The Unassuming Economist

A nice update by Timothy Taylor on declining labor mobility in the United States and the possible reasons, a topic I have written on as well.

“Elevated exposure to mortgage debt continues, and low interest rates could rekindle a credit-driven upswing in house prices (…) [the authorities should] stand ready to adopt new macroprudential measures if credit and house prices again turn up, with a focus on the build-to-let segment”, says IMF’s latest report on Switzerland.

The report also says that “House prices relative to income have grown significantly since the great recession, and while prices have recently stabilized, price to income ratios remain stretched. Average debt per borrower is very high given the relatively low rate of home ownership. A prompt response will be needed if greater competition in credit markets further bids down interest rates and spurs a resurgence of mortgage lending or an acceleration of house prices. The response should target the build-to-rent segment where activity is currently brisk and where larger risk weights and/or faster amortization relative to owner-occupied properties is appropriate to reflect the international tendency for higher default and loss rates on these loans. Greater recourse to legally-binding regulation in preference to banks’ self-regulation could ensure any needed changes are implemented in timely manner and that uniform standards apply to all mortgage providers”

A nice paper by Philip Cross on what the different measures of GDP tell us. HT: Dave Giles’ Blog.

Barry Ritholtz lists economic predictions about 2016 that didn’t come true. Read the list here.

A new IMF working paper is the first comprehensive empirical study of earnings, income, and consumption inequality in urban China from 1986 to 2009, using unique micro-level data from the Urban Household Survey (UHS). The paper documents a drastic increase in economic inequality for the sample period. The paper finds that consumption inequality closely tracks income inequality, both over time and over the life cycle. The paper believes that the main driver of this co-movement could be a dramatic increase in noninsurable idiosyncratic permanent income shocks after the early 1990s, associated with the economic transition in urban China.