The Unassuming Economist

From a paper by Marek A. Dąbrowski, Jakub Janus, and Krystian Mucha:

“In this paper, we propose a novel approach to classifying inflation-targeting (IT) economies based on fractionally integrated processes. Motivated by the rising prevalence and diversity of IT strategies, we leverage variation in the persistence of inflation rate series to identify four de facto IT strategies, or ‘shades’ of IT. Moving from negative orders of fractional integration, indicating anti-persistent behaviour, to more persistent long-memory processes, often associated with less credible policy frameworks, we classify countries into average IT, strict IT, flexible IT, and uncommitted IT categories. This framework sheds light on the differences between declarative and actual monetary policy strategies across 36 advanced and emerging market economies. Notably, we demonstrate that while most economies fall into the flexible IT category, extreme cases, including the uncommitted IT category, occur with marked frequency. Furthermore, we link our IT classification to institutional features of national monetary frameworks using ordinal probit models. The results suggest that differences across IT categories are related to variations in the maturity and stability of IT frameworks, with less pronounced connections to central bank independence and transparency.”

From a paper by Martin Boďa and Mariana Považanová:

“In order to canvass the state of the art of research on Okun’s law, the paper surveys 84 articles published in Web of Science™ journals between 1995 and 2020 occupied with estimating the relationship between unemployment and output in the spirit of an approach proposed by Okun (1962). A bibliometric analysis is conducted to identify the most influential works and authors, to establish links between them, and to outline research fronts with main paths of knowledge diffusion. Under a content analysis, the articles included in the survey are further classified by their leitmotif and research agenda as well as by their geographical scope. The basal methodological choices of the articles are overviewed and their temporal patterns are studied. An emphasis is put on the stylized facts constituting the research agenda of 57 of the surveyed applications of Okun’s law (such as instability over time, asymmetries, or age and gender specificity). A majority of studies estimated Okun’s law on the basis of a regression equation that may suggest that it is unemployment that responds to fluctuations in output and adopted the difference version of Okun’s law. In estimating the gap version, the Hodrick-Prescott filter has continued to be a preferred choice despite its well-known flawed statistical properties. Lotka’s law indicates an above-average level of research productivity of authors in this field. The findings provide insights into the intellectual structure of the empirics of Okun’s law and act as guidance for future research on cyclical unemployment-output fluctuations.”

From a paper by by Luca Bettarelli, Davide Furceri, Michael Ganslmeier, Marc Tobias Schiffbauer:

“Beyond its environmental damage, climate change is predicted to produce significant economic costs. Combining novel high-frequency geospatial temperature data from satellites with measures of economic activity for the universe of US listed firms, this article examines a potentially important channel through which global warming can lead to economic costs: temperature uncertainty. The results show that temperature uncertainty—by increasing power outages, reducing labor productivity, and increasing the degree of exposure of firms to environmental and non-political risks, as well as economic uncertainty at the firm-level—persistently reduce firms’ investment and sales. This effect varies across firms, with those characterized by tighter financial constraints being disproportionally more affected.”

From a paper by Nestor Garza, Ivo Gasic, Clemente Larrain:

“This paper aims to build a set of long-term, geographically controlled land value indices for Santiago de Chile, with which to test land rent theory predictions regarding macroeconomic impacts. This paper uses a geographic cluster approach to the Laspeyres estimator, weighted by the stock of available land plots and their market offers per zone, to create two quarterly land value indices for Gran Santiago during the period 1983Q4–2016Q2. Subsequently, this paper implements dynamic time series methods (Vector Error Correction) as a baseline to determine the effect of economic performance and interest rate on urban land values. The two land value indices are correctly predicted by economic and interest rate shocks, as theoretically expected. In addition, this paper found that land values grew faster-than-predicted during the period of the so-called “Chilean Miracle” (1992–1998), a situation associated in the literature with worsened housing affordability and socio-spatial inequality.” 

From a paper by David Autor, David Dorn, Gordon Hanson, Maggie R. Jones, Bradley Setzler:

“This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000–2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors such as medical services, education, retail, and hospitality. Using the panel structure of the employer-employee data, we decompose changes in the employment composition of places into trade-induced shifts in the gross flows of people across sectors, locations, and non-employment status. Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019. The employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas, with minimal contributions from cross-sector transitions of former manufacturing workers. Although worker inflows into non-manufacturing more than fully offset manufacturing employment losses in trade-exposed locations after 2010, incumbent workers neither fully recover earnings losses nor predominantly exit the labor market, but rather age in place as communities undergo rapid demographic and industrial transitions.”