|
on Macroeconomics |
|
Issue of 2019‒05‒06
ninety-one papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Albers, Scott |
| Abstract: | This book is about the construction of reality. The central aim of this study is to understand how gravity works and how it may be focused and manipulated. While I do not have an answer to this question, the discoveries along the way have been worth collecting into a single volume for future reference. |
| Keywords: | Zeno's Paradox, Consciousness, Reality, Real GNP, Prices, Bio-Complexity, Hearsay, Russell's Paradox, Kondratiev Wave, Fibonacci Series, Phi, Golden Mean, Revolution, Crisis, Okun's Law, |
| JEL: | A10 A12 A13 A14 A2 A20 B4 B40 B41 B5 B50 B52 B59 C0 C00 C02 C1 C5 C6 C60 C68 E1 E10 E17 E19 E23 E27 E3 E30 E32 E37 Y1 Y10 Y8 Y80 Z1 Z10 Z13 |
| Date: | 2019–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93632&r=all |
| By: | Giannone, Domenico (Federal Reserve Bank of New York and CEPR); Lenza, Michele (European Central Bank and ECARES-ULB); Reichlin, Lucrezia (London Business School and CEPR) |
| Abstract: | This paper studies the relationship between the business cycle and financial intermediation in the euro area. We establish stylized facts and study their stability during the global financial crisis and the European sovereign debt crisis. Long-term interest rates have been exceptionally high and long-term loans and deposits exceptionally low since the Lehman collapse. Instead, short-term interest rates and short-term loans and deposits did not show abnormal dynamics in the course of the financial and sovereign debt crisis. |
| Keywords: | money; loans; nonfinancial corporations; monetary policy; euro area |
| JEL: | C32 C51 E32 E51 E52 |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:885&r=all |
| By: | Aðalheiður Ó. Guðlaugsdóttir; Lilja S. Kro |
| Abstract: | This paper presents a new measure of underlying inflation in Iceland: the common component of the CPI. It is obtained from a factor model that is estimated using monthly data on individual subcomponents of the CPI. The results indicate that the common component is most responsive to imported inflation. Over the entire estimation period, the common component explained, on average, half of the total variation of individual subindices. Following the easing and stabilisation of inflation and inflation expectations in recent years, the majority of the variance of individual subindices is explained by sector-specific shocks over a shorter estimation period. The performance of this measure was also checked along several dimensions. It appears robust to the estimation period used, and both the level of aggregation and the impact of revisions due to real-time extraction of the common component were negligible. The common component could serve as a useful complement to existing measures of underlying inflation already monitored by the Central Bank of Iceland. |
| JEL: | C38 E31 E32 E52 E58 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp78&r=all |
| By: | Hegeland, Erik (Department of Economic History and International Relations, Stockholm University); Taalbi, Josef (Department of Economic History, Lund University) |
| Abstract: | This paper presents an empirical analysis of the relation between unemployment and macroeconomic performance. A strong correlation has been pointed out before, but a crucial question is over what time-horizon this holds. To the best of our knowledge, no previous cross-country study has shown that there is a long-run relationship between unemployment and macroeconomic performance over a time-period that stretches before the 1960s. To address this issue, we use wavelet analysis to decompose the time series into short, medium and long-run variations, and band spectrum regressions on the relation between unemployment, GDP, investment, long-term interest rate and TFP, covering ten countries 1913-2016. This methodology has several advantages compared to standard econometrical methods and other tools for decomposition. Our results show that unemployment correlates negatively with the long-run components of investment. This suggests that aggregate demand and capital formation inuence long-term labor market outcomes. According to our estimates ca 17-percent of overall variations in unemployment and 29 percent of the long-run variations may be explained by long-run variations in capital formation. |
| Keywords: | unemployment; capital formation; wavelets; multiple equilibria |
| JEL: | E10 E12 E22 E24 E32 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0203&r=all |
| By: | Alexander Mihailov (Department of Economics, University of Reading); Giovanni Razzu (Department of Economics, University of Reading); Zhe Wang (Department of Economics, University of Reading) |
| Abstract: | This paper studies the effects of monetary policy on the national rates of unemployment in Germany, France, Italy and Spain, the four largest economies of the European Monetary Union (EMU), since the introduction of the euro in 1999 and before and after the Global Financial Crisis (GFC) of 2007-09. Estimating and simulating a version of a canonical medium-scale New Keynesian dynamic stochastic general equilibrium (DSGE) model with indivisible labor that incorporates unemployment developed by Galí, Smets and Wouters (2012), the paper compares the relative importance of monetary policy shocks, risk premium shocks, wage markup shocks and labor supply shocks and studies their effects on other labor market variables, such as labor force participation and real wages. We find that the same monetary policy of the European Central Bank (ECB) has had heterogeneous effects on unemployment rates and other labor market variables in these four major EMU economies. Moreover, in all of them monetary policy shocks are the second largest source of unemployment rate variability in the short, medium and long run, only preceded by risk premium shocks. Our results also confirm that the post-GFC zero lower bound environment has rendered ECB's interest rate policy much less powerful in affecting EMU unemployment rates. In addition to the heterogeneity documented in the effects of monetary policy along various labor market dimensions across the countries in our sample, we also reveal that the EMU economies are, further, characterized by important differences along these dimensions with respect to the United States (US). |
| Keywords: | single monetary policy, European Monetary Union, unemployment rate fluctuations, labor market heterogeneity, New Keynesian DSGE models, Bayesian estimation |
| JEL: | D58 E24 E31 E32 E52 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2019-07&r=all |
| By: | Lindé, Jesper; Trabandt, Mathias |
| Abstract: | We propose a resolution of the missing deflation puzzle. Our resolution stresses the importance of nonlinearities in price- and wage-setting when the economy is exposed to large shocks. We show that a nonlinear macroeconomic model with real rigidities resolves the missing deflation puzzle, while a linearized version of the same underlying nonlinear model fails to do so. In addition, our nonlinear model reproduces the skewness of inflation and other macroeconomic variables observed in post-war U.S. data. All told, our results caution against the common practice of using linearized models to study inflation and output dynamics. |
| Keywords: | great recession; inflation dynamics; linearized model solution; liquidity trap; nonlinear model solution; Real rigidities; strategic complementarities; zero lower bound |
| JEL: | E30 E31 E32 E37 E44 E52 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13690&r=all |
| By: | Buera, Francisco J. (Washington University in St. Louis); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis) |
| Abstract: | In this chapter, we review the monetary and fiscal history of Argentina for the period 1960–2017, a time during which the country suffered several balance of payments crises, three periods of hyperinflation, two defaults on government debt, and three banking crises. All told, between 1969 and 1991, after several monetary reforms, thirteen zeros had been removed from its currency. We argue that all these events are the symptom of a recurrent problem: Argentina’s unsuccessful attempts to tame the fiscal deficit. An implication of our analysis is that the future economic evolution of Argentina depends greatly on its ability to develop institutions that guarantee that the government does not spend more than its genuine tax revenues over reasonable periods of time. |
| Keywords: | Inflation; Deficits; Fiscal and monetary interactions; Government budget constraint; Macroeconomic history |
| JEL: | E31 E42 E5 E63 N16 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:580&r=all |
| By: | Youngsoo Jang; Takeki Sunakawa; Minchul Yum |
| Abstract: | This paper explores how the interaction between household heterogeneity and progressive government transfers shapes aggregate labor market ‡uctuations. Using a static model of the extensive margin labor supply, we analytically show that greater progressivity in the transfer system leads to greater volatility of low wage workers’ employment and less procyclical average labor productivity. We then build a dynamic general equilibrium model with both idiosyncratic and aggregate productivity shocks and show that household heterogeneity substantially shapes the dynamics of macroeconomic aggregates when interacted with progressive transfers. Specifically, a notable feature of the performance of our heterogeneous-agent model is its ability to reproduce moderately procyclical average labor productivity while retaining the success of the representative-agent indivisible labor model in generating a large cyclical volatility of aggregate hours relative to output. Finally, we document that among low-wage workers, (i) the individuallevel probability of adjusting labor supply along the extensive margin is signi…cantly higher, and (ii) the fall in employment rate is considerably steeper during the last six recessions, both of which support the key mechanism of our model. |
| Keywords: | Heterogeneity, progressivity, government transfers, extensive margin labor supply, business cycles |
| JEL: | E32 E24 E21 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_085&r=all |
| By: | Funke, Michael; Tsang, Andrew |
| Abstract: | The recent upgrade of the People’s Bank of China’s monetary policy framework establishes a corridor system of interest rates. As the revamped policy arrangement now features a multiple-instrument mix of liquidity tools and pricing signals, we employ a dynamic factor modelling approach to derive an indicator of China’s monetary policy stance. The approach is based on the notion that comovements in several monetary policy instruments have a common element that can be captured by a single underlying, unobserved component. To clarify and interpret the derived index, we employ a baseline DSGE model that can be solved analytically and allows tracing of the expansionary and contractionary on-and-off phases of Chinese monetary policy. |
| JEL: | C54 E52 E58 E61 E32 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_008&r=all |
| By: | Razin, Assaf |
| Abstract: | This essay offers an economic-history perspective of the long struggle towards macroeconomic stability. The paper is a broad analytical overview of major exogenous shocks and shifts in macroeconomic policy and institutions in Israel since the 1977-1985 great inflation through the global financial crisis and the effects of those shifts on long term growth, inflation, the business cycle, the Phillips curve and related economic developments. The paper will discuss three main issues. The first one on the inflation crisis focuses on the 1985 stabilization and on its impact on subsequent reform of monetary institutions. The second discusses the impact of globalization on growth, inflation and the Phillips curve. The third contains a discussion of the reasons for the relatively good performance of Israel during the crisis, including foreign exchange market intervention. |
| JEL: | E0 F0 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13701&r=all |
| By: | Cem Cakmakli (Koc University); Hamza Demircan (Koc University); Sumru Altug (American University of Beirut, CEPR) |
| Abstract: | In this paper, we propose a method for jointly estimating indexes of economic and financial conditions by exploiting the intertemporal link between their cyclical behavior. This method combines a dynamic factor model for the joint modeling of economic and financial variables with mixed frequencies together with a tailored Markov regime switching specification for capturing their cyclical behavior. It allows for imperfect synchronization between the cycles in economic and financial conditions/factors by explicitly estimating the phase shifts between their cyclical regimes. We examine the efficacy of the model for predicting cyclical activity in a key emerging economy, namely, Turkey, by making use of a mixed frequency ragged-edge data set. A comparison of our framework with more conventional cases imposing common cyclical dynamics as well as independent cyclical dynamics for the economic and financial indicators reveals that the proposed specification provides precise estimates of indexes of economic and financial activity together with accurate and timely recession probabilities. Recession probabilities estimated using the available data in the first week of November 2018 indicate that Turkey entered a recession that is still ongoing starting from August 2018. We further conduct a recursive real-time exercise of nowcasting and forecasting business cycle turning points. The results show evidence for the superior predictive power of our specification by signaling oncoming recessions (expansions) as early as 3.6 (3.3) months ahead of the actual realization. |
