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on Macroeconomics |
| By: | Javier Bianchi; Louphou Coulibaly |
| Abstract: | What is the optimal monetary policy response to tariffs? This paper explores this question within an open-economy New Keynesian model and shows that the optimal monetary policy response is expansionary, with inflation rising above and beyond the direct effects of tariffs. This result holds regardless of whether tariffs apply to consumption goods or intermediate inputs, whether the shock is temporary or permanent, and whether tariffs address other distortions. |
| JEL: | E24 E44 E52 F13 F41 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33560 |
| By: | Jose Barrales-Ruiz; Ivan Mendieta-Muñoz; Codrina Rada; Rudiger von Arnim |
| Abstract: | The literature on the empirical linkages between economic growth (or other measures of macroeconomic performance) and the functional distribution of income is copious on the short run. The sustained and simultaneous decline in average rates of real GDP growth and the labor share of income in the US in recent decades has led to renewed interest in the long run, in light of the hypothesis of inequality-induced secular stagnation. This paper employs a vector error correction model with time-varying parameters and stochastic volatility to estimate the long run interaction between real GDP growth, labor share and the unemployment rate. Our key result indicates that a lower labor share is associated with a decline in the growth rate - economic growth is wage-led in the long run. |
| Keywords: | Growth and distribution; stagnation; demand regime. JEL Classification: C32, E12, E25, E32, O40. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:uta:papers:2025-03 |
| By: | Max Sina Knicker (X - École polytechnique - IP Paris - Institut Polytechnique de Paris, LadHyX - Laboratoire d'hydrodynamique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique); Karl Naumann-Woleske (X - École polytechnique - IP Paris - Institut Polytechnique de Paris); Jean-Philippe Bouchaud (Académie des sciences [Paris, France], X - École polytechnique - IP Paris - Institut Polytechnique de Paris, CFM - Capital Fund Management); Francesco Zamponi (UNIROMA - Università degli Studi di Roma "La Sapienza" = Sapienza University [Rome], Systèmes Désordonnés et Applications - LPENS - Laboratoire de physique de l'ENS - ENS Paris - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Département de Physique de l'ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres) |
| Abstract: | The economic shocks that followed the COVID-19 pandemic have brought to light the difficulty, both for academics and policy makers, of describing and predicting the dynamics of inflation. This paper offers an alternative modelling approach. We study the 2020-2023 period within the well-studied Mark-0 Agent-Based Model, in which economic agents act and react according to plausible behavioural rules. We include a mechanism through which trust of economic agents in the Central Bank can de-anchor. We investigate the influence of regulatory policies on inflationary dynamics resulting from three exogenous shocks, calibrated on those that followed the COVID-19 pandemic: a production/consumption shock due to COVID-related lockdowns, a supply-chain shock, and an energy price shock exacerbated by the Russian invasion of Ukraine. By exploring the impact of these shocks under different assumptions about monetary policy efficacy and transmission channels, we review various explanations for the resurgence of inflation in the United States, including demand-pull, cost-push, and profit-driven factors. Our main results are four-fold: (i) without appropriate fiscal policy, the shocked economy can take years to recover, or even tip over into a deep recession; (ii) the response to policy is non-monotonic, leading to a narrow window of ''optimal'' policy responses due to the trade-off between inflation and unemployment; (iii) the success of monetary policy in curbing inflation is primarily due to expectation anchoring, rather than to direct impact of interest rate hikes; (iv) the two most sensitive model parameters are those describing wage and price indexation. The results of our study have implications for Central Bank decision-making, and offers an easy-to-use tool that may help anticipate the consequences of different monetary and fiscal policies. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04238133 |
| By: | Michael T. Kiley |
