The Unassuming Economist

From a paper by Paolo Di Lorenzo and Eric Anthony Lacey“

“This paper provides an overview of issues related to fiscal consolidation drawing on the
literature; it distills some lessons from fiscal consolidation episodes using a new database covering
196 countries from 2000 to 2023. The paper discusses the motives, timing, design, and political
economy of fiscal consolidation, as well as its macroeconomic and social impacts. We find that
fiscal consolidation is often necessary and successful in restoring fiscal sustainability by stopping
debt accumulation, but less successful in lowering debt levels; moreover, it can also entail
significant costs and trade-offs in terms of growth, poverty, and inequality. Composition also
matters, as expenditure-based consolidations tend to be more successful than revenue-based
consolidations and less likely to cause a deterioration in poverty rates or inequality. However,
revenue gains usually play an important role starting in the second year of consolidation. Overall,
the paper suggests that successful fiscal consolidation requires careful consideration of the
economic context, the composition of adjustment, complementary economic policies, and
communication and credibility of the strategy. The best way to implement fiscal adjustment is to
establish a consolidation strategy in normal/non-crisis times} to ensure that governments do not
have to rely on abrupt, pro-cyclical adjustments that may exhaust all buffers in the aftermath of a
shock.

“

From a paper by Omang Ombolo Messono, Fabrice Assoumou Zambo, and Alexandre Turpin Iroume A. Bouebe:

“While many studies have highlighted the influence of the degree of central bank independence on economic and financial dynamics, less is known about its importance for economic vulnerability. The objective of this paper is to examine, for the first time, the effect of central bank independence on economic vulnerability in Africa. Based on the hypothesis that countries with more independent central banks are less vulnerable to external shocks, we estimate a dynamic panel model using the system generalised method of moments in a sample of 44 African countries between 1990 and 2017. Our results show that an independent central bank can significantly reduce the economic vulnerability of African countries by allowing monetary policy decisions to be made outside political influence, promoting financial stability, and strengthening the credibility of economic policy. These results remain robust to alternative measures of the main variables. Furthermore, the analysis of transmission mechanisms reveals that central bank independence has a negative effect on economic vulnerability in Africa through channels such as GDP growth, financial development, exchange rate misalignments and budget balance. We suggest that policymakers promote central bank independence in the development of public policies to address economic vulnerability in Africa.”

From a paper by Yiran Zhao, Xiangyun Gao, Huiling Zheng, Yupeng Zhang, Qingru Sun, Anjian Wang, and HaiZhong An:

“This study examines the impact of international crude oil prices on national sub-price indices following external shocks. It analyzes the heterogeneous transmission mechanisms of these shocks across diverse national price index networks. To achieve this, we employ Granger causality tests as the filter to construct impulse response networks. This approach helps unveil the duration, magnitude, and pathways of impact on sub-price indices in five countries: China, the US, Russia, Germany, and the UK. Our findings suggest that the impact of crude oil price changes on national sub-price indices is most pronounced within 1-2 months, and more persistent on the Producer Price Index (PPI) than the Consumer Price Index (CPI). Identifying specific sub-price indices affected by shocks shows that China and the US are more significantly impacted. Moreover, identifying the transmission paths of crude oil price changes within a country’s internal price system underscores the significance of the CPI of transportation. This study of price transmission within countries offers key insights for managing economic shocks at the microeconomic level.”

From a paper by Paolo Di Lorenzo, and Eric Anthony Lacey:

“This paper provides an overview of issues related to fiscal consolidation drawing on the literature; it distills some lessons from fiscal consolidation episodes using a new database covering 196 countries from 2000 to 2023. The paper discusses the motives, timing, design, and political economy of fiscal consolidation, as well as its macroeconomic and social impacts. We find that fiscal consolidation is often necessary and successful in restoring fiscal sustainability by stopping debt accumulation, but less successful in lowering debt levels; moreover, it can also entail significant costs and trade-offs in terms of growth, poverty, and inequality. Composition also matters, as expenditure-based consolidations tend to be more successful than revenue-based consolidations and less likely to cause a deterioration in poverty rates or inequality. However, revenue gains usually play an important role starting in the second year of consolidation. Overall, the paper suggests that successful fiscal consolidation requires careful consideration of the economic context, the composition of adjustment, complementary economic policies, and communication and credibility of the strategy. The best way to implement fiscal adjustment is to establish a consolidation strategy in normal/non-crisis times} to ensure that governments do not have to rely on abrupt, pro-cyclical adjustments that may exhaust all buffers in the aftermath of a shock.”

From a paper by David M. Brickman:

“Over the past four decades, the multifamily housing market has grown and evolved significantly to become a much more prominent part of the US housing landscape. Since 1990, the total value of the multifamily housing stock has grown more than tenfold, from less than $600 million to more than $6
billion today, as both the number and value of multifamily housing units have steadily increased. Although a broad range of macroeconomic and demographic factors have contributed to this growth, the primary catalyst has been the establishment of well-functioning multifamily capital markets, defined by large liquid debt and equity markets and a largely unconstrained private rental market. Against this backdrop, multifamily housing has become a standout among commercial real estate in terms of capital flows and performance while disproportionately contributing to the nation’s supply of newly constructed housing at this moment of intense shortages and affordability challenges.

Given the success of the modern multifamily capital and housing markets, there is value in understanding their development to identify market areas in need of additional investment and to inform regional and global markets elsewhere. To that end, this brief identifies and examines key moments in the evolution of multifamily debt and equity flows from the late 1980s through today and their impact on capitalization rates, property values, housing supply, rental rates, and rent growth. The brief concludes with a discussion of policy implications.”

Continue reading here.