment. |
| Keywords: | mortality, health, education |
| JEL: | I1 I2 J1 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18085 |
| By: | Damien Capelle; Bruno Pellegrino |
| Abstract: | We use a dynamic spatial general equilibrium model of international investment and production to investigate the real implications of the last five decades of financial globalization. We introduce a wedge accounting framework to estimate country- and time-varying measures of outward and inward Revealed Capital Account Openness (RKO). We show how to identify these wedges for a large panel of countries using limited publicly available data on national accounts and external asset and liability positions since the 1970s. Our analysis reveals striking cross-country differences in the pace and direction of financial account opening: wealthier countries have become relatively more open to foreign capital inflows, while poorer countries have become relatively more open to capital outflows, a phenomenon we call “Unbalanced Financial Globalization.” Counterfactual simulations show that this unbalanced financial globalization has worsened capital allocation, resulting in a 5.9% decrease in world GDP, a 3.4% rise in cross-country income inequality, lower wages in poorer countries, and a decline in rates of return on capital in richer countries. In contrast, if financial account opening had been uniform, the improved allocation of capital would have reduced income inequality, and increased global GDP. These findings underscore the crucial role of spatial heterogeneity in shaping the real impact of international capital markets integration. |
| JEL: | F2 F3 F4 F6 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34121 |
| By: | Domeshek, Maya (Resources for the Future) |
| Abstract: | As Missouri is a state with no formal climate goals and an electricity sector that is three-quarters coal generation (Figure 1a), the decarbonization of its electricity grid will depend in large part on decisions by utilities to retire or retrofit coal capacity (Figure 1b; Table 1). Utilities covering a majority of electricity sales in Missouri have net-zero targets—Empire District, 2050; Ameren, 2045; Evergy, 2045; and City Utilities of Springfield, 2050—accounting for 71 percent of sales (Figure 1d). Most of the remaining electricity sales are covered by cooperatives (co-ops), none of which have climate targets. But these private net-zero targets are not enforceable, and they may not have direct impacts on coal generation in Missouri, given that the utilities serve customers in multiple states. On the other hand, the US Environmental Protection Agency’s (EPA’s) recent proposed regulation of existing fossil generators under section 111(d) of the Clean Air Act sets firm dates before which coal plants must either retire or retrofit in a way that reduces their greenhouse gas emissions. “New Source Performance Standards for GHG Emissions from New and Reconstructed EGUs; Emission Guidelines for GHG Emissions from Existing EGUs; and Repeal of the Affordable Clean Energy Rule, ” Item No. 1, Docket ID EPA-HQ-OAR-2023-0072. https://www.regulations.gov/document/EPA-HQ-OAR-2023-0072-0001. In addition, advocacy groups within Missouri—most notably the Sierra Club, through its Beyond Coal Campaign—have been pushing for coal plant retirements through litigation and rate cases because of the climate and public health harms.So what plans have Missouri utilities made for their coal plants, and are they following through on those plans? A brief accounting indicates that Missouri utilities plan to retire 6.0 gigawatts (GW) of coal capacity between now and 2050, leaving 4.3 GW still online after that date and making no plans for carbon capture and storage (CCS) retrofits (Figure 2). Moreover, there have been noticeable shifts in successive integrated resource plans (IRPs) about which plants are to be retired and when. This issue brief explores three factors influencing whether Missouri coal plants retire as planned: (1) whether the plants are in conflict with environmental regulation and would require expensive upgrades to continue operating, (2) whether financial barriers to retirement exist, and (3) whether generators are available to replace the coal plants.The main (enforceable) driver of coal retirements is environmental regulation. For example, when the Department of Justice sued Ameren’s Rush Island plant for violating the Clean Air Act’s New Source Review requirements, the plant was ordered to install flue gas desulfurization (Sierra Club 2021). Rather than do so, Ameren elected to move the plant’s retirement date from 2039 to 2024 (Skipworth 2022). The recent coal combustion residual rule required that wet coal ash be stored in lined ponds. After making investments to close the final ash ponds at its Meramec plant, Ameren made plans to close the plant in 2022 (Ameren Missouri 2021). Perhaps most impactfully, the EPA’s proposed 111(d) regulation will require coal plants that want to exist beyond 2035 but retire by 2040 to retrofit to cofire with fossil gas by 2030 and plants that want to exist after 2040 to retrofit with 90 percent carbon capture by 2030. Several plants have retirement dates just one or two years after one of these deadlines (Labadie 1&2 in 2036, Labadie 3&4 in 2042), so they may choose to retire earlier than planned rather than retrofit to run for only a short while longer. Others with no retirement date (Thomas Hill, Sikeston, New Madrid, Iatan, Hawthorne) will have to install CCS by 2030 or declare retirement dates before 2040 (Table 1).Many coal plants cost more to operate than the expense of building and operating a new renewable resource, but remaining debt on the coal facilities deters utilities from retiring them (Bodnar et al. 2020). When a regulated utility retires a plant without recovering its costs, the utility’s shareholders lose money, and in some cases the utility’s credit rating falls, affecting its ability to borrow money in the future. This makes utilities reluctant to retire plants early, even when doing so would save ratepayers