| Abstract: | Since the 1990s, monetary policy research has highlighted the properties of policy rules that stabilize inflation and economic activity, the role of inflation targeting in anchoring expectations, and the constraints posed by the effective lower bound (ELB). This paper combines these themes by examining whether explicitly responding to long-run inflation expectations improves policy effectiveness. Using both a small model for intuition and a large-scale policy model for quantitative evaluation, the analysis shows that the proposed approach reinforces inflation anchoring, reduces volatility from slow-moving inflationary forces, and mitigates ELB risks. The findings suggest that policy rules incorporating long-run inflation expectations enhance stability and complement makeup strategies by addressing ELB risks through different channels. Given that central banks already emphasize inflation expectations in their communications, this strategy aligns naturally with existing policy discussions. |
| Keywords: | Monetary policy; Inflation targeting; Anchored inflation expectations; Effective lower bound |
| JEL: | E52 E58 E37 |
| Date: | 2025–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-27 |
| By: | Frederic S. Mishkin; Michael Kiley |
| Abstract: | Since the initial launch of inflation targeting in the early 1990s in New Zealand and a few other countries, inflation targeting has become the predominant monetary policy strategy in large advanced and emerging market economies. Inflation targeting has been remarkably successful in anchoring inflation, likely owing to core elements of the framework across central banks. Its reaction process, which adjusts the monetary policy stance to ensure the return of inflation to target, allows it to flexibly incorporate a wide range of factors while limiting the discretionary biases that can contribute to excessive inflation. The emphasis on communications about the inflation outlook promotes transparency and accountability. As a result, inflation targeting central banks have, on balance, managed well the large shocks associated with the Global Financial Crisis and COVID. Even so, there are numerous challenges discussed in this paper that are associated with calibration and communications of forward guidance, quantitative easing/tightening, and financial stability. |
| JEL: | E52 E58 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33585 |
| By: | Georgia Thebault (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres) |
| Abstract: | Quel rôle joue la distance à la formation la plus proche dans les choix d'orientation ? À partir de données individuelles détaillées retraçant les parcours des élèves dans l'enseignement secondaire et supérieur, cette note apporte un nouvel éclairage sur cette question. Elle analyse l'impact de la création de classes préparatoires aux grandes écoles (CPGE) et de sections de technicien supérieur (STS) dites de « proximité » entre 2006 et 2015. En France, où il existe de nombreux freins à la mobilité étudiante, la répartition inégale de l'offre de formation sur le territoire contribue fortement aux disparités géographiques d'accès aux formations sélectives. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:ipppap:halshs-05042548 |
| By: | Fernanda Marquez-Padilla; Susan W. Parker; Tom S. Vogl |
| Abstract: | Mexico’s pioneering conditional cash transfer program Progresa, later renamed Prospera, operated over two decades in a shifting policy landscape. We exploit the program's sudden and unexpected rollback to estimate whether, two decades after rollout studies documented its initial impacts on schooling and labor, the program still raised enrollment and reduced work in youth. Comparing areas with high and low program penetration before and after rollback, we find that rollback immediately reduced school enrollment, especially in boys of high school age. Effects on enrollment were larger at rollback than they were at rollout, albeit shifted from middle school ages to high school ages. Rising work mirrored falling enrollment in boys of high school age. Our results suggest the program had successfully adapted to the rise of high school, but Mexico's poor were unable to protect their children from its unexpected demise. |
| JEL: | I25 J22 O15 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33527 |
| By: | Cathy Krohmer (LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); François Jaujard (Mines Saint-Étienne MSE - École des Mines de Saint-Étienne, FAYOL-ENSMSE - Institut Henri Fayol - Mines Saint-Étienne MSE - École des Mines de Saint-Étienne - IMT - Institut Mines-Télécom [Paris], COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne, LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); Ewan Oiry |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05023206 |
| By: | Bruno Bouchard; Xiaolu Tan |
| Abstract: | We provide an extension of the unbiased simulation method for SDEs developed in Henry-Labordere et al. [Ann Appl Probab. 27:6 (2017) 1-37] to a class of path-dependent dynamics, pertaining for Asian options. In our setting, both the payoff and the SDE's coefficients depend on the (weighted) average of the process or, more precisely, on the integral of the solution to the SDE against a continuous function with bounded variations. In particular, this applies to the numerical resolution of the class of path-dependent PDEs whose regularity, in the sens of Dupire, is studied in Bouchard and Tan [Ann. I.H.P., to appear]. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.16349 |
