The Unassuming Economist

From a paper by Bertrand Candelon and Francesco Roccazzella

“This paper evaluates the informative value of the ECB inflation forecasts vis-à-vis other institutional and model-based forecasts in the euro area using ex post optimal combinations of forecasts and nonnegative weights. From a methodological perspective, we adapt the corresponding forecast encompassing test to the constrained parameter space, showcasing its superior performance over traditional encompassing tests in both size and power properties. Empirically, the combining weights and the forecast encompassing test reveal that the ECB was the most informative forecaster of euro area inflation over the 2009–2021 period. This changed in 2022: The ECB lost its position as the most informative forecaster, and when using rolling windows to estimate the combining weights using a rolling window, we find an important decline in the ECB’s weight over time. This time dependency can be associated with the economic environment and, in particular, the level of uncertainty, the monetary policy, and the macro-financial conditions in which the ECB operates.”

From a paper by Claudio Borio:

“From its tentative beginnings, inflation targeting has spread to become the de facto global monetary standard. Historically, only the Gold Standard has had a longer lifespan. Inflation targeting has done its job: helping to hardwire a low-inflation regime, even in the face of the post-Covid inflation surge. But the journey has been far from easy. Inflation targeting had to contend with the rise of financial instability, most spectacularly in the form of the Great Financial Crisis. In the wake of that crisis, it struggled to push inflation back up to point targets, and it saw a historical erosion in the room for policy manoeuvre. This paper assesses these challenges and considers possible adjustments to the framework. These include more systematic consideration of the longer-term damage that financial factors can cause to the economy and of the importance of safety margins in the conduct of policy. And all this should be grounded on a clear recognition of what monetary policy can and cannot deliver.”

From a Keynote address by Mr Swaminathan J:

“Regional Director for Mumbai Regional Office, Shri Suman Ray; Regional Director for Nagpur Regional Office, Shri Sachin Shende; Chief General Manager, National Bank for Agriculture and Rural Development, Ms. Rashmi Darad; General Manager, Bank of Maharashtra and Convenor, SLBC Maharashtra, Shri R D Deshmukh; senior executives from banks, Lead District Managers (LDMs), Lead District Officers (LDOs) and my colleagues from Reserve Bank of India, present here.

Good morning, it is my proud privilege today to be addressing this Conference for Lead District Managers of Maharashtra.

Being here near Nagpur and that, too, for a Conference of the LDMs, it would be amiss of me if I am not reminded of Shri Baba Amte, whose Ashram is within a few kilometres. As you all would be aware he was one of the proponents of rural economy-driven growth. There is this one part of a quote attributed to him, which says, “A balanced economic system is one which provides sufficiency for all and superfluity for some-“

When you parse the quote, you will realise that the LDMs are facilitating the sufficiency of the rural economy. And balancing the economy by facilitating sufficiency for the rural economy rings as much true today as it must have been when it was said. When you look at the results of the Economic Survey, 2023-24, it is observed that Indian agriculture sector provides livelihood support to about 42.3 per cent of the population and has a share of 18.2 per cent in the country’s GDP at current prices.

So, with the rural economy thriving, the role of Lead Banks assumes a renewed emphasis. In fact, the aspirational goals that RBI has set for RBI@100 in a Multi-Year Time Frame, reiterates its focus on ‘Accessibility, Availability and Quality of financial services to all sections of the society’.

It is this underlying principle that had conceptualised the Lead Bank Scheme (LBS) in 1969. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government. And within this leadership role, the role of LDMs cannot be overstated.

As key pillars of the LBS framework, you hold the responsibility of extending banking services and credit to underserved regions, facilitating economic advancement, the results of which can be personally fulfilling. Having served as the Convenor of the SLBC in Telangana, I can attest to the deep satisfaction derived from the tangible impact created through LBS fora.

