The Unassuming Economist

From a paper by Behnaz Minooei Fard and Willi Semmler:

“In some academic and policy circles, carbon pricing, generally in the form of Cap & Trade or carbon taxes (see Metcalf and Stock (2020)), is often seen as a key strategy for tackling climate change and its associated risks. Others support directed technical change and direct investments in cleaner energy sources (see Acemoglu et al. (2012) and Aghion et al. (2022)). One can design theoretical and model-guided strategies and efficient or optimal paths to decarbonization of the economy. Politically, however, one of the most important issues is that significant behavioral constraints exist in actual policymaking. This paper provides an overview and survey of the strengths and weaknesses of either side of the decarbonization strategy and the role of behavioral drivers toward a low-carbon economy, assessed from the macro-and microeconomic perspectives.”

From a paper by Nigel Meade and Ciaran Driver:

“Policy makers are concerned with the accuracy of GDP forecasts and want to understand the reasons for the revision of forecasts. We study these issues by examining forecasts of annual UK GDP growth by a panel of agents, published monthly by HM Treasury. We focus on two main issues: the developing accuracy of the group-mean forecast as horizons shorten and the identification of information categories underlying agents’ forecast revisions. The accuracy of the group-mean forecast is poor; there is evidence of information rigidity in forecasts within the target year, and accuracy only improves in May of the target year when contemporary information flows lead to increased accuracy. We find a pessimism bias; the median errors of group-mean forecasts are increasingly positive for horizons shorter than 17months. We seek to explain revisions to both long- and short-horizon group-mean forecasts and individual agent forecasts. Modeling individual agents’ forecast revisions using a moving window, we note a consistent tendency by agents to revise their forecast towards the group-mean. Although their importance varied over time, the main information categories explaining revisions were, over longer horizons, the cost of finance, production, and a business confidence indicator. FX rates and inflation were influential over shorter horizons.”