money. In 2021 Missouri passed a securitization law designed to address this problem (Kite 2021). Under the law, the utility establishes a special-purpose entity that issues ratepayer-backed bonds to pay off the remaining debt. The bonds are then paid off over a long period through a charge on electric bills. Because the ratepayer-backed bonds have a lower rate of interest than the utility’s rate of return, ratepayers save money on both operating expenses for the coal plant (since it’s no longer running) and the interest rate they would have paid on the utility’s coal plant debt. At the same time, the utility avoids an unpaid debt, and having cash on hand allows it to invest in new clean generation (Varadarajan 2018). Empire District Electric Company (Algonquin) used securitization when it closed its last coal unit, the Ashbury plant, in 2020 (Uhlenhuth 2019; Howland 2022c). And Ameren intends to use it to recover some of the costs associated with the Meramec and Rush Island plants (Ameren Missouri 2022b).While Missouri’s securitization law is aimed primarily at regulated utilities, the Inflation Reduction Act (IRA) contains two provisions that may address financial barriers faced by co-op–owned coal plants. The US Department of Energy Loan Program Office’s Energy Infrastructure Reinvestment program (funded at $5 billion) will provide low-interest loans to refinance and replace or reduce emissions at existing fossil generators (DOE n.d.). These funds are available to all power plants. The US Department of Agriculture’s Empowering Rural America program (funded at $9.7 billion) is limited to co-ops and is designed to help them replace existing fossil plants with low-interest, forgivable loans (USDA 2023). Given that 2.7 of the 4.3 GW of coal units left after 2050 are from co-ops or municipal utilities (munis) (Figure 2), these programs will do important work to ease the retirement of coal in Missouri.Despite new environmental regulations and policies to overcome financial barriers to retirement, the utilities have repeatedly delayed coal retirements as the dates approach. And each time, the stated reason was a lack of adequate replacement capacity. For example, Ameren, which has retirement dates for all its remaining coal units, is planning to replace this coal mostly with fossil gas plants that have the ability to burn hydrogen or with unnamed “clean firm” facilities. The utility has already delayed two of these coal retirements. The Rush Island plant, which will be retiring with securitization in lieu of retrofitting with coal gas desulfurization, delayed its retirement beyond 2024 after the Midcontinent Independent System Operator (MISO) asked the Federal Energy Regulatory Commission to keep it online as a System Support Resource through 2025 (Howland 2022a). The Sioux Energy Center has pushed its retirement date from 2028 in the 2020 IRP to 2030 in the 2022 Change in Preferred Plan (Ameren Missouri 2022a), while Ameren waits for a fossil gas unit to come online in 2031. Evergy has repeatedly modified and delayed the quantity of renewables they planned to build in their 2020 IRP (Evergy 2021, 2022), before suggesting a significant fossil gas build-out in 2027 and 2028 (Evergy 2023). See also “In the Matter of Evergy Missouri West, Inc. d/b/a Evergy Missouri West’s 2023 Integrated Resource Plan Annual Update Filing, ” Item No. 9, Docket Sheet EO-2023-0212; “In the Matter of Evergy Metro, Inc. d/b/a Evergy Missouri Metro’s 2023 Integrated Resource Plan Annual Update Filing, ” Item No. 16, EO-2023-0213. Similarly, City Utilities of Springfield has delayed the retirement of the first unit at the John Twitty Energy Center from 2027 to 2030 in response to slower-than-anticipated renewable builds and new reliability rules from the Southwest Power Pool (SPP) (CU 2022). These examples suggest that even when utilities are planning to replace their coal plants, construction delays and reliability rules from Independent System Operators are keeping coal plants online longer. Additionally, current ways of measuring reliability may be pushing utilities to replace coal plants with fossil gas and hydrogen-enabled fossil gas rather than with renewables.In summary, Missouri has a lot of coal generators and some unenforceable commitments from utilities to reach net-zero emissions. If the commitments are to be met, all these coal generators must be retired or retrofitted with CCS. An examination of IRPs reveals that as of now, utilities do not plan to do so, leaving 4.3 GW of coal with uncontrolled carbon emissions after 2050 (Figure 2). Regulations, specifically the coal combustion residuals and the 111(d) rule, may play an important role in pushing coal plants to retire or retrofit. Financial barriers to retirement related to paying off the debt on coal plants are surmountable for regulated utilities, given the state’s securitization law, and for co-ops, given the federal government’s new programs under the IRA. Nonetheless, planned coal plant retirements have been delayed because of slower-than-expected build-out of replacements and reliability concerns from grid operators. |
| Date: | 2023–10–11 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-23-07 |
| By: | Haojie Liu; Zihan Lin; Randall R. Rojas |
| Abstract: | This study integrates real-time sentiment analysis from financial news, GPT-2 and FinBERT, with technical indicators and time-series models like ARIMA and ETS to optimize S&P 500 trading strategies. By merging sentiment data with momentum and trend-based metrics, including a benchmark buy-and-hold and sentiment-based approach, is evaluated through assets values and returns. Results show that combining sentiment-driven insights with traditional models improves trading performance, offering a more dynamic approach to stock trading that adapts to market changes in volatile environments. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.09739 |
| By: | Abdullah Karasan; \"Ozge Sezgin Alp |