Over the years, the roles and responsibilities of the LDMs have evolved. But the underpinnings of these myriad objectives remain the same. Today I would like to highlight certain expectations that we have from the functioning of the LDMs. For easy recallability, I have attempted to give a different spin to the acronym – LDM – and identified three attributes viz., (L)iaison, (D)esigning and Development, and (M)onitoring and Motivating. I will now elaborate upon these.”

Continue reading here.

From the State Council of China:

“nding poverty has long been a major challenge for humanity since ancient times. Today, the world still has more than one billion people living in extreme poverty. In the global war on extreme impoverishment, China has blazed a trail that gives hope to all yearning for a better life.

Being the world’s largest developing country with over 1.4 billion people, China has lifted 800 million out of poverty. It has also met the poverty reduction target of the UN 2030 Agenda for Sustainable Development well ahead of schedule. UN Secretary-General Antonio Guterres lauded China’s achievement as “the greatest anti-poverty achievement in history.”

Centering on “targeted poverty alleviation,” China’s poverty reduction strategy blends rapid economic growth with tangible improvements in well-being. By tailoring solutions to local conditions, it ensures that anti-poverty measures address the specific needs of communities.

This approach has transformed some of the country’s most impoverished regions and offered useful inspiration for other nations grappling with similar challenges.

One example is the introduction of Juncao technology, which has had a transformative impact in countries like Rwanda. Developed as a sustainable method for growing mushrooms using grass, Juncao technology exemplifies China’s ability to provide practical, scalable solutions for global challenges.

In Rwanda, Juncao technology has empowered rural farmers by enabling them to cultivate mushrooms with minimal resources. This has not only diversified income sources for many households but also contributed to food security and environmental sustainability.

Across Africa, Juncao has been adopted in more than 40 countries, improving food security and advancing sustainable farming practices.

China’s contributions to global poverty alleviation extend beyond agricultural innovations. Through initiatives like the Belt and Road Initiative (BRI), China has worked with developing countries worldwide to develop projects in infrastructure, education and healthcare sectors. These projects create jobs, improve connectivity, and foster inclusive growth, helping lift millions out of poverty.

So far, China has provided development aid to over 160 countries, pursued high-quality BRI partnerships with over 150 countries, and backed more than 1,100 projects with about 20 billion U.S. dollars in development funding, injecting vital resources into the economic revitalization of the Global South.

China’s contributions to global poverty alleviation also go beyond financial and technical aid. By strengthening the self-development capacities of developing nations, it has fostered a greater and more sustainable global poverty reduction effort.

To date, China has trained over 400,000 professionals from over 180 countries and regions, boosting their capacity in poverty alleviation and development.

At the recently concluded G20 summit in Rio de Janeiro, Chinese President Xi Jinping outlined China’s eight actions for global development, which include pursuing high-quality Belt and Road cooperation, implementing the Global Development Initiative, supporting development in Africa, and supporting international cooperation on poverty reduction and food security.

Also at the summit, Xi announced China’s decision to join the Global Alliance Against Hunger and Poverty, an initiative designed to raise resources and knowledge to implement proven public policies and social technologies to combat hunger and poverty worldwide.

These actions represent China’s latest commitment to common prosperity and shared development, proving that China will always be a reliable long-term partner of developing countries, and a doer and go-getter working for global development.

Meanwhile, starting Dec. 1, China offers zero-tariff treatment for 100 percent tariff lines to all the least developed countries having diplomatic relations with China. This measure, combined with China’s ongoing efforts to enhance South-South cooperation, underscores its resolve to address systemic inequities in global trade and economic development.

By providing tariff-free access to its vast market, China aims to empower the least developed countries to expand their export capabilities, generate income, and reduce reliance on external aid.

As the world faces mounting challenges such as climate change and economic inequality, China’s poverty alleviation efforts offer valuable lessons. Its model underscores the potential of innovative, localized solutions and international cooperation in building a more equitable and prosperous future for all.”

