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on Macroeconomics |
| By: | Stelios S. Fourakis; Loukas Karabarbounis |
| Abstract: | Advanced economies borrowed substantially during the Covid recession to fund their fiscal policy. The Covid recession differed from the Great Recession in that sovereign debt markets remained calm and spreads barely responded. We study the experience of Greece, the most extreme manifestation of the puzzling behavior of spreads during Covid. We develop a small open economy model with long-term debt and default, which we augment with official lenders, heterogeneous households and sectors, and Covid constraints on labor supply and consumption demand. The model is quantitatively consistent with the observed boom-bust cycle of Greece before Covid and salient observations on macro aggregates, government debt, and the sovereign spread during Covid. The spread is stable despite a rise in external borrowing during Covid, because lockdowns were perceived as transitory and the bailouts of the 2010s had tilted the composition of debt at the beginning of Covid away from defaultable private debt. The ECB's policy of purchasing debt in secondary markets during Covid did not stabilize spreads so much, but allowed the government to provide transfers that reduced inequality. |
| JEL: | E20 E58 E60 F34 F44 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32044&r=mac |
| By: | Codrina Rada (Department of Economics, University of Utah, USA); Ansel Shiavone (Department of Economics, St. John's University, USA); Rudiger von Arnim (Department of Economics, University of Utah, USA) |
| Abstract: | Neo-Goodwinian theory builds on and extends the classical growth cycle (Goodwin, 1967). It facilitates investigation of short run business cycles and long run economic growth in a unified framework. This paper makes two contributions. First, we summarize recent research on a Keynesian distributive cycle in income-capital ratio, employment rate and labor share. This model generates the Goodwin pattern (short run counter-clockwise cycles in activity-labor share planes) with the Goodwin mechanism (profit-led activity and profit squeeze distribution). Further, the natural rate of growth is wage-led through a positive effect of the labor share on labor productivity growth. The connection of short run profit-led cycles and long run wage-led growth allows for a nuanced discussion of relevant constraints and trade-offs. Second, we respond to renewed criticism that the Goodwin pattern is an artefact of pro-cyclical labor productivity. To clarify this debate, we demonstrate that a two-dimensional model in income-capital ratio and labor share with pro-cyclical labor productivity cannot generate the Goodwin pattern, unless it also features a sufficiently strong Goodwin mechanism. Extending the baseline three-dimensional Keynesian distributive cycle with pro-cyclical labor productivity does not alter key conclusions concerning short run profit led cycles and long run wage led growth. |
| Keywords: | Neo-Goodwinian theory, cyclical growth, labor productivity, secular stagnation |
| JEL: | E12 E25 E32 J50 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2403&r=mac |
| By: | Effiong, Ubong Edem; Akpan, Ekomabasi; Ekpe, John Polycarp |
| Abstract: | This study aimed to ascertain the validity of the Phillips Curve in six countries of Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone within the West African Monetary Zone (WAMZ). The study utilised panel data from these countries varying from 2000 to 2021, which were obtained from the World Bank database. The data were analysed using the Panel unit root test, Johansen Fisher Panel (JFP) co-integration test, Pairwise Dumitrescu Hurlin Panel (PDHP) Causality Tests, and the Panel Autoregressive Distributed Lag (ARDL) approach. The PDHP Causality Test revealed a one-way causality from unemployment to inflation; hence, unemployment causes inflation. The JFP co-integration test conducted since the variables were not all stationary at levels revealed that the two variables are cointegrated, which portrayed some degree of long-run relationship. The significant findings of this study, as presented by the panel ARDL result, indicated that the inverse relationship between inflation and unemployment is only valid in the short run within the WAMZ. This finding supports the argument that there is no trade-off between inflation and unemployment in the long run and the Phillips Curve is a vertical line at the natural unemployment rate. |
| Keywords: | Phillips Curve; Natural Rate of Unemployment; Inflation; Monetary Policy; Labour Market. |
| JEL: | E24 E31 E52 |
| Date: | 2022–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119722&r=mac |
| By: | ha, jongrim; Kose, Ayhan M.; Ohnsorge, Franziska; Yilmazkuday, Hakan |
| Abstract: | This paper examines the drivers of fluctuations in global inflation, defined as a common factor across monthly headline consumer price index (CPI) inflation in G7 countries, over the past half-century. We estimate a Factor-Augmented Vector Autoregression model where a wide range of shocks, including global demand, supply, oil price, and interest rate shocks, are identified through narrative sign restrictions motivated by the predictions of a simple dynamic general equilibrium model. We report three main results. First, oil price shocks followed by global demand shocks explained the lion’s share of variation in global inflation. Second, the contribution of global demand and oil price shocks increased over time, from 56 percent during 1970-1985 to 65 percent during 2001-2022, whereas the importance of global supply shocks declined. Since the pandemic, global demand and oil price shocks have accounted for most of the variation in global inflation. Finally, oil price shocks played a much smaller role in global core CPI inflation variation, for which global supply shocks were the main source of variation. These results are robust to various sensitivity exercises, including alternative definitions of global variables, different samples of countries, and additional narrative restrictions. |
| Keywords: | Oil prices; demand shocks; supply shocks; interest rate shocks |
| JEL: | E31 E32 Q43 |
| Date: | 2023–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119645&r=mac |
| By: | Navarro, Adoracion M.; Camara, Jethro El L. |