| Abstract: | Filtering signal from noise is fundamental to accurately assessing spillover effects in financial markets. This study investigates denoised return and volatility spillovers across a diversified set of markets, spanning developed and developing economies as well as key asset classes, using a neural network-based denoising architecture. By applying denoising to the covariance matrices prior to spillover estimation, we disentangle signal from noise. Our analysis covers the period from late 2014 to mid-2025 and adopts both static and time-varying frameworks. The results reveal that developed markets predominantly serve as net transmitters of volatility spillovers under normal conditions, but often transition into net receivers during episodes of systemic stress, such as the Covid-19 pandemic. In contrast, developing markets display heightened instability in their spillover roles, frequently oscillating between transmitter and receiver positions. Denoising not only clarifies the dynamic and heterogeneous nature of spillover channels, but also sharpens the alignment between observed spillover patterns and known financial events. These findings highlight the necessity of denoising in spillover analysis for effective monitoring of systemic risk and market interconnectedness. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.01156 |
| By: | Xinyan Deng |
| Abstract: | This study analyzes the 2018 Chinese Household Income Project survey data to evaluate the income gaps between an "outsider" ethnic minority group, the Mongols, an "insider" ethnic minority group, the Manchus, and the majority Han group in urban and rural areas of Liaoning province and Inner Mongolia in China. Three statistical methods, a simple first-order OLS linear regression, linear regressions with interaction terms, and the Blinder-Oaxaca Decomposition, are used to investigate the income disparity amongst the three groups. The results indicate that Mongols suffer a significant ethnic wage penalty attributable to possible discrimination in the rural areas of these two provinces, while the urban income gaps between the three groups can mostly be explained by participation in public sector occupations or affiliation with the Chinese Communist Party. In rural settings, Mongols also have higher returns to public sector jobs and CCP membership compared to the other two ethnic groups. The findings suggest that Chinese affirmative actions regarding ethnic policy are effective in accelerating the integration of ethnic minorities with Han in the outcomes of the labor market. This conclusion is consistent with previous studies. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.21625 |
| By: | Akcan S. Balkir; Emmanuel Saez; Danny Yagan; Gabriel Zucman |
| Abstract: | We estimate income and taxes for the wealthiest group of US households by matching Forbes 400 data to the individual, business, estate, and gift tax returns of the corresponding group in 2010–2020. In our benchmark estimate, the total effective tax rate—all taxes paid relative to economic income—of the top 0.0002% (approximately the “top 400”) averaged 24% in 2018–2020 compared with 30% for the full population and 45% for top labor income earners. This lower total effective tax rate on the wealthiest is substantially driven by low taxable individual income relative to economic income. First, the C-corporations owned by the wealthiest distributed relatively little in dividends, limiting their individual income tax unless they sell their stocks. Second, top-owned passthrough businesses reported negative taxable income on average in spite of positive book income, further limiting their individual income tax. The top-400 effective tax rate fell from 30% in 2010–2017 to 24% in 2018–2020, explained both by a smaller share of business income being taxed and by that income being subject to lower tax rates. Estate and gift taxes contributed relatively little to their effective tax rate. Top-400 decedents paid 0.8% of their wealth in estate tax when married and 7% when single. Annual charitable contributions equalled 0.6% of wealth and 11% of economic income in 2018–20. |
| JEL: | H2 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34170 |
| By: | Nino Zarnadze (Caucasus International University, Tbilisi, Georgia) |
| Abstract: | Recent global changes and the tense geopolitical climate have placed companies on the brink of crisis. Heightened rhetoric from political authorities and the escalation of trade conflicts between major economic powers have created uncertainty, compelling organizations to reconsider and reshape their development strategies. This volatility, coupled with individuals' diminished sense of control over their personal and professional lives, concerns about future stability, and fear of job loss, negatively influences employee productivity. In recent years, the business sector has faced particularly tough challenges. Events related to COVID-19, compounded by geopolitical tensions, an increase in religion-based conflicts, and rising instances of sex and gender discrimination in the workplace, have significantly challenged traditional organizational structures and management practices. Organizations responded to the aforementioned challenges in diverse ways. Some managed to maintain cohesion and operate effectively despite the adverse conditions. Others were unable to adapt to the new realities and ceased operations. Some companies, while similarly struggling to overcome the challenges, have remained active in the market, continuing their activities despite diminished performance or unresolved structural issues. This study aims to investigate the nature of team building, its influence on staff cohesion, and its contribution to organizational success. This research gains particular importance against the backdrop of increasing socio-economic and political uncertainty in the global market. In such a volatile context, understanding the internal dynamics of companies, particularly the factors contributing to organizational cohesion and cultural maturity, becomes increasingly relevant. By examining organizational culture through the lens of Maslow’s hierarchy of needs, this study aims to shed light on how companies can foster resilient, trust-based environments that are less reliant on purely economic incentives and more capable of withstanding external shocks. |
