|
on Macroeconomics |
| By: | Seo, Jinyoung (Wake Forest University, Economics Department) |
| Abstract: | I show that Treasuries’ role as hedge assets is determined by the level of trend inflation and the conduct of monetary policy, using a Generalized New Keynesian habit model. A novel prediction from the model is that when trend inflation is high, nominal bonds exhibit a positive correlation with stock returns, making them risky assets. As trend inflation rises, inflation becomes more countercyclical because any transitory inflation generates temporary output loss due to endogenous cost-push effects, which emerge under positive trend inflation. When countercyclical inflation prevails, bond returns drop when stocks underperform, leading to a positive bond-stock correlation. The model explains the shift in US bond-stock correlation from positive to negative in 1997 as a consequence of stabilized trend inflation. |
| Keywords: | Bond-stock correlation; trend inflation; monetary policy; output gap-inflation correlation; bond risk premium |
| JEL: | E31 E43 E44 E52 G12 |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:wfuewp:0115 |
| By: | Chris Murphy |
| Abstract: | The health policies the government introduced in March 2020 to contain the COVID-19 pandemic led to recession in the restricted industries. This recession was treated with a very large expansion of fiscal policy and the monetary policy interest rate was reduced to its assessed effective lower bound (ELB). This paper evaluates this macro policy response from the three related perspectives of pandemic macro policy principles, scenario analysis and optimal control of unemployment and inflation. Using scenario analysis, we find that the macro policy response was successful initially, reducing the peak rate of unemployment in mid-2020 by 2.0% points. However, the stimulus lingered for too long, in the end providing $2 of compensation for every $1 of private income lost to COVID. Under the macro policy principles for a pandemic, a shorter stimulus scenario is developed in which fiscal stimulus provides $1 for $1 compensation for income lost to COVID and the policy interest rate begins rising a year earlier, in May 2021. This reduces the peak inflation rate during 2022 by a simulated 2.1% points. Using optimal control, we find that the macro policy stimulus continued for too long irrespective of whether we place a high or low weight on controlling unemployment relative to inflation. In future pandemics, fiscal policy should compensate, but not over-compensate, economic agents for income losses due to restrictions and should not stimulate aggregate demand.The monetary authorities should focus on inflation in the industries not subject to restrictions. |
| JEL: | E37 E52 E62 E63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pas:papers:2024-9 |
| By: | Frantisek Masek (National Bank of Slovakia); Jan Zemlicka (University of Zurich) |
| Abstract: | We analyze the optimal window length in the average inflation targeting rule within a Behavioral THANK model. The central bank faces an occasionally binding effective lower bound (ELB) or persistent supply shocks, and can also use quantitative easing. We show that the optimal averaging period is infinity for a moderate myopia. Finite yet long-lasting windows dominate for stronger cognitive discounting; i.e., the makeup property is shown to be qualitatively resistant to deviation from rational expectations. We point out that the optimal window depends on the speed of return to the target path when myopia plays a bigger role. We quantify the welfare effect of uncertainty due to the ELB (downward inflation bias) and show how it varies across window lengths and cognitive discounting degrees. |
| JEL: | E31 E32 E52 E58 E71 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1108 |
| By: | Kshama Dwarakanath; Svitlana Vyetrenko; Tucker Balch |
| Abstract: | We present an agent-based simulator for economic systems with heterogeneous households, firms, central bank, and government agents. These agents interact to define production, consumption, and monetary flow. Each agent type has distinct objectives, such as households seeking utility from consumption and the central bank targeting inflation and production. We define this multi-agent economic system using an OpenAI Gym-style environment, enabling agents to optimize their objectives through reinforcement learning. Standard multi-agent reinforcement learning (MARL) schemes, like independent learning, enable agents to learn concurrently but do not address whether the resulting strategies are at equilibrium. This study integrates the Policy Space Response Oracle (PSRO) algorithm, which has shown superior performance over independent MARL in games with homogeneous agents, with economic agent-based modeling. We use PSRO to develop agent policies approximating Nash equilibria of the empirical economic game, thereby linking to economic equilibria. Our results demonstrate that PSRO strategies achieve lower regret values than independent MARL strategies in our economic system with four agent types. This work aims to bridge artificial intelligence, economics, and empirical game theory towards future research. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.12038 |
| By: | Possas, Mario Luiz |
| Abstract: | Mainstream Macroeconomics has withdrawn completely from its remote origins in Keynes and Kalecki, replacing the principle of effective demand (P.E.D.) with supply economics, investment with savings, and dynamics with equilibrium as a norm This article discusses, in the event of Kalecki's centenary, the importance of his contribution for the reconstruction of a macroeconomic theory capable of (i) explaining, through P.E.D., the basic causal relations amongst economic variables without any reference to equilibrium; (ii) thus invalidating the false relevant role ascribed to savings; and (iii) bringing macrodynamics back to the core of the analysis of the capitalist economy. |
