Macroeconomics http://lists.repec.org/mailman/listinfo/nep-mac Macroeconomics 2026-07-13 Macroeconomic Policies for AI https://d.repec.org/n?u=RePEc:cpr:ceprdp:21412&r=&r=mac We provide a macroeconomic framework to study monetary and fiscal policies for AI. Advances in AI expand firms' ability to automate production. While higher automation boosts productivity and potential output, it also reduces workers' share of income. Since workers have a high propensity to consume, advances in AI may depress aggregate demand and lead to a slump. Expansionary monetary policy can convert an AI slump into an AI boom, but in doing so it faces two challenges. In the short run, AI worsens the inflation-employment trade off faced by the central bank. In the medium run, monetary policy may be constrained by the zero lower bound, since weak demand lowers the natural rate. Employment subsidies and cuts in labor taxes can usefully complement monetary policy, by reducing firms' cost of labor and inflation, as well as supporting workers' income and aggregate demand. Fornaro, Luca Wolf, Martin Inflation 2026-04 The Impact of Women's Empowerment on Infant and Young Child Feeding Practices: Key Dimensions and Mediating Channel in Nepal https://d.repec.org/n?u=RePEc:frz:wpaper:wp2026_04.rdf&r=&r=mac The concept of women's empowerment has received a lot of recognition in the past few years and is considered an important factor in determining the nutritional outcomes of children. Nevertheless, there is a lack of evidence regarding the impact of women's empowerment on infant and young child feeding (IYCF) practices. This study examined the causal relationship between women’s empowerment and IYCF outcomes by utilizing the most recent data from the Demographic and Health Survey (2022) conducted in Nepal. Women's empowerment is measured using a composite index that encompasses five domains: information access, healthcare access, asset ownership, decision-making autonomy, and attitude towards domestic abuse. Each of these dimensions was also analyzed separately to assess its impact on IYCF practices. The empirical strategy encompassed the Lewbel two-stage least squares method (I+E) as the primary methodology. The findings indicate a positive relationship between the overall women’s empowerment score and minimum meal frequency, minimum acceptable diet, and iron-rich foods. Specifically, the information access dimension has a positive relationship with the minimum acceptable diet and iron-rich foods. The decision making autonomy dimension is positively related to the minimum meal frequency, vitamin-A rich foods, and iron-rich foods. The attitude toward domestic violence dimension indicates a positive relationship with minimum dietary diversity, minimum acceptable diet, and vitamin-A rich foods. Further analysis also suggests that women's empowerment has an indirect effect on IYCF practices, specifically through mother’s education. It has a substantial positive impact on minimal dietary diversity, a minimum acceptable diet, and vitamin A rich foods. Interventions aimed at enhancing IYCF practices in Nepal should prioritize women's empowerment strategies. In particular, focus on key areas such as decision-making autonomy, access to information, and shaping women's attitudes towards domestic violence. Likewise, it is also necessary to comprehend the indirect impact of a mother's education on these child nutritional outcomes. Sana Khan Lucia Ferrone infant and child feeding practices, women’s empowerment, Lewbel estimation method, mediation analysis 2026 When to go Green? Firm Dynamics & Clean Technology Adoption https://d.repec.org/n?u=RePEc:ete:ceswps:777266&r=&r=mac Carbon pricing is a central policy instrument for reducing emissions, but governments face a trade-off: faster decarbonization can raise output losses and carbon leakage, while gradual implementa-tion slows emission reductions. This paper studies how EU carbon policies have shaped firms’ adoption of abatement technologies and identifies the optimal trajectory to reach the EU’s 2050 net zero target, particularly in a unilateral context. I develop a dynamic heterogeneous-firm model in which forward-looking manufacturing firms choose when to adopt discrete abatement technologies under a gradually tightening carbon price. I estimate it using panel data on EU ETS firms from 2005-2019. The model rationalizes the low carbon prices of the 2010s as a consequence of gradual policy and firm anticipation. Emission reduc-tions arise mainly from large, productive, and initially polluting firms. Anticipation of future tightening mitigates half of the short-run output losses in 2025 and two-thirds by 2050, keeping overall output losses below 2%. A moderately faster tightening could cut cumulative emissions by 15% at an additional cost of only 0.11% of output. Finally, because firms anticipate future policy changes, unilateral and global carbon pricing yield nearly identical effects on domestic output and carbon leakage. Bas Gorrens trade and environment, technology adoption, firm decisions, climate