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on Macroeconomics |
| 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. |
| Keywords: | monetary policy, fiscal policy, COVID, econometric modelling |
| JEL: | E37 E52 E62 E63 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-58 |
| By: | Joseph H. Haslag (Department of Economics, University of Missouri-Columbia); Dong Ho Kang (Center for Macroeconomic Research, University of Cologne, Germany) |
| Abstract: | Over the past decade, researchers have identified monetary policy surprises using highfrequency movements in futures contract prices. Based on this identification strategy, the evidence suggests that contractionary monetary policy surprises are significantly related to decreases in output and the price level. In other words, monetary policy is relevant. With more than a decade of data with nominal rates at or near the zero lower bound and interest on reserves, the open question is whether this relevance depends on the opportunity cost of holding money. We test this hypothesis, reporting impulse responses that are relevant when opportunity costs are greater than zero, but irrelevant when opportunity costs are close to zero. Hence, we conclude that monetary policy is conditionally relevant. |
| Keywords: | high-frequency, monetary policy surprises, interest on reserves, conditional relevanc |
| JEL: | E32 E44 E52 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:umc:wpaper:2410 |
| By: | Enrique Martínez García; Yixiang Zhang |
| Abstract: | We find empirical evidence of a possible structural break in the relationship between the foreign holdings of U.S. Treasury securities and the U.S. long-term interest rate occurring at the time when U.S. monetary policy became constrained at the zero-lower bound (ZLB). The estimated marginal effect of the foreign holdings ratio on the U.S. long-term interest rate, particularly its long-run effect, appears to have become stronger during the ZLB regime than it was before. We argue that the leading explanation of this apparent break is the nonlinearity introduced by the ZLB. Motivated by theory, we propose a flexible nonlinear specification to deal with the ZLB—a threshold single-equation error-correction model splitting the sample in two regimes, pre-ZLB and ZLB, which replaces the observed Fed Funds rate with a shadow Fed Funds rate derived from a Tobit-IV model to incorporate a broader measure of the stance of monetary policy. With this setup, we find no significant structural break in the relationship between foreign holdings and long-term rates at the ZLB. Therefore, we argue that the ZLB is a leading cause of the apparent shift in the empirical relationship. We also show that the estimated effects are not just statistically significant, but also economically significant. Through counterfactual analysis, we show that changes in China’s holdings of U.S. Treasury securities played an important role in explaining the 2004-2006 interest rate conundrum period and kept the long-term interest rate from going even lower in the recent ZLB period. |
| Keywords: | long-term interest rates; foreign holdings; expectations hypothesis; structural breaks; zero lower bound |
| JEL: | C24 E43 E58 F21 |
| Date: | 2024–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddgw:98916 |
| By: | Nina Boyarchenko; Richard K. Crump; Anna Kovner; Or Shachar |
| Abstract: | We link bond market functioning to future economic activity through a new measure, the Corporate Bond Market Distress Index (CMDI). The CMDI coalesces metrics from primary and secondary markets in real time, offering a unified measure to capture access to debt capital markets. The index correctly identifies periods of distress and predicts future realizations of commonly used measures of market functioning, while the converse is not the case. We show that disruptions in access to corporate bond markets have an economically material, statistically significant impact on the real economy, even after controlling for standard predictors including credit spreads. |
| Keywords: | credit conditions; primary and secondary corporate bond market; dimension reduction; financial conditions; real activity |
| JEL: | C38 E32 E44 G12 G32 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:98841 |
| By: | Anton A. Cheremukhin; Sewon Hur; Ron Mau; Karel Mertens; Alexander W. Richter; Xiaoqing Zhou |
| Abstract: | The U.S. experienced an extraordinary postpandemic surge in unauthorized immigration. This paper combines administrative data on border encounters and immigration court records with household survey data to document two new facts about these immigrants: They tend to be hand-to-mouth consumers and low-skilled workers that complement the existing workforce. We build these features into a model with capital, household heterogeneity and population growth to study the inflationary effects of this episode. Contrary to the popular view, we find little effect on inflation, as the increase in supply was largely offset by an increase in demand. |
| Keywords: | immigration; population growth; inflation; skills; hand-to-mouth |
| JEL: | E21 E22 E31 F22 J11 J15 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:98919 |