| Keywords: | Macroeconomic dynamics, Kalecki, Effective demand, Investment and savings |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cessdp:301870 |
| By: | François Moreau (CEPN - Centre d'Economie de l'Université Paris Nord - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord, LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord); Patrik Wikström (QUT - Queensland University of Technology [Brisbane]); Ola Haampland (Inland Norway University of Applied Sciences - Høgskolen i Innlandet); Rune Johannessen (Inland Norway University of Applied Sciences - Høgskolen i Innlandet) |
| Abstract: | Music streaming platforms' models for sharing revenues with content providers have been the subject of intense debate for nearly a decade. The dominating model involves pooling platform revenues and allocating these funds to songs based on a song's share of the total number of platform streams. Since this model has several controversial consequences, alternative models have been proposed. This paper uses a novel approach to assess the two most discussed modelsthe "user-centric" and the "artist-centric". Our approach relies on a unique data set of 154, 505 streaming platform users (890 million streams) and simulates how a large-scale implementation of these models may reallocate revenues across different songs and rightsholders. We disentangle the static effects of a transition to a "user-centric" or an "artist-centric" model across each of six different song characteristics. We then compare the results of the two models. We show that contrary to its objective, an artist-centric payment system does not significantly improve remuneration to professional artists while the user-centric payment system would generate more significant changes in revenue reallocation, mainly at the expense of Rap & Hip-hop songs, superstars and new releases. Finally, we analyze the positions of the various stakeholders with regard to each of them. |
| Keywords: | Streaming, User-centric, Music industry |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04679366 |
| By: | Suguru Otani (Market Design Center, University of Tokyo and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | I investigate how explicit cartels, known as "shipping conferences", in a global container shipping market facilitated the formation of one of the largest globally integrated markets through entry, exit, and shipbuilding investment of shipping firms. Using a novel data, I develop and construct a structural model and find that the cartels shifted shipping prices by 20-50% and encouraged firms' entry and investment. In the counterfactual, I find that cartels would increase producer surplus while slightly decreasing consumer surplus, then may increase social welfare by encouraging firms' entry and shipbuilding investment. This would validate industry policies controlling prices and quantities in the early stage of the new industry, which may not be always harmful. Investigating hypothetical allocation rules supporting large or small firms, I find that the actual rule based on tonnage shares is the best to maximize social welfare. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-28 |
| By: | Forero, David (FEDESARROLLO); Oviedo, Sandra (FEDESARROLLO); Puyana, Rafael (FEDESARROLLO); Zuluaga, Sandra (FEDESARROLLO) |
| Abstract: | El Programa Colombia más Competitiva es un programa bilateral de Suiza y Colombia que busca mejorar la competitividad colombiana mediante un enfoque sistémico con tres niveles de intervención, desde las reformas a políticas nacionales hasta el apoyo a unidades productivas en las regiones. En este documento se presentan los hallazgos de la evaluación cualitativa y cuantitativa siguiendo los criterios de evaluación del Comité de Ayuda al Desarrollo (CAD) de la Organización para la Cooperación y el Desarrollo Económico (OCDE). La evaluación cualitativa permite encontrar que el programa, de forma general, está altamente adecuado a las necesidades de los beneficiarios gracias a su enfoque de demanda, ha sido eficaz en el logro de sus objetivos y ha generado impacto sobre sus beneficiarios, aunque la sostenibilidad de este es limitada. Al mismo tiempo, la evaluación cuantitativa permite hallar que, en las unidades productivas beneficiarias, el programa ha causado un incremento en el empleo, las ventas y ha logrado fomentar posiciones de liderazgo femenino. Los hallazgos se presentan por nivel de intervención, y también se presentan recomendaciones para la fase II del programa, la cual se encuentra actualmente en ejecución. |
| Keywords: | Competitividad; Colombia Más Competitiva; Cooperación Internacional; Cadenas de Valor; Política Pública Evaluación de Programas; Colombia; Suiza |
| JEL: | D04 F35 L83 Q12 Q18 Z18 |
| Date: | 2024–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:col:000124:021045 |
| By: | Bianchi, Milo; Rhodes, Andrew |
| Abstract: | We consider a model in which consumers live in isolated villages and need to send money to each other. Each village has (at most) one digital payment provider, which acts as a bridge to other villages. With fully rational consumers interoperability is beneficial: it raises financial inclusion, which in turn increases consumer surplus. With behavioural consumers who have imperfect information or incorrect beliefs about off-net fees, interoperability can reduce consumer welfare. Policies that cap transaction fees have an ambiguous effect on consumers, depending on how the cap is implemented, whether consumers are rational, and on how asymmetric providers are in terms of coverage. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129664 |
| By: | Gnaoui Imane; Moutahaddib Aziz |