| Keywords: | Team Building, Non-Market Values, Assets, Coherence, Collaboration, Crisis, Culture |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:0549 |
| By: | Emma Harrington; Matthew E. Kahn |
| Abstract: | When women become mothers, they often take a step back from their careers. Could work from home (WFH) reduce this motherhood penalty, particularly in traditionally family-unfriendly careers? We leverage technological changes prior to the pandemic that increased the feasibility of WFH in some college degrees but not others. In degrees where WFH increased, motherhood gaps in employment narrowed: for every 10% increase in WFH, mothers’ employment rates increased by 0.78 per centage points (or 0.94%) relative to other women’s. This change is driven by majors linked to careers that have high returns to hours and inflexible demands on workers’ time. We microfound these results using panel data that show that women who could WFH before childbirth are less likely to exit the workforce. |
| JEL: | H2 J01 J13 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34147 |
| By: | Pinelopi K. Goldberg; Charles TL. Gottlieb; Somik Lall; Meet Mehta; Michael Peters; Aishwarya Lakshmi Ratan |
| Abstract: | The extent to which women participate in the labor market varies greatly across the globe. If such differences reflect distortions that women face in accessing good jobs, they can reduce economic activity through a misallocation of talent. In this paper, we build on Hsieh et al. (2019) to provide a methodology to quantify these productivity consequences. The index we propose, the ”Global Gender Distortions Index (GGDI)”, measures the losses in aggregate productivity that gender-based misallocation imposes. Our index allows us to separately identify labor demand distortions (e.g., discrimination in hiring for formal jobs) from labor supply distortions (e.g., frictions that discourage women’s labor force participation) and can be computed using data on labor income and job types. Our methodology also highlights an important distinction between welfare-relevant misallocation and the consequences on aggregate GDP if misallocation arises between market work and non-market activities. To showcase the versatility of our index, we analyze gender misallocation within countries over time, across countries over the development spectrum, and across local labor markets within countries. We find that misallocation is substantial and that demand distortions account for most of the productivity losses. |
| JEL: | O10 O4 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34142 |
| By: | Amir Sariri; Evgenia Gatov; Geneva Neal; Kyle Robinson; Sonia Sennik; Wei Yang Tham; Michael Vertolli; Avi Goldfarb |
| Abstract: | We introduce a new dataset built from a global non-profit startup program for early-stage high-technology startups called Creative Destruction Lab (CDL). The early stages of startup formation remain one of the least understood aspects of firm growth. The nature of this program and the data collected from its operations are well suited to investigate open questions in entrepreneurial strategy, entrepreneurial finance, advice, and technology transfer. This dataset combines three critical features for rigorous empirical research. First, the large, multi-year sample includes roughly 15, 000 applicants, 9, 000 founders in admitted startups, and nearly 2, 000 mentors. Second, CDL recognized the academic value from the outset and built enterprise IT linking venture-level characteristics, structured longitudinal records of firm development and operations, and unstructured verbatim transcripts of mentor–founder discussions. Third, the data cover 27 technological domains such as therapeutics and quantum computing. This paper provides an overview of the setting from which data is collected, a high-level description of available data, and information on how to access these data for research. |
| JEL: | G24 L26 O3 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34127 |
| By: | Rasmus Ingemann Tuffveson Jensen; Sebastian Holmby Hansen; Kalle Johannes Rose |
| Abstract: | Almost all countries in the world require banks to report suspicious transactions to national authorities. The reports are known as suspicious transaction or activity reports (we use the former term) and are intended to help authorities detect and prosecute money laundering. In this paper, we investigate the relationship between suspicious transaction reports and convictions for money laundering in the European Union. We use publicly available data from Europol, the World Bank, the International Monetary Fund, and the European Sourcebook of Crime and Criminal Justice Statistics. To analyze the data, we employ a log-transformation and fit pooled (i.e., ordinary least squares) and fixed effects regression models. The fixed effects models, in particular, allow us to control for unobserved country-specific confounders (e.g., different laws regarding when and how reports should be filed). Initial results indicate that the number of suspicious transaction reports and convictions for money laundering in a country follow a sub-linear power law. Thus, while more reports may lead to more convictions, their marginal effect decreases with their amount. The relationship is robust to control variables such as the size of shadow economies and police forces. However, when we include time as a control, the relationship disappears in the fixed effects models. This suggests that the relationship is spurious rather than causal, driven by cross-country differences and a common time trend. In turn, a country cannot, ceteris paribus and with statistical confidence, expect that an increase in suspicious transaction reports will drive an increase in convictions. Our results have important implications for international anti-money laundering efforts and policies. (...) |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.18932 |