| By: | Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This paper is about fiscal consolidation measures (i.e. tax hikes and government spending cuts motivated by a desire to reduce the fiscal deficit and public debt) in euro area (EA) countries. The focus is on analysing the growth effects of fiscal adjustments as well as their implications for debt sustainability assessments. I discuss the size and composition of fiscal consolidation by distinguishing three periods the run-up to the EA, when governments faced the Maastricht criteria for joining the monetary union (1992-1998); before and during the recession triggered by the global financial crisis (1999-2009); and the euro crisis (with a specific focus on the 2011-2013 period). The empirical evidence on the growth effects of fiscal consolidation shows that while fiscal adjustments are contractionary, the negative growth effects were particularly strong and persistent during the euro crisis. With regard to the austerity outlook, I show that, beginning in 2025, EA countries are set to implement fiscal consolidations over multiple years so as to meet reformed EU fiscal rules. The adjustment requirements for some member countries are large in historical comparison. The paper argues that the framework for debt sustainability analysis at the heart of the reformed EU fiscal rules downplays the domestic growth impacts of fiscal adjustments and ignores cross-country spill-overs that magnify domestic growth effects. In all likelihood, the reformed framework underestimates the negative growth effects of fiscal consolidation. I conclude that implementing the multi-year fiscal adjustments required to meet EU fiscal rules may not reduce public debt ratios across the EA’s member countries, as the European Commission expects, and that the economic and political implications of austerity may complicate the governance of a fragile EA. |
| Keywords: | Fiscal policy, fiscal consolidation, fiscal multiplier, growth, public debt, euro area |
| JEL: | H30 H63 O47 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:253 |
| By: | Baganzi, Samuel; Romel, Mostafa |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302531 |
| By: | Lisa Balzarin (Dept. of Management, University of Venice) |
| Abstract: | This working paper is based on a qualitative study that aims at investigating knowledge boundaries in organizations. Through the observation of how designers craft the interaction with nonexperts of design, I discuss the dynamics that knowledge boundaries trigger. |
| Keywords: | knowledge boundaries, design, professional identity |
| JEL: | M10 |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:vnm:wpdman:207 |
| By: | Nie, Zhuoyuan |
| Abstract: | After the Kuomintang(KMT) retreated to Taiwan in 1949, they established an authoritarian regime and instituted martial law to maintain the minority mainlanders’ governance over the majority Taiwanese. This oppression led to the Kaohsiung Incident in 1979, a moment in which the Tangwai(democratic promoters outside KMT) leaders clashed with the KMT over the future of democracy. In the ensuing military trials, the KMT and the Tangwai performed as victims to curry international support. The international media recognized the KMT’s efforts to initiate moderate reforms in Taiwan and the Tangwai’s commitment to achieving democracy and human rights. Thus, the KMT and the Tangwai both achieved some success. More importantly, their clashes resulted in democratization as the two sides eventually reached compromises to reform Taiwan, marking the most peaceful process in the Third Wave of Democratization. |
| Date: | 2024–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:rqfhy |
| By: | Tiedemann, Jurek; Werner, Dirk |
| Abstract: | Das neue Ausbildungsjahr steht in den Startlöchern. In den vergangenen Jahren nahm die Zahl junger Menschen ohne Berufsabschluss zu; viele steigen direkt als An- und Ungelernte in den Arbeitsmarkt ein. Eine Ausbildung anzustreben, ist jedoch auch aus finanziellen Aspekten lohnend, vor allem wenn die gesamte Lebensspanne betrachtet wird. Zudem verdienen Beschäftigte in ausgewählten Fachkraftberufen überdurchschnittlich gut. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkkur:302794 |
| By: | Putra, Diva Haqina |
| Abstract: | Abstrak Indonesia memiliki potensi besar dalam rantai nilai global (Global Value Chain/GVC), terutama setelah bergabung dengan perjanjian CPTPP pada 2018. Peningkatan partisipasi Indonesia dalam GVC terlihat dari pertumbuhan ekspor dan investasi asing langsung (FDI). Dengan terlibatnya Indonesia dalam GVC, terdapat peningkatan produktivitas, kualitas tenaga kerja, dan peluang investasi, terutama di sektor manufaktur dan produk medis selama pandemi COVID-19. Namun, tantangan seperti rendahnya kualitas sumber daya manusia dan infrastruktur masih menjadi hambatan. Untuk memaksimalkan manfaat dari GVC, pemerintah harus mendorong kebijakan yang berfokus pada peningkatan kualitas tenaga kerja melalui pendidikan dan pelatihan, peningkatan infrastruktur, dan strategi research and development. GVC memberikan peluang untuk meningkatkan daya saing Indonesia di pasar global, terutama melalui transfer teknologi dan pengetahuan. Partisipasi yang lebih besar dalam GVC diharapkan dapat meningkatkan kesejahteraan ekonomi dan mengurangi kemiskinan di Indonesia. Kata Kunci: Global Value Chain, partisipasi, investasi asing, produktivitas, tenaga kerja, transfer teknologi. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:vpc5m |