| Keywords: | Financial conditions index; Coincident economic index; Dynamic factor model; Markov switching; Imperfect synchronization; Bayesian inference. |
| JEL: | C11 C32 C38 E37 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1907&r=all |
| By: | Anson, Mike (Bank of England); Bholat, David (Bank of England); Kang, Miao (Bank of England); Rieder, Kilian (University of Oxford); Thomas, Ryland (Bank of England) |
| Abstract: | It is well known that quantitative credit restrictions, rather than Bagehot-style ‘free lending’ constituted the standard response to financial crises in the early days of central banking. But why did central banks in the past frequently restrict the supply of loans during financial crises? In this paper, we draw on a large novel, loan-level data set to study the Bank of England’s policy response to the crisis of 1847. We find that credit rationing due to residual imperfect information in the sense of Stiglitz and Weiss (1981) cannot be a convincing explanation for quantitative credit restrictions during the crisis of 1847. We provide preliminary evidence which could suggest that discriminatory credit rationing on the basis of loan applicants’ type and identity characterized the Bank of England’s (BoE’s) response to the crisis of 1847. Our results also show that collateral characteristics played an important role in the BoE’s loan decisions, even after controlling for the identity of loan applicants. This finding confirms the hypothesis in Capie (2002) and Flandreau and Ugolini (2011, 2013, 2014) that the characteristics of bills of exchange submitted to the discount window mattered. Since our results suggest that the Bank also took decisions on the basis of the identity of loan applicants, our preliminary findings would seem to challenge Capie’s ‘frosted glass’ metaphor, but more work is required to confirm these conjectures. |
| Keywords: | Credit rationing; lender of last resort; collateral management |
| JEL: | E44 E52 E58 G21 N12 N20 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0794&r=all |
| By: | Delatte, Anne-Laure; Garg, Pranav; Imbs, Jean |
| Abstract: | Using a bank-firm level credit registry combined with firm-level balance sheet data we establish the presence of heterogeneity in the effects of unconventional monetary policy transmission. We examine the consequences of a loosening in the collateral eligibility requirement for credit refinancing in France. The policy was designed to affect bank lending positively. We expect a linear increase in lending and an additional increase in loans to firms with newly acceptable rating. We find a large heterogeneity of the monetary policy transmission including the unexpected reduction of lending by the banks benefiting the most from the policy. These are small, risk-averse banks whose foremost concern after the recession was to strengthen their balance sheets. Banks least affected by the policy respond with a reduction in credit to low risk borrowers in reaction to the change in the market structure. Last we document heterogenous effects of the policy on firms depending on their size. |
| Keywords: | Corporate Finance; individual data; Real Effects Of Monetary Policy; Transmission Channels; Unconventional Monetary Policy |
| JEL: | C58 E44 E52 E58 G21 G28 G30 G32 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13693&r=all |
| By: | Cristina Fernández; Francisco Fernández; Fedesarrollo |
| Abstract: | La presente sección busca analizar los fenómenos de informalidad empresarial y tributaria por parte de las microempresas en Bogotá. Lo anterior indica que nuestra unidad de análisis son las empresas de diez o menos trabajadores; las definiciones y medidas de la informalidad empresarial y tributaria que se van a utilizar en el resto del trabajo, y la relación que existe entre estas dos variables se presenta a continuación. |
| Keywords: | Informalidad, Informalidad de Firma, Informalidad Tributaria, Estructura Tributaria, Finanzas Locales, Finanzas Públicas, Impuestos, Impuestos Locales, Ingresos Fiscales, Tributación, Bogotá, Distrito Capital |
| JEL: | J21 O17 D24 E24 E26 E62 H21 H20 H71 |
| Date: | 2018–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017254&r=all |
| By: | Antonio Alvarez; Alejandro Fernandez; Joaquin Garcia-Cabo; Diana Posada |
| Abstract: | This study attempts to evaluate the impact of an increase in banks' funding stress and its transmission to the real economy, taking into account different funding sources banks can rely on. Using aggregate data from eight Euro area financial systems, we find that following a liquidity funding shock, both credit and GDP decline in different amounts and lengths. GDP reverts faster than credit. Furthermore, periphery countries experience a more pronounced fall in deposits and credit growth and the negative effects from the shock last longer than in core countries. Banks' funding seems to play a relevant role as periphery countries rely more on wholesale funding during normal times. |
| Keywords: | Liquidity funding shocks ; ECB policy ; Euro Area |
| JEL: | E50 E58 |
| Date: | 2019–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1245&r=all |
| By: | Hüser, Anne-Caroline (Bank of England); Kok, Christoffer (European Central Bank) |
| Abstract: | We present new evidence on the structure of euro area securities markets using a multilayer network approach. Layers are broken down by key instruments and maturities as well as the secured nature of the transaction. This paper utilizes a unique dataset of banking sector cross-holdings of securities to map these exposures among banks and economic and financial sectors. We can compare and contrast funding and exposure networks among banks themselves and of banks, non-banks and the wider economy. The analytical approach presented here is highly relevant for the design of appropriate prudential measures, since it supports the identification of counterparty risk, concentration risk and funding risk within the interbank network and the wider macro-financial network. |
| Keywords: | Interbank networks; macro-financial networks; multilayer networks; market microstructure; macroprudential analysis |
| JEL: | D85 E44 G21 L14 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0795&r=all |
| By: | Makarski, Krzysztof (Warsaw School of Economics); Tyrowicz, Joanna (University of Warsaw); Malec, Magda (Warsaw School of Economics) |
| Abstract: | Many countries consider rising fertility through pro-family policies as a solution to the fiscal pressure stemming from longevity. However, an increased number of births implies immediate private costs and only delayed public benefits of younger and larger population. We propose using an overlapping generations model with a rich family structure to quantify the effects of simulated increases to the birth rates. We analyze the overall macroeconomic and welfare effects of these simulated paths relative to status quo. We also study the distribution of these effects across cohorts and study the sensitivity of the final effects to the assumed target value and path of increased fertility. Since our study tries to quantify the possible effects of pro-natalistic policies, we focus of public costs and benefits of having children. We find that fiscal effects are positive, but short of the natalistic expenditures in many countries. The sign and the size of both welfare and fiscal effects depend on the patterns of increased fertility. |
| Keywords: | fertility, welfare, natalistic policies, overlapping generations model |
| JEL: | H55 E17 C60 C68 E21 D63 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12272&r=all |
| By: | Romain Plassard (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | During the 1970s, Keynesian macroeconomics was challenged by the New Classical Economics of Robert Lucas. This involved a battle between disequilibrium and equilibrium macroeconomics. My article contributes to explain why the equilibrium approach came to dominate. My case study is Robert Barro and Herschel Grossman. In 1971, Barro and Grossman elaborated the basic disequilibrium model. In 1976, they wrote the first book on disequilibrium macroeconomics – i.e., Money, Employment, and Inflation. However, at the end of the 1970s, they came to advocate for equilibrium models à la Lucas (1972, 1975). My article traces how and why |
| Keywords: | business cycle, non-neutrality of money, disequilibrium macroeconomics, equilibrium macroeconomics |
| JEL: | B21 B22 B23 E1 E3 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2019-17&r=all |
| By: | Ragnheiður Jónsdóttir |
| Abstract: | This paper aims to answer the question of what kind of liquidity management system would be optimal for Iceland with respect to two important considerations. One is the current environment of surplus reserves and the other is Iceland’s specific character of being a very small, open economy with its own currency. The theory behind monetary policy implementation is discussed as well as the various origins of surplus reserves, their characteristics and implications for the conduct of monetary policy. The reasons for the steep accumulation of surplus reserves in the Icelandic banking system are considered and fluctuations in reserves are found likely to persist in a small, open economy, not least one with a managed float. Four different types of liquidity management systems at central banks are discussed in turn and the examples of Sweden, Norway and Denmark considered in that context. Finally, some conclusions are provided on the optimal system for Iceland. |
| JEL: | E51 E52 E58 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp79&r=all |
| By: | María Angélica Arbeláez; Carlos E. Mendoza |
| Abstract: | Este documento se construye a partir de los trabajos realizados por los autores desde la perspectiva jurídica (Carlos Eduardo Mendoza, “Estudio en materia de seguro previsional, calificación de invalidez, pago de incapacidades y empleo de personas discapacitadas”) y desde la económica (María Angélica Arbeláez, “Estudio en materia de seguro previsional, incapacidad e invalidez”) |
| Keywords: | Seguro Previsional, Calificación de Invalidez, Pago de Incapacidades, Personas Discapacitadas, Gastos Públicos, Finanzas Públicas, Colombia |
| JEL: | H55 H50 E60 E62 |
| Date: | 2018–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017260&r=all |
| By: | Carrera, César (Banco Central de Reserva del Perú) |
| Abstract: | Una forma de entender el consumo privado es subdividir esta variable macroeconómica agregada en sus componentes y estudiar las partes. En este documento se estima el comportamiento de los componentes más importantes del consumo privado al cual se denomina componentes principales. Tomando como punto de inicio la información de la Tabla Insumo Producto para distintos años, se utiliza un conjunto de variables proxi para cada componente a partir de los cuales se obtiene una distribución del consumo por componente para cada año. Los componentes restantes forman parte de una serie denominada Otros, cuyo rol es de disciplinar los resultados mediante el registro de ciertas regularidades en su conducta. Esta metodología permite proyectar el consumo privado con un bajo error de proyección. |
| Keywords: | Consumo privado, Bottom – Up, Tabla Insumo Producto. |
| JEL: | C13 C43 E01 E21 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:rbp:wpaper:2019-004&r=all |
| By: | Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Machicado, Carlos Gustavo (Institute for Advanced Development Studies); Peres-Cajías, José (University of Barcelona) |
| Abstract: | After the economic reforms that followed the National Revolution of the 1950s, Bolivia seemed positioned for sustained growth. Indeed, it achieved unprecedented growth from 1960 to 1977. Mistakes in economic policies, especially the rapid accumulation of debt due to persistent deficits and a fixed exchange rate policy during the 1970s, led to a debt crisis that began in 1977. From 1977 to 1986, Bolivia lost almost all the gains in GDP per capita that it had achieved since 1960. In 1986, Bolivia started to grow again, interrupted only by the financial crisis of 1998–2002, which was the result of a drop in the availability of external financing. Bolivia has grown since 2002, but government policies since 2006 are reminiscent of the policies of the 1970s that led to the debt crisis, in particular, the accumulation of external debt and the drop in international reserves due to a de facto fixed exchange rate since 2012. |
