The Unassuming Economist

From a paper by Ajay Chhibber:

“Contrary to common perception India is not a low inflation country. India’s inflation has in periods deviated significantly from world inflation despite increasing trade and financial integration with the rest of the world. In recent years India’s inflation rate has exceeded inflation even in Latin America and has consistently been higher that East Asian inflation. Past studies of India’s inflation follow either a Philips Curve or a structuralist approach which use a fixed mark-up cost push model. In our model we combine the two approaches with a variable markup model where instead of the output gap, which is insignificant, we postulate that excess money balances determine excess demand in the system and affect inflation through the markup. This allows our model to capture the effects of monetary policy as well as cost push factors such as real wages, relative food prices, and oil prices in understanding the dynamics of inflation in India. We find no convincing evidence that inflation targeting affects inflation or expectations but suggest keeping it as a framework for better functioning of the Monetary Policy Committee.”

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.”