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on Macroeconomics |
| By: | Le, Vo Phuong Mai (Cardiff Business School); Meenagh, David (Cardiff Business School); Minford, Patrick (Cardiff Business School) |
| Abstract: | DSGE models based on New Keynesian principles, which have been extended to allow for banking, the zero lower bound on interest rates (ZLB), and varying price duration, can account well for recent macroeconomic behavior across a variety of economies. These models Önd that active Öscal policy can contribute to macroeconomic stability and welfare by reducing the frequency of hitting the ZLB. Fiscal policy can also share the stabilisation role with monetary policy, whose effectiveness under the ZLB is much reduced. |
| Keywords: | Moments, fiscal policy, zero bound, monetary policy, DSGE model, macro stability, indirect inference |
| JEL: | E17 E31 E32 E42 E52 E62 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2023/26&r=mac |
| By: | Serdar Birinci; Fatih Karahan; Yusuf Mercan; Kurt See |
| Abstract: | We develop a heterogeneous-agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for inflation. We find that EE dynamics played an important role in shaping the differential inflation dynamics observed during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. The optimal monetary policy prescribes a strong positive response to EE fluctuations, implying that central banks should distinguish between recovery episodes with similar unemployment but different EE dynamics. |
| Keywords: | Business fluctuations and cycles; Inflation and prices; Labour markets; Monetary policy |
| JEL: | E12 E24 E52 J31 J64 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-52&r=mac |
| By: | Vivek Sharma |
| Abstract: | What are the effects of changing bank lending conditions in a model in which borrowers have endogenously-persistent credit relationships with lenders? This paper answers this question in a simple Two-Agent New Keynesian (TANK) setup. Fluctuations in collateral requirements, termed collateral shocks in this paper, result in a rise in spread, a drop in bank credit and amplification of macroeconomic volatility. These effects are amplified by presence of lending relationships and are greater at higher persistence and volatility of the collateral shocks. The results in this paper underscore that credit relationships matter when collateral shocks hit the economy and a model that assumes away the existence of these lending relationships, risks underestimating their effects. |
| Keywords: | Collateral Shocks, Lending Relationships, Economic Activity |
| JEL: | E32 E44 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2023-49&r=mac |
| By: | Andrejs Zlobins (Latvijas Banka) |
| Abstract: | Portfolio rebalancing is a key mechanism through which central bank asset purchases flatten the yield curve, thus providing additional monetary policy accommodation when conventional policy rate setting is constrained by the effective lower bound. Existing literature provides ample evidence that this channel has played a major role in compressing the long-term interest rates and provided a broad-based easing of financial conditions for firms and households in the euro area. However, this evidence originates from either aggregate euro area or its largest jurisdictions, leaving the effects of the Eurosystem's asset purchases on smaller member states, such as Latvia, unclear. Therefore, we employ a bilateral structural vector autoregression, featuring both aggregate euro area and Latvian blocks, as well as a panel structural vector autoregression with cross-sectional heterogeneity to obtain evidence from both macro-level and bank-level data in order to shed some light on the transmission of QE to the Latvian economy. Our findings suggest that QE led to a compression of sovereign borrowing costs in Latvia and boosted economic activity and prices. At the same time, we also document that the further pass-through to domestic financial conditions was weak owing to limited asset rebalancing by the domestic banking sector in response to the Eurosystem's QE. Instead, we show that Latvian yields were compressed due to direct intervention of the central bank in the bond markets and portfolio readjustment of foreign investors. Our study thus provides additional evidence that the transmission of common monetary policy to the Latvian economy is impaired via the domestic banking sector. |
| Keywords: | quantitative easing, portfolio rebalancing, monetary policy, euro area, Latvia |
| JEL: | C54 E50 E52 E58 |
| Date: | 2023–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202305&r=mac |
| By: | Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This paper analyses the link between discretionary fiscal policy and interest-growth differentials (r-g). Panel regressions based on a dataset for 20 advanced countries over the years 1990-2019 reveal no evidence of a systematic linear relationship between fiscal policy and r-g. However, more unfavourable r-g differentials are linked more strongly to a tighter fiscal stance when public-debt-to-GDP ratios are higher – but only in the euro area, not in advanced stand-alone countries issuing government debt in their own currency. |
| Keywords: | Public debt, fiscal deficits, interest-growth differentials, fiscal policy |
| JEL: | E43 E62 F33 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:230&r=mac |
| By: | Nuguer, Victoria; Finkelstein-Shapiro, Alan |
