The Unassuming Economist

A new IMF working paper investigates the relationship between economic growth and job creation in developing economies with a focus on low and lower middle-income countries along two dimensions: growth patterns and short-run correlations. Analysis on growth patterns shows that regime changes are quite common in both economic growth and employment growth, yet they are not synchronized with each other. Okun’s Law—the short-run relationship between output and labor market—holds in half of the countries in our sample and shows considerable cross-country heterogeneity.

On cross-country:

• 8th Global Housing Finance Conference (May 30-June 01, 2018) – World Bank
• How Cities Are Tightening the Leash on Airbnb – Citylab
• Housing policy and marriage: evidence from Egypt, Jordan and Tunisia – Economic Research Forum

On the US:

• Implications of US Tax Policy for House Prices, Rents, and Homeownership – American Economic Review
• America’s Republicans take aim at mortgage subsidies – Economist
• How Many Hours Americans Need to Work to Pay Their Mortgage – Visual Capitalist
• Labor Market Improvement and the Use of Subsidized Housing Programs – Federal Reserve Bank of Kansas City
• Stuck in Subprime? Examining the Barriers to Refinancing Mortgage Debt – Federal Reserve Bank of Philadelphia
• Home Equity Wealth at New High – HousingViews
• Low-Income Housing Tax Credit: Costly, Complex, and Corruption-Prone – Cato Institute
• Bank Think Mortgage deduction helps housing lobby, but not homeowners – American Banker
• New research says it’s better to buy than rent—and it has nothing to do with money – Quartz

On other countries:

• [Australia] A rare dose of honesty in the housing affordability debate – MacroBusiness
• [Canada] Immigration, Capital Flows, and Housing Prices – British Columbia
• [Canada] Vancouver Limits Airbnb, in an Effort to Combat Its Housing Crisis – New York Times
• [Germany] Ticking time-bomb lies under Berlin’s property market – Financial Times
• [Germany] Spreading housing shortage hits over 850,000 people in Germany – Reuters
• [India] Home Price Rises Slow in India Thanks to Modi’s Cash Ban – Bloomberg
• [Ireland] Irish house prices: Déjà vu all over again? – Economic & Social Research Institute
• [Netherlands] Amsterdam returns Dutch house prices to 2008 highs – Financial Times
• [Sweden] UPDATE 3-Sweden’s FSA proposes tighter mortgage rules as housing market slows – Reuters
• [Sweden] Sweden’s big banks call an end to decades-long housing boom – Financial Times
• [Sweden] The Shock of Sweden’s Housing Market is Hitting the Country’s Currency – Bloomberg
• [United Kingdom] However you analyse it, housing in Britain is a mess – Financial Times
• [United Kingdom] Solving UK housing crisis requires more than new homes – Financial Times

Photo by Aliis Sinisalu

From a new IMF working paper:

“We investigate the link between gender inequality in financial inclusion and income inequality, with three contributions to the recent literature. First, using a micro-dataset covering 146,000 individuals in over 140 countries, we construct novel, synthetic indices of the intensity of financial inclusion at the individual and country level. Second, we derive the distribution of individual financial access “scores” across countries to document a “Kuznets”-curve in financial inclusion. Third, cross-country regressions confirm that our measure of inequality in financial access is significantly related to income inequality, above and beyond other factors previously highlighted in the literature.”

From a new IMF working paper:

“Data show that middle-income households have continued to move down, and less so up, the income distribution in the United States since the 1970s—a phenomenon that is often referred to as the polarization or “hollowing out” of the income distribution. While the level of income polarization is generally lower in the richer states (defined as those with higher median household income levels), there have been wide variations in income polarization over time and across states. We develop two indices to measure income polarization, including a novel hollowing-out index. We also examine the proximate causes of income polarization, using an econometric analysis at both state and household levels. The results suggest that technology, measured by job routinization, and international trade, measured by job offshoring, can explain more than half of the rise in income polarization, with broadly equal contributions. Household characteristics, particularly better education, have had important countervailing effects on income polarization. Policies should continue promoting technological progress and international trade, but also recognize that these positive forces have important side-effects on the income distribution and household welfare that need to be understood and mitigated.”

Dani Rodrik says:

“That neoliberalism is a slippery, shifting concept, with no explicit lobby of defenders, does not mean that it is irrelevant or unreal. Who can deny that the world has experienced a decisive shift toward markets from the 1980s on? Or that center-left politicians—Democrats in the United States, Socialists and Social Democrats in Europe—enthusiastically adopted some of the central creeds of Thatcherism and Reaganism, such as deregulation, privatization, financial liberalization, and individual enterprise? Much of our contemporary policy discussion remains infused with norms and principles supposedly grounded in homo economicus.

But the looseness of the term neoliberalism also means that criticism of it often misses the mark. There is nothing wrong with markets, private entrepreneurship, or incentives—when deployed appropriately. Their creative use lies behind the most significant economic achievements of our time. As we heap scorn on neoliberalism, we risk throwing out some of neoliberalism’s useful ideas.

The real trouble is that mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions. A proper understanding of the economics that lies behind neoliberalism would allow us to identify—and to reject—ideology when it masquerades as economic science. Most importantly it would help us develop the institutional imagination we badly need to redesign capitalism for the twenty-first century.”

Here’s the rest of the article.