| Keywords: | Bolivia; Monetary policy; Fiscal policy; Hyperinflation; Public enterprises |
| JEL: | E52 E63 H63 N16 |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:579&r=all |
| By: | María Angélica Arbeláez; Fedesarrollo |
| Abstract: | El objetivo de este estudio es profundizar el análisis desde el punto de vista económico de las implicaciones de las decisiones jurídicas en el sistema de seguridad social en su conjunto, derivadas del reconocimiento y extensión de beneficios en materia de incapacidades, invalidez y sobrevivientes. Se identifican las principales sentencias y decisiones de la jurisprudencia en esta materia con mayor incidencia económica, y se analiza en qué medida y a través de qué canales éstas afectan a los actores del sistema de pensiones y riesgos laborales. En el segundo capítulo se presentan algunos aspectos generales del Sistema Pensional y del Seguro Previsional y se ilustra cómo se distribuyen las funciones entre los regímenes público y privado y su evolución en el tiempo. El tercer capítulo describe la normativa relativa a los beneficios por incapacidad y pensiones de invalidez, incluyendo los beneficios, requisitos y entidades encargadas de asumir las prestaciones económicas derivadas de estos siniestros. En el cuarto capítulo se describen las principales sentencias y fallos de tutela que tienen una incidencia económica en el Sistema. En el quinto capítulo se presenta un análisis económico asociado a dicha jurisprudencia. En el sexto capítulo se hace un análisis a nivel internacional y se evalúa a Colombia en este contexto. Finalmente se presentan las conclusiones y recomendaciones. |
| Keywords: | Sistema de Seguridad Social, Seguridad Social, Incapacidades, Invalidez, Gastos Públicos, Finanzas Públicas, Seguro Previsional, Colombia |
| JEL: | H55 H50 H70 E60 E62 |
| Date: | 2018–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017259&r=all |
| By: | Bennani, Hamza |
| Abstract: | This paper tests whether the People's Bank of China's communication affects expectations of market participants and matters as a monetary policy instrument. For that purpose, we first rely on a computational linguistic tool to measure the tone of PBC speeches and second, we use a high frequency methodology to estimate the effect of tone on stock prices. Our results show that positive changes of the tone affect positively stock prices in the Shanghai and the Shenzhen stocks markets. Additional extensions show that PBC communication does not have a persistent e ect on stock prices and that the tone of PBC communication still has a positive and significant impact on stock prices even when controlling for all the monetary policy instruments implemented by the central bank. Hence, our findings show that PBC communication matters as a monetary policy instrument to shape market expectations and to move asset prices. |
| JEL: | E52 E58 |
| Date: | 2019–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_009&r=all |
| By: | Grant, Everett (Federal Reserve Bank of Dallas); Yung, Julieta (Bates College) |
| Abstract: | We develop a multi-sector DSGE model to calculate upstream and downstream industry exposure networks from U.S. input-output tables and test the relative importance of shocks from each direction by comparing these with estimated networks of firms’ equity return responses to one another. The correlations between the upstream exposure and equity return networks are large and statistically significant, while the downstream exposure networks have lower — but still positive — correlations that are not statistically significant. These results suggest a low short-term elasticity of substitution across inputs transmitting shocks from suppliers, but more flexible ties with downstream firms. Additionally, both the DSGE model and simulations of our empirical approach highlight the importance of accounting for common factors in network estimation, which become more important over our 1989-2017 sample period, explaining 11.7% of equity return variation over the first ten years and 35.0% over the final ten. |
| Keywords: | upstream versus downstream; input-output linkages; firm networks; shock propagation; aggregate shocks |
| JEL: | C32 D85 E23 E44 G01 |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:360&r=all |
| By: | Ayres, Joao Luiz (Inter-American Development Bank); Navarro, Gaston (Federal Reserve Board); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis); Teles, Pedro (Banco de Portugal) |
| Abstract: | We explore quantitatively the possibility of multiple equilibria in a model of sovereign debt crises. The source of multiplicity is the one identified by Calvo (1988). This type of multiplicity has been at the heart of the policy debate through the recent European sovereign debt crisis. Key for multiplicity in the model is a stochastic process for output featuring long periods of either high or low growth. We calibrate the output process in the model using data for the southern European countries that were exposed to the debt crisis. We find that expectations-driven sovereign debt crises are empirically plausible, but only in periods of stagnation. Multiplicity is state dependent: in periods of stagnation and for intermediate levels of debt, interest rates may be high for reasons unrelated to fundamentals. |
| Keywords: | Self-fulfilling debt crises; Sovereign default; Multiplicity; Good and bad times; Stagnation |
| JEL: | E44 F34 |
| Date: | 2019–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:757&r=all |
| By: | Jim Malley; Ulrich Woitek |
| Abstract: | To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare. |
| Keywords: | human capital externalities, endogenous growth, Bayesian estimation |
| JEL: | C11 C52 E32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7603&r=all |
| By: | Jungsoo Park (Department of Economics, Sogang University, Seoul) |
| Abstract: | This study provides a comprehensive analysis on the comparison of labor productivity growth, wage growth, changes in labor share and in household income in Korea for the 2000-2017 period. The findings show that contrary to the concerns raised in the recent literature that wages are lagging behind growths in GDP per employment, actually wage growth and GDP per employment growth for the Korean economy were very similar for the corresponding period either in nominal terms or real terms using the same price index. Furthermore, the firm-level and establishment-level micro data show that wage growth is surpassing the productivity growth, especially in the manufacturing sector and for the small-and-medium-sized enterprises. Declining household income share is mainly due to expanding government sector and reduction in the self-employment shares. Lastly, there are many unresolved issues in calculating adjusted labor income share and room for improvement in long-term time series of labor income shares. These findings imply that recent government policies to promote rapid wage increases based on incorrect facts should be reconsidered. |
| JEL: | E24 E25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:sgo:wpaper:1901&r=all |
| By: | Jonathan Kearns (Reserve Bank of Australia); Andreas Schrimpf (Bank for International Settlements); Fan Dora Xia (Bank for International Settlements) |
| Abstract: | Using monetary policy shocks for 7 advanced economy central banks, measured at high frequency, we document the strength and characteristics of interest rate spillovers to 47 advanced and emerging market economies. Our main goal is to assess different channels through which spillovers occur and why some economies' interest rates respond more than others. We find that there is no evidence that spillovers relate to real linkages, such as trade flows. There is some indication that exchange rate regimes influence the extent of spillovers. By far the strongest determinant of interest rate spillovers is financial openness. Economies that have stronger bilateral (and aggregate) financial links with the United States or euro area are susceptible to stronger interest rate spillovers. These effects are much more pronounced at the longer end of the yield curve, indicating that while economies retain policy rate independence, financial conditions are influenced by global yields. |
| Keywords: | monetary policy spillovers; high-frequency data; financial integration |
| JEL: | E44 F36 F42 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:rba:rbardp:rdp2019-03&r=all |
| By: | María Inés Agudelo; Camila Aguilar; Fedesarrollo |
| Abstract: | Este trabajo tiene 7 secciones. La primera consiste en esta introducción y contextualización del sistema presupuestal en Colombia. La segunda presenta el marco conceptual de las revisiones de gasto y la experiencia internacional que le ha dado forma a este instrumento. En la tercera sección se cuenta qué se quiso hacer en Colombia con este ejercicio en las diferentes etapas de revisiones de gasto que se trabajaron en el Gobierno Nacional. En la cuarta sección se presentan la implementación de las diferentes fases del instrumento y actividades que se llevaron a cabo. La quinta sección resume los resultados que se obtuvieron de las revisiones de gasto de cada sector. En las últimas dos secciones se presentan los logros y recomendaciones particulares derivadas del ejercicio de revisiones de gasto, y unas conclusiones con recomendaciones generales sobre cómo consideramos que puede utilizarse la herramienta a futuro. |
| Keywords: | Gastos Públicos, Finanzas Públicas, Política Fiscal, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017248&r=all |
| By: | Kopiec, Pawel |
| Abstract: | This paper provides an analytical formula for the government spending multiplier in economy populated with heterogeneous households that face uninsured idiosyncratic risk. To derive this expression I use the canonical Bewley-Huggett-Aiyagari model extended to capture frictional product market. In my analysis I relax several assumptions that were made in the literature to obtain closed-form solutions in heterogeneous agent models such as: partial equilibrium (e.g., Auclert (2017)), extreme illiquidity (e.g., Krusell et al. (2011)) and constant real interest rates (e.g., Auclert et al. (2018)). The resulting formula for the multiplier is decomposed into interpretable, model-based channels. Calibrated model is used to estimate their magnitude under alternative fiscal and monetary policy rules. Quantitative exploration indicates that household heterogeneity plays a crucial role in the propagation of government expenditures shocks. |
| Keywords: | Heterogeneous Agents, Fiscal Stimulus |
| JEL: | D30 E62 H23 H30 H31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93499&r=all |
| By: | Chari, V. V. (Federal Reserve Bank of Minneapolis); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis); Teles, Pedro (Banco de Portugal) |
| Abstract: | We use the Ramsey and Mirrlees approaches to study how fiscal and trade policy should be set cooperatively when governments must raise revenues with distorting taxes. Free trade and unrestricted capital mobility are optimal. Efficient outcomes can be implemented with taxes only on final consumption goods and labor income. We study alternative tax systems, showing that uniform taxation of household asset returns, and not taxing corporate income yields efficient outcomes. Border adjustments exempting exports from and including imports in the tax base are desirable. Destination and residence based tax systems are desirable compared to origin and source based systems. |
| Keywords: | Capital income tax; Free trade; Value-added taxes; Border adjustment; Origin- and destination-based taxation; Production efficiency |
| JEL: | E60 E61 E62 |
| Date: | 2019–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:581&r=all |
| By: | Camila Pérez; Juan Sebastián Corrales; Fedesarrollo |
| Abstract: | En este módulo encuentra la información histórica y las proyecciones correspondientes al sector real de la economía colombiana. Adicionalmente, se encuentra un archivo de supuestos que sirve de insumo tanto a este módulo como al resto de módulos del modelo de consistencia macroeconómica. Al final de este manual encontrará una nota metodológica con los resultados de las estimaciones de elasticidades para el consumo de los hogares y la inversión total. La tabla 1 resume las principales hojas que contiene el archivo Sector Real. |
| Keywords: | Economía Colombiana, Modelo de Consistencia MacroeconómicaManuales, Gastos Públicos, Finanzas Públicas |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017249&r=all |
| By: | Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley |
