The Unassuming Economist

From reddytoread:

“When I first encountered the ideas central to the winners of this year’s three Nobel Prize in Economics[2] around two and a half decades ago I was startled. The excessive economy of their framework for understanding a complex global reality combined with a set of premises that looked starkly ideological. Despite the time that has passed, the reams that have been written, and the imprimatur these ideas have now received, these charges remain pertinent.

The point of view of the authors remains narrowly focused – even fixated – on property rights, seeing them as defining inclusive economic institutions[3] and as underpinning inclusive political institutions[4], the coupled concepts at the center of their understanding of Why Nations Fail, the sizable volume in which two of the authors elaborated and extended their view.[5] It is understandable that this perspective enjoys a resonance among property holders and enthusiasts, both in the economic discipline and more broadly in society, as it is reflection of a common sense that prevails in such quarters, but it provides an inadequate guide to understanding either democracy or development. This is because property rights play more diverse and ambivalent roles in both phenomena than they acknowledge. Their view is ahistorical. It misses essential aspects of the colonial experience (such as the impact of ethnic and racial prejudices and solidarities based on the global color line) and its resulting legacies. It also misunderstands the sources of success of rising nations in the contemporary world, such as the role of developmental states.

I had been interested in political economy, and in particular the role of institutions, as a way of understanding the economics of development – and the world at large – more deeply, throughout my student years.  As did many others, I had drunk deeply at the well of available knowledge, ingesting tracts on social conflict as it affects inflation and other economic outcomes, about how states are captured by particular interests, the economic causes and consequences of colonialism and imperialism, the role of norms, customs and conflict in shaping the use of shared resources, the political and social underpinnings of economic innovation, and many other topics. The enormous range of writings on institutions and economic life was by economic and social historians, political scientists, sociologists, anthropologists, legal scholars and some economists too, especially those writing outside of the mainstream (running a gamut from the leftist French “regulation school” to the libertarian Virginia school of political economy). It was not unwelcome that well-positioned mainstream economists, sitting at the institutional apex of the discipline, would be interested in these topics, but what was one to make of their reductionistic approach? Many of the writings I had digested did have the unhelpful view that ‘It is complicated’ and a simple framework that cut through the fog would have its appeal – but could such a perspective in fact be offered while respecting facts about the world?”

Continue reading here.

On cross-country:

• Housing & renting difficulties: what is the EU’s situation? – Eurostat

Working papers and conferences:

• Population, Prices, and Amenities. To make housing more affordable, we need to understand what makes some places hot, others not. – Philadelphia Fed
• The Measurement of Spatial Competition: Evidence from the Real Estate Market – CESifo
• Mortgage Lock-in, Lifecycle Migration, and the Welfare Effects of Housing Market Liquidity – Atlanta Fed
• Do Housing Investors Pass-through Changes in Their Interest Costs to Rents? – Reserve Bank of Australia
•  30+ year mortgages – are these the new norm? What does this mean for financial stability? – Bank of England
• Impact of Housing Demand Shocks on Home Appraisal Precision: Insights From The Shift To Work From Home During The COVID-19 Pandemic – SSRN
• Housing Prices and Marriage Delay: Evidence from China – SSRN  

On the US—developments on house prices, rent, permits and mortgage:    

• Home Price Growth Slows but Remains Robust. Latest FNM-HPI Reading Showed Year-over-Year Increase of 5.9 Percent in Q3 2024 – Fannie Mae
• House Prices to Income. New Data for 2023 National Average Wage Index Released This Morning – Calculated Risk
• Could Legalizing Mid-Rise Single-Stair Housing Expand and Improve Housing Supply? – Harvard Joint Center for Housing Studies
• 2023 Home Improvement Loan Applications: A State- and County-Level Analysis – NAHB
• Part 1: Current State of the Housing Market; Overview for mid-October 2024 – Calculated Risk
• 2nd Look at Local Housing Markets in September – Calculated Risk
• Why some renters aren’t in a hurry to buy homes – Axios
• The GSE Experiment Has Failed–Congress Should End It. The federal government’s dominance in the housing finance market—both before and throughout the GSE conservatorships—has stifled private competition and worsened Americans’ financial condition, but it has done virtually nothing to increase the homeownership rate. – Cato
• High Home Prices Force Builders to Offer Mortgage Buydowns—and More. House hunters might see further price reductions – Wall Street Journal
• The Weird Reason Rents Are Rising in the Midwest—but Falling Down South – Realtor.com
• Single-Family Permits Higher in August 2024 – NAHB 
• Declines for Residential Construction Loans – NAHB 
• U.S. Rents Declining, but Not in the Midwest – Wall Street Journal
• Home Seller Profit Margins Drop Slightly Across U.S. as Housing Market Slows During Third Quarter – ATTOM  