policy, carbon leakage 2025-11-26 Household coping mechanisms under grid failure: Evidence from a high electrification context in Lebanon https://d.repec.org/n?u=RePEc:arx:papers:2606.17807&r=&r=mac Despite near-universal electrification in many countries, electricity supply shortages continue to shape household energy use. This paper examines how households adapt to chronic grid failure in high-electrification, high-dependence contexts, using Lebanon as a case study. Drawing on original survey data from 1, 000 households, we analyze both supply-side coping mechanisms such as diesel generators and solar photovoltaic (PV)-battery systems, and demand-side adaptations, including load shifting and demand suppression. The results reveal a landscape of household responses, where socioeconomic status plays a central role in determining access to backup solutions and the extent of met demand. While diesel generators remain widespread, a transition toward PV-battery systems is observed, especially among financially capable households. However, decentralized self-generation is associated with inefficiencies, including substantial levels of curtailed solar generation. On the demand side, households exhibit reductions in electricity use, leading to distinct consumption profiles depending on the type of backup system employed. These findings highlight the importance of distinguishing between met and unmet demand when assessing energy needs under unreliable supply. The paper contributes to the literature by providing a quantitative characterization of the interaction between self-generation and demand adaptation in a supply-constrained high-electrification context. It also offers empirical demand profiles that incorporate suppressed consumption, addressing a key gap in electricity system planning. From a policy perspective, the results underscore the need to account for unmet demand, address inequities in access to coping technologies, and reduce inefficiencies in decentralized systems. Majd Olleik Haytham M. Dbouk Anne Neumann Elsa Bou Gebrael Sebastian Zwickl-Bernhard 2026-06 SCORE Strand 3 White Paper on Religions and Economic Development https://d.repec.org/n?u=RePEc:cam:camdae:2645&r=&r=mac Research on religions and economic development is substantial and global in its scope. This White Paper consolidates research for the Social Consequences of Religions (SCORE) Strand 3 programme on Religions and Economic Development, led by the University of Cambridge. Our focus is the place of religion in economic development outcomes, the literature in this field, a meta-analysis of relevant studies, and current policy debates. The outcomes include growth and productivity, human capital formation, institutional quality, market functioning, and resilience to shocks. The evidence base has expanded rapidly but remains dispersed across disciplines and research designs. SCORE Strand 3 synthesises evidence into a mechanism-based map, which integrates results and clarifies where the evidence is strongest. These findings may be translated into research priorities that will provide guidance on commissioning future research in this area and policy engagement to help change the global conversation about religions worldwide. Iyer, S. Shastry, K Iljina, K. Wiemann, M. Powell, C. Religion, Development, Scoping Review, Meta-Analysis, Strategic Priorities for Research 2026-07-06 Weak Bundle, Strong Bundle: How AI Redraws Job Boundaries https://d.repec.org/n?u=RePEc:cpr:ceprdp:21453&r=&r=mac This paper studies how the effect of AI on an occupation depends not just on which tasks AI can perform but also on how costly it is to unbundle those tasks from the job. Much of the discussion of AI and labor markets starts from task exposure: if AI can perform more tasks in an occupation, that occupation should lose employment or earnings. This is incomplete because labor markets price jobs, not tasks. Jobs bundle tasks together, and the effect of AI depends on how costly it is to break the bundle. We build a two-task model in which AI can either assist one task inside a bundled job or supply that task autonomously while a human supplies the residual task. We show that, in weak-bundle occupations, AI automates some tasks and narrows the boundary of the job, activating the standard task-substitution channel once product demand is sufficiently inelastic. In strong-bundle occupations where tasks are not independently reallocable, AI improves performance inside the job, but does not remove the human from the bundle. Thus, bundling provides a force that protects jobs and workers' share of downstream revenue. Garicano, Luis Li, Jin Wu, Yanhui 2026-05 Transition Planning 2026: decarbonisation strategies in oil and gas, and diversified mining https://d.repec.org/n?u=RePEc:ehl:lserod:138888&r=&r=mac The TPI Centre Transition Planning 2026 report assesses the transition plans of 22 large publicly listed companies in the oil and gas and diversified mining sectors. The report applies the TPI Centre's Net Zero Strategies (NZS) assessment frameworks to