The Unassuming Economist

From a paper by Patrick Honohan (Peterson Institute for International Economics):

“Should central banks take more account of ethical distributional and environmental concerns in the design and implementation of the wider monetary policy toolkit they have been using in the past decade? Although the scope to influence a range of objectives is more limited than is often supposed, and while it is vital to not derail monetary policy from its core purposes, central bank mandates justify paying more attention to such broad issues, especially if policy choices have a significant potential impact. Carefully managed steps in this direction could actually strengthen central bank independence while making some contribution to improving the effectiveness of public policy on these matters.”

From an new IMF working paper by Michal Andrle and Miroslav Plašil:

“This paper assesses house prices in 11 Canadian Census Metropolitan Areas (CMA) using the borrowing-capacity and the net-present-value approaches. The results indicate that by the end of 2018, house prices in most metropolitan areas are aligned with macroeconomic fundamentals. However, in Hamilton, Toronto, and Vancouver house prices have increased beyond the values implied by the fundamentals.”

On cross-country:

• Housing Finance in Africa Yearbook – Housing Finance in Africa
• Comparing the effects of homeownership on intergenerational income mobility in the US, Germany, and Australia – VOX
• Prime Global Cities Index-Q3 2019 – Knight Frank
• Brexit Among Reasons For Rising Real Estate Prices In France – NPR

On the US:

• First Look: 2020 Housing Forecasts – Calculated Risk
• Why It Costs So Much to Build Affordable Housing – New York Times
• Institutional Investors and the U.S. Housing Recovery – Federal Reserve Bank of Philadelphia
• Magnification of the ‘China Shock’ Through the U.S. Housing Market – NBER
• Effects of Mandatory Energy Efficiency Disclosure in Housing Markets – NBER
• San Francisco’s housing crisis needs political will – Financial Times
• The Privileged Few: How Exclusionary Zoning Amplifies the Advantaged and Blocks New Housing—and What We Can Do About It – Urban Affairs Review
• Home Purchase Sentiment Still Strong Despite Second Straight Decline – FannieMae
• Household Debt Continues to Climb in Third Quarter as Mortgage and Auto Loan Originations Grow – Federal Reserve Bank of New York
• The Carpenter Index – American Enterprise Institute

On other countries:

• [Canada] Canada’s housing market buzz is back as Toronto rebounds – Financial Times
• [Canada] Vancouver Real Estate Crackdown’s Next Step: A Big Watchdog – Bloomberg
• [Hong Kong] Hong Kong’s Gravity-Defying Property Market Can’t Walk on Air Forever – Wall Street Journal
• [Uruguay] Spillover Effects from New Housing Supply – IDEAS
• [United Kingdom] The Politics of Crisis: Deconstructing the Dominant Narratives of the Housing Crisis – Newcastle University

From Pathways for Prosperity Commission:

“Digital technologies are transforming the world, and nowhere are the stakes higher than in developing countries. With new digital technologies come opportunities for low- and middle-income countries to build new industries, deliver better services, improve markets, and, most importantly, enhance peoples’ lives. But the news is not all good. Digital technologies can also entrench exclusion, create new ways for the powerful to abuse the weak, and disrupt – or render obsolete – peoples’ livelihoods and jobs. The Pathways for Prosperity Commission has been on a two-year mission to investigate how countries can best navigate this technological disruption so that everyone benefits.

Developing countries are starting from a challenging position, often grappling with some combination of low human capital, ineffective institutions, and a difficult business environment. Developing countries are also rarely digitally ready: less than a quarter of people in low-income countries have ever used the internet. But this does not mean they should be paralysed by change, or that they must resign themselves to be passive observers of this digital revolution. Quite the opposite. Now is the time for countries to take control of their technological futures – as, indeed, many are already starting to do.

The technological revolution at hand is not simply about technology or ‘digital policy’ in isolation: this transition involves optimising social, political and economic conditions for inclusive growth in the digital age. Technology alone, no matter how innovative, will not guarantee success. Development will come from deploying technologies in a conducive environment, alongside profitable business models, and with the necessary protections in place. Not every country has an existing environment in which firms, individuals and service providers can take full advantage of new digital technologies. Creating this ecosystem is often a case of getting ‘analogue’ matters right in a digital age.

The use of digital technologies will not automatically lead to the inclusion of the poor and marginalised. Throughout our consultations and research, it has been clear that a large proportion of society is being left behind by technological change. Just as trickle-down growth has failed to deliver inclusive development, so too will trickle-down digitalisation. Civil society groups are right to be concerned about the dangers of digitalisation. When policymakers and private sector decision-makers do not consciously design for inclusiveness, they create a digital world that entrenches disadvantage, rendering inclusion an afterthought, and offering opportunities only to the well-of.”

Continue reading here.

From a VOX post by Jesper Lindé and Mathias Trabandt:

“The alleged breakdown of the Phillips curve has left monetary policy researchers and central bankers wondering if we need to develop completely new models for price and wage determination. This column argues that a relatively small alteration of the standard New Keynesian model, combined with using the nonlinear instead of the linearised solution, is sufficient to resolve the two puzzles – the ‘missing deflation’ during the recession and the ‘missing inflation’ during the recovery – underlying the supposed breakdown.

The Great Recession has left macroeconomists with many puzzles. One such puzzle is the alleged breakdown of the relationship between inflation and the output gap – also known as the Phillips curve.

There are two main arguments underlying the hypothesis of a breakdown of the Phillips curve.

The first is the ‘missing deflation puzzle’. The Great Recession generated an extraordinary decline in US GDP of about 10% relative to its pre-crisis trend, while inflation dropped only by about 1.5% (see Figure 1).¹ The modest decline in inflation was surprising to many macroeconomists. For instance, New York Fed President John C. Williams (2010: 8) wrote: “The surprise [about inflation] is that it’s fallen so little, given the depth and duration of the recent downturn. Based on the experience of past severe recessions, I would have expected inflation to fall by twice as much as it has.”

Continue reading here.