The Unassuming Economist

From a new IMF report:

“For the 2015 Paris Agreement on climate change, the European Union (EU) pledged to reduce greenhouse gas (GHG) emissions by at least 40 percent below 1990 levels by 2030. Policies envisioned to achieve this goal include: tightening the Emissions Trading System (ETS) covering large emitting firms; requirements for energy efficiency, vehicle CO2 emission standards, and renewables; and policies to meet national-level targets for small-scale emissions sources outside of the ETS. This note analyses various refinements to the envisioned policy package that might meet the 2030 commitments with lower costs and greater fiscal and domestic environmental benefits (though implications for energy security are not considered). The results suggest potential economic and fiscal benefits from greater reliance on emissions pricing—for example, replacing tighter energy efficiency regulations with a higher ETS emissions price and use of carbon taxes (or tax-like instruments) for emissions outside the ETS sector. Other options, such as equating carbon charges across sectors and across countries, yield some economic benefits at the EU level, but do not raise revenue and, without compensating measures, impose uneven burdens across countries.”

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From a new IMF report:

“Income inequality has increased in several euro area countries over the last few decades. We explore whether the relationship between income inequality and growth depends on equality of opportunity. This question is critical in the euro area where several countries exhibit higher levels of inequality of opportunities. Our econometric results confirm a robust negative effect of widening income disparities on growth in presence of high inequality of opportunity. Reducing income inequality can therefore accelerate growth in the euro area. Over the long-run, addressing the root causes of inequality of opportunity can make growth less sensitive to shifts in income distribution.”

Continue reading here.

From a new IMF Working Paper:

“The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium. Using data that are disaggregated across both state and industry, we show the decline in the labor share is broad-based but the extent of the fall varies greatly. Exploiting a new data set on the task characteristics of occupations, the U.S. input-output tables, and the Current Population Survey, we find that in addition to changes in labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw: a high initial intensity of “routinizable” occupations; steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage. Quantitatively, we find that the bulk of the effect comes from changes in technology that are linked to the automation of routine tasks, followed by trade globalization.”

Continue reading here.

Me on BBC Radio, talking about forecasting (I come on at 4.25 for a couple of minutes and then at the end at 23.00).

On cross-country:

• Robert Shiller on Why Do Cities Become Unaffordable? – Project Syndicate
• House prices up by 4.0% in the euro area – Eurostat

On the US:

• Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment – NBER
• The Effect of Debt on Default and Consumption: Evidence from Housing Policy During the Great Recession – Harvard Joint Center for Housing Studies, Housing Perspectives
• • Not my problem: Growth spillovers from uncoordinated land use policy – Land Use Policy
• • A better way to solve the housing crisis — tax land, not development – Los Angeles Times

On other countries:

• [Australia] How Did the Housing Market Perform Over the Financial Year? – CoreLogic
• [Canada] Mortgage and Consumer Credit Trends – CMHC 
• [Spain] Situación Inmobiliaria España – BBVA