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on Macroeconomics |
| By: | Melissa van Rensburg (The Treasury) |
| Abstract: | Over the past few decades, there has been a persistent decline in the level of real interest rates, both in New Zealand and in many other advanced countries. This decline is thought to reflect a decline in the neutral level of the real interest rate. The neutral level of the real interest rate can be defined as the real interest rate level that would be consistent with an economy that is in equilibrium over the medium term. That is, all resources are fully utilised, inflation is stable at its target, and the output gap is closed. Whilst the neutral interest rate is not observable, and cannot be measured with much precision or certainty, it is a useful theoretical concept that can be helpful for analysing the appropriate setting of monetary and fiscal policies. Following a long period of decline, interest rates have increased in the post-COVID-19 environment, which has raised important questions about the outlook for the structural factors affecting the level of real neutral interest rates over the long term. The objective of this note is to better understand these structural drivers. This will help us to design robust macroeconomic frameworks to ensure the effectiveness of monetary and fiscal policies in stabilising economic fluctuations. This paper gives an overview of the literature on the drivers that have contributed to the decline in real neutral interest rates over recent decades. It considers whether the direction or magnitude of these factors are likely to change in the next few decades and possible scenarios are presented. |
| JEL: | E43 E52 E61 E62 |
| Date: | 2023–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztans:an23/05 |
| By: | GOLEBIOWSKA-TATAJ Daria |
| Abstract: | This policy paper assesses the means to enhance European competitiveness in alignment with core European values of fairness, sustainability, and strategic autonomy. It critically examines Ursula von der Leyen's Political Guidelines for the 2024–2029 European Commission and Mario Draghi's report, "The Future of European Competitiveness, " focusing on re-industrialisation, education, AI, and regional growth. The paper underscores the imperative of radical transformation to maintain Europe's socio-economic model in light of geopolitical shifts, advocating for sustainable industrial policies, transformational education systems, generative AI integration, and regional growth strategies. It proposes policy recommendations that include re-industrialisation with a focus on decarbonisation and sustainable jobs, fostering a resilient education system with lifelong learning, leveraging AI for innovation, and closing the innovation gap through strengthened regional ecosystems. The paper concludes that Europe must adapt to ensure competitiveness and influence in the future, guided by an ethos of change to preserve its values and prosperity. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc139560 |
| By: | Yichen Luo; Yebo Feng; Jiahua Xu; Paolo Tasca; Yang Liu |
| Abstract: | Cryptocurrency investment is inherently difficult due to its shorter history compared to traditional assets, the need to integrate vast amounts of data from various modalities, and the requirement for complex reasoning. While deep learning approaches have been applied to address these challenges, their black-box nature raises concerns about trust and explainability. Recently, large language models (LLMs) have shown promise in financial applications due to their ability to understand multi-modal data and generate explainable decisions. However, single LLM faces limitations in complex, comprehensive tasks such as asset investment. These limitations are even more pronounced in cryptocurrency investment, where LLMs have less domain-specific knowledge in their training corpora. To overcome these challenges, we propose an explainable, multi-modal, multi-agent framework for cryptocurrency investment. Our framework uses specialized agents that collaborate within and across teams to handle subtasks such as data analysis, literature integration, and investment decision-making for the top 30 cryptocurrencies by market capitalization. The expert training module fine-tunes agents using multi-modal historical data and professional investment literature, while the multi-agent investment module employs real-time data to make informed cryptocurrency investment decisions. Unique intrateam and interteam collaboration mechanisms enhance prediction accuracy by adjusting final predictions based on confidence levels within agent teams and facilitating information sharing between teams. Empirical evaluation using data from November 2023 to September 2024 demonstrates that our framework outperforms single-agent models and market benchmarks in classification, asset pricing, portfolio, and explainability performance. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.00826 |
| By: | Robert Minton; Casey B. Mulligan |
| Abstract: | Markets, likened to an invisible hand, often appear to contradict econometric assumptions that rule out spillovers of one person’s treatment on another’s outcomes. This paper provides a simple statistical framework highlighting that controls are indirectly affected by the treatment through the market. Further, the effect of the treatment on the treated reveals only part of the consequence for the treated of treating the entire market. When combined with economic theory, our framework leads to a new application of Marshall’s Laws of Derived Demand that relates econometric estimates of treatment effects in the marketplace to the substitution and scale effects of demand theory. We show how treatment-effect estimators can diverge – both in magnitude and direction – from the causal effects of treatment on the treated or counterfactual policies treating all market participants. The framework shows how the consequences of targeted treatments reveal the effects of marketwide treatments, and the role of market frictions in that inference. Examples from labor, public finance, economic geography, development, and the macro literature on the “missing intercept” are provided. |
| Keywords: | Treatment effects; Spillovers; Difference-in-differences |
| JEL: | D41 L11 C21 |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-96 |
| By: | Lahoti , Rahul (UNU-WIDER); Abraham , Rosa (Azim Premji University); Swaminathan, Hema (Asian Development Bank) |
| Abstract: | We investigate the impact of marriage and childbirth on women’s labor market participation in rural India. In the absence of panel data, we employ a novel approach using Life History Calendar data to analyze women’s labor market trajectories from age 15 onward. Our event study models reveal that marriage leads to a significant and sustained increase in women’s labor supply, particularly in informal agricultural work. This increase is more pronounced among women from poorer households and those with working mothers. Notably, childbirth does not negatively impact labor supply; this differs from findings in developed countries. We attribute these results to early marriage and motherhood, low levels of economic development, and prevalence of informal employment. Our research highlights the crucial role of socioeconomic context in shaping the impact of life events on women’s labor market outcomes in developing economies. |
| Keywords: | marriage; motherhood penalty; women’s labor force participation; event studies; life history calendar (LHC) |
| JEL: | J13 J16 J18 |
| Date: | 2024–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0757 |