| By: | Ahmed Aboulhassane (ESCA Ecole de Management, Morocco); Azzeddine Allioui (ESCA Ecole de Management, Morocco) |
| Abstract: | This study explores the introduction of Overnight Index Swaps (OIS) to the Moroccan financial market. OIS are financial derivatives that involve the exchange of fixed interest rate payments for floating payments linked to an overnight index, and they are widely used for interest rate risk management. The primary goal of this research is to assess the feasibility and potential impact of OIS in Morocco through a thorough analysis of their characteristics, benefits, and the regulatory environment. A detailed examination of OIS reveals their potential advantages for Moroccan businesses and financial institutions, including improved interest rate risk management and increased liquidity. The study also evaluates the current regulatory framework in Morocco, assessing its readiness to support the introduction of OIS, and identifies key market participants and their needs for such financial instruments. To provide insights into market dynamics and future trends, the study employs quantitative models such as ARIMA (Auto Regressive Integrated Moving Average), SARIMA (Seasonal ARIMA), and the Simple Moving Average (SMA) method. These models are used to analyze historical interest rate data, identify patterns, and forecast future movements, thereby aiding in understanding the potential impact of OIS on the Moroccan market. The findings suggest that OIS could significantly enhance risk management practices and contribute to market stability in Morocco. By providing effective hedging against interest rate volatility, OIS can reduce financial uncertainty for institutions and corporations. Additionally, the introduction of OIS could attract more foreign investment and stimulate the growth of Morocco's financial derivatives market. |
| Keywords: | Overnight Index Swaps (OIS), Moroccan Financial Market, Morrocan Overnight Index Average, ARIMA, SARIMA, Risk Management, Financial Derivatives, Market Stability |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:05 |
| By: | Yuichiro Kamada; Fuhito Kojima; Akira Matsushita |
| Abstract: | Fragmentation of matching markets is a ubiquitous problem across countries and across applications. In order to study the implications of fragmentation and possibilities for integration, we first document and discuss a variety of fragmentation cases in practice such as school choice, medical residency matching, and so forth. Using the real-life dataset of daycare matching markets in Japan, we then empirically evaluate the impact of interregional transfer of students by estimating student utility functions under a variety of specifications and then using them for counterfactual simulation. Our simulation compares a fully integrated market and a partially integrated one with a "balancedness" constraint -- for each region, the inflow of students from the other regions must be equal to the outflow to the other areas. We find that partial integration achieves 39.2 to 59.6% of the increase in the child welfare that can be attained under full integration, which is equivalent to a 3.3 to 4.9% reduction of travel time. The percentage decrease in the unmatch rate is 40.0 to 52.8% under partial integration compared to the case of full integration. The results suggest that even in environments where full integration is not a realistic option, partial integration, i.e., integration that respects the balancedness constraint, has a potential to recover a nontrivial portion of the loss from fragmentation. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.19628 |
| By: | Craig S Wright |
| Abstract: | The CAP theorem asserts a trilemma between consistency, availability, and partition tolerance. This paper introduces a rigorous automata-theoretic and economically grounded framework that reframes the CAP trade-off as a constraint optimization problem. We model distributed systems as partition-aware state machines and embed economic incentive layers to stabilize consensus behavior across adversarially partitioned networks. By incorporating game-theoretic mechanisms into the global transition semantics, we define provable bounds on convergence, liveness, and correctness. Our results demonstrate that availability and consistency can be simultaneously preserved within bounded epsilon margins, effectively extending the classical CAP limits through formal economic control. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.02464 |
| By: | International Monetary Fund |
| Abstract: | 2025 Selected Issues |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2025/246 |
| By: | Kaoru HOSONO; Masaki HOTEI |
| Abstract: | Expanding the coverage of employees’ social insurance leads to higher social insurance premiums paid by firms, potentially affecting employment and firm revenue. We examine these effects using the reform of Japan’s social insurance in 2016, which extended the social insurance coverage of part-time workers from those working at least 30 hours per week to those working 20 hours or more per week, as a quasi-natural experiment. Employing a difference-in-differences approach in which we compare firms with a higher share of part-time workers in the pre-reform year and those with a lower share, we obtain the following findings. First, firms substituted significant amounts of part-time workers with regular workers, but not with capital. Second, total labor costs including social insurance premiums paid by firms increased. Third, firms saw a significant increase in sales revenues but a reduction in profit ratios, suggesting that the increased labor costs were primarily absorbed by firms and buyers due to a partial pass-through of labor costs to output prices. Fourth, high-growth firms were more likely to substitute part-time workers with regular workers and to pass the higher labor costs through to output prices. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25080 |
| By: | Saki Bigio; Diego R. Känzig; Pablo Sánchez; Conor Walsh |