On the US—other developments:    

• How would Harris build 3 million new housing units? – New York Times
• Two presidential candidates agree on something: the source of the housing crisis. The battle over investment underscores a broader political dynamic at play, with both parties casting around for solutions to the high cost of housing. – Politico
• Trump, Republicans link immigrants to high US housing prices, researchers disagree – Reuters
• Trump Blames Immigrant Surge for Housing Crisis. Most Economists Disagree. The former president often implies that deportations will bring down housing costs. Reality is more complicated. – New York Times
• The Week in Review. Week of Oct 7 — Buyers brighten, inflation eases – Home Economics
• Why the South and West Can’t Seem To Crack the List of America’s Hottest Housing Markets – Realtor.com
• The Easiest Way To Make Homes More Affordable – Real Estate Decoded
• The Little-Known Factor Driving up Housing Costs: Dirty Money. Dirty money is a major but little-recognized contributor to our housing affordability crisis. – Politico
• Why America’s Housing Shortage Is So Hard to Fix – Bloomberg
• How Climate Disasters Are Making Mobile Homes a Huge Risk. Millions of Americans, many poor and vulnerable, live in mobile and manufactured homes. When catastrophe strikes, they’re often on their own. – New York Times 
• Hispanic homeowners narrow home value gap to smallest margin on record – Zillow
• Property Taxes by State – 2023 – NAHB
• 10 Major Housing Stories from the Latest ACS Data – Harvard Joint Center for Housing Studies
• How will first-time homebuyer assistance affect the housing markets? – Brookings
• Introducing the Atlanta Fed’s Home Ownership Affordability Monitor (HOAM) 2.0 – Atlanta Fed
• Builder Confidence Edges Higher Despite Affordability Headwinds – NAHB
• Low home turnover rate, charted – Axios

On China:

• China’s property crisis claims more victims: companies. Unsold homes are contributing to a balance-sheet recession – The Economist
• Chinese vice-premier urges more ‘white list’ lending to stabilise housing market. He Lifeng calls for efforts to help China beat property sector slump, which has been a stumbling block to economic recovery – South China Morning Post
• Key Takeaways as China Outlines Plans to Revive Economy, End Housing Slump. China will act to help local governments address “hidden debt”. Finance Minister says China can borrow more, increase deficit – Bloomberg
• Key Takeaways from China’s Housing Ministry Briefing – Bloomberg
• China to boost lending for stalled property projects to $560bn. Beijing is trying to restore confidence in economy amid prolonged real estate slowdown – FT
• China goes all out to stabilise vital property sector: as it happened. Housing minister held a briefing along with officials from the central bank, Ministry of Finance and National Financial Regulatory Administration – South China Morning Post
• China to almost double support for unfinished housing projects – AFP
• China boosts funds for housing projects to support embattled sector – Reuters  

On other countries:  

• [Argentina] Argentina Ended Rent Control. Guess What Happened Next. A free market for housing is one that benefits both renters and landlords. – Reason
• [Australia] Australia’s Residential Property Market Analysis 2024 – Global Property Guide
• [Hong Kong] Hong Kong Relaxes Mortgage Rules to Bolster Property Market. Loan-to-value ratio for all residential properties set at 70%. Interest rate cuts have not led to property market rebound – Bloomberg
• [Hong Kong]Hong Kong leader announces measures to address housing crisis in annual policy address – CNBC
• [Hungary]Hungary seeks housing boost from pensions ahead of 2026 election – Reuters
• [Hungary]Hungary Wants Banks to ‘Voluntarily’ Agree to 5% Mortgage Cap – Bloomberg
• [India]India’s Residential Property Market Analysis 2024 – Global Property Guide
• [Italy] Italy’s Residential Property Market Analysis 2024 – Global Property Guide
• [Singapore] Singapore Home Sales See Minor Recovery After US Rate Cuts. Developers sold 401 private units in city-state in September. The number of apartments transacted was highest since July – Bloomberg
• [South Korea] Cooler Home Prices in Seoul Support Bank of Korea’s Policy Pivot. September home price data show growth momentum snapped. BOK ties pace of easing to household debt driven by properties – Bloomberg
• [Spain] Spain’s Residential Property Market Analysis 2024 – Global Property Guide
• [United Kingdom] Cheapest UK mortgage deals hit by rise in government borrowing costs. Barclays pulls best-priced home loan rate with other lenders set to follow suit – FT
• [United Kingdom] Low mortgage rates are no panacea for first-time buyers. With the Bank of England’s lending criteria, they’re likely to achieve little – FT
• [United Kingdom] Can software help ease Britain’s housing crisis? Some tech utopians think so – The Economist