| By: | Bruckmeier, Kerstin (Institute for Employment Research (IAB), Nuremberg, Germany); Lehnert, Claudia (Institute for Employment Research (IAB), Nuremberg, Germany); Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg, Germany ; FAU); Wolff, Joachim (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "Active labor market policy - provided it is effective - is an investment in the employment opportunities of people affected or threatened by unemployment. Particularly in the context of basic income support, it can also achieve social policy objectives, such as enabling people who are very distant from the labor market to access the labor market at all. The aim of this article is to assess the potential of cost-benefit analyses of active labor market policy. It also discusses the informative value of such analyses, which is limited for various reasons. Numerous studies are available on the effects of active labor market policy on the labor market opportunities of those supported. At the individual level, the instruments of labor market policy generally prove to be efficient. However, not every measure that is effective must also be cost-effective (from a simplified fiscal perspective). When resources are scarce, decision-makers in politics and administration are therefore very interested in cost-benefit analyses of active labor market policy. In practice, however, cost-benefit analyses of active labor market policy are subject to various limitations. The costs and benefits of labor market policy instruments can arise at different levels and from different perspectives. The fiscal cost-benefit analysis evaluates the costs and benefits of labour market policy. There are already various methodological challenges when estimating direct fiscal effects. In addition to direct fiscal components, there may also be macro and welfare effects of employment promotion, some of which may extend far beyond the labor market. From the perspective of society as a whole, social cost-benefit analysis focuses on the welfare of individuals as a whole, measured in units of benefit. While estimates of program effectiveness are comparatively easy to interpret, the situation is different for cost-benefit analyses. There are different levels at which cost-benefit analyses can start. For macroeconomic analyses, it is generally almost impossible to estimate all the necessary variables. In the case of the predominant direct fiscal cost-benefit analyses from the perspective of the state, on the other hand, there are numerous limitations that must be taken into account when interpreting the results. Due to these limitations and assumptions, it is extremely simplistic and can also be misleading to summarize the net benefit of a measure in a single figure. This is because the costs and benefits of active labor market policy cannot be fully recorded and therefore cannot be precisely quantified. The authors of this article therefore advocate quantitative and qualitative assessments and classifications instead of traditional fiscal cost-benefit analyses. Where information is available, these should discuss costs and benefits, but also take into account non-monetary cost and benefit components and address other aspects (such as target groups and funding objectives). The latter are decisive in determining whether a measure is appropriate. The classification also includes information on the degree of uncertainty, which reveals the relevant aspects for which there is no evidence and the extent to which statements are based on (possibly strong) assumptions." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| Date: | 2024–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabfob:202421 |
| By: | Javier Cembrano; Max Klimm; Arturo Merino |
| Abstract: | Impartial selection problems are concerned with the selection of one or more agents from a set based on mutual nominations from within the set. To avoid strategic nominations of the agents, the axiom of impartiality requires that the selection of each agent is independent of the nominations cast by that agent. This paper initiates the study of impartial selection problems where the nominations are weighted and the set of agents that can be selected is restricted by a combinatorial constraint. We call a selection mechanism $\alpha$-optimal if, for every instance, the ratio between the total sum of weighted nominations of the selected set and that of the best feasible set of agents is at least $\alpha$. We show that a natural extension of a mechanism studied for the selection of a single agent remains impartial and $\frac{1}{4}$-optimal for general independence systems, and we generalize upper bounds from the selection of multiple agents by parameterizing them by the girth of the independence system. We then focus on independence systems defined by knapsack and matroid constraints, giving impartial mechanisms that exploit a greedy order of the agents and achieve approximation ratios of $\frac{1}{3}$ and $\frac{1}{2}$, respectively, when agents cast a single nomination. For graphic matroids, we further devise an impartial and $\frac{1}{3}$-optimal mechanism for an arbitrary number of unweighted nominations. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.20477 |