| Abstract: | This paper establishes new evidence on the cyclical behaviour of household income risk in Great Britain and assesses the role of social insurance policy in mitigating against this risk. We address these issues using the British Household Panel Survey (1991-2008) by decomposing stochastic idiosyncratic income into its transitory, persistent and fixed components. We then estimate how income risk, measured by the variance and the skewness of the probability distribution of shocks to the persistent component, varies between expansions and contractions of the aggregate economy. We first find that the volatility and left-skewness of these shocks is a-cyclical and counter-cyclical respectively. The latter implies a higher probability of receiving large negative income shocks in contractions. We also find that while social insurance (tax-benefits) policy reduces the levels of both measures of risk as well as the counter-cyclicality of the asymmetry measure, the mitigation effects work mainly via benefits. |
| Keywords: | household income risk, social insurance policy, aggregate fluctuations |
| JEL: | D31 E24 J31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7594&r=all |
| By: | SIDEPRO; Fedesarrollo |
| Abstract: | El objetivo general del proyecto es el de realizar el diseño del Modelo Integrado de Información Financiera Pública – MIIFP, a partir de la conceptualización de una propuesta de modelo que incluya la especificación de requerimientos de información de y entre los distintos sistemas de información financiera que en su adecuación e inter operatividad conformarán el MIIFP. |
| Keywords: | Gastos Públicos, Finanzas Públicas, Modelo Integrado, Información Financiera Pública, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017262&r=all |
| By: | Juan Gonzalo Zapata; Fedesarrollo |
| Abstract: | Segundo informe de un proyecto de la Contraloría General de la República y Fedesarrollo que tiene como objetivo: “Diseñar el Banco de Estadísticas Fiscales - BEF en la CGR, con estándares internacionales, con el fin de disponer de información relevante, confiable, actualizada y organizada que sea el insumo de los informes Constitucionales y Legales y permita cumplir con los deberes misionales de la Entidad, así como poner dicha información a disposición de la comunidad en general para el control político y ciudadano.” |
| Keywords: | Gastos Públicos, Finanzas Públicas, Banco de Estadísticas Fiscales, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017263&r=all |
| By: | Costain, James; Nakov, Anton; Petit, Borja |
| Abstract: | We study the effects of monetary shocks in a model of state-dependent price and wage adjustment based on “control costs”. Suppliers of retail goods and of labor are both monopolistic competitors that face idiosyncratic productivity shocks and nominal rigidities. Stickiness arises because precise decisions are costly, so agents choose to tolerate small errors in the timing of adjustments. Our simulations are calibrated to microdata on the size and frequency of price and wage changes. Money shocks have less persistent real effects in our state-dependent model than they would a time-dependent framework, but nonetheless we obtain sufficient monetary nonneutrality for consistency with macroeconomic evidence. Nonneutrality is primarily driven by wage rigidity, rather than price rigidity. State-dependent nominal rigidity implies a flatter Phillips curve as trend inflation declines, because nominal adjustments become less frequent, making short-run inflation less reactive to shocks. JEL Classification: E31, D81, C73 |
| Keywords: | control costs, logit equilibrium, near rationality, nominal rigidity, state-dependent adjustment |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20192272&r=all |
| By: | Carlos E. Mendoza; Fedesarrollo |
| Abstract: | Análisis jurídico del estudio de seguro previsional, calificación de invalidez, pago de incapacidades y empleo de personas discapacitadas. |
| Keywords: | Gastos Públicos, Finanzas Públicas, Seguro Previsional, Calificación de Invalidez, Pago de Incapacidades, Personas Discapacitadas, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017261&r=all |
| By: | Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis) |
| Abstract: | In this paper, I revisit some recent work on the theory of the money supply, using a theoretical framework that closely follows Karl Brunner's work. I argue that had his research proposals been followed by the profession, some of the misunderstandings related to the instability of the money demand relationship could have been avoided. |
| Keywords: | Money multiplier; Means of payment; Transaction services |
| JEL: | E51 E58 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:582&r=all |
| By: | Fernando Rojas; Carolina Durana; Fedesarrollo |
| Abstract: | Este documento de informe final consta de cuatro partes: (i) Cinco áreas temáticas que parecieron presentar particular desafío a los equipos a cargo de los estudios de la CGR. (ii) Fichas para los cinco Estudios Sectoriales con mayores avances. (iii) La experiencia de los consultores para con los nueve estudios sectoriales seleccionados., Deberá incluir el diagnóstico, diseño y recomendaciones para la continuidad en la realización de los estudios sectoriales por parte de la CGR. (iv) Descripción de logros, problemas encontrados y recomendaciones, con resumen de la metodología empleada e identificación de las oportunidades de diálogo de política entre los actores involucrados en las entidades beneficiarias de este proyecto. |
| Keywords: | Evaluación de Programas, Política Pública, Contraloría General de la República, Gastos Públicos, Finanzas Públicas, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017257&r=all |
| By: | Engbom, Niklas (Federal Reserve Bank of Minneapolis) |
| Abstract: | I develop an idea flows theory of firm and worker dynamics in order to assess the consequences of population aging. Older people are less likely to attempt entrepreneurship and switch employers because they have found better jobs. Consequently, aging reduces entry and worker mobility through a composition effect. In equilibrium, the lower entry rate implies fewer new, better job opportunities for workers, while the better matched labor market dissuades job creation and entry. Aging accounts for a large share of substantial declines in firm and worker dynamics since the 1980s, primarily due to equilibrium forces. Cross-state evidence supports these predictions. |
| Keywords: | Demographics; Employment; Economic growth; Labor turnover; Entrepreneurial choice |
| JEL: | E24 J11 O40 |
| Date: | 2019–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:756&r=all |
| By: | Markus K. Brunnermeier; Simon C. Rother; Isabel Schnabel |
| Abstract: | We analyze the relationship between asset price bubbles and systemic risk, using bank-level data covering almost thirty years. Systemic risk of banks rises already during a bubble’s build-up phase, and even more so during its bust. The increase differs strongly across banks and bubble episodes. It depends on bank characteristics (especially bank size) and bubble characteristics, and it can become very large: In a median real estate bust, systemic risk increases by almost 70 percent of the median for banks with unfavorable characteristics. These results emphasize the importance of bank-level factors for the build-up of financial fragility during bubble episodes. |
| JEL: | E44 G01 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25775&r=all |
| By: | Roberto Steiner; Carolina Durana; María A. Ortega; Fedesarrollo |
| Abstract: | El presente documento corresponde al informe de cierre del proyecto Batería de Indicadores Sectoriales de Gasto, desarrollado para la Contraloría General de la República (CGR). La consultoría encargada a Fedesarrollo se enmarca en el proyecto “Desarrollo de capacidades para la Gestión de las Finanzas Públicas en Colombia”, financiado por la Delegación de la Unión Europea en Colombia, cuyo objetivo general es fortalecer las capacidades de gestión del Estado colombiano. La Batería de Indicadores Sectoriales de Gasto (BdISG) es un conjunto de indicadores que permiten relacionar los objetivos de la política pública con los resultados obtenidos. |
| Keywords: | Gastos Públicos, Finanzas Públicas, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017264&r=all |
| By: | Dvorkin, Maximiliano (Federal Reserve Bank of St. Louis); Monge-Naranjo, Alexander (Federal Reserve Bank of St. Louis) |
| Abstract: | We develop a tractable dynamic Roy model in which workers choose occupations to maximize their lifetime utility. In our setting, a worker’s human capital is driven by his labor market choices, given idiosyncratic occupation-specific productivity shocks and the costs of switching occupations. We characterize the equilibrium assignment of workers to jobs and show that the resulting evolution of aggregate human capital across occupations ultimately determines the long-run rate of growth of the economy. We then use our model to quantitatively study the impact of labor-saving technical changes on workers’ occupational choices and on the economy’s income inequality, job polarization and long-run growth. |
| Keywords: | Occupational Choice; Human Capital; Dynamics; Inequality; Endogenous Growth; General Equilibrium |
| JEL: | E24 J24 J31 J62 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2019-013&r=all |
| By: | Shrestha, Ruzel (National Institute of Public Finance and Policy); Chakraborty, Lekha (National Institute of Public Finance and Policy) |
| Abstract: | Our paper analyses the subnational public finance practices in one of the States in India -Kerala- and estimate the fiscal marksmanship. Fiscal marksmanship is the analysis of fiscal forecasting errors. Kerala, though well known for its achievements in human de-velopment outcomes, is facing fiscal stress within the rule-based fiscal framework and in-novating policy tools to achieve a revenue-led fiscal consolidation. We have examined the Budget Estimates, Revised Estimates and Actuals for the macro-fiscal variables from Kerala State Budgets, for the period from 2011-12 to 2016-17 to analyse deviations between the projections and actual realizations. We found that the magnitude of forecasting errors was significant in case of tax revenue. While partitioning the sources of errors in the budg-etary forecasting in Kerala, we observed that the random components of the error were larger than the systematic components for all the macro-fiscal variables, except for grants, own revenue and capital expenditure. This has three macro policy implications. One, the volatility in intergovernmental fiscal transfers can affect the stability of finances at subnational level. Two, the State needs to identify innovative policy tools for Addi-tional Resource Mobilisation (ARM) to maintain the human development achievements. Three, within the rule-based fiscal framework, State has to innovate financing strategies for strengthening growth-inducing capital infrastructure formation. |
| Keywords: | Fiscal marksmanship ; fiscal forecasting errors ; fiscal rules |
| JEL: | C32 C53 E62 H50 H60 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:19/261&r=all |
| By: | Richard H. Clarida |
| Abstract: | This paper highlights some of the theoretical and practical implications for monetary policy and exchange rates that derive specifically from the presence of a global general equilibrium factor embedded in neutral real policy rates in open economies. Using a standard two country DSGE model, we derive a structural decomposition in which the nominal exchange rate is a function of the expected present value of future neutral real interest rate differentials plus a business cycle factor and a PPP factor. Country specific “r*” shocks in general require optimal monetary policy to pass these through to the policy rate, but such shocks will also have exchange rate implications, with an expected decline in the path of the real neutral policy rate reflected in a depreciation of the nominal exchange rate. We document a novel empirical regularity between the equilibrium error in the VECM representation of the empirical Holston Laubach Williams (2017) four country r* model and the value of the nominal trade weighted dollar. In fact, the correlation between the dollar and the 12 quarter lag of the HLW equilibrium error is estimated to be 0.7. Global shocks to r* under optimal policy require no exchange rate adjustment because passing though r* shocks to policy rates ‘does all the work’ of maintaining global equilibrium. We also study a richer model with international spill overs so that in theory there can be gains to international policy cooperation. In this richer model we obtain a similar decomposition for the nominal exchange rate, but with the added feature that r* in each country is a function global productivity and business cycle factors even if these factors are themselves independent across countries. We argue that in practice, there could well be significant costs to central bank communication and credibility under a regime of formal policy cooperation, but that gains to policy coordination could be substantial given that r*’s are unobserved but are correlated across countries. |
| Keywords: | Exchange rate ; Monetary policy ; Policy coordination |
| JEL: | E4 F31 F33 |
| Date: | 2019–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1244&r=all |