IMF’s F&D Magazine on The Economics of Housing:

• Housing’s Unique Role in Lives and Economies Demands Greater Understanding. Affordability and other complex housing issues challenging governments can be better revealed in broader economic analysis – IMF Blog
• Walkways, Not Walls. There are benefits to better connecting macroeconomics with real estate economics – F&D
• The Housing Affordability Crunch. A newly developed dataset shows how the pandemic’s aftermath ushered in the worst housing affordability crisis in more than a decade – F&D
• Housing Markets and Monetary Policy. Comprehensive, country-specific understanding of housing and mortgage markets can help calibrate monetary policy – F&D
• The True Cost of Living. Sharply higher borrowing costs, especially for housing, fueled a disconnect between inflation statistics and consumer sentiment – F&D
• How To Spot Housing Bubbles. Early detection and mitigation can help deflate asset bubbles before they burst – F&D
• China’s Real Estate Challenge. Sliding property prices may presage a painful economic adjustment – F&D
• Are Housing Markets Broken? Many people aspire to own their own home, but it’s becoming increasingly unaffordable – F&D
• Falling Out of Favor. Some countries are turning against foreign buyers as soaring property prices become political – F&D
• São Paulo Reclaims Its Center. Brazil’s megalopolis combines federal and municipal programs to retrofit buildings in the downtown area – F&D
• Housing Africa’s Growing Population. Deeper understanding of informality and better use of technology can build more sustainable housing markets – F&D
• Housing Costs Mount. A look at rising housing cost trend – F&D
• Hidden Fortunes. How dirty money distorts real estate markets – F&D

Working papers and conferences:

• Macroprudential Policy and Capital Flows – CEPR
• Climate change’s impact on real estate prices in Chile – Central Bank of Chile
• From Novelty to Norm: Uncovering the Drivers of Virtual Tour Effectiveness in Real Estate Sales – NBER
• CFP: Real Estate Economics Special Issue on Housing and Housing Policy – The American Real Estate and Urban Economics Association

On the US—developments on house prices, rent, permits and mortgage:    

• Housing Forecast 2025: Mortgage Rates To Stay Above 6% as Home Prices Grow – Realtor.com
• Trump may renew a housing fight that could rattle mortgage rates – CNN
• US Mortgage Rates Decline to 6.69%, Lowest Since Mid-October – Bloomberg
• Freddie Mac House Price Index Increased in October; Up 3.7% Year-over-year. 18 of the 35 cities with largest price declines are in Florida! – Calculated Risk
• US Home Price Insights – December 2024 – CoreLogic
• CoreLogic: Annual Home Price Growth Stalls in October – CoreLogic
• Can rent control have adverse effects on housing affordability? – Econofact
• Giant homebuilders are taking over the housing market—just look at Lennar. Giant homebuilder Lennar recently announced it is acquiring competitor Rausch Coleman Homes, accelerating a housing market trend. – Fast Company
• New York City Rental Report October 2024: What Home Can a Manhattan Renter Afford Across the U.S.? – Realtor.com
• Pro Take: A Trump Deportation Plan Could Have Mixed Impact on Still-Hot Housing Inflation. Construction worker shortages and falling numbers of renters in some areas could both influence housing prices – Wall Street Journal
• Inflation Adjusted House Prices 1.4% Below 2022 Peak. Price-to-rent index is 8.1% below 2022 peak – Calculated Risk
• Private Residential Construction Spending Rises in October – NAHB
• These local housing markets are shifting—just look at inventory. Some housing markets in the Southwest and Southeast are weakening, while others in the Midwest, Northeast, and Southern California remain tight. – Fast Company
• Construction Labor Market Continues to Ease – NAHB
• Where Residential Construction Thrives: Metro Area Hotspots for Jobs and Businesses – NAHB

On the US—other developments:    