| By: | Nanna Fukushima; Stephanie von Hinke; Emil N. S{\o}rensen |
| Abstract: | This paper investigates the effects of the staggered roll-out of a pollution reduction programme introduced in the UK in the 1950s. The policy allowed local authorities to introduce so-called Smoke Control Areas (SCAs) which banned smoke emissions. We start by digitizing historical pollution data to show that the policy led to an immediate reduction in black smoke concentrations. We then merge data on the exact location, boundary and month of introduction of SCAs to individual-level outcomes in older age using individuals' year-month and location of birth. We show that exposure to the programme increased individuals' birth weights as well as height in adulthood. We find no impact on their years of education or fluid intelligence. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.11839 |
| By: | Raquel Carrasco |
| Abstract: | Esta nota analiza la percepción creciente de la inmigración como principal preocupación en España, a raíz de los datos del CIS de septiembre de 2024, y contrasta dicha preocupación con la evidencia empírica disponible. A pesar del aumento en la visibilidad mediática y el debate público, el análisis sugiere que muchas de las preocupaciones sobre el impacto de la inmigración en el empleo, los salarios y los servicios públicos están influenciadas por percepciones erróneas y desinformación. Se explora el caso español en un contexto europeo y se aportan datos que muestran que, si bien la inmigración ha aumentado significativamente en las últimas décadas, sus efectos reales en el mercado laboral y otros aspectos sociales son menos alarmantes de lo que a menudo se percibe. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdafen:2024-26 |
| By: | Campos, Rodger (Departamento de Economia, Universidade de São Paulo) |
| Abstract: | Urban planning regulates cultural and sports mega-projects in cities and requires detailed planification for their surroundings. However, regulation is not enough to mitigate negative externalities or maximize positive ones arising from these projects. Using hedonic prices approach and difference-in-difference method, I investigate the impact of net effect of externalities on housing price surrounding sport stadium following its inauguration. The estimates suggest apartment prices decreasing by 8% and 45%, depending on the econometric specification used and on distance from source of the externalities. These findings contribute to the literature on the impact of mega-projects on housing prices literature and inform discussion about urban planning and regulation. |
| Keywords: | Housing Price; Urban planning |
| JEL: | R10 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:2024_011 |
| By: | Amit Garg; Kruti Upadhyay; Sanjay Kumar Jain |
| Abstract: | This study is an attempt to compare and contrast the existing sustainability-related frameworks – Sustainable Finance Disclosure Regulations (SFDR) introduced by the European Union, Business responsibility and sustainability reporting (BRSR) introduced by the Securities and Exchange Board of India (SEBI) and the International Finance Corporation Performance Standards (IFC PS) developed by the International Finance Corporation. The content analysis method has been employed to gain an in-depth understanding of the indicators included in these frameworks. Our key findings suggest that SFDR is the most comprehensive of the three frameworks considered. The BRSR framework stops at the disclosures related to the business itself. However, the IFC PS is the most adaptable as compared to the other two frameworks considered for this study. |
| Date: | 2024–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:iim:iimawp:14717 |
| By: | Pierre Jacquemot (Fondation Jean Jaurès) |
| Abstract: | Africa faces depletion of its marine fisheries resources. The role of the fisheries sector in feeding the African continent is considerable: 22% of available animal protein comes from marine and freshwater products, and more than 50% in some African countries, particularly in North and West Africa. Fisheries and related activities not only provide food, but also jobs for 12 million people, and generate income for governments and communities alike. But the outlook is pessimistic. Overfishing, illegal, unreported and unregulated fishing, and the poorly controlled exploitation of fish stocks by export-oriented meal and oil industries are leaving heavy consequences in their wake. How can we reverse these trends? By adopting a sovereign and sustainable fisheries policy that addresses two main concerns: 1/ respecting a level of catches at sea that is compatible with the reproductive needs of fish stocks; 2/ imposing sufficient landings for processing to ensure the best possible local and regional food supply. |