From The Conversation:

“Economists working on macroeconomic policy – things like taxes and spending, interest rates and border controls on flows of trade and money – often refer to a set of key relationships governments can influence. In the textbooks, each of those relationships is drawn as a curve in a graph.

First is the IS (“investment–saving”) curve. This says that if everything else stays the same, the Reserve Bank can increase economic output and employment by lowering the interest rate. Or it can cause a recession by raising the interest rate. (For simplicity’s sake, the curves here are depicted as straight lines.)

Second comes the Phillips Curve, which is usually drawn sloping upwards to suggest that if everything else stays the same, inflation will rise during economic booms and fall in recessions. In other words, the Reserve Bank or the government can apparently bring inflation down by causing a recession.”

Third comes the trade balance – the current account of the balance of payments (investment income and traded goods and services between New Zealand and the rest of the world).

If everything else stays the same here, as the exchange rate of the dollar falls, the current account strengthens by moving towards or expanding a surplus. If the exchange rate rises, the current account weakens: exports fall and imports increase.”

Continue reading here.

From a new World Bank report:

“We are facing a series of overlapping and interconnected crises that are impacting lives and livelihoods almost everywhere. The combined effects of slow economic growth, rising conflict and fragility, persistent inequality, and extreme weather-related events have sent shockwaves across the globe.

High-income economies are showing signs of resilience, but the outlook for low-income economies and fragile countries remains deeply troubling.

Just a decade ago, we had cause for more optimism. There was significant progress in sustainable development between 1990 and 2015, with more than a billion people lifted out of extreme poverty. This was a monumental achievement, driven primarily by strong economic growth in China and India, and it brought the wealthiest and least-well off economies closer in income levels.

Yet, what seemed like a clear path to complete poverty eradication has since faded. Our new report shows that global poverty rates have only now gone back down to pre-pandemic levels, with forecasts indicating a trajectory for the coming years that is dismal at best.

Almost half the world’s population—around 3.5 billion people—is living on less than $6.85 a day, the poverty line for upper-middle-income countries. At a more extreme level, almost 700 million people are living on less than $2.15 a day, the poverty line for low-income countries. Extreme poverty has become increasingly concentrated in Sub-Saharan Africa or places affected by conflict and fragility.”

Continue reading here.

From Nishtha Anushree at Swarajya:

“The Nobel Prize 2024 in Economic Sciences has been awarded to Daron Acemoglu, Simon Johnson and James A Robinson “for studies of how institutions are formed and affect prosperity.”

The Royal Swedish Academy of Sciences has chosen the awardees of the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for demonstrating the importance of societal institutions for a country’s prosperity.

The laureates’ model for explaining the circumstances under which political institutions are formed and changed has three components. The first is a conflict over how resources are allocated and who holds decision-making power in a society (the elite or the masses).

The second is that the masses sometimes have the opportunity to exercise power by mobilising and threatening the ruling elite; power in a society is thus more than the power to make decisions.

The third is the commitment problem, which means that the only alternative is for the elite to hand over decision-making power to the populace.

“The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power,” the laureates say.

The laureates have also developed an innovative theoretical framework that explains why some societies become stuck in a trap with what the laureates call extractive institutions, and why escaping from this trap is so difficult.

They have added a new dimension to previous explanations for the current differences in the wealth of countries around the globe. One of these relates to geography and climate.

Their insights regarding how institutions influence prosperity show that work to support democracy and inclusive institutions is an important way forward in the promotion of economic development.”