The Unassuming Economist

From a paper by William Gale, Ian Berlin, and Sam Thorpe:

“How should the U.S. respond to its unsustainable fiscal outlook? How and when a country should fiscally consolidate depends on its existing circumstances, policies, and institutions. We review the experiences of other countries that attempted consolidations and highlight lessons applicable to the U.S. We find that (a) the U.S. does not face a short-term crisis, so it can employ gradual adjustments, which may minimize short-term harm, (b) consolidation should occur in a strong economy with monetary accommodation, and (c) tax increases (spending cuts) could plausibly play a larger (smaller) role in US consolidations than in European adjustments.”

From a paper by Michalis Nikiforos, Vlassis Missos, Christos Pierros, and Nikolaos Rodousakis:

“This paper investigates the structural transformation of the Greek economy over the past fifteen
years, focusing on the increasing dominance of the Accommodation and Food Service Activities
(AFSA) sector in the aftermath of austerity and structural reforms. Despite promises of productivity
gains through labor market and product market reforms, the Greek economy has experienced a sharp
decline in labor productivity and a significant reallocation of employment towards low-productivity
sectors, especially AFSA, reminiscent of a Lewis-type dual sector economy. Using a simple Panel-VAR
model we find that declining aggregate demand and real wages were key drivers of this productivity
collapse. Our findings support theories of technological change that emphasize output growth and
the cost of labor as fundamental determinants of productivity growth.”

On prices, rent, and mortgage:    

• Home Prices: Sept Update – Home Economics
• Zillow upgrades its outlook—here’s its home price forecast for more than 400 housing markets. Zillow slightly upgrades its national home price outlook—predicting that over the next 12 months, U.S. home prices are likely to rise 1.9%. – Fast Company
• The cities where home prices have changed the most (and least) over the past 130 years. Did your grandparents and great-grandparents really pay less for their homes than you did, even after inflation? The Department of Data might have the answer. – Washington Post
• Zohran Mamdani’s Socialist Housing Plan Could Crash New York’s Rickety Rental Market. The city has the nation’s most regulated housing sector and the largest stock of government-owned and subsidized housing, and yet progressives blame its real estate troubles on the free market. – Reason

On sales, permits, starts, and supply:    

• Non-Conventional Financing for New Home Sales Loses Ground in 2024 – NAHB
• California Home Sales Up 6.6% Year-over-year SAAR in September – Calculated Risk
• Median Age of Construction Labor Force Holds at 42 – NAHB
• Where are Porches Most Common for Newly-Built Homes? – NAHB
• The Outlook for US Housing Supply and Affordability – Goldman Sachs

On other developments:    

• Housing Market Stalls as Government Shutdown Drags On – Realtor.com
• Judge Blocks Federal Layoffs During Shutdown, Including Deep Cuts at HUD’s Fair Housing Office – Realtor.com
• New Housing Options Emerge for Older Americans. As people live longer, they are reimagining where and how they want to live – Wall Street Journal
• Is It Bad to Buy Into a Gentrified Neighborhood? I can finally afford to live in the area I once only dreamed of calling home. But I’m torn. – New York Times
• We Found a Solution to Homelessness. Now the Trump Administration Wants to Throw It Out. – New York Times
• September 2025 Rental Report: Rental Affordability Improved Compared to a Year Ago – Realtor.com
• My Generation: Blame the Rich, Not the Boomers – CEPR
• California’s Housing Market Amid Shutdown: 5 Key Takeaways – Realtor.com
• A real estate boom is coming — are you ready? – The Hill
• How COVID-19 Reshaped the U.S. Labor Market and Housing Demand – NAHB
• 2nd Look at Local Housing Markets in September – Calculated Risk
• Are You Paying More Than 30% of Income on Housing Costs? Recent census data shows that owning a home that is considered affordable is impossible in some areas. – New York Times

From a paper by Thuy Dao, Haithem Awijen, Rizwan Ahmed, and Hachmi Ben Ameur:

“This study examines the influence of technological innovation and geopolitical risk on energy security by analysing energy diversification indices—the Adjusted Herfindahl-Hirschman Index (HHI) and Country Diversification Index (CDI)—across 117 nations from 2002 to 2021. Utilising Pooled OLS, Feasible Generalised Least Squares (FGLS), and Multilevel Regression models, we evaluate the impact of patent-driven innovation and geopolitical volatility on energy diversification, political risk, and covariance effects. Our study concentrates on significant geopolitical events, such as the Iraq War, the Annexation of Crimea, and the 2014 Oil Price Collapse. Findings indicate that technological innovation consistently improves diversification and covariance dimensions, however, its impact on risk is contingent upon specific events. Conversely, geopolitical risk exhibits inconsistent statistical significance, indicating a more intricate, indirect influence on energy security outcomes. These findings provide practical recommendations for policymakers aiming to integrate an innovation-focused energy strategy with resilience to geopolitical disruptions.”

From a paper by Abhishek Halder and M. Kannadhasan:

“The growing concern over energy security has raised critical questions about the role of energy uncertainty in shaping firm-level outcomes. While prior research underscores the importance of energy uncertainty, there is limited understanding of its impact on corporate bankruptcy risk, particularly in a cross-country context. This paper presents the first empirical evidence of the relationship between energy uncertainty and corporate bankruptcy risk using a sample of listed firms from 28 countries. The findings reveal that energy uncertainty escalates bankruptcy risk, which is consistent with resource dependency, agency and pecking order theories. Contracting profit margins and surging cost of debt are two intervening mechanisms through which energy uncertainty adversely impacts bankruptcy risk, indicating that heightened costs associated with operating and financing activities inflates financial distress. We also unveil that a conservative working capital policy and superior working capital efficiency diminish the detrimental impact of energy uncertainty. Our sub-sample analyses divulges that this detrimental impact is stronger in firms operating in high energy-consuming and cyclical sectors, and in those based in energy exporting and high energy-intensity countries. Furthermore, at low levels of energy uncertainty, firms effectively curtail bankruptcy risk by executing risk management measures whereas such measures are ineffective when energy uncertainty surpasses a threshold at ∼25th percentile. Our baseline result remains unchanged on employing several robustness checks. Overall, this study yields crucial insights and suggestions for corporate managers, regulators and policymakers to navigate energy shocks and to enhance firm resilience through strategic planning and decision-making.”