| By: | Krebs, Tom (Federal Reserve Bank of Minneapolis); Scheffel, Martin (Karlsruhe Institute of Technology) |
| Abstract: | This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of human capital shocks (moral hazard). We show that constrained optimal allocations are simple in the sense that they can be found by solving a static social planner problem. We further show that constrained optimal allocations are the equilibrium allocations of a market economy in which the government uses taxes and transfers that are linear in household wealth/income. We use the tractability result to show that an increase in labor market (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we provide a quantitative analysis of the secular rise in job displacement risk in the US and find that the welfare cost of not adjusting the social insurance system optimally can be substantial. |
| Keywords: | Labor market risk; Social insurance; Moral hazard |
| JEL: | E21 H21 J24 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:0018&r=all |
| By: | Juan Gonzalo Zapata; Daniela Trespalacios; Fedesarrollo |
| Abstract: | Bogotá enfrenta grandes retos de mediano y largo plazo en términos de financiación. Esto como consecuencia de las crecientes necesidades de gasto en infraestructura y provisión de servicios públicos y de un crecimiento lento, en los últimos años, de sus fuentes principales de financiamiento. El presente trabajo estudia las fuentes de financiación del distrito de Bogotá. La capital ha logrado incrementar su capacidad de generación de recursos propios y cada vez depende menos de las transferencias del nivel central. Estos recursos propios representan hoy en día el 53% de los ingresos totales del distrito. Además, como la estructura tributaria de la ciudad depende en una proporción del 65% de los impuestos a la actividad económica, esto la hace vulnerable a los ciclos económicos. Adicionalmente, se ha dado una recomposición de la importancia de los impuestos en la capital. Al analizar los principales impuestos, se encontró que el predial ha tomado fuerza mientras que ICA ha perdido la dinámica que tenía en el pasado. De otra parte, aunque Bogotá sigue concentrando la mayor parte del recaudo de la región, otros municipios de la Sabana han aumentado su participación pues han tenido recientemente altas tasas de crecimiento en su recaudo. Esto resultados son similares al efectuar una comparación con las otras cuatro ciudades más grandes del país. Con base en estos resultados, se hacen sugerencias de política, principalmente centradas en que es necesario promover las simplificaciones a la estructura tributaria de la ciudad para generar un crecimiento dinámico de sus principales fuentes de financiamiento. Adicionalmente, se reconoce la necesidad de integrar a Bogotá con los municipios de la Sabana, con el fin de promover la potencialidad existente en términos económicos. Además, para evitar episodios de competencia tributaria y mejorar las distribuciones de los impuestos departamentales, se requiere una mayor coordinación entre los territorios. Hay avances en este camino, pero falta mucho por recorrer. |
| Keywords: | Estructura Tributaria, Finanzas Locales, Finanzas Públicas, Impuestos, Impuestos Locales, Ingresos Fiscales, Tributación, Bogotá, Distrito Capital |
| JEL: | E62 H20 H21 H71 |
| Date: | 2018–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017252&r=all |
| By: | Felipe Benguria; Alan M. Taylor |
| Abstract: | Are financial crises a negative shock to demand or a negative shock to supply? This is a fundamental question for both macroeconomics researchers and those involved in real-time policymaking, and in both cases the question has become much more urgent in the aftermath of the recent financial crisis. Arguments for monetary and fiscal stimulus usually interpret such events as demand-side shortfalls. Conversely, arguments for tax cuts and structural reform often proceed from supply-side frictions. Resolving the question requires models capable of admitting both mechanisms, and empirical tests that can tell them apart. We develop a simple small open economy model, where a country is subject to deleveraging shocks that impose binding credit constraints on households and/or firms. These financial crisis events leave distinct statistical signatures in the empirical time series record, and they divide sharply between each type of shock. Household deleveraging shocks are mainly demand shocks, contract imports, leave exports largely unchanged, and depreciate the real exchange rate. Firm deleveraging shocks are mainly supply shocks, contract exports, leave imports largely unchanged, and appreciate the real exchange rate. To test these predictions, we compile the largest possible crossed dataset of 200+ years of trade flow data and event dates for almost 200 financial crises in a wide sample of countries. Empirical analysis reveals a clear picture: after a financial crisis event we find the dominant pattern to be that imports contract, exports hold steady or even rise, and the real exchange rate depreciates. History shows that, on average, financial crises are very clearly a negative shock to demand. |
| JEL: | E44 F32 F36 F41 G01 N10 N20 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25790&r=all |
| By: | Natalia Salazar; Diego Gutíerrez; Fedesarrollo |
| Abstract: | Este capítulo se enfoca en revisar las alternativas de financiación para las grandes ciudades. Este objetivo se busca a través de diferentes aproximaciones para extraer algunas recomendaciones interesantes para el caso de Bogotá, que ya es de gran tamaño dado el número de habitantes y que será considerada como una de las 41 megaciudades del mundo en el año 2030. Este capítulo consta de cinco secciones incluyendo esta introducción. En primer lugar, después de esta introducción, en la sección II se describen las actuales proyecciones de población en las ciudades para el año 2030 que realizan las Naciones Unidas. La sección III presenta una revisión de la literatura sobre las fuentes de financiamiento de las ciudades, las cuales no se limitan a los impuestos y las transferencias, sino que incluyen otros tipos de financiación como son los cargos al usuario, el endeudamiento, las asociaciones público-privadas, y de manera importante, la captura de plusvalía. También se analizan el tamaño y composición de los ingresos de diez grandes ciudades: Madrid, Barcelona, Berlín, Londres, Nueva York, Santiago de Chile, Ciudad de México, Lima, Buenos Aires y Sao Paulo. Estas comparaciones se hacen a nivel muy agregado debido a las dificultades metodológicas pero está basado en la construcción de una base de datos elaborada a partir de los presupuestos publicados por los gobiernos de estas ciudades. |
| Keywords: | Estructura Tributaria, Finanzas Locales, Finanzas Públicas, Impuestos, Impuestos Locales, Ingresos Fiscales, Tributación, Bogotá, Distrito Capital |
| JEL: | E62 H20 H21 H70 |
| Date: | 2018–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017253&r=all |
| By: | Fernando Rojas; Carolina Durana; Fedesarrollo |
| Abstract: | El objetivo de este acompañamiento ha sido fortalecer la capacidad de los equipos que realizan estudios de evaluación de resultados en la CGR con ocasión de la producción de tales siete estudios. En el proceso se transmiten enfoques contemporáneos en las Entidades de Fiscalización Superior de los países más avanzados, se elevan los estándares de los informes y se apoya la institucionalización de un enfoque moderno de estos estudios, conocidos internacionalmente con el nombre genérico de spending reviews. |
| Keywords: | Gastos Públicos, Finanzas Públicas, Evaluación de Resultados, Colombia |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017251&r=all |
| By: | Begenau, Juliane (Stanford GSB) |
| Abstract: | This paper develops a quantitative dynamic general equilibrium model in which households’ preferences for safe and liquid assets constitute a violation of Modigliani and Miller. I show that the scarcity of these coveted assets created by increased bank capital requirements can reduce overall bank funding costs and increase bank lending. I quantify this mechanism in a two-sector business cycle model featuring a banking sector that provides liquidity and has excessive risk-taking incentives. Under reasonable parametrizations, the marginal benefit of higher capital requirements related to this channel significantly exceeds the marginal cost, indicating that US capital requirements have been sub-optimally low. |
| JEL: | E44 G21 G28 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3554&r=all |
| By: | Pierre-Olivier Gourinchas; Hélène Rey; Maxime Sauzet |
| Abstract: | International currencies fulfill different roles in the world economy with important synergies across those roles. We explore the implications of currency hegemony for the external balance sheet of the United States, the process of international adjustment, and the predictability of the US dollar exchange rate. We emphasize the importance of international monetary spillovers, of the exorbitant privilege, and analyze the emergence of a new ‘Triffin dilemma’. |
| JEL: | E0 F3 F4 G1 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25782&r=all |
| By: | International Monetary Fund |
| Abstract: | Sustained improvements in macroeconomic outcomes. The economy has expanded for the past 15 quarters; unemployment is at historic lows; international reserve coverage is consistently high; inflation is subdued—albeit below the BOJ targe 4–6 percent range; the stock market was the globe’s best performer in 2018; and Fitch recently upgraded Jamaica’s credit rating. A slow pick-up in private investment, however, is still pointing to the need to reinvigorate the effort to remove supply-side impediments to growth and job creation. |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/105&r=all |
| By: | Fernando Rojas; Fedesarrollo |
| Abstract: | El criterio de validación de los subsidios cambió en los últimos treinta años. El enfoque económico de las políticas y los programas que se apoyan en subsidios públicos a los particulares no ha cambiado sustancialmente desde mediados del Siglo pasado. Desde el ángulo de la economía política, la discusión académica sobre los subsidios ha estado dominada por posiciones ideológicas que se remontan a los clásicos de la economía capitalista. El debate ideológico-?estratégico entre los partidarios más acérrimos del libre mercado y los defensores de la intervención estatal en el comportamiento de la oferta, la demanda y los precios, se reduce en la práctica a una cuestión de grado. En el fondo todos aceptamos un cierto grado de intervencionismo en el mercado, sea mayor, sea menor. Y tirios y troyanos reconocen en los subsidios a precios, ingresos, ahorro, consumo o inversión una palanca legítima de orientación del comportamiento. |
| Keywords: | Subsidios, Gastos Públicos, Finanzas Públicas |
| JEL: | H50 H70 E60 E62 |
| Date: | 2018–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017250&r=all |
| By: | Hüser, Anne-Caroline; Kok, Christoffer |
| Abstract: | We present new evidence on the structure of euro area securities markets using a multilayer network approach. Layers are broken down by key instruments and maturities as well as the secured nature of the transaction. This paper utilizes a unique dataset of banking sector crossholdings of securities to map these exposures among banks and economic and financial sectors. We can compare and contrast funding and exposure networks among banks themselves and of banks, non-banks and the wider economy. The analytical approach presented here is highly relevant for the design of appropriate prudential measures, since it supports the identification of counterparty risk, concentration risk and funding risk within the interbank network and the wider macro-financial network. JEL Classification: D85, E44, G21, L14 |
| Keywords: | Interbank networks, macro-financial networks, macroprudential analysis., market microstructure, multilayer networks |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20192273&r=all |
| By: | International Monetary Fund |
| Abstract: | Costa Rica has made great strides converging towards OECD living standards, but significant vulnerabilities persist, mainly from the weak fiscal position and sizable FX lending to unhedged borrowers. Growth slowed markedly in 2018, reflecting multiple shocks buffeting the country. The new government recognizes the challenges and passed a fiscal reform bill—something in the works for nearly two decades—into law last December. |
| Date: | 2019–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/101&r=all |
| By: | Altig, David E. (Federal Reserve Bank of Atlanta); Auerbach, Alan J. (University of California at Berkeley); Higgins, Patrick C. (Federal Reserve Bank of Atlanta); Koehler, Darryl (Economic Security Planning Inc.); Kotlikoff, Laurence J. (Boston University); Leiseca, Michael (Economic Security Planning Inc.); Terry, Ellie (Federal Reserve Bank of Atlanta); Ye, Victor (Boston University) |
