The Unassuming Economist

From a VoxEU post by Karan Bhasin and Prakash Loungani:

“Many governments have to mitigate concerns about fiscal sustainability, without triggering near-term output losses or reversing progress on containing poverty or inequality. This column assesses how the design of fiscal consolidation packages shapes their impact on aggregate and distributional outcomes. It finds that the careful design of fiscal consolidation (making use of available monetary space or choosing tax-based instruments) can lower the output and unemployment costs of austerity and mitigate the adverse impacts on poverty and inequality. The results stress the importance of monetary-fiscal coordination for maintaining fiscal buffers, while limiting setbacks to development goals.”

From a paper by Galina Hale, Michael Halling, Nora Alice. Paulus, and Han H.G. Pham:

“Limiting global warming to 1.5 degrees requires that cumulative carbon dioxide emissions remain
within a finite remaining carbon budget. How this budget is allocated across countries raises
questions of fairness and development. This paper evaluates whether equity-based carbon
allocations are compatible with sustained economic growth in emerging and developing economies.
We compute country-level fair shares of the remaining carbon budget under the equal-cumulativeper-
capita (ECPC) principle. Using data for 162 countries between 1950 and 2023, we then estimate
the historical relationship between income and per-capita CO2 emissions across income groups and
use these elasticities to simulate cumulative emissions until 2050. Our results show that ECPC
implies strongly negative remaining carbon budgets for most advanced economies, while lowerincome
countries retain positive but constrained allocations. Under historically observed income–
emissions elasticities, many developing countries would exceed their fair shares when converging
toward advanced-economy income levels. At the aggregate level, unused allocations offset only
17% of the combined carbon budget shortfall implied by countries exceeding their allocation and
the negative fair shares arising from historical responsibilities. In a scenario in which we assume
that the technology of advanced economies is transferred to all countries, the carbon budget
coverage increases to 38%.”

From a VoxEU post by Francesco Bianchi, Marco Del Negro, Giorgio Primiceri, and Frank Schorfheide:

“Chris Sims, who passed away in March 2026, reshaped modern macroeconomics by insisting that theory and data speak together. A pioneer of vector autoregressions, Bayesian methods, and policy relevant modelling, he transformed how scholars and practitioners analyse economic dynamics and inform central bank decisions. His influence spanned econometrics and macroeconomics, from DSGE models to rational inattention. Beyond his intellectual legacy, Sims was a demanding yet deeply supportive mentor whose sharp insights pushed generations of students to produce stronger work. This personal reflection highlights both his groundbreaking contributions and the lasting imprint he left on the field and on those he taught.”

From a paper by Dániel Szilágyi and Tímea Kocsis:

“The paper examines the relationship between economic growth and greenhouse gas (GHG) emissions in Hungary from 1995 to 2022 using the Tapio decoupling model and the Mann-Kendall trend test. The Tapio decoupling elasticity coefficient (DI) was used to assess the relation between economic activity and environmental impact. The Mann-Kendall trend test was used to detect monotonic trends in Gross Value Added (GVA) and emissions, revealing their statistical significance and direction of change. The results revealed varying decoupling trends across various sectors. Strong decoupling occurred in sectors like B, C, D, and E, where emissions decreased alongside economic growth, reflecting technological advancements and structural shifts. Weak decoupling was observed in sectors such as A, F, G, and Q, where emissions grew more slowly than GVA, indicating progress but falling short of full decoupling. Conversely, sector T exhibited expansive negative decoupling, revealing unsustainable growth. At the national level, data from recent years have shown a trend toward absolute decoupling, in which GVA grew as emissions stabilized or declined. The Mann-Kendall test confirmed consistent economic growth across all sectors but diverse emission trends. Sectors like B and E achieved significant reductions in emissions, while others, including A and T, recorded increases. Some sectors, like I and M, displayed no clear trends, influenced by external or sector-specific factors.”

From a paper by J. Mikael Malmaeus, Linn Andreou Brolin, Pernilla Hagbert, Åsa Nyblom, Mirjam Särnbratt, Johan Rootzén:

“Current strategies to reduce the climate impact of production and consumption are insufficient to meet the pressing targets of the Paris Agreement. To expand visions of the possible ‘solution space’ in climate transitions, we explore a framework based on two dichotomies centred around the role of labour and the composition of economic output. From these dichotomies we sketch out four pathways for a future low-carbon society: Green growth, Care economy, Degrowth and Green accelerationism. Using a stylized representation of the Swedish economy as a case, we explore possible changes in the economic structure following the different pathways with respect to labour inputs, production volumes, GHG emissions and resource use in different sectors. The pathways suggest different strategies and overarching logics for decarbonisation. The results indicate that the technological emphasis in prevalent green growth strategies is not sufficient to stay within a carbon budget in line with the Paris agreement. Depending on the pathway taken, the upholding of social welfare, reassessing the role of labour and shifting production and consumption patterns become key challenges. Overall, key insights indicate that swift, radical transformation can advance climate goal attainment but also demands major societal reorganisation. The results also illustrate how the different transformation pathways entail distinct trade-offs, each associated with its own set of advantages and challenges.”