The Unassuming Economist

From a paper by John Beirne, and Nuobu Renzhi:

“This paper provides estimates of oil price pass-through (OPPT) to both producer and consumer prices for nine emerging Asian economies using a time-varying parameter SVAR model over the period 1991–2023. We further examine how global factors affect the transmission of oil prices to producer and consumer prices, specifically via shocks in global output, US monetary policy, and global financial market uncertainty. Overall, we find that OPPT is less than proportionate and mostly higher for OPPT to producer than consumer prices, while pass-through estimates also tend to be higher in the long term. In addition, we find that OPPT has been declining for most Asian EMEs in the period after the global financial crisis of 2008. Finally, while the responsiveness of OPPT to global shocks varies depending on the type of shock, contractionary US monetary policy shocks overall most significantly amplify OPPT for both producer and consumer prices.”

From a paper by Samina Iqbal, and Muhammad Faisal Khan:

“Inflation targeting (IT) has emerged as a dominant monetary policy framework adopted by central banks to enhance price stability and macroeconomic credibility. This study empirically examines the impact of inflation targeting on macroeconomic performance, focusing on inflation control, output stability, and economic growth. Using cross-country evidence from inflation targeting and non-inflation-targeting economies, the analysis evaluates whether IT frameworks deliver superior macroeconomic outcomes. The findings suggest that inflation targeting is associated with lower inflation volatility and improved policy transparency, though its effectiveness depends heavily on institutional strength, fiscal discipline, and financial market development. The study contributes to ongoing policy debates by highlighting both the benefits and limitations of inflation targeting in emerging and developing economies.”

From a paper by Muhammad Ramzan Kalhoro, Ameet Kumar, Khine Kyaw, and Pervaiz Ahmed Memon:

“This paper investigates how financial development and institutional quality influence the negative impact of economic uncertainty on economic growth. Using a panel dataset of 32 countries covering the period 2004–2017, the study examines whether the institutional context can mitigate the adverse effects of uncertainty, and through which channels this effect is transmitted. To address potential endogeneity issues, we employ the system-GMM estimation method and margin plot techniques. The overall level of financial development is measured using principal component analysis (PCA). The results show that financial development reduces the negative impact of uncertainty on economic growth through both the investment and consumption channels. Further analysis reveals that access to finance, financial depth, financial stability, and stock market depth all play significant roles in moderating this relationship. In contrast, financial efficiency shows no mitigating effect. Regarding institutional quality, government stability helps to lessen the adverse effects of uncertainty, while bureaucratic quality does not appear to have a significant influence. The findings highlight the importance of institutional context in shaping how uncertainty affects economic growth and contribute to the limited literature on the role of financial development in this relationship. This study also pioneers the analysis of how institutional quality interacts with financial development to influence the uncertainty–growth nexus. From a policy perspective, governments should promote financial system development to cushion the economy against uncertainty, and policymakers should consider the state of financial markets when designing strategies to sustain growth under uncertain conditions.”

From a paper by Dooyeon Cho, and Seunghwa Rho:

“Using survey data on households’ inflation expectations in Japan, this study investigates how the tone of central bankers’ speeches, measured with FinBERT, a domain-specific large language model, affects these expectations across the business cycle. Our findings indicate that a positive tone in central bank communications significantly boosts inflation expectations during recessions by increasing public confidence and promoting beliefs about future inflation. By contrast, during expansions, this positive tone has little impact. We also find that monetary policy shocks do not significantly affect inflation expectations in Japan. Given the country’s unique economic challenges and prolonged deflation, these findings can provide important policy implications for Japan, as managing inflation expectations is critical to its monetary policy. Overall, our results suggest that central bankers’ speeches in Japan play an important role in shaping inflation expectations, particularly during economic downturns, beyond the influence of conventional policy rate adjustments.”

From a paper by David Sturrock, and Peter Levell:

“We study the impact of the UK house price boom on the intergenerational persistence of homeownership, housing wealth, location and earnings. Using price variation driven by geographic differences in the elasticity of housing supply, we find that increases in local house prices have a negative effect on homeownership and increase the intergenerational persistence of housing wealth. We show that by age 28 to 37 around 15% of parental gross housing wealth differences are passed through to children’s gross housing wealth. This is not explained by parental housing wealth gains increasing childrens’ likelihood of becoming homeowners, but is largely explained by the children of wealthier parents being more likely to move to and own a home in London. Moving to this high house price and high earning part of the country comes alongside an effect of parental housing wealth on occupation choice and a positive effect of parental housing wealth on the likelihood of being a top earner for men. Increased parental housing wealth causes larger wealth transfers to adult children. We interpret these findings with a model in which wealthier parents help their children overcome liquidity constraints to move to high house price parts of the country. Counterfactual simulations show that the UK house price boom doubled the intergenerational persistence of housing wealth and caused living in London to become more concentrated among the children of the wealthy.”