| Abstract: | The Tax Cut and Jobs Act of 2017 (TCJA) made significant changes to corporate and personal federal income taxation, including limiting the SALT (state and local property, income and sales taxes) deductibility to $10,000. States with high SALT tend to vote Democratic. This paper estimates the differential effect of the TCJA on red- and blue-state taxpayers and investigates the importance of the SALT limitation to this differential. We calculate the effect of permanent implementation of the TCJA on households using The Fiscal Analyzer: a life-cycle, consumption-smoothing program incorporating all major federal and state fiscal policies. We find that the average percentage increase in remaining lifetime spending under the TCJA is 1.6 percent in red states versus 1.3 percent in blue states. Among the richest 10 percent of households, this differential is larger. Rich households in red states enjoyed a 2.0 percent increase compared to a 1.2 percent increase among the rich in blue-state households. This gap is driven almost entirely by the limitation on the SALT deduction. Excluding the SALT limitation from the TCJA results in a spending gain of 2.6 percent for rich red-state households compared to 2.7 percent for rich blue-state households. |
| Keywords: | fiscal policy; elections; Tax Cuts and Jobs Act; resource distribution; federal tax reform; state and local taxes; life cycle model |
| JEL: | D31 D72 E62 H20 H22 H71 |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2019-07&r=all |
| By: | Joseph Upile Matola (National Graduate Institute for Policy Studies, Tokyo, Japan / bMinistry of Finance, Economic Planning, and Development, Lilongwe, Malawi); Roberto Leon-Gonzalez (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | In this paper, Malawi fs fiscal and monetary policy rules are estimated and their effects and influence on key macroeconomic variables analyzed in a New Keynesian DSGE framework. Bayesian estimation is used to estimate the model using data on consumption, investment, inflation, nominal interest rate, government spending, consumption tax revenue, and income tax revenue. It is found that monetary policy in Malawi follows a Taylor type interest rate rule in which interest rates respond strongly to changes in inflation, in accordance with the gTaylor principle h, and only mildly to output fluctuations. Fiscal policy too reacts to output fluctuations in a modest fashion. With regards to the main drivers of output fluctuations, it is shown that although fiscal and monetary policy shocks play a significant role, it is actually productivity shocks and to a lesser extent cost-push and preference shocks that are the main contributors to business cycles. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:19-03&r=all |
| By: | Friederike Niepmann; Tim Schmidt-Eisenlohr |
| Abstract: | This paper documents that an appreciation of the U.S. dollar is associated with a reduction in the supply of commercial and industrial loans by U.S. banks. An increase in the broad dollar index by 2.5 points (one standard deviation) reduces U.S. banks' corporate loan originations by 10 percent. This decline is driven by a reduction in the demand for loans on the secondary market where prices fall and liquidity worsens when the dollar appreciates, with stronger effects for riskier loans. Today, the main buyers of U.S. corporate loans---and, hence, suppliers of funding for these loans---are institutional investors, in particular mutual funds, which experience outflows when the dollar appreciates. A shift of traditional financial intermediation to these relatively unregulated entities, which are more sensitive to global developments, has led to the emergence of this new channel through which the dollar affects the U.S. economy, which we term the secondary market channel. |
| Keywords: | Leveraged loan market ; Commercial and industrial loans ; U.S. dollar exchange rate ; Credit standards ; Institutional investors |
| JEL: | E44 F31 G15 G21 G23 |
| Date: | 2019–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1246&r=all |
| By: | Astrid Martínez Ortiz; Fedesarrollo |
| Abstract: | El presente trabajo se propone analizar la presión tributaria generada por las empresas grandes y medianas. Para este fin, se obtuvieron las tasas efectivas de tributación impuestos locales y nacionales. Adicionalmente, para profundizar en el análisis de las problemáticas sectoriales, también se caracterizaron algunas grandes empresas, y por último, se entrevistaron empresas para entender la percepción de las empresas acerca de la evasión, sus decisiones de localización y para ejemplificar los costos de cumplimiento de las obligaciones tributarias locales. Los resultados en muestras representativas muestran que, pese a una gran dispersión en el segmento de las empresas grandes y pequeñas, las tasas de tributación efectiva del ICA ponderada por activos varían entre el 5.25% y el 9.43, mientras que en Cundinamarca está entre el 6.05% y el 9.36% (El ICA, además, parece ser un impuesto regresivo). Respecto a los tributos nacionales, en promedio la tasa efectiva del impuesto de renta en Bogotá es siete p.p. mayor que en Cundinamarca para el promedio ponderado, tal vez debido a que en la base departamental no quedan incluidos sectores con alta tributación y, en segundo lugar, se puede deber a las menores tasas estatutarias para las zonas francas. La ejemplificación de empresas constata las particularidades sectoriales y diferencias con los promedios obtenidos de las bases de datos, encontrando tasas efectivas de tributación de renta y de ICA inferiores a las obtenidas en el análisis agregado, y también resalta el alto costo de cumplimiento tributario y el carácter antitécnico del ICA al usar como base los ingresos brutos. Respecto a las decisiones de localización en Bogotá y en Cundinamarca, pesan más el tamaño del mercado, la disponibilidad de mano de obra y materiales y, de infraestructura y logística que los impuestos locales. De manera similar a lo que había encontrado una encuesta de la Cámara en 2011. Finalmente, se realizan recomendaciones de política con base en lo encontrado en el trabajo. |
| Keywords: | Estructura Tributaria, Finanzas Locales, Finanzas Públicas, Impuestos, Impuestos Locales, Ingresos Fiscales, Tributación, Bogotá, Distrito Capital |
| JEL: | E62 H20 H21 H71 |
| Date: | 2018–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017255&r=all |
| By: | Richard Blundell (University College London and Institute for Fiscal Studies); Monica Costa Dias (Institute for Fiscal Studies and University of Porto); David Goll (University College London and Institute for Fiscal Studies); Costas Meghir (Cowles Foundation, Yale University, NBER, IZA, CEPR, and Institute for Fiscal Studies) |
| Abstract: | We investigate the role of training in reducing the gender wage gap using the UK- BHPS which contains detailed records of training. Using policy changes over an 18 year period we identify the impact of training and work experience on wages, earnings and employment. Based on a lifecycle model and using reforms as a source of exogenous variation we evaluate the role of formal training and experience in defining the evolution of wages and employment careers, conditional on education. Training is potentially important in compensating for the effects of children, especially for women who left education after completing high school. |
| Keywords: | Workplace training, On the job training, Female labor supply, Gender wage differentials, Human capital, Fertility and the gender wage gap, Lifecycle labor supply |
| JEL: | E24 H24 I28 J16 J22 J24 J31 J71 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2174&r=all |
| By: | Tiago Domingues (GEE) |
| Abstract: | This paper evaluates the growing participation of the Portuguese economy, and especially of the textiles, leather, and shoes industry, in the so-called Global Value Chains (GVCs).We use the 2016 edition of the World Input-Output Database (WIOD) to empirical assess the changes in the geography of imports and exports of the Portuguese textiles, leather and shoes industry as well as quantify the growing vertical specialization in this sector. We also measure value added, import and employment coefficients for the Portuguese economy and the Portuguese textiles, leather, and shoes sector. The results show that Portuguese textiles, leather, and shoes trade have been more concentrated in Spain, Italy, India and China and less concentrated in Germany, France, and the United Kingdom. This sector is more relevant in the Portuguese economy than in any other Eurozone economy in terms of output, employment and value-added, and it has been recovering its relevance in the Portuguese economy since 2009.Textiles, leather, and shoes is the manufacturing industry with the higher potential to generate new jobs in Portugal. Despite the negative contribution of the financial crisis, vertical specialization of Portuguese textiles, leather, and shoes exports have been increasing ever since. |
| Keywords: | Global value chains; Textiles, leather, and shoes; Input-Output models |
| JEL: | C67 D57 E01 F14 L67 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0117&r=all |
| By: | Konstantinos Efstathiou; Guntram B. Wolff |
| Abstract: | We use a newly-compiled dataset to investigate whether and why European Union countries implement the economic policy recommendations they receive from the EU. We find that implementation rates are modest and have worsened at a time when the economic environment has improved and market pressure on sovereigns has subsided. Implementation has deteriorated in particular among countries designated as having ‘excessive’ macroeconomic imbalances. We then empirically test three factors that could influence implementation rates - (i) the macroeconomic environment; (ii) pressure from financial markets; and (iii) the strength of EU-level macroeconomic surveillance. The econometric estimates indicate that larger fiscal and current account deficits and a higher probability of sovereign default increase the likelihood of implementation. However, stronger surveillance under the Macroeconomic Imbalances Procedure (MIP) does not seem to drive implementation rates. The quality of governance, the fragmentation of government coalitions and fewer recommendations received are connected to increased implementation, whereas for countries under the MIP, implementation slowed during election years. Finally, recommendations on financial services have a much greater chance of being implemented, whereas those on broadening the tax base, the long-term sustainability of public finance and pension systems, and competition in services are much less likely to be implemented. Overall, economic fundamentals and political economy factors provide only a small part of the answer to the question of why countries reform - ultimately, reform decisions are down to factors outside of the models. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:30346&r=all |
| By: | Tommaso Giommoni |
| Abstract: | The goal of this paper is to study the effects of introducing income redistribution at the municipal level, with the adoption of local tax progressivity. In particular, we analyse whether this complex fiscal tool modifies the incentives of local politicians to be strategic leading to higher tax manipulation, in the form of political budget cycle. We exploit an Italian reform of the local personal income tax (PIT), which was flat before the intervention, that allows mayors to introduce progressive schemes. First, we make use of the staggered timing of local elections to estimate a Difference-in-Differences model and we find that the reform consistently amplifies political budget cycle of local PIT. In terms of mechanism, progressivity allows mayors to target diverse income groups and to play different strategies: high income rates, indeed, are subject to larger manipulation than the moderate ones. Second, we exploit the fact that income concentration level is a valid predictor for the introduction of progressivity. The main results are confirmed in a Triple-Differences analysis. And finally, we show that manipulation is rewarding from an electoral point of view. These results reveal a negative side of decentralizing income redistribution as it may lead to consistent tax manipulation and large distortions in fiscal policy. |
| Keywords: | tax progressivity, personal income tax, political budget cycle, tax manipulation, fiscal federalism |
| JEL: | D72 E62 H71 P16 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7588&r=all |
| By: | Dotsey, Michael (Federal Reserve Bank of Philadelphia); Li, Wenli (Federal Reserve Bank of Philadelphia); Yang, Fang (Louisiana State University) |