| Abstract: | Corporate social responsibility encourages companies to integrate social and environmental concerns into their activities and their relations with stakeholders. It encompasses all actions aimed at the social good, above and beyond corporate interests and legal requirements. Various international organizations, authors and researchers have explored the notion of CSR and proposed a range of definitions reflecting their perspectives on the concept. In Morocco, although Moroccan companies are not overwhelmingly embracing CSR, several factors are encouraging them to integrate the CSR approach not only into their discourse, but also into their strategies. The CGEM is actively involved in promoting CSR within Moroccan companies, awarding the "CGEM Label for CSR" to companies that meet the criteria set out in the CSR Charter. The process of labeling Moroccan companies is in full expansion. The graphs presented in this article are broken down according to several criteria, such as company size, sector of activity and listing on the Casablanca Stock Exchange, in order to provide an overview of CSR-labeled companies in Morocco. The approach adopted for this article is a qualitative one aimed at presenting, firstly, the different definitions of the CSR concept and its evolution over time. In this way, the study focuses on the Moroccan context to dissect and analyze the state of progress of CSR integration in Morocco and the various efforts made by the CGEM to implement it. According to the data, 124 Moroccan companies have been awarded the CSR label. For a label in existence since 2006, this figure reflects a certain reluctance on the part of Moroccan companies to fully implement the CSR approach in their strategies. Nevertheless, Morocco is in a transitional phase, marked by the gradual adoption of various socially responsible practices. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.11519 |
| By: | Dan Romulus Serban (BabeÈ™-Bolyai University, Cluj-Napoca, Romania) |
| Abstract: | This paper analyzes the biblical episode involving the daughters of the deceased Zelophehad and demonstrates that Hebrew society had the ability to overcome prejudices regarding the primacy of the male sex, even in an eminently patriarchal period. Inheritance is no longer transmitted through the male line and the distinction of sex is eliminated. It must also be recognized that the first important legal disputes in the world appeared in Jewish society long before the codes issued (ius scriptum) during the Roman Empire. They indicate the effervescence of disputes in Jewish legal life. Finally, the Zelophehad episode raises questions about the inspiration and authorship of the biblical text. The ability of the human receiver to perceive and modulate the divine message is accidentally called into question. The study considers societal norms, legal consequences, and ethical aspects involving the daughters' request for inheritance, offering reflections on the evolving nature of laws and the attitudes of society in Hebrew culture. |
| Keywords: | Zelophehad’s daughters, inheritance, legislation, property, common law, subjective law |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:smo:scmowp:01303 |
| By: | De Loecker, Jan; Obermeier, Tim; Van Reenen, John |
| Abstract: | We review the existing literature on falling business dynamism and present a new analysis using comprehensive UK firm-level panel data. Since the mid-1990s, there has been a large increase in UK firm-level inequality (especially in the upper tails) of productivity, wages, markups and labour shares, similarly to the USA. We suggest a simple theoretical framework for understanding some of these trends and quantitatively analyse why, despite increasing markups, the UK labour share has not fallen as sharply as that in the USA. Finally, we suggest some policy options in response to these worrying trends, including modernizing competition rules to deal with the growth of superstar firms and strengthening worker bargaining power. |
| Keywords: | OUP deal |
| JEL: | J1 |
| Date: | 2024–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:121234 |
| By: | Meango, Romuald (University of Oxford); Girsberger, Esther Mirjam (University of Technology, Sydney) |
| Abstract: | Ex ante returns, the net value that agents perceive before they take an investment decision, are understood as the main drivers of individual decisions. Hence, their distribution in a population is an important tool for counterfactual analysis and policy evaluation. This paper studies the identification of the population distribution of ex ante returns using stated choice experiments, in the context of binary investment decisions. The environment is characterised by uncertainty about future outcomes, with some uncertainty being resolved over time. In this context, each individual holds a probability distribution over different levels of returns. The paper provides novel, nonparametric identification results for the population distribution of returns, accounting for uncertainty. It complements these with a nonparametric/semiparametric estimation methodology, which is new to the stated-preference literature. Finally, it uses these results to study the preference of high ability students in Côte d'Ivoire for public-sector jobs and how the competition for talent affects the expansion of the private sector. |
| Keywords: | subjective expectations, ex ante returns, nonseparable panel, distribution regression, job search, public sector |
| JEL: | C21 C23 D84 J21 J24 J30 J45 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17174 |
| By: | Kimolo, D.W; Odhiambo, N.M; Nyasha, S |