evaluate how companies plan to deliver emissions reductions across their businesses. It conducts detailed assessments of companies’ decarbonisation strategies, including by analysing decarbonisation levers (the key actions companies plan to take to decarbonise), evaluating the alignment of those actions with low-carbon scenarios, and examining capital expenditure and investment planning. In doing so, the report sheds light on the credibility, investability, external dependencies and transition readiness of corporate transition plans in these sectors. Modirzadeh, Seyed Alireza Davies, Ella Fitzpatrick, Meghan Sinclair, Maxim Jahn, Valentin Dietz, Simon 2026-06 The Politics of Carbon Pricing: Young vs. Old, Debtors vs. Creditors https://d.repec.org/n?u=RePEc:cpr:ceprdp:21246&r=&r=mac We develop a small open economy model with overlapping generations to analyse the macroeconomic, distributional, and political economy effects of unilateral climate policy under an emissions cap. Carbon pricing lowers wages and thus human wealth, while financial assets continue to earn the world interest rate. This asymmetry generates sharp generational and cross country differences: in creditor economies the young lose most, whereas in debtor economies the old bear the heaviest burden as they must reduce their debt when incomes fall. We compare constant carbon taxes with efficient Hotelling price paths and show that delayed implementation dramatically raises the carbon price needed to meet a fixed emissions cap, especially in debtor economies. Hotelling pricing yields substantially lower near term welfare losses. Across all policies, carbon pricing depresses wages, reduces consumption and human wealth, and induces capital flight; labour supply responses differ by asset position. Public debt can be used to secure majority support for climate policy by shifting part of the burden to future generations—more easily so in creditor economies than debtor ones. Since labour tax cuts counteract the wage depression caused by climate policy, less debt is needed to obtain a political majority. Rezai, Armon van der Ploeg, Frederick Decarbonization; Overlapping generations; Carbon pricing; Employment; Capital flight; Current account; Government debt; Double dividend 2026-03 How Should Central Banks Respond to Commodity Price Shocks? Optimal Monetary and Exchange Rate Frameworks for Commodity-Expos... https://d.repec.org/n?u=RePEc:cpr:ceprdp:21518&r=&r=mac We show that the optimal monetary policy and exchange rate framework depend critically on the economy’s commodity exposure. We develop a flexible but tractable model economy with commodity exports and imports, in which international financial conditions may vary with the commodity cycle. Stabilizing domestic prices is optimal for commodity exporters, in line with standard open-economy policy prescriptions. But for economies that use commodities as inputs in production, optimal policy largely ‘looks through’ the direct and indirect effects of commodity shocks on domestic prices; this contrasts with some earlier findings and policy practice (which only ‘looks through’ the direct effect). Exchange-rate pegs perform better for commodity importers because they stabilize wages and employment, though it is not a robustly optimal policy. In emerging and developing economies, where financial conditions are more tied to the commodity cycle, trade-offs are starker and implementing the optimal policy may be challenging, since it requires enough credibility to keep inflation expectations anchored amidst greater volatility in some nominal variables. Drechsel, Thomas Tenreyro, Silvana McLeay, Michael Turri, Enrico Duilio Monetary policy; Exchange rates; Inflation targeting; Commodity prices; Small open economy 2026-05 Breaking the Poverty and Poor-Health Trap: A Structural Analysis of Informality in South Africa https://d.repec.org/n?u=RePEc:gat:wpaper:2607&r=&r=mac We study the interplay between informality, health, and education in South Africa. Using data from the National Income Dynamics Study, we document large disparities in health and labor market outcomes over the life cycle. We develop and estimate a life-cycle search-and-matching model with endogenous education and a dual labor market. We show that informal employment and poor health reinforce each other, generating a persistent poverty and poor-health trap. Policy experiments show that the optimal reform combines tertiary education subsidies, a broader tax base, and a lower average tax burden on earnings, increasing employment, welfare, and health while preserving fiscal balance. Julien Albertini Tony Berthonneau Anthony Terriau Informality, Health, Education, Human Capital, Search and Matching 2026 The Macroeconomic Effects of Bank Regulation: New Evidence from a High-Frequency Approach https://d.repec.org/n?u=RePEc:cpr:ceprdp:21371&r=&r=mac Bank regulation supports financial stability, but might constrain economic activity. This paper estimates the macroeconomic effects of bank regulation using a high-frequency identification approach. We