The Unassuming Economist

From a paper by Xiaoke Zhu, and Xiaohua Yu:

“This study aims to investigate whether and how food inflation influences U.S. macroeconomic dynamics. To this end, we develop and estimate a heterogeneous dynamic stochastic general equilibrium (DSGE) model incorporating both the food and non-food sectors. Calibration and Bayesian estimation methods are employed to derive the key parameters involved in this model. Our analysis reveals that key macroeconomic variables exhibit significant nonlinear responses to food price shocks. Notably, a quarter of headline inflation can be attributed to food inflation in the post-pandemic era. Furthermore, a higher labor substitution parameter and lower consumption substitution elasticity amplify the economic recession. In response to food price shocks, moderate monetary policies can mitigate declines in real GDP and consumption but potentially exacerbate inflation.”

From a paper by Shuang Wang, Yan Wang, and Jing Li:

“Crude oil is a critical resource for modern industrialized societies and is heavily affected by geopolitical factors. However, existing studies on oil security assessment often overlook the interdependence among evaluation indicators and dimensions, leading to biased estimations. Furthermore, few studies have examined the varying impacts of geopolitical risks on oil security, ignoring potential heterogeneous impacts. To address these gaps, we propose a novel analytical framework. First, we introduce an innovative approach to evaluate oil security using a refined multi-level nested copula, which captures the dependence structure among indicators and dimensions. Second, we employ copula functions to explore how geopolitical risks affect a nation’s oil security and uncover their transmission channels. Empirical analysis using data from China shows that geopolitical risks significantly weaken oil security, with a symmetric tail dependence between them, indicating consistent effects regardless of geopolitical fluctuations. Moreover, we identify diminishing supply security as the primary pathway through which geopolitical risks impact oil security. These findings offer valuable policy insights for strengthening energy security amidst geopolitical uncertainties.”

From a paper by Dong-Hyeon Kim, Peiyao Liu, Shu-Chin Lin:

“Rising income and wealth inequality have renewed interest in their determinants, positioning the financial sector as a central focus of the ongoing debate. Nevertheless, controversy persists regarding the relationship between financial development and economic inequality. While much of the empirical literature focuses on income inequality, wealth inequality has received comparatively less attention. Given the extreme concentration of wealth and its influence on economic opportunity and political power, this paper explores whether it is excessive or insufficient financial development that contributes to the widening disparities in wealth distribution. Using a cross-country panel data framework, the study finds that financial development exacerbates wealth inequality by increasing wealth concentration at the top and diminishing wealth shares in the bottom 50% up to a certain threshold. Beyond this point, financial development results in a reduction of top wealth shares and an increase in the wealth shares of the bottom 50%, thereby narrowing wealth inequality. A similar pattern is observed for income inequality. Pathway analyses indicate that these effects are partially mediated through entrepreneurship. Insufficient financial development adversely impacts both wealth and income distribution.”

From a paper by Liesel A. Ritchie, Susan L. Cutter, Nnenia Campbell, Melanie Gall:

“In the United States, segments of the population were suddenly and unexpectedly thrown into need during the COVID-19 pandemic and began to use food banks and other non-profit organizations providing food services. Here we examine the meaning of what we call the “new vulnerable.” The pandemic became a test of the entire food system, and clearly exposed the need for a re-examination of preparedness in the short run, and vulnerability and resilience in the long term. We explore whether the demographics associated with the drivers of vulnerability (e.g., ageism, racism, ethnocentrism) have changed. The lived experiences of vulnerable groups are defined by a form of epistemic and structural injustice—the dismissal of the knowledge of their own lives and needs that socially marginalized groups experience.”

From a paper by Sergio Julio Chión-Chacón and Kevin Antonio Álvarez García:

“This study empirically investigates the impact of Inflation Targeting (IT) on nominal interest rates over the past 40 years, focusing on 10 advanced and emerging economies. By using a Binary Regime Model embedded within a Backward-Looking Taylor, our findings confirm that IT adoption has significantly contributed to reducing interest rates, with the strongest effects observed in Latin American countries. To reinforce these results, we incorporate Smooth Transition Regression (STR) models, with and without instrumental variables, allowing for a more suitable representation of gradual policy transitions. The STR estimates consistently support our main findings, validating the robustness of the observed impacts. Furthermore, we show that, both before and after IT implementation, central banks display a stronger emphasis on responding to inflation than to the output gap, with this focus intensifying under IT regimes.”