| Abstract: | We examine the role of demographics and changing industrial policies in ac- counting for the rapid rise in household savings and in per capita output growth in China since the mid-1970s. The demographic changes come from reductions in the fertility rate and increases in the life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of employment, and later on benefiting capital-intensive firms resulting in an increasing share of capital devoted to heavy industries. We conduct our analysis in a general equilibrium economy that also features endogenous human capital investment. We calibrate the model to match key economic variables of the Chinese economy and show that demographic changes and industrial policies both contributed to in- creases in savings and output growth but with differing intensities and at different horizons. We further demonstrate the importance of endogenous human capital investment in accounting for the economic growth in China. |
| Keywords: | Aging; Credit policy; Household saving; Output growth; China |
| JEL: | E21 J11 J13 L52 |
| Date: | 2019–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:19-21&r=all |
| By: | Michael Dotsey (Federal Reserve Bank of Philadelphia); Wenli Li (Federal Reserve Bank of Philadelphia); Fang Yang (Louisiana State University) |
| Abstract: | We examine the role of demographics and changing industrial policies in accounting for the rapid rise in household savings and in per capita output growth in China since the mid-1970s. The demographic changes come from reductions in the fertility rate and increases in life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of employment, and later on benefiting capital-intensive firms resulting in an increasing share of capital devoted to heavy industries. We conduct our analysis in a general equilibrium economy that also features endogenous human capital investment. We calibrate the model to match key economic variables of the Chinese economy and show that demographic changes and industrial policies both contributed to increases in savings and output growth but with differing intensities and at different horizons. We further demonstrate the importance of endogenous human capital investment in accounting for the economic growth in China. |
| Keywords: | aging, credit policy, household saving, output growth, China |
| JEL: | E21 J11 J13 L52 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-030&r=all |
| By: | Klaus Gründler; Niklas Potrafke |
| Abstract: | Scholars have been active in investigating causes and consequences of austerity policies. We examine how economists use the term “austerity” in scientific studies and measure austerity in empirical analyses. The sample includes around 3,500 journal articles published in the top 400 journals (RePEc ranking) over the period 1990-2018. The results show that the term austerity is often used in heterodox journals. Papers published in mainstream journals use the term “fiscal consolidation” instead. The term austerity is ambiguous: scholars use manifold definitions of austerity and the empirical measures identify different country-year observations as periods of austerity. We employ panel data for 34 OECD countries over the period 1960-2014 and examine how austerity is associated with economic growth. The results show that depending on how austerity is measured, inferences change. Strategic selection of austerity measures allows scholars to arrive at any desired results about the economic effects of austerity periods. |
| Keywords: | austerity, fiscal consolidation, economic growth, rankings |
| JEL: | P16 O11 O23 E62 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7613&r=all |
| By: | Lalé, Etienne (University of Québec at Montréal) |
| Abstract: | A search-theoretic model of the labor market with idiosyncratic fluctuations in hours worked, search both off- and on-the-job, and multiple jobholding is developed. Taking on a second job entails a commitment to hold onto the primary employer, enabling the worker to use the primary job as her outside option to bargain with the secondary employer. The model performs well at explaining multiple jobholding inflows and outflows, and it is informative for understanding the secular decline in multiple jobholding. While some worry that this decline heralds a less-flexible labor market, the model reveals that it has contributed to reducing search frictions. |
| Keywords: | multiple jobholding, employment, hours worked, job search |
| JEL: | E24 J21 J62 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12294&r=all |
| By: | Borella, Margherita (Università di Torino); De Nardi, Mariacristina (Federal Reserve Bank of Minneapolis); Yang, Fang (Louisiana State University) |
| Abstract: | White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured as a one-time asset compensation, are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest. |
| JEL: | E21 H31 |
| Date: | 2019–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:0019&r=all |
| By: | Fedesarrollo |
| Abstract: | Realizar una evaluación de los impactos causados en las regiones productoras de hidrocarburos y minerales con el actual Sistema General de Regalías que permita evaluar su funcionamiento, fórmulas de distribución de las regalías, e identificar los aspectos por mejorar y los cambios a incorporar en la composición y esquema de distribución actual. |
| Keywords: | Regalías, Sistema General de Regalías, Evaluación de Impacto, Análisis Costo-Beneficio, Economía Regional, Hidrocarburos, Minería, Colombia |
| JEL: | L71 F43 O47 R11 E60 |
| Date: | 2018–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:017258&r=all |
| By: | Yongo Kwon |
| Abstract: | We examine the welfare effects of GDP-indexed bonds in a New Keynesian DSGE model. We add to a literature showing that the issuance of GDP-indexed bond may help stabilise public debt and so give more room for countercyclical fiscal policy, by conducting a careful general equilibrium welfare analysis. In a standard DSGE models, where Ricardian equivalence holds, household welfare is immune to the source of government financing. We examine how GDP-indexed bonds, rather than nominal bonds, affect welfare when Ricardian equivalence does not hold. Specifically, we add “hand-to-mouth” households (Galí et al., 2007), distortionary income taxes that fund debt, and Epstein and Zin (1989) type recursive preference to the most widely used medium scale model of Smets and Wouters (2007). The results show when the fiscal authority tries to stabilise debt, GDP-indexed bonds can significantly increase the welfare of the hand-to-mouse households by stabilising their consumption and labour supply responses to fiscal consolidations compared to a case involving nominal debt alone. |
| Keywords: | New-Keynesian model, GDP-indexed bonds, Counter-cyclical fiscal policy |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:504&r=all |
| By: | Leung, Charles Ka Yui; Ng, Joe Cho Yiu |
| Abstract: | This paper aims to achieve two objectives. First, we demonstrate that with respect to business cycle frequency (Burns and Mitchell, 1946), there was a general decrease in the association between macroeconomic variables (MV) and housing market variables (HMV) following the global financial crisis (GFC). However, there are macro-finance variables that exhibited a strong association with the HMV following the GFC. For the medium-term business cycle frequency (Comin and Gertler, 2006), we find that while some correlations exhibit the same change as the business cycle counterparts, others do not. These “new stylized facts” suggest that a reconsideration and refinement of existing “macro-housing” theories would be appropriate. We also provide a review of the recent literature, which may enhance our understanding of the evolving macro-housing-finance linkage. |
| Keywords: | Stylized facts, macro-housing-finance linkage, global financial crisis, business cycle frequency, housing market variables |
| JEL: | E30 G10 R30 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93512&r=all |
| By: | Been-Lon Chen; Hung-Ju Chen; Ping Wang |
| Abstract: | In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human capital-based endogenous growth model with frictional labor search, allowing each firm to create multiple vacancies and each worker to determine market participation. We find that the conventional efficient bargaining condition is necessary but not sufficient for achieving constrained social optimality. We then conduct tax incidence exercises in balanced growth by calibrating to the U.S. economy with a pre-existing 20% flat tax on capital and labor income. Our quantitative results suggest that, due to a dominant channel via the interactions between vacancy creation and market participation, it is optimal to switch only partially from capital to labor taxation in a benchmark economy where human capital formation depends on both physical and human capital stocks. This main finding is robust even along the transition with time-varying factor tax rates. Moreover, our quantitative analysis under alternative setups suggest that while endogenous human capital and labor market frictions are essential for obtaining a positive optimal capital tax, endogenous leisure, nonlinear human capital accumulation and endogenous growth are not crucial. |
| JEL: | E62 H22 J24 O41 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25783&r=all |
| By: | Ameriks, John (The Vanguard Group, Inc.); Briggs, Joseph (Federal Reserve Board of Governors); Caplin, Andrew (New York University and NBER); Lee, Minjoon (Carleton University); Shapiro, Matthew D. (University of Michigan and NBER) |
| Abstract: | Older Americans, even those who are long retired, have strong willingness to work, especially in jobs with flexible schedules. For many, labor force participation near or after normal retirement age is limited more by a lack of acceptable job opportunities or low expectations about finding them than by unwillingness to work longer. This paper establishes these findings using an approach to identification based on strategic survey questions (SSQs), purpose-designed to complement behavioral data. These findings suggest that demand-side factors are important in explaining late-in-life labor market behavior and need to be considered in designing policies aimed at promoting working longer. |
| JEL: | E24 J22 J26 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3743&r=all |
| By: | Bhandari, Anmol (Federal Reserve Bank of Minneapolis); Birinci, Serdar (Federal Reserve Bank of Minneapolis); McGrattan, Ellen R. (Federal Reserve Bank of Minneapolis) |
| Abstract: | In this appendix, we provide details on the data sources and construction of variables for our analysis in "What Do Survey Data Tell Us about U.S. Businesses?" We also include the auxiliary tables and figures omitted from the main text. |
| Keywords: | Survey data; Intangibles; Business taxes and valuation |
| JEL: | C83 E22 H25 |
| Date: | 2019–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:578&r=all |
| By: | Plamen Nikolov; Paolo Pasimeni |
| Abstract: | The debate about the use of fiscal instruments for macroeconomic stabilization has regained prominence in the aftermath of the Great Recession, and the experience of a monetary union equipped with fiscal shock absorbers, such as the United States, has often been a reference. This paper enhances our knowledge about the degree of macroeconomic stabilization achieved in the United States through the federal budget, providing a detailed breakdown of the different channels. In particular, we investigate the relative importance and stabilization impact of the federal system of unemployment benefits and of its extension as a response to the Great Recession. The analysis shows that in the United States, corporate income taxes collected at the federal level are the single most efficient instrument for providing stabilization, given that even with a smaller size than other instruments they can provide important effects, mainly against common shocks. On the other hand, Social Security benefits and personal income taxes have a greater role in stabilizing asymmetric shocks. A federal system of unemployment insurance, then, can play an important stabilization role, in particular when enhanced by a discretionary program of extended benefits in the event of a large shock, like the Great Recession. |
| Keywords: | China; Monetary Union; Macroeconomic Stabilization; Fiscal Policy; Monetary Policy |
| JEL: | E63 F36 F41 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_926&r=all |
| By: | Jena, Pratap Ranjan (National Institute of Public Finance and Policy) |
| Abstract: | The paper assesses the remarkable success story of State of Odisha in making fiscal correction after adopting the fiscal rules and the policy responses. The degree of correction was one of the highest among the Indian States. The tradeoff between fiscal restraint and the development priorities assumes significance as a relatively economically weak State like Odisha maintained a very low-deficit regime by limiting the public spending for a long time. The paper highlights that while fiscal discipline improves the ability of the Government to prioritize among policy choices and improve operational management, strict imposition of self-restraint and large adjustments may lead to distortions. After a decade of controlled fiscal management, as the State has started opening up by expanding the public spending, the shrinking fiscal space, slow growth of internal revenue, and high dependence on Central funds present new challenges. The paper examines the institutional reforms in this context to address emerging fiscal architecture. |