| Abstract: | L'Afrique face à l'épuisement de ses ressources de la pêche maritime. Le rôle du secteur halieutique dans l'alimentation du continent africain est considérable : 22 % des protéines animales disponibles viennent des produits de la mer et des eaux douces et plus de 50 % dans certains pays africains, en particulier en Afrique du Nord et de l'Ouest. Les pêches et leurs activités connexes fournissent non seulement de la nourriture, mais aussi des emplois à 12 millions de personnes, et génèrent des revenus pour les États comme pour les communautés. Mais les perspectives sont pessimistes. La surpêche, la pêche illégale, non déclarée et non réglementée et l'exploitation mal contrôlée des stocks de poissons par des industries de farine et d'huile tournées vers l'exportation laissent de lourdes conséquences dans leur sillage. Comment opérer un retournement de ces tendances ? En adoptant une politique souveraine et durable de la pêche répondant à deux préoccupations principales : 1/ respecter un niveau des captures en mer compatible avec les besoins de reproduction du potentiel halieutique ; 2/ imposer des débarquements à terre destinés à la transformation suffisants pour assurer la meilleure couverture alimentaire locale et régionale. |
| Keywords: | Afrique, Pêche, Ressources maritime, Accords de pêche |
| Date: | 2024–09–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04703863 |
| By: | Stephen Gibbons; Sandra McNally; Piero Montebruno |
| Abstract: | A high level of school absence has persisted across many countries since the COVID-19 pandemic. We use English data to investigate whether a student's absence during the pandemic had a causal impact on school attendance and academic progress in future years, using variation in local regulations during the pandemic (not aimed at schools). We find that more stringent regulations caused higher rates of school absence at that time, leading to lower attendance and rates of achievement in subsequent years. Our evidence suggests that the persistent effect is caused by changes in parents' and pupils' attitudes to attendance and not because of rules forcing students to stay at home when they had been in contact with others who had COVID-19. The effects of policy restrictions on contemporaneous and persistent absences was stronger for lower socio-economic groups. |
| Keywords: | student absence, COVID-19 pandemic |
| Date: | 2024–09–06 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepsps:47 |
| By: | Yang Sun; Wei Zhao; Junjie Zhou |
| Abstract: | We study dynamic network formation from a centralized perspective. In each period, the social planner builds a single link to connect previously unlinked pairs. The social planner is forward-looking, with instantaneous utility monotonic in the aggregate number of walks of various lengths. We show that, forming a nested split graph at each period is optimal, regardless of the discount function. When the social planner is sufficiently myopic, it is optimal to form a quasi-complete graph at each period, which is unique up to permutation. This finding provides a micro-foundation for the quasi-complete graph, as it is formed under a greedy policy. We also investigate the robustness of these findings under non-linear best response functions and weighted networks. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.14136 |
| By: | International Monetary Fund |
| Abstract: | Guinea-Bissau continues to face very challenging domestic and international environments. The terms of trade shocks continue, while tightening of regional financial conditions have been shooting up borrowing costs. Since the political crisis in December 2023, underlying social tension has been high. The next legislative election will be held on November 24, 2024. Despite these challenges, the authorities have maintained the political and economic stability. The cashew export campaign has been progressing smoothly. Growth is on course to recover, but risks to the outlook remain tilted to the downside. |
| Date: | 2024–09–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2024/295 |
| By: | Yan-Hong Yang; Ying-Hui Shao; Wei-Xing Zhou |
| Abstract: | This study examines the quantile connectedness among grain futures markets in BRICS and international markets, with a particular focus on the ongoing and escalating impacts of the Russia-Ukraine conflict. The findings reveal significant heterogeneity in spillover effects across different quantiles and market conditions. Specifically, the time-varying total connectedness index (TCI) consistently fluctuated around 95\% under both extreme bearish and bullish market conditions, markedly higher than in normal market conditions. Moreover, across all quantile levels, the TCI was higher during the pre-outbreak period than in the post-outbreak period. This systemic risk has notably decreased following the onset of the Russia-Ukraine conflict and the subsequent changes to the Black Sea Grain Initiative. Apart from rice, U.S. grain futures maintained a dominant position as benchmarks for international grain prices, exerting substantial influence over the grain futures markets in BRICS throughout most of the period. Finally, the study highlights that the influence of grain type and regional proximity strengthens pairwise connectedness among futures markets, with short-term spillovers being dominant and the spillover effect generally symmetric across quantiles. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.19307 |