measure market surprises in a bank stock price index during a narrow time window around Federal Reserve speeches that discuss the US banking system and its regulation. We then develop a sign restriction procedure to elicit the variation in these market surprises that can be interpreted as news about bank regulation. News that bank regulation will be tighter than expected mitigates risk in the banking sector, but reduces economic activity by increasing banks' funding costs and tightening loan supply. A 10 basis point regulation-induced peak reduction in bank risk premiums is accompanied by a 15 basis point peak increase in the unemployment rate. Compared to previous studies, these magnitudes suggest a relatively high macroeconomic cost of tightening bank regulation, at least in the short run. Drechsel, Thomas Miura, Ko Federal Reserve; Bank regulation; Macroprudential policy; High-frequency identification; Sign restrictions 2026-04 Hunger-Driven Emigration: Evidence from Venezuela https://d.repec.org/n?u=RePEc:mse:cesdoc:26007&r=&r=mac This paper estimates the causal effect of food insecurity on Venezuelan emigration to Colombia using municipal-level panel data for 2010–2023. Exploiting exogenous variation in crop losses via an instrument that interacts drought intensity with 2007 agricultural production, I show that a one percentage-point increase in food insecurity raises the emigration rate by 4.2 percent on average. A 10 percent drop in crop yields increases food insecurity by 0.56 percentage points, implying a 2.4 percent rise in the emigration rate. Reduced-form evidence indicates that drought shocks mattered only after the 2014 food import collapse, showing the role of local agricultural fragility in the broader political crisis. Responses are strongest in municipalities with low crop diversity, a larger oil sector, intermediate levels of development, and a higher share of rural land. These findings provide the first causal evidence that hunger operates as a major push factor in contemporary emigration from developing countries and high-light that climate adaptation and food security policies are critical to reducing forced migration Alejandro Arciniegas Herrera Agriculture; Climate Shocks; Drought; Food Insecurity; International Migration; Venezuela 2026-05 Mergers, Lobbying, and Elections: Is there a "Curse of Bigness"? https://d.repec.org/n?u=RePEc:cpr:ceprdp:21420&r=&r=mac We study the impact of mergers on quid-pro-quo lobbying and elections in a political agency model. Two incumbent firms can lobby an incumbent politician to block a pro-competitive reform. The politician’s type determines whether they are susceptible to the firms’ influence or not. A representative voter tries to infer the politician’s type monitoring the policy-making process. We show that lobbying increases when firms merge because rents from political protection are not dissipated by price competition. While greater market concentration may increase prices and political influence, it also improves voters’ ability to screen bad politicians by observing distorted policy outcomes. This generates a novel trade-off: mergers can harm consumers through market and political power, yet improve selection of politicians. We characterize when standard consumer welfare–based merger control is too lenient or too strict once these political economy effects are taken into account. Broso, Matteo Valletti, Tommaso Mergers; Lobbying; Consumer welfare standard; Antitrust policy; market power; Political economy of competition policy 2026-04 An introduction to land in demand-led growth https://d.repec.org/n?u=RePEc:zbw:ipewps:341637&r=&r=mac This paper incorporates land and rents into demand-led growth theory, examining how a tripartite class structure - workers, capitalists, and landlords - shapes income distribution and accumulation. Within a one-sector economy with normal-cost pricing, we derive income shares under two contractual rent forms, fixed costs and tithes, and show that their distributional consequences differ qualitatively. For the Kaleckian closure, the introduction of landlords dissolves the binary wage-led versus profit-led regime taxonomy: rent-led growth e!ects emerge as a genuine possibility; multiple distributional effects can coexist; and the economy may be purely rent-led when landlords are sufficiently less thrifty than capitalists. For the Sraffian supermultiplier, distributional changes are confined to level effects on fully adjusted output, the wage-led effect is unconditional, and profit-led and tithe-led effects are mutually exclusive, a contrast arising from the absence of autonomous investment sensitivity to profitability. Finally, we derive minimal conditions under which land conservation is compatible with demand-led growth, and show that the simultaneous achievement of ecological limits, full employment, and balanced external accounts cannot be expected to arise from the normal functioning of the economy under either closure. Zaffari, Gabriel land rent, demand-led growth, income distribution, Kaleckian