| Abstract: | We study how policies that facilitate firm digital adoption shape the labor market and economic recovery from COVID-19 in a search and matching framework with firm entry and exit where salaried firms can adopt digital technologies and the labor market and firm structure embodies key features of Latin American economies. Using Mexico as a case study, we first show that the model quantitatively replicates the dynamics of the labor market and output at the onset of the COVID recession and in its aftermath, including the sharp decline in labor force participation and informal employment that is unique to the COVID recession. We then show that a policy-induced permanent reduction in the barriers to adopting digital technologies introduced at the trough of the recession bolsters the recovery of GDP, total employment, and labor income, and leads to a larger expansion in the share of formal employment compared to the no-policy scenario. In the long run, the economy exhibits a long-run reduction in total employment and labor force participation, but higher levels of GDP and labor income, greater average firm productivity, a larger formal employment share, and a marginally lower unemployment rate. |
| Keywords: | Business cycles and labor search frictions;Self-employmentand informality;Unemployment;Labor force participation;Information and communications technologies (ICT);Latin America |
| JEL: | E24 J23 J24 J64 O14 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:12232&r=mac |
| By: | Agnes Medinaceli (SDSN Bolivia); Lykke E. Andersen (SDSN Bolivia); Marcelo Delajara (Anker Research Institute); Richard Anker (Anker Research Institute); Martha Anker (Anker Research Institute) |
| Abstract: | This report provides updated estimates of family living expenses and living wage for rural areas and small towns of coffee and cocoa growing regions of San Martín, Cajamarca, Junín, and Cusco, Peru. The update for 2023 takes into account inflation and changes in payroll deductions since the original Anker living wage study carried out in June 2022 (Andersen et al., 2022). |
| Keywords: | Living costs, living wages, Anker Methodology, Peru |
| JEL: | J30 J50 J80 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:iad:glliwa:230430&r=mac |
| By: | Agnes Medinaceli (SDSN Bolivia); Lykke E. Andersen (SDSN Bolivia); Marcelo Delajara (Anker Research Institute); Richard Anker (Anker Research Institute); Martha Anker (Anker Research Institute) |
| Abstract: | This report provides updated estimates of family living expenses and living wages for rural Cibao Norte, the northern region of the Dominican Republic. The update for 2023 takes into account inflation and changes in payroll deductions since the original Anker living wage study carried out in March 2022 (Voorend, Alvarado, Anker & Anker, 2022). |
| Keywords: | Living costs, living wages, Anker Methodology, Dominican Republic |
| JEL: | J30 J50 J80 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:iad:glliwa:230426&r=mac |
| By: | Agnes Medinaceli (SDSN Bolivia); Lykke E. Andersen (SDSN Bolivia); Marcelo Delajara (Anker Research Institute); Richard Anker (Anker Research Institute); Martha Anker (Anker Research Institute) |
| Abstract: | This report provides updated estimates of family living expenses and living wage for rural areas in the Limón and Heredia Provinces of Costa Rica. This region focuses on agriculture, particularly banana and pineapple. The update for 2023 takes into account inflation since the original Anker living wage study carried out in May 2017 (Voorend, Anker & Anker, 2017). |
| Keywords: | Living costs, living wages, Anker Methodology, Costa Rica |
| JEL: | J30 J50 J80 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:iad:glliwa:230425&r=mac |
| By: | Agnes Medinaceli (SDSN Bolivia); Lykke E. Andersen (SDSN Bolivia); Marcelo Delajara (Anker Research Institute); Richard Anker (Anker Research Institute); Martha Anker (Anker Research Institute) |
| Abstract: | This report provides updated estimates of family living expenses and living wages for the Lake Victoria Basin in rural Uganda. The update for 2023 takes into account inflation and changes in payroll deductions since the original Anker living wage study carried out in September 2019 (Khan and Buyinza, 2019). |
| Keywords: | Living costs, living wages, Anker Methodology, Uganda |
| JEL: | J30 J50 J80 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:iad:glliwa:230446&r=mac |
| By: | Agnes Medinaceli (SDSN Bolivia); Lykke E. Andersen (SDSN Bolivia); Marcelo Delajara (Anker Research Institute); Richard Anker (Anker Research Institute); Martha Anker (Anker Research Institute) |
| Abstract: | This report provides updated estimates of family living expenses and living wages for the non-metropolitan urban flower-producing region in Ziway, Ethiopia. The update for June 2023 takes into account inflation and changes in payroll deductions since the original Anker living wage study carried out in July 2015 (Melese, 2015). |
| Keywords: | Living costs, living wages, Anker Methodology, Ethiopia |
| JEL: | J30 J50 J80 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:iad:glliwa:230437&r=mac |
| By: | Anke Hoeffler |
| Abstract: | Although the provision of security to all their citizens is a state's fundamental duty, over 50 countries experienced armed conflict in 2021. The international development community has identified armed conflict as an impediment to development and provides considerable resources to reduce armed conflicts. However, other forms of violence, such as suicide, homicide, and assault, are vastly more prevalent and far more widely distributed across countries than armed conflict. |
| Keywords: | Aid, Violence, Conflict |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2023-118&r=mac |
| By: | Buxmann, Peter; Zöll, Anne |
| Date: | 2023–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:138904&r=mac |