| By: | Bokai Cao; Xueyuan Lin; Yiyan Qi; Chengjin Xu; Cehao Yang; Jian Guo |
| Abstract: | Market simulator tries to create high-quality synthetic financial data that mimics real-world market dynamics, which is crucial for model development and robust assessment. Despite continuous advancements in simulation methodologies, market fluctuations vary in terms of scale and sources, but existing frameworks often excel in only specific tasks. To address this challenge, we propose Financial Wind Tunnel (FWT), a retrieval-augmented market simulator designed to generate controllable, reasonable, and adaptable market dynamics for model testing. FWT offers a more comprehensive and systematic generative capability across different data frequencies. By leveraging a retrieval method to discover cross-sectional information as the augmented condition, our diffusion-based simulator seamlessly integrates both macro- and micro-level market patterns. Furthermore, our framework allows the simulation to be controlled with wide applicability, including causal generation through "what-if" prompts or unprecedented cross-market trend synthesis. Additionally, we develop an automated optimizer for downstream quantitative models, using stress testing of simulated scenarios via FWT to enhance returns while controlling risks. Experimental results demonstrate that our approach enables the generalizable and reliable market simulation, significantly improve the performance and adaptability of downstream models, particularly in highly complex and volatile market conditions. Our code and data sample is available at https://anonymous.4open.science/r/fwt_-E 852 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.17909 |
| By: | Noam Angrist; Sarah Kabay; Dean Karlan; Lincoln Lau; Kevin Wong |
| Abstract: | Children spend most of their time at home in their early years, yet efforts to promote human capital at home in many low- and middle-income settings remain limited. We conduct a randomized controlled trial to evaluate an intervention which encourages parents and caregivers to foster human capital accumulation among their children between ages 3 and 5, with a focus on math and phonics skills. Children gain 0.52 and 0.51 standard deviations relative to the control group on math and phonics tests, respectively (p |
| JEL: | I20 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33574 |
| By: | Bin Ramli, Muhammad Sukri |
| Abstract: | Mandatory job rotations are a cornerstone of the Malaysian civil service, designed to enhance governance, reduce integrity risks, and foster organizational agility. However, these rotations present significant onboarding challenges, requiring employees to rapidly adapt to diverse roles and complex responsibilities, particularly in 'hot seat' and high-risk-to-corruption positions. This study focuses on the Jabatan Kastam Diraja Malaysia (JKDM), where the need for efficient onboarding is heightened by the structured tenure of job rotations. The necessity to quickly acclimate to new roles within a defined period, especially in sensitive positions, underscores the urgency of effective onboarding strategies. To address the inherent onboarding complexities, particularly in navigating intricate customs regulations, this research proposes leveraging Large Language Models (LLMs), with a specific focus on NotebookLM. NotebookLM's ability to ingest and summarize extensive regulatory documents, coupled with features like interactive training modules and AI-powered Q&A, offers a dynamic, personalized learning experience. This approach aims to surpass traditional training limitations, streamlining onboarding, enhancing knowledge transfer, and boosting productivity within JKDM. The study outlines an implementation plan, including a pilot program and department-wide rollout, with expected outcomes of improved onboarding efficiency, enhanced knowledge sharing, and increased operational effectiveness, ultimately contributing to a more agile and integrity-driven public service. Figure |
| Date: | 2025–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:gjv9r_v1 |
| By: | Rodríguez-Pose, Andrés |
| Abstract: | This article examines the role of Swedish higher education institutions (HEIs) in economic development, focusing on the impact of their research capacities on local economic activity. Globally, HEIs are increasingly prioritising research, frequently at the expense of education and local economic engagement, as a means to climb the university ranking ladder. Sweden has been no exception. Our findings indicate that research intensity at Swedish HEIs does not correlate with higher local income. Rather, the opposite is the case: more emphasis on top-end research seems to undermine local income. We explore human capital and innovation as possible mechanisms for the limited local economic influence of Swedish HEIs. The results reveal that HEIs do not significantly improve local human capital. Moreover, despite Swedish HEIs holding intellectual property rights to foster innovation, the actual economic translation of this knowledge faces considerable hurdles, including a misalignment with industry needs and limited local business collaboration. |