| Abstract: | Despite broad acceptance among economists, carbon taxes face persistent public resistance. We measure the sources and distribution of welfare losses from unexpected European carbon price changes by estimating their impact on consumer prices, labor income, financial wealth, and government transfers. A 1% carbon-policy-induced increase in energy prices yields an average welfare loss of about 1.5% of a year’s consumption, primarily driven by indirect labor-income effects. Younger, poorer, and less educated households, especially in Southern and Eastern Europe, bear a disproportionate burden. These findings suggest public opposition to carbon taxes stems from legitimate distributional concerns. |
| JEL: | D31 H23 Q58 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34125 |
| By: | Thompson, Jack |
| Abstract: | Much of the existing work on LGBT+ placemaking relies on qualitative or historical narratives, which lack the empirical precision to systematically evaluate the structural factors driving the presence and evolution of LGBT+ establishments over time. To address these shortcomings, my paper examines the spatial evolution of LGBT+ establishments in US cities between 1990-2000, using a novel panel dataset combining geocoded Damron Guide entries from Mapping the Gay Guides (MGG) with contextual data from the NHGIS/U.S. Census Bureau. Employing fixed-effects panel models and difference-in-differences frameworks, my analysis investigates how establishment-level and MSA-level factors predict the presence and turnover dynamics of LGBT+ establishments over time. My findings reveal that bars/clubs and erotic shops have a higher likelihood of presence in MSAs relative to accommodations. Theatre/entertainment venues exhibit higher entry and stability into MSA markets, whereas other establishment types face volatile turnover. I also find that the so-called “great cities, " ubiquitous in works on LGBT+ placemaking, exhibit conditions favorable to the viability of LGBT+ establishments and yet exhibit no significant differences in turnover dynamics compared to other MSAs. My findings extend qualitative narratives by quantifying the impacts of economic changes, demographic shifts, and cultural influences, which should inform urban policy and advocacy efforts to sustain inclusive LGBT+ spaces amidst changing urban landscapes. |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:hyr3t_v2 |
| By: | Nisha Taneja (Indian Council for Research on International Economic Relations (ICRIER)); Snajana Joshi; Vasudha Upreti; Nirlipta Rath |
| Abstract: | The trajectory of India-China economic engagement, rooted in a legacy of complex geopolitical ties and asymmetrical economic relations, now stands at a critical juncture amid a changing global order. In this context, Indian Prime Minister Narendra Modi's upcoming visit to China for the Shanghai Cooperation Organisation (SCO) summit carries considerable strategic significance. The thaw in India-China relations offers a timely opportunity to address existing economic imbalances to foster a more balanced engagement along with reducing external vulnerabilities. Amid these shifting global realities, this policy brief explores three key questions: (i) How can India enhance and diversify its exports to China? (ii) What strategies can reduce its import dependence on China? and (iii) How can Chinese FDI be increased with appropriate guardrails? Drawing on an analysis of export trends and untapped potential, patterns of import dependence, and the evolving trajectory of Chinese investment in India, the policy brief identifies policy pathways to enhance export competitiveness, reduce vulnerabilities from concentrated imports, and channel FDI with appropriate guardrails strategies. It also emphasises the need for stronger institutional mechanisms to address non-tariff barriers and product standards. Together, these measures aim to foster a more balanced, secure, and resilient economic partnership between India and China. |
| Keywords: | India Exports, US Tariff Shock, Sectoral Impact, Market Diversification, icrier |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:45 |
| By: | Enes Dilber; Colin Gray |
| Abstract: | When using observational causal models, practitioners often want to disentangle the effects of many related, partially-overlapping treatments. Examples include estimating treatment effects of different marketing touchpoints, ordering different types of products, or signing up for different services. Common approaches that estimate separate treatment coefficients are too noisy for practical decision-making. We propose a computationally light model that uses a customized ridge regression to move between a heterogeneous and a homogenous model: it substantially reduces MSE for the effects of each individual sub-treatment while allowing us to easily reconstruct the effects of an aggregated treatment. We demonstrate the properties of this estimator in theory and simulation, and illustrate how it has unlocked targeted decision-making at Wayfair. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.01202 |
| By: | Robin Musolff; Florian Zimmermann |
| Abstract: | Mental models help people navigate complex environments. This paper studies how people deal with model uncertainty. In an experiment, participants estimate a company’s value, facing uncertainty about which one of two models correctly determines its true value. Using a between subjects design, we vary the degree of model complexity. Results show that in high-complexity conditions people fully neglect model uncertainty in their actions. However, their beliefs continue to reflect model uncertainty. This disconnect between beliefs and actions suggests that complexity leads to biased decision-making, while beliefs remain more nuanced. Furthermore, we show that complexity, via full uncertainty neglect, leads to higher confidence in the optimality of own actions. |
| Keywords: | Mental Models, Beliefs, Attention, Confidence, Representations |
| JEL: | D01 D83 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_697 |