• Home builders are cheering Trump’s return to the White House. Companies are eager for lighter regulations. But they also could see their industry strained by tariffs and immigration changes. – Washington Post
• Donald Trump’s Second Term Could Bring ‘Significant Shifts’ to the Housing Market – Realtor.com
• This Old House? Home Buyers’ Best Deals Are on Builders’ Lots. The premium that buyers usually have to pay for a brand-new house is disappearing – Wall Street Journal
• Housing Becoming Unaffordable for First-Time Homebuyers – Apollo Academy
• The Unsung Power Players of Real Estate: How Gen X Carves Up a Significant Slice of the Market – Realtor.com
• Construction Industry Braces for One-Two Punch: Tariffs and Deportations. Trump’s immigration and trade policies put home builders in a vulnerable position – Wall Street Journal
• Housing Cost Burdens Climb to Record Levels (Again) in 2023 – Harvard Joint Center for Housing Studies
• The Mysteries of Cities and Economic Growth – AEI

On Australia and New Zealand:

• [Australia] An Overview Of Australia’s Housing Market And Residential Mortgage-Backed Securities – S&P Global
• [Australia] Tight supply and lower interest rates to lift Australia home prices – Reuters poll – Reuters
• [Australia] How far house prices have soared above fair value – The Sydney Morning Herald
• [Australia] Australian Home Prices Rise at Weakest Pace in Almost Two Years – Bloomberg
• [Australia] Rate cuts won’t stimulate a big upswing in house prices: CoreLogic – Financial Review
• [Australia] Aussie capital cities where house prices are falling and booming: ‘Wealth effect’ – Yahoo Finance
• [Australia] Australia’s housing market loses steam with prices falling in Sydney and Melbourne. More houses for sale in country’s two biggest cities in November than there were at this time of year since 2018 – The Guardian
• [Australia] Why it’s the least worst time to buy a home in three years – The Sydney Morning Herald
• [Australia] How Much Further Will Sydney and Melbourne House Prices Fall? – Bloomberg
• [New Zealand] New Zealand House Prices Fell a Ninth Straight Month in November – Bloomberg
• [New Zealand] New Zealand home prices to rise modestly in coming two years: Reuters poll – Reuters

On other countries:  

• [Canada] Toronto Housing Sales Climb With Buyers Flocking Back to Market. Benchmark price measure increased for a second-straight month. Real estate board president says stage is set for recovery – Bloomberg
• [Canada] Home builders are only part of the solution to the housing crisis – The Globe and Mail
• [Denmark] Why being close to a cycle network can boost house prices – The Conversation
• [France] Paris joins clampdown on holiday apartment rentals, blamed for housing shortage. French capital takes advantage of new law to curb apartment rentals to tourists. Officials say practice limits housing supply for residents – South China Morning Post
• [Hong Kong] Hong Kong’s property slump may be terminal. Demographics and geopolitics will make a recovery harder – The Economist
• [Ireland] Paul McNeive: Has increased housing supply come in time to save the Government? – Irish Independent
• [Ireland] ‘Nothing can be built’: Northern Ireland sewage crisis hits housing construction. Property prices surge as 19,000 homes are left on hold due to lack of wastewater services – FT
• [Norway] Norway Cuts Home Loan Equity Need to Help First-Time Buyers – Bloomberg
• [United Kingdom] House prices and sales across UK expected to rise in early 2025. Buyers seeking to benefit from expiring tax breaks and pent-up demand predicted to drive up costs, according to Zoopla report – The Guardian
• [United Kingdom] UK Home Prices Rise by Most Since March 2022, Lender Says. Average 1.2% price in November far exceeded expectations. Wage gains helping to support buyer interest, Nationwide says – Bloomberg
• [United Kingdom] UK house prices rise at fastest rate in nearly two years. Nationwide reports surprise growth despite near-record prices straining affordability – The Guardian
• [United Kingdom] UK Housebuilding Falls Most in Five Months in Wake of Budget – Bloomberg
• [United Kingdom] Why London’s property market is stagnating. The capital is stuck in a rut; digging itself out is not going to be easy — or cheap – FT