| Keywords: | higher education institutions; Sweden; research capacity; innovation; human capital |
| JEL: | I23 I20 R11 |
| Date: | 2025–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127188 |
| By: | Marine Robuchon (JRC - European Commission - Joint Research Centre [Ispra]); Camille Bernery (ESE - Ecologie Systématique et Evolution - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Ana Cristina Cardoso (JRC - European Commission - Joint Research Centre [Ispra]); Cheikh Abdou Khadre Mbacké Dia (UCAD - Université Cheikh Anta Diop de Dakar [Sénégal]); Franck Courchamp (ESE - Ecologie Systématique et Evolution - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Christophe Diagne (UMR CBGP - Centre de Biologie pour la Gestion des Populations - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD [Occitanie] - Institut de Recherche pour le Développement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Eugenio Gervasini (JRC - European Commission - Joint Research Centre [Ispra]); Gustavo Heringer (UFLA - Universidade Federal de Lavras = Federal University of Lavras, Nürtingen-Geislingen University, Thünen Institute of Biodiversity); Sandrine Pavoine (CESCO - Centre d'Ecologie et des Sciences de la COnservation - MNHN - Muséum national d'Histoire naturelle - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); David Renault (ECOBIO - Ecosystèmes, biodiversité, évolution [Rennes] - UR - Université de Rennes - INEE-CNRS - Institut Ecologie et Environnement - CNRS Ecologie et Environnement - CNRS - Centre National de la Recherche Scientifique - CNRS - Centre National de la Recherche Scientifique - OSERen - Observatoire des sciences de l'environnement de Rennes - UR - Université de Rennes - INSU - CNRS - Institut national des sciences de l'Univers - UR2 - Université de Rennes 2 - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Vanessa Theodoro Rezende (UFLA - Universidade Federal de Lavras = Federal University of Lavras, Universidade do Estado de Minas Gerais = Minas Gerais State University); Anne-Charlotte Vaissière (ESE - Ecologie Systématique et Evolution - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, ECOBIO - Ecosystèmes, biodiversité, évolution [Rennes] - UR - Université de Rennes - INEE-CNRS - Institut Ecologie et Environnement - CNRS Ecologie et Environnement - CNRS - Centre National de la Recherche Scientifique - CNRS - Centre National de la Recherche Scientifique - OSERen - Observatoire des sciences de l'environnement de Rennes - UR - Université de Rennes - INSU - CNRS - Institut national des sciences de l'Univers - UR2 - Université de Rennes 2 - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Céline Bellard (ESE - Ecologie Systématique et Evolution - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Highlights: • 10 invasive alien species (IAS) with economic costs are also threatened. • 27 IAS with economic costs are among the most distinctive species of their group. • One IAS with economic costs, the koala, is both threatened and distinctive. • Those 36 IAS with economic costs are in need of priority protection in their native ranges. • Coordinated management at population-level would maximise conservation outcomes. Abstract: Several studies have revealed species that constitute conservation paradoxes because they are invasive in some areas and threatened in others. However, those studies only considered ecological impacts of invasions and species' threat category as a criterion that makes them conservation priorities. Here, our aim was to highlight further species that cause economic costs because of their invasiveness in some areas while being in need of priority protection in their native ranges. We used the InvaCost database to calculate an economic cost for each invasive alien species (IAS) in this database and explored the threat category, as well as the phylogenetic and functional distinctiveness of these IAS. We also focused on the costliest IAS to reveal their threat category and distinctiveness. Among the 355 species of mammals, birds, and plants constituting IAS with sufficient data on economic costs, we found that 10 species are also conservation priorities because they are threatened in their native range, therefore constituting conservation paradoxes. We further found that 27 IAS with economic costs are also conservation priorities because they are among the most phylogenetically or functionally distinctive, thus constituting conservation challenges. One IAS with economic costs is a conservation priority both because it is threatened in its native range and phylogenetically distinctive: the koala. Finally, we found three conservation paradoxes or challenges among the costliest IAS. Our work stresses to an unprecedented level that some species simultaneously need to be controlled in their invasive range and protected in their native range. |
