The Unassuming Economist

From a paper by Yurii Sholomytskyi:

“This paper examines the statistical properties of the IMF’s World Economic Outlook (WEO) projections over 1999–2023 for 29 economies. The optimism of WEO growth forecasts is well established; we confirm it and look behind it at two features of how the forecasts are built. First, the growth of the systemic economies (the United States and China) appears to be underutilized in the projections: forecasts embed less of the cross-country growth comovement present in the data, a gap we term forecast fragmentation that did not narrow over the sample. Second, the conditional growth–inflation link present in the historical data is weakly represented in the projections. These patterns suggest that structural models, in which such cross-country and real–nominal linkages can be verified through estimation, could be a useful complement to expert judgment, serving as a baseline check for medium-term anchors.”

From a paper by Mark Zandi, Cristian deRitis, Marisa DiNatale, Dante DeAntonio, Matt Colyar, Shandor Whitcher, Justin Begley, Ilir Hysa, and Gwen Semmens:

“Artificial intelligence stands to become one of the most consequential technologies in generations, if not in the history of humankind, with enormous implications for the economy. However, the specifics of how it will shape the future remain highly uncertain and are the subject of immense debate. Many technologists deeply involved in AI’s development believe it will massively increase productivity, resulting in significant net job loss and much higher unemployment. Conversely, most economists who look to the economic history of past general-purpose technologies tend to be more circumspect, expecting AI to lift productivity but also to diffuse slowly enough through the economy for the job market to adjust more gracefully. There may be bouts of higher unemployment, but any increase will be modest, as jobs lost to AI will be largely offset by new jobs supported by the income and wealth it creates.”

From a paper by Marina da Silva Sanches:

“This study examines the effects of fiscal consolidation on income inequality in OECD countries from 1978 to 2014, using narrative data. Employing local projections methodology and using a Gini decomposition interpretation, we estimate the impact of austerity episodes on disposable income, market income, wage, and functional inequalities. While the literature has primarily focused on the overall effect of fiscal consolidation on disposable income inequality, this paper examines how different dimensions of inequality respond to fiscal consolidation episodes. We find an increase in wage inequality in the short and medium runs, and a decrease in labor’s share of income in the short run. The results also underscore the importance of social protection in the short term. Additionally, we observe a significant increase in earnings inequality, when including the lower end of the distribution. Finally, spending-based austerity measures are, in general, more relevant than tax-based ones. Results are robust to several tests.”

From a paper by Martin T. Bohl, Niklas Humann, and Pierre L. Siklos:

“This survey synthesizes evidence on the bidirectional links between commodity markets and monetary policy. On the
commodities-to-policy side, we review how shocks to energy, food, and metals pass through to inflation, inflation expectations,
economic activity, and financial stability in state-dependent ways that vary by shock type, exposure, and policy regime. We
complement the literature with an analysis of central-bank speeches, showing how officials classify commodity shocks and how
these framings map into policy stances. On the policy-to-commodities side, we organize evidence on the transmission of monetary
policy to commodity markets via financial, real-economy, and expectations channels, highlighting heterogeneity across policy
instruments, commodities, and central banks. We emphasize how financialization tightens cross-asset linkages, raises leverage
and margin sensitivity, and amplifies discount-rate and risk-taking mechanisms. Overall, commodities are best treated as policy sensitive state variables, not exogenous disturbances, with implications for policy design, central bank communication, and
international monetary spillovers.”

From a paper by Marina da Silva Sanches:

“This study examines the effects of fiscal consolidation on income inequality in OECD countries from 1978 to 2014, using narrative data. Employing local projections methodology and using a Gini decomposition interpretation, we estimate the impact of austerity episodes on disposable income, market income, wage, and functional inequalities. While the literature has primarily focused on the overall effect of fiscal consolidation on disposable income inequality, this paper examines how different dimensions of inequality respond to fiscal consolidation episodes. We find an increase in wage inequality in the short and medium runs, and a decrease in labor’s share of income in the short run. The results also underscore the importance of social protection in the short term. Additionally, we observe a significant increase in earnings inequality, when including the lower end of the distribution. Finally, spending-based austerity measures are, in general, more relevant than tax-based ones. Results are robust to several tests.”