| Abstract: | This article provides a comprehensive chronological analysis of Uganda's inflation performance and policy reforms aimed at reducing inflation and stabilising the economy from 1970 to 2021. The impetus for this article lies in the growing interest in Uganda as a prototype for other developing countries grappling with high inflation rates. To achieve the objective, the study adopts a rigorous methodology involving a detailed analysis of selected statistical and academic literature. Uganda faced persistent hyperinflation for much of the 1970s and 1980s and early 1990s. In response, the Ugandan government implemented a series of inflation policy reforms aimed at reducing inflation and stabilizing the economy. The policy reforms in Uganda can be analysed episodically through five distinct periods, starting with the first 10 years after independence (1962-1971), followed by 15 years of political instability (1971- 1985), 10 years of recovery (1986-1995), 10 years of economic growth and poverty reduction (1996-2006), and the most recent episode of reforms consolidation (2007-2021). The impact of these reforms has been significant, with inflation rates falling to single digits and the economy experiencing sustained growth. The decline in inflation has helped to stabilize the economy, reduce the cost of living for Ugandans, and attract foreign investment. The study underscores the importance of implementing sound macroeconomic policies, strong political will and leadership, investing in infrastructure, diversifying the economies, communicating effectively with the public, and cooperating regionally to build a robust and sustainable economy that benefits all its citizens. |
| Keywords: | Price Level; Inflation; Deflation; Uganda |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:uza:wpaper:31543 |
| By: | Domenico Moramarco (University of Bari - Department of Economics and Finance); Paolo Brunori (University of Firenze and LSE - International Inequalities Institute); Pedro Salas-Rojo (LSE - International Inequalities Institute) |
| Abstract: | In this paper we discuss some limitations of using survey data to measure inequality of opportunity. First, we highlight a link between the two fundamental principles of the theory of equal opportunities -- compensation and reward -- and the concepts of power and confidence levels in hypothesis testing. This connection can be used to address, for example, whether a sample has sufficient observations to appropriately measure inequality of opportunity. Second, we propose a set of tools to normatively assess inequality of opportunity estimates in any type partition. We apply our proposal to Conditional Inference Trees, a machine learning technique that has received growing attention in the literature. Finally, guided by such tools, we suggest that standard tree-based partitions can be manipulated to reduce the risk of compensation and reward principles.Our methodological contribution is complemented with an application using a quasi-administrative sample of Italian PhD graduates. We find a substantial level of labor income inequality among two cohorts of PhD graduates (2012 and 2014), with a significant portion explained by circumstances beyond their control. |
| Keywords: | Equality of opportunity, Machine learning, PhD graduates, Compensation, Reward |
| JEL: | C38 D31 D63 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2024-675 |
| By: | Todd A. Gormley; Manish Jha; Meng Wang |
| Abstract: | Institutional investors are less likely to support shareholder proposals involving environmental and social issues for firms headquartered in Republican-led states. The lower support concentrates in recent years, when politicians became more vocal about firms’ social responsibility activities, and among larger institutions and firms, which tend to attract more attention from politicians. Investor support also shifts within states following changes in their leadership. Support for such proposals is 10 percentage points lower in the same state when it is led by Republicans instead of Democrats. The findings suggest that state-level politics and the politicization of an issue impacts institutional investors’ votes. |
| JEL: | G23 G30 G34 M14 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32869 |
| By: | Chen Chen; Koralai Kirabaeva; Danchen Zhao |
| Abstract: | Financially constrained governments, particularly in emerging and developing economies, tend to face a fiscal trade-off between adapting to climate change impacts and pursuing broader development goals. This trade-off is especially relevant in the agriculture sector, where investing in adaptation is critical to ensure food security amidst climate change. International trade can help alleviate this challenge and reduce adaptation investment needs by offsetting agricultural production shortages. However, in the presence of trade fragmentation, the adaptive role of trade diminishes, exacerbating food insecurity and increasing investment needs for adaptation. In this paper, we present a model to guide policymakers in deciding on the cost-efficient balance between investing in adaptation in the agricultural sector versus in broader development under financing and trade constraints. We apply the model to Ghana, Egypt, and Brazil, to examine the adaptation-development trade-off and highlight factors that would potentially lower adaptation investment needs. These factors include trade openness, higher agricultural productivity and efficiency of adaptation spending, and reduced labor market distortions. The key takeaways from the model applications suggest that (i) promoting trade openness and accessing concessional finance for adaptation help tackle climate challenges and ensure food security in lower-income countries; and (ii) domestic structural reforms are necessary to facilitate adaptation investments and reduce investment needs, by improving labor market flexibility, adaptation efficiency, and agriculture productivity. |
| Keywords: | agriculture; investment; adaptation; trade; climate change |
| Date: | 2024–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/184 |