| By: | Mikhail Drugov; Dmitry Ryvkin |
| Abstract: | We characterize robust tournament design -- the prize scheme that maximizes the lowest effort in a rank-order tournament where the distribution of noise is unknown, except for an upper bound, $\bar{H}$, on its Shannon entropy. The robust tournament scheme awards positive prizes to all ranks except the last, with a distinct top prize. Asymptotically, the prizes follow the harmonic number sequence and induce an exponential distribution of noise with rate parameter $e^{-\bar{H}}$. The robust prize scheme is highly unequal, especially in small tournaments, but becomes more equitable as the number of participants grows, with the Gini coefficient approaching $1/2$. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.16348 |
| By: | Rusch, Hannes (RS: GSBE UM-BIC, Microeconomics & Public Economics, RS: GSBE other - not theme-related research) |
| Abstract: | Humans are a group-living species. Our evolutionary past could thus have shaped the ways in which we think and behave in group contexts. One such candidate feature of human social cognition and behavior is ingroup favoritism. Indeed, recent work revealed that at least some people are ingroup favoring and ‘strongly groupy’. Such individuals readily discriminate negatively against outgroup members across all group contexts they are put into, even these contexts are minimal and even if discriminating does not entail any benefits. However, so far, it has not been tested whether ingroup favoring behavior in general or ’groupy’ social preferences in particular are stable within persons over longer periods of time. Here, we present the results of a longitudinal lab-in-the-field study of ingroup favoritism and ’groupiness’ over one year. We find that neither ingroup favoritism nor ‘groupiness’ are particularly time-stable. Thus, our findings are hard to reconcile with notions of ingroup favoritism or ‘groupiness’ as individual traits. Instead, our observations underscore that group-based discrimination is malleable—for better or for worse. Our results reemphasize the need to understand which situational factors trigger ‘groupy’ behavior and how these interact with individual characteristics. |
| JEL: | C90 D01 D80 D90 J15 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2025006 |
| By: | Gabjin Oh |
| Abstract: | This study measures the long memory of investor-segregated cash flows within the Korean equity market from 2015 to 2024. Applying detrended fluctuation analysis (DFA) to BUY, SELL, and NET aggregates, we estimate the Hurst exponent ($H$) using both a static specification and a 250-day rolling window. All series exhibit heavy tails, with complementary cumulative distribution exponents ranging from approximately 2 to 3. As a control, time-shuffled series yield $H \approx 0.5$, confirming that the observed persistence originates from the temporal structure rather than the distributional shape. Our analysis documents long-range dependence and reveals a clear ranking of persistence across investor types. Persistence is strongest for retail BUY and SELL flows, intermediate for institutional flows, and lowest for foreign investor flows. For NET flows, however, this persistence diminishes for retail and institutional investors but remains elevated for foreign investors. The rolling $H$ exhibits clear regime sensitivity, with significant level shifts occurring around key events: the 2018--2019 tariff episode, the COVID-19 pandemic, and the period of disinflation from November 2022 to October 2024. Furthermore, regressions of daily volatility on the rolling $H$ produce positive and statistically significant coefficients for most investor groups. Notably, the $H$ of retail NET flows demonstrates predictive power for future volatility, a characteristic not found in institutional NET flows. These findings challenge the canonical noise-trader versus informed-trader dichotomy, offering a model-light, replicable diagnostic for assessing investor persistence and its regime shifts. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.20426 |
| By: | C.O. Olaniyi (University of South Africa); N.M. Odhiambo (University of South Africa) |
| Abstract: | Transitioning to a carbon-neutral renewable energy (REN) option to decarbonize ecosystems and mitigate carbon dioxide (CO2) emissions and the negative impacts of climate change is consistent with United Nations Sustainable Development Goals 7 and 13. Scholars have identified natural resource wealth and institutions as critical factors in the REN transition in resource-rich countries. Financial barriers are arguably the most significant impediments to transitioning to REN, as REN is more capital-intensive and costly to produce, invest in, and use than traditional fossil fuel-based energy. Meanwhile, weak institutions and corruption in most resource-rich countries culminate in the resource curse phenomenon and the mismanagement of natural resource wealth. It implies that institutions (weak or strong) modify the natural resource rent contribution to the REN transition. Previous research has paid little attention to the impact of the interplay between natural resources and institutional quality on the REN transition in resource-rich African countries. This study examines how institutions moderate the contribution of natural resource wealth to accelerating or inhibiting the REN switch in resource-rich African countries for the period 2000–2021, using fully modified ordinary least squares, a Driscoll-Kraay nonparametric covariance matrix, and moments-based quantile regression estimators. This study departs from earlier studies by determining the institutional quality threshold above which institutions significantly stimulate natural resource rents to accelerate Africa's REN transition. The findings indicate that institutions in resource-rich African countries breed inefficient bureaucracies and corruption in natural resource rent administration. These undermine the ability of natural resource incomes to facilitate a shift to renewable energy sources. The threshold analyses indicate that most resource-rich African countries operate below the institutional quality threshold. This finding corroborates that inefficient institutions abet natural resource rent mismanagement and hinder the channeling of resource income towards the REN transition. The findings' policy implications are robustly articulated and outlined. |