| Keywords: | Sub-national fiscal policy ; fiscal federal system ; Fiscal rules ; Budgeting system ; Medium term perspective |
| JEL: | H61 H72 H77 E61 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:19/264&r=all |
| By: | James D. Hamilton |
| Abstract: | A number of economic studies have used a proxy for world real economic activity derived from shipping costs. This measure turns out to depend on a normalization that has substantive consequences of which users of the index had been unaware prior to this paper. This paper further evaluates this and alternative measures in terms of treatment of trends, coherence with world output, and ability to predict commodity prices. I conclude that measures derived from world industrial production offer a better indicator of global real economic activity. |
| JEL: | E01 Q02 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25778&r=all |
| By: | Arnaud Deseau (Université Saint-Louis - Bruxelles, CEREC); Adam Levai (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Michèle Schmiegelow (UCLouvain, CRIDES) |
| Abstract: | We empirically investigate the impact of access to justice (ATJ) on GDP per capita growth in a panel of 83 countries from 1970 to 2014. Our analysis relies on a new database documenting the number of judges per capita as a proxy for capturing the cross-country evolution of ATJ. The proxy measures the extent to which disputes between economic actors can be resolved at a relatively low cost, without dysfunctional delay and discrimination. In a dynamic panel setting using internal instruments, we find that increasing ATJ by 1% increases the five-year growth rate of GDP per capita by 0.86 p.p. (0.17 p.p. annually) with diminishing marginal returns. In line with the diminishing marginal returns argument, we find that the effect of ATJ is two times smaller in Europe compared to other regions due to higher levels of ATJ. We find no evidence of a differential effect of ATJ across other regions, income levels, legal origins, democracy, corruption of the judicial system or human capital levels. |
| Keywords: | Access to Justice, Legal development, Economic Development, Growth, Institution |
| JEL: | E02 K00 O11 O43 O47 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2019009&r=all |
| By: | Logan, Lorie (Federal Reserve Bank of New York) |
| Abstract: | Remarks before the Money Marketeers of New York University, New York City. |
| Keywords: | floor system; FOMC; the Desk; ample-reserves regime; Balance Sheet Normalization Principles and Plans; monetary policy implementation; demand for reserves; lowest comfortable level of reserves (LCLoR); SOMA portfolio; reserve buffer; TGA; mortgage-backed securities (MBS) |
| Date: | 2019–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:318&r=all |
| By: | Harker, Patrick T. (Federal Reserve Bank of Philadelphia) |
| Abstract: | In remarks to the Greater Vineland Chamber of Commerce in New Jersey, Philadelphia Fed President Patrick T. Harker kept his outlook in line with that of recent weeks. “I continue to be in wait-and-see mode, and my outlook for rates remains, at most, one hike for 2019 and one for 2020,” he said. |
| Keywords: | federal reserve; employment; economic outlook |
| Date: | 2019–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpsp:164&r=all |
| By: | Díez, Federico; Fan, Jiayue; Villegas-Sanchez, Carolina |
| Abstract: | Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000-2015. Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants. |
| Keywords: | firm size; market power; Markups; TFP |
| JEL: | D2 D4 E2 L1 L4 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13696&r=all |
| By: | Berger, David (Northwestern University); Herkenhoff, Kyle (University of Minnesota); Mongey, Simon (University of Chicago) |
| Abstract: | What are the welfare implications of labor market power? We provide an answer to this question in two steps: (1) we develop a tractable quantitative, general equilibrium, oligopsony model of the labor market, (2) we estimate key parameters using within-firm-state, across-market differences in wage and employment responses to state corporate tax changes in U.S. Census data. We validate the model against recent evidence on productivity-wage pass-through, and new measurements of the distribution of local market concentration. The model implies welfare losses from labor market power that range from 2.9 to 8.0 percent of lifetime consumption. However, despite large contemporaneous losses, labor market power has not contributed to the declining labor share. Finally, we show that minimum wages can deliver moderate, and limited, welfare gains by reallocating workers from smaller to larger, more productive firms. |
| Keywords: | wage setting, market structure, labor markets |
| JEL: | E2 J2 J42 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12276&r=all |
| By: | International Monetary Fund |
| Abstract: | The economic outlook has weakened with risks to stability rising. Growth rebounded in 2017/18, led by exports and a recovery in agriculture, but is losing momentum. The impact from the Rakhine crisis is depressing foreign investor sentiment and donor financing. Macro-financial spillovers from banking sector restructuring may be severe if banks delay recapitalization. Global risks include trade tensions and global financial volatility, high crude oil prices and spillovers from a slowdown in China. |
| Date: | 2019–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/100&r=all |
| By: | Haroon Bhorat; Zaakhir Asmal; Kezia Lilenstein; Kirsten van der Zee (University of Cape Town; Director) |
| Abstract: | Small, Medium and Micro Enterprises (SMMEs) have been identified as a key component to advancing inclusive growth and development in South Africa. This paper serves to present a snapshot of the current profile of SMMEs in South Africa as well as the key inhibitors of growth for SMMEs. We provide a comparative perspective of the role of SMMEs and entrepreneurship in South Africa, then profile the current landscape of SMMEs in South Africa, evaluating the characteristics of SMMEs across three dimensions: firm, owner and employee characteristics. Following this, we distinguish between formal and informal SMMEs in order to highlight the unique nature of informality in South Africa. This paper also evaluates the endogenous and exogenous impediments to growth faced by South African SMMEs. Endogenous challenges are internal to the firm while exogenous challenges are external to the firm. In summarising these findings, we present the major challenges inhibiting the growth of SMMEs in South Africa, taking into account firm heterogeneity in terms of both firm size and informality status. |
| Keywords: | SMMEs; South Africa; inclusive growth; development; entrepreneurship; informality |
| JEL: | E2 E26 J26 J4 O1 O4 O17 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:201802&r=all |
| By: | Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Bashir Muhammad (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan) |
| Abstract: | In this paper we assess the effect of institutional similarity on foreign direct investment. In a large panel of bilateral FDI stocks that covers roughly 190 countries both as host and source country of FDI we demonstrate that it is not similarity in general, but similarity with respect to government involvement in markets and with respect to corruption that matters. Our finding is robust to a large set of different panel estimators and specifications of the gravity model that is underlying our estimation. |
| Keywords: | FDI, institutions, similarity, gravity model |
| JEL: | F21 E02 D73 |
| URL: | http://d.repec.org/n?u=RePEc:fds:dpaper:201902&r=all |
| By: | Chris Tsoukis; Jun-ichi Itaya |
| Abstract: | We introduce distributive justice into a simple model of growth and distribution. Two groups (‘classes’) of otherwise identical, capital-rich and capital-poor individuals (‘capitalists’) and (‘workers’) are in conflict over factor (labour-capital) shares. Capitalists’ (workers’) ideal labour share is low (high) – but always tempered by the recognition that everyone supplies one unit of labour inelastically and desires a wage; and that the labour share impacts growth negatively in our ‘AK’ production economy. Social conflict is defined as the difference between the ideal labour shares of the two classes. This conflict is resolved by the two positive and three normative criteria we consider. Thus, the macroeconomy (growth, factor shares, distribution), social conflict and the methods of its resolution are jointly determined in a complete socio-economic equilibrium. We believe both this approach and our rich set of results are novel. We consider two positive (probabilistic voting and Nash bargaining, encapsulating electoral politics and socio-political bargaining) and two normative (justice) criteria (utilitarian and Rawlsian) of conflict resolution. Greater impatience, intensified status comparisons and negative consumption externalities, greater wealth inequality and a decline in productivity exacerbate social conflict. Status comparisons and wealth inequality tend to raise the labour share under all positive and normative criteria. Finally, we propose and analyse a criterion of ‘justice as minimal social friction’. Under the plausible assumption that the capitalists’ overall socio-political influence (numerical strength aside) is at least as high as that of workers, all positive methods imply a smaller labour share and more inequality than all our three criteria of distributive justice. We offer a numerical illustration of the key points. |
| Keywords: | growth, factor shares, status, distributive justice, social conflict, social contract |
| JEL: | O41 O43 E25 P16 Z13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7601&r=all |
| By: | Morris A. Davis (Department of Finance and Economics, Rutgers Business School, Rutgers University); William D. Larson (Federal Housing Finance Agency); Stephen D. Oliner (American Enterprise Institute for Public Policy Research); Benjamin Smith (American Enterprise Institute for Public Policy Research) |
| Abstract: | This paper provides a comprehensive account of the evolution of default risk for newly originated home purchase loans since 1990. We bring together several data sources to produce this history, including loan-level data for the entire Enterprise (Fannie Mae and Freddie Mac) book. We use these data to track a large number of loan characteristics and a summary measure of risk, the stressed default rate. Among the many results in the paper, we show that mortgage risk had already risen in the 1990s, planting the seeds of the financial crisis well before the actual event. Our results also cast doubt on explanations of the crisis that focus on low-credit-score borrowers. |
| Keywords: | mortgage risk, housing boom, default, foreclosure, house price, leverage |
| JEL: | E32 G21 G28 H22 R31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hfa:wpaper:19-02&r=all |
| By: | Cai, Ning; Feng, Jinlu; Liu, Yong; Ru, Hong; Yang, Endong |
| Abstract: | By merging transaction-level trade data from China Customs and loan data from the China Development Bank (CDB), we analyze the effects of government credit on trade activities. We find that CDB credit mainly flows to SOEs in strategic industries at the top of the supply chain. These up-stream loans lead to the lower price and higher amount of export goods of private firms in down-stream industries, which leads to decreases in employment and performance of the US firms in the same industry. In contrast, the US firms in downstream industries use cheaper intermediate goods imported from China and perform better subsequently. |
| JEL: | E51 F30 G21 G28 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_007&r=all |
| By: | Dautovic, Ernest |
| Abstract: | The paper evaluates the impact of macroprudential capital regulation on bank capital, risk taking behaviour, and solvency. The identification relies on the policy change in bank-level capital requirements across systemically important banks in Europe. A one percentage point hike in capital requirements leads to an average CET1 capital increase of 13 percent and no evidence of reduction in assets. The increase in capital comes at a cost. The paper documents robust evidence on the existence of substitution effects toward riskier assets. The risk taking behavior is predominantly driven by large and less profitable banks: large wholesale funded banks show less risk taking, and large banks relying on internal ratings based approach successfully disguise their risk taking. In terms of overall impact on solvency, the higher risk taking crowds out the positive effect of increased capital. JEL Classification: E51, G21, O52 |
| Keywords: | capital requirements, macroprudential policy, moral hazard, risk-taking |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:srk:srkwps:201991&r=all |