| Keywords: | Coordinated management, Functional distinctiveness, InvaCost, Phylogenetic distinctiveness, Threat category |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04993757 |
| By: | Orazio Attanasio (University College London); Gabriella Conti (University College London); Pamela Jervis (University of Chile); Costas Meghir (Yale University); Aysu Okbay (Vrije Universiteit Amsterdam) |
| Abstract: | We evaluate impacts heterogeneity of an Early Childhood Intervention, with respect to the Educational Attainment Polygenic Score (EA4 PGS) constructed from DNA data based on GWAS weights from a European population. We find that the EA4 PGS is predictive of several measures of child development, mother’s IQ and, to some extent, educational attainment. We also show that the impacts of the intervention are significantly greater in children with low PGS, to the point that the intervention eliminates the initial genetic disadvantage. Lastly, we find that children with high PGS attract more parental stimulation; however, the latter increases more strongly in children with low PGS. |
| Keywords: | gene-environment interactions, early childhood development, stimulation programs |
| JEL: | C21 J13 I24 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:hka:wpaper:2025-003 |
| By: | Felipe Brugués; Ayumu Ken Kikkawa; Yuan Mei; Pablo Robles |
| Abstract: | This paper assesses the impact of the North American Free Trade Agreement on Mexican manufacturing plants’ output prices and markups. We distinguish between Mexican goods that are exported and those sold domestically, and decompose their prices separately into markups and marginal costs. We then analyze how these components were affected by the reductions in Mexican output tariffs, intermediate input tariffs, and U.S. tariffs on Mexican exports. We find that domestically sold products saw a decline in prices as Mexican plants faced more competition and gained access to cheaper inputs. Prices of exported goods fell only slightly as plants increased their markups in response to a favorable competitive environment due to declines in U.S. tariffs. |
| JEL: | F12 F14 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33516 |
| By: | Brendan Kline; Matthew A. Masten |
| Abstract: | We develop an approach to sensitivity analysis that uses design distributions to calibrate sensitivity parameters in a finite population model. We use this approach to (1) give a new formal analysis of the role of randomization, (2) provide a new motivation for examining covariate balance, and (3) show how to construct design-based confidence intervals for the average treatment effect, which allow for heterogeneous treatment effects but do not rely on asymptotics. This approach to confidence interval construction relies on partial identification analysis rather than hypothesis test inversion. Moreover, these intervals also have a non-frequentist, identification-based interpretation. We illustrate our approach in three empirical applications. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.14127 |
| By: | Imaduddin Abdullah; Andy Sumner |
| Abstract: | This paper examines Indonesia's upgrading within the global nickel value chain. Indonesia's transformation from a major nickel ore exporter into an integrated producer of refined nickel products offers important lessons for resource-rich developing countries seeking economic diversification. Drawing on evidence from Indonesia's strategic shift towards midstream and downstream manufacturing, this paper examines how policy choices and state intervention can reshape a country's position in global value chains. |
| Keywords: | Structural transformation, Industrialization, Industrial policy, Indonesia |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-29 |
| By: | Dugoua, Eugenie; Gerarden, Todd D. |
| Abstract: | We study how individual inventors respond to incentives to work on “clean” electricity technologies. Using natural gas price variation, we estimate output and entry elasticities of inventors and measure the medium-term impacts of a price increase mirroring the social cost of carbon. We find that the induced clean innovation response primarily comes from existing clean inventors. New inventors are less responsive on the margin than their average contribution to clean energy patenting would indicate. Our results strengthen the rationale for government intervention to expedite the energy transition. |
| Keywords: | inventors; energy technology; induced innovation |
| JEL: | O31 Q55 Q40 |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124461 |