model, Sraffian supermultiplier, rent-led growth, ecological macroeconomics, absolute rent 2026 The Tradition of Federal Reserve Independence https://d.repec.org/n?u=RePEc:fip:fedlwp:103485&r=&r=mac The tradition of Federal Reserve independence is encoded in statute in important ways but is also rooted in norms and practices. To articulate this tradition, we discuss how those norms and practices emerged historically from compromises over the concentration of power, actions taken by political leaders and Fed officials to define the boundaries of the Fed’s independence, and in reaction to evolving monetary theories and practices. We argue that understanding these historic roots provides essential context for evaluating challenges to the Fed's independence today and in the future. Jonathan D. Rose David C. Wheelock Federal Reserve; central bank independence; monetary policy 2026-07-06 Sufficientarian Grading Rules and Rankings:Characterizations and Implementation https://d.repec.org/n?u=RePEc:usi:wpaper:945&r=&r=mac Sufficientarian grading rules are de ned using a nite family of sucientarian judgements on individual capability assignments as embodied in a sufficientarian binary grading function (BGF). Both sufficientarian grading rules and the sufficientarian total preorders on capability-type assignments they induce are characterized. Moreover, several further total preorders based upon sufficiency-gap information provided by a sufficientarian grading rule are explicitly de ned and some of them are also characterized. It is also shown that there exists a class of inclusive, unanimity-respecting and suitably strategy-proof protocols (including simple majority when the number of agents is odd) which can be deployed in order to select one specific sufficientarian grading rule. Marcello Basili Ernesto Savaglio Stefano Vannucci Suffcientarianism, Grading Function, Thresholds, Rating, Ranking Jel Classification: D31, D63 2026-07 Alternative data information on climate risk and corporate cash holdings https://d.repec.org/n?u=RePEc:ehl:lserod:138697&r=&r=mac This study investigates the association between firm-level climate risk exposure and corporate cash holdings, drawing on transcript-based climate measures constructed from earnings conference calls. These measures track the relative frequency of climate-related bigrams in quarterly transcripts, providing a forward-looking and firm-specific view of climate exposure that distinguishes between overall, regulatory, and physical dimensions. We further exploit the release of the Stern Review in 2006 as a common shock to climate awareness, using it as a conceptual test of whether greater climate salience amplifies the link between firm-level exposure and precautionary liquidity accumulation. Our findings show that firms with higher climate risk exposure maintain significantly larger cash reserves, consistent with a precautionary savings motive. Financially constrained firms exhibit a stronger response than their unconstrained counterparts, reflecting the interaction between climate uncertainty and financing frictions. The results also demonstrate how text-based alternative data derived from managerial disclosures can uncover firm-level climate exposure that aggregate proxies may fail to capture, with direct implications for research in emerging markets where conventional climate data are often limited. Xu, Mofu climate risk; cash holdings; alternative data; earnings calls; financial constraints; emerging markets 2026-06-17 Adapting to Brexit: the Response of Corporate Structures to Geopolitical Uncertainty https://d.repec.org/n?u=RePEc:cpr:ceprdp:21312&r=&r=mac Geopolitical uncertainty alters the incentives of firms to organise their corporate structure across borders, creating a distinct margin of adjustment in response to policy risk. We study this margin using the Brexit referendum as a quasi-natural experiment. We combine firm level data on parent-subsidiary links for UK and EU firms between 2011 and 2021 with measures of Brexit-related uncertainty and study changes in foreign subsidiary formation at the extensive margin. Following the referendum, there was an increase in the number of subsidiary formation from the UK into the EU, while the number of EU firms that expanded with subsidiaries into the UK dropped. UK firms establishing their first EU subsidiary after the referendum were systematically weaker ex ante than comparable firms that did so before the referendum. Increased Brexit-related uncertainty is associated with increased foreign subsidiary formation from the UK into the EU, driven primarily by small firms, alongside suggestive evidence of decreased domestic subsidiary incorporation by UK firms. We interpret these findings as evidence of a 'precautionary' foreign direct investment channel, operating through changes in the corporate structures of firms in response to geopolitical uncertainty. Crowley, Meredith A. Domenech Palacios, Mar Faraglia, Elisa Giannitsarou, Chryssi Havemeister, Lea Brexit; geopolitical uncertainty; foreign subsidiary 2026-03