The Unassuming Economist

From the IMF’s latest report on Indonesia:

“There are no signs of asset bubbles—residential property prices grew by 3 percent (y/y) in 2018:Q4, while commercial property prices have been flat since 2017.”

 

From the IMF’s latest report on Lithuania:

A new paper by authors Werner Eichhorst, Arne L. Kalleberg, André Portela de Souza and Jelle Visse discusses on how to design sustainable labor market institutions:

“Demographic shifts, technological innovation, institutional reforms and global economic integration affect the way people work. Technological innovations have a major impact on occupations and industries, changing the ways economies in different world regions, in both developed and developing countries, work along with new division of labour that are facilitated by global economic integration. This paper is based on the joint work within the International Panel on Social Progress. It highlights three main areas of attention: a) skill formation, d) the challenges to collective bargaining, and e) social protection and labour market policies. Based on an assessment of the existing evidence, the paper suggests some policy principles and concrete policy options that might further those objectives, not ignoring some tensions that might exist between flexibility and security in the different labour markets. The ultimate direction of reforms in line with an idea of social progress lies in institutional arrangements that facilitate the reconciliation of flexibility and productivity with access to decent jobs and social protection. We argue that distinct policy options are available that can be implemented more globally in order to achieve these goals simultaneously”

In the context of Brexit and the developments within UK, this  interesting paper  by Monica Langella and Alan Manning gives a perspective on the labor market in the UK:

“One of the main forces that economists expect to equalize economic opportunity across areas is migration: individuals leaving depressed areas for booming areas. There is strong evidencethat migration does respond to differences in economic opportunity (for a thorough, though early, survey see Greenwood, 1997). The classic reference for the US is Blanchard and Katz (1992) who concluded that negative local labour demand shocks cause a short-run rise in the unemployment rate but that migration causes unemployment rates to be equalized within 5-7 years, a relatively short time. However, Amior and Manning (2018) argue that for the US the migration response over decades is slower than that estimated by Blanchard and Katz (1992) and that local demand shocks are highly persistent, causing very persistent differentials in unemployment rates. The US has also had a marked fall in residential mobility in recent years that has attracted attention (Molloy, Smith and Wozniak, 2011, 2014; Dao, Furceri, and Loungani, 2017). Similar exercises for Europe (e.g. Pissarides and McMaster, 1990; Decressin and Fatas, 1995; Overman , 2002; OECD 2005) find slower adjustment processes than in the US though Amior and Manning (2019) argue that the net migration response to unemployment in the UK is higher and more similar to the US than commonly believed. Although these studies do provide convincing evidence that migration does respond to economic opportunities, there is still surprisingly little evidence on the process in recent years (the survey of Greenwood, 1997, seems to be the most recent) and considerable gaps in our knowledge“

From the India Forum:

“Renewable energy capacity has expanded globally but this does not as yet mark a shift away from fossil fuels. On current trends, energy use from CO2-emitting fuels will continue to rise in the future. Talk of decarbonsiation of the world economy is premature.

In 2015, global carbon dioxide (CO2) emissions plateaued even as the world economy grew by about 3%. Emissions rose, but only slightly, the following year. There was much relief, even triumph, in the mainstream press and some scholarly literature, that the world economy had begun decarbonising. Reports suggested we were experiencing “a partial decoupling between the growth in CO2 emissions and that in the economy”.

Since 1970, CO2 emissions from fossil fuels―coal, oil, and gas―had grown by about 0.4% for every one percentage point rise in world GDP. But now writers surmised, they would stay flat or even decline while economic growth continued.

A second proposition, connected to the first, suggests we have been witnessing an energy transition worldwide: a shift away from fossil fuels and towards a huge expansion of renewable energy, led primarily by solar and wind power. Referring to one such fossil fuel, the energy analyst and executive chairman of Brookings India, Vikram S Mehta, wrote a couple of years ago, “Historians will look back on 2016 as the year of inflexion for the oil industry … the year the oil era began to slowly but inexorably hand over the energy baton to clean energy”(“Over the Barrel”, Indian Express, 6 February 2017). The climate change activist and writer Bill McKibben recently wrote approvingly “ … in the next few years, we will reach the peak use of fossil fuels, not because we are running out of them but because renewables will have become so cheap. … [Kingsmill] Bond writes that in the 2020s―probably the early 2020s―the demand for fossil fuels will stop growing.” ( “A Future Without Fossil Fuels”, New York Review of Books, 4 April 2019)

This essay probes whether, and to what extent, these two propositions hold water. It builds on arguments made by others that talk of an energy transition is misleading (Sweeney and Treat 2017) or very partial (Pirani 2018). Using the latest available data I show that whereas we are undoubtedly witnessing an expansion of renewable energy worldwide, it does not amount to a transition. Not as yet. For the concept energy “transition” also implies that we are transiting away from what was dominant earlier and relegating it to a small proportion of the energy landscape. That is certainly not happening with oil and gas. Whether we are even transiting from coal is moot.

What’s more, given the accelerating impacts of global warming in recent years, are we transiting away from fossil fuels at anywhere near the pace that the science demands? This question has acquired even greater salience with the eruption of the “Extinction Rebellion” and other movements in Europe and elsewhere, including India, by school students and others demanding sharp cuts in emissions and the declaration of a climate crisis, both in India and on a planetary scale.”