| Date: | 2024–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:afa:wpaper:wp032024 |
| By: | Hendrik Rommeswinkel |
| Abstract: | Decision makers may face situations in which they cannot observe the consequences that result from their actions. In such decisions, motivations other than the expected utility of consequences may play a role. The present paper axiomatically characterizes a decision model in which the decision maker cares about whether it can be ex post verified that a good consequence has been achieved. Preferences over acts uniquely characterize a set of events that the decision maker expects to be able to verify in case they occur. The decision maker chooses the act that maximizes the expected utility across verifiable events of the worst possible consequence that may have occurred. For example, a firm choosing between different carbon emission reduction technologies may find some technologies to leave ex post more uncertainty about the level of emission reduction than other technologies. The firm may care about proving to its stakeholders that a certain amount of carbon reduction has been achieved and may employ privately obtained evidence to do so. It may choose in expectation less efficient technologies if the achieved carbon reduction is better verifiable using the expected future evidence. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.19585 |
| By: | Hamdani, Asaf; Kastiel, Kobi |
| Abstract: | Delaware is widely regarded as the global capital of corporate law and the leader in attracting incorporations. Its dominance is often attributed by legal scholars to its expert judiciary and reliance on judicial decision-making to develop corporate norms. Until recently, the prevailing view has been that legislation plays a minimal role in shaping corporate law. This Article examines the interplay between the courts and legislation in Delaware over nearly six decades. We analyze amendments to the Delaware General Corporation Law (DGCL) from 1967 to 2025 and uncover a consistent pattern of legislative responses to judicial decisions. These responses, we argue, address critical challenges inherent in Delaware's reliance on judge-made law, including the tension between norm-setting and insulating corporate insiders from out-of-pocket liability, the limitations of fiduciary-based adjudication, and other institutional constraints of the judiciary. The interplay between courts and legislation also allows Delaware to adapt to stakeholder pressures and mitigate the risk of federal intervention or other threats to Delaware's dominance. However, too frequent or openly contentious legislative overrides could undermine Delaware's dominance by threatening judicial independence and raising concerns about the effect of interest groups on Delaware's corporate law. Uncovering the pattern of legislative responses raises new questions about the forces shaping Delaware's corporate law and the underlying interaction between its judiciary and legislative branches. This Article explores some of these questions and considers implications for future research. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:324652 |
| By: | Stender, Frederik; Vogel, Tim; Kornher, Lukas; Olekseyuk, Zoryana; Berndt, Sascha; Edele, Andreas |
| Abstract: | United States (US) trade policy has undergone a series of significant changes introducing far-reaching uncertainty for trading partners in both the short and long term. Among the most vulnerable to these changes are low- and middle-income countries. Anticipating the potential impact of proposed or enacted US trade measures ex-ante is difficult. Therefore, this discussion paper examines the structural vulnerabilities of a selection of African countries - Lesotho, Madagascar, Côte d'Ivoire, South Africa, and Tunisia - to recent shifts. Using descriptive trade data, the paper maps direct and indirect channels of exposure and highlights the structural constraints that amplify vulnerability. While Africa is not among the most directly exposed regions, several countries face significant risks due to concentrated export structures, reliance on a few trade partners, and limited capacity to redirect trade in the short term. This highlights the strategic importance for African countries to strengthen regional integration, industrial upgrading, and reduce external dependencies. |
| Keywords: | US trade policy, trade policy uncertainty, Africa, tariff vulnerability, structural trade exposure |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:diedps:324634 |
| By: | Achim Hagen; Gilbert Kollenbach |
| Abstract: | We study the interaction of climate policies and investments into fossil and renewable energy generation capacity under political uncertainty caused by democratic elections. We develop an overlapping generations model, where elected governments determine carbon taxation and green investment subsidies, and individuals make investments into fossil and renewable capacity. We find that some fossil investments become stranded assets if the party offering the higher carbon tax is unexpectedly elected. Green investment subsidies can be used by governments to bind the hands of their successor. By using the subsidy, the party in power can influence the capital stocks and, therefore, the climate policy of the following period to reduce or even avoid potentially stranded assets. With endogenous reelection probability, the impact on the capital stocks can also be used strategically to manipulate the reelection probabilities in favor of the party in power. |
| Keywords: | stranded assets, elections, fossil fuel, renewable energy, carbon tax, investment subsidy |
| JEL: | D72 H23 Q54 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12063 |