The Unassuming Economist

From a paper by Javier Bilbao-Ubillos and Ana-Isabel Fernández-Sainz:

“In line with the orientation of EU economic policy, the Spanish government has favoured a strategy of internal devaluation as a way of adjusting price levels within the currency union and offsetting the fall in competitiveness accumulated over time, as evidenced by the persistent trade deficit. The results of comparative empirical studies indicate that the internal wage devaluation applied in Spain as a crisis exit strategy (in the form of labour reforms and, in general, measures to contain labour costs) does not seem to have attained the desired goals in terms of reducing the relative prices of exports and consolidating a model of growth based on external demand. Indeed, the estimates drawn up show that tailwinds – the depreciation of the euro as a result of the measures taken by the ECB, greater economic activity by trading partners and the fall in the price of oil – exercised a decisive influence in the trends followed by the prices of exports and the balance of trade during the period of crisis management in Spain.”

From a paper by Andrea Ariu and Laura Ogliari:

“This paper shows that trade in services is still at its infancy in Africa; its growth started later than for other developed and developing economies and, so far, it involves mostly low-skilled services. Disentangling the different sources of trade growth, we find that demand and supply determinants have been relatively stable during the period 2002‒2016, while service diversification and trade policy are the main propellants. In particular, trade in goods liberalization increased service trade as well due to the complementarities between the two. In terms of geographical and industrial involvement, services produced in Africa are able to reach farther destinations than goods, but they are concentrated on industries close to final demand, thus missing high-skilled services which are more upstream, but represent higher value-added inputs. Therefore, there is still plenty of scope to consider trade in services as a potential source of growth and development for African countries.”

From a paper by Radek Dědeček:

“This paper examines the influence of cross-border capital flows on income inequality in both origin and recipient countries. Using bilateral flow data and a panel dataset spanning 63 countries from 2005 to 2018, we employ panel regression analysis to investigate the effects of different types of capital. Our findings indicate that FDI inflows reduce income inequality in advanced countries by creating jobs and raising wages in sectors that employ lower-income individuals. Conversely, in developing countries, FDI often targets capital-intensive and high-skilled industries, increasing inequality. Portfolio investments generally increase inequality by driving up asset prices and creating instability, but can decrease inequality in emerging markets by supporting financial inclusion and reducing government financing costs. Specific scenarios, such as investments in tax havens or differences in human capital, show distinct results. Policymakers should regulate international capital flows through financial regulations, progressive taxation and international cooperation to mitigate their impact on income inequality.”

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.”