| Abstract: | Given the frequent observation that the Philippine energy sector is complex, this study provides a structured review of issues in the sector. The structured review method is usually employed to systematically introduce readers to the complexities of a broad topic, such as the convolutions of a problem, the intricacies of a theme or sector, or the conjectures about a new trend or technology. The study starts with a discussion of the physical flows of energy via a Sankey diagram of energy flows in the Philippines, and then proceeds to describe the upstream oil, gas, and coal industry, the downstream oil industry, the renewable energy development industry, and the electric power industry. The discussion includes the market structure, regulatory framework, and issues in each industry. As the analysis shows, structuring the understanding of the energy sector by component industry is a useful approach to untangling the complexities of the sector. As part of the concluding remarks, the study claims that another useful approach is to look at problems in the energy sector as cross-cutting concerns or cutting across several industries, such as the energy affordability problem. All the issues identified in the study can be considered future research areas by public and private entities interested in Philippine energy sector research because all those issues are affecting the country’s energy security. Nevertheless, what may be considered as priority future research areas at present are energy affordability concerns and issues that can be addressed by amending the EPIRA. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | energy;upstream industry;downstream oil industry;renewable energy;electric power industry;energy security;energy affordability;clean energy transition |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2023-50&r=mac |
| By: | Francisco, Kris A.; Abrigo, Michael R.M. |
| Abstract: | Electricity serves as a crucial input to many businesses and household activities. As such, the government has historically focused its efforts on expanding the populations’ access to electricity. By contrast, electricity reliability has received less attention from policymakers despite the economic disruption caused by electricity supply interruptions. This paper seeks to deepen the discussion on electricity reliability in the Philippines by providing empirical evidence on the impact of electricity supply interruptions on local economies. Our results show that frequent electricity supply interruptions lead to lower local government income due to reductions in receipts from economic enterprises, business taxes, and real estate taxes. We also found that, consequently, the local government’s ability to provide services related to housing and community development, as well as labor and employment, is constrained, placing the local population at a disadvantage. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | electricity reliability;electricity supply interruptions;local economies |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2023-49&r=mac |
| By: | Aneta Hryckiewicz (Kozminski University); Kinga Tchorzewska (Kozminski University); Marcin Borsuk (Narodowy Bank Polski; Polish Science Academy; University of Cape Town); Dimitrios Tsomocos (Saïd Business School and St. Edmund Hall, University of Oxford) |
| Abstract: | The recent development of technological innovation in the banking sector has the potential to bring numerous benefits, but it also raises concerns regarding financial stability, an aspect that has been relatively understudied in academic literature. Our research paper aims to explore the impact of banks' recent adoption of FinTech solutions on both individual and systemic risks within the banking sector. Specifically, we examine how banks' technological innovations influence non-performing loans (NPLs), asset correlation in the system, and measures of systemic risk. To accomplish this, we utilize a unique dataset generated through data mining techniques, which captures the scale, types, and sources of technological solutions implemented by the largest banks in 23 countries over an 11-year period. Our findings indicate that FinTech solutions implemented by banks reduce both individual and aggregated systemic risks in the banking sector, although there are certain areas where systemic risk increases. |
| Keywords: | Fintech, innovation, IT technology, IT providers, bank, systemic risk, NPLs |
| JEL: | G21 G23 G32 L13 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:367&r=mac |
| By: | King King Li (SAFTI - Shenzhen Audencia Financial Technology Institute); Kang Rong (Shanghai University of Finance and Economics) |
| Abstract: | We propose a two-step guessing game to measure the depth of thinking. We apply this method to the P beauty contest game. Using our method, we find that 81% of subjects do not make choice following best response reasoning while the classical method would suggest only 12%. The result suggests that the classical method has the fundamental problem that it cannot distinguish if a submitted number is due to best response reasoning or not. It also suggests that traditional level k analysis falsely attributes some sophistication to random players, and that the degree of false attribution is large. Our procedure provides an alternative way to identify whether the individual has best response reasoning which is essential for any positive level of depth of thinking and differentiates between the depth of thinking and random choice, and hence provides a very different conclusion, which is suggestive of limitations of the classical method. |
| Keywords: | P Beauty Contest, Best Response Reasoning, Experiment |
| Date: | 2023–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04376266&r=mac |
| By: | Shen, Chi; Chen, Xi |
| Abstract: | There is mounting evidence indicating that the aging process initiates during early life stages, with in utero the individual's environment playing a significant role. Consequently, it is crucial to comprehend the enduring effects of early life circumstances on health in old age. In this study, we conducted a meta-analysis to examine the effects of the Great Chinese Famine (1959-1961) on the health of older adults. We also explored potential mechanisms underlying these effects. The complex interplay between early life circumstances, multiple health-related sectors, and healthy aging necessitates a comprehensive life-course approach and strategic interventions to enhance public health in an aging society. |
| Keywords: | Meta-Analysis, Aging, Life Course Health, Famine, Early Life Circumstances |
| JEL: | I14 J14 J13 I18 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1373&r=mac |
| By: | Motta, Matt (Boston University School of Public Health); Callaghan, Timothy; Ross, Jennifer; Padmanabhan, Medini; Gargano, Lisa; Bowman, Sarah; Yokum, David Vincent (District of Columbia Government) |
| Abstract: | In May 2023, federal regulators authorized two vaccines designed to prevent infection with Respiratory Syncytial Virus (RSV) for adults aged 60 or older. While some efforts have been made to study the prevalence of vaccine uptake thus far, few have studied this group’s intentions to vaccinate, as well as socio-demographic barriers to vaccination. In a nationally representative survey of N = 1, 200 US Adults (N = 362 aged 60+), we find that a majority of seniors (53%) intend to refuse an RSV vaccine. As of late Fall 2023, just 14% of those eligible have already received a RSV vaccine. We also present multivariate evidence that vaccine safety and efficacy attitudes, as well as previous vaccination behaviors, are associated with RSV vaccination intentions. |
| Date: | 2024–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:ezaur&r=mac |