The Unassuming Economist

From a paper by Saeeda Batool, and Saira Tufail:

“This study examines the link between the energy market dynamics and labor market outcomes with a focus on the impact of oil market shocks, energy-related uncertainties, and risks on labor income share. Utilizing Panel Structural Vector Autoregression (PSVAR) for a group of 29 OECD countries over the period of 1999 to 2021, this research offers key insights for economies navigating the challenge of ensuring energy security while safeguarding workers’ incomes amid evolving energy markets. The results of the impulse response analysis revealed that among different energy market dynamics, the oil price has a strong negative impact on labor income, whereas higher aggregate demand tends to increase the share of labor income. Similarly, shocks to energy security risks and energy-related uncertainties reduce labor income. The variance decomposition analysis confirms that oil supply shocks are the main factor accounting for the variability in labor income, followed by oil demand shocks. Additionally, energy security risks and economic uncertainty significantly shape the labor income variability, particularly in the medium to long term, by increasing the volatility and unpredictability in labor markets. These findings underscore the critical need for policies that address the vulnerabilities of the labor income share against these shocks.”

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 Puneet Vatsa, Gabriel Pino, Dragan Miljkovic:

“Using partially identified Bayesian structural vector autoregressions, we examine how food price shocks have influenced core inflation and inflation expectations in the United States since 1990. This is important, given the conspicuousness of food prices and the substantial share of food expenditure in households’ budgets. Shocks raised one-year expectations immediately, with effects lasting nine quarters; they increased core inflation with a short delay. Long-term expectations were largely unaffected. Counterfactuals show that one-year expectations would have been lower in 2020 and 2022 without these shocks. The findings suggest food price shocks warrant a measured response, not an overreaction, from central banks.”

From a paper by Naveen Kumar & Dibyendu Maiti:

“This paper examines the understudied relationship between anthropogenic global warming and wealth inequality, two defining challenges of the twenty-first century, by focusing on the impact of temperature on subnational wealth inequality across 1000 regions worldwide, using data from the Global Data Lab spanning the period from 1992 to 2021. Building on earlier climate-economy studies, this paper estimates heterogeneous parameter models under a common factor framework, which addresses econometric challenges of heterogeneous slopes, cross-sectional spillover, unobserved common factors, and explicitly allows the temperature effect on wealth to differ across subnational regions. Our preferred specification estimates provide suggestive evidence that a 1 C rise in temperature is associated with a modest increase in wealth inequality, measured by Gini coefficients, approximately 0.54 units. The effect of precipitation on wealth inequality remains unclear. Second, the results suggest that poorer and hotter regions, predominantly located in the Global South, are adversely affected by temperature-induced wealth inequality. Third, we empirically identify two key plausible channels among others through which temperature worsens wealth inequality: (i) health and education-induced reduction in labor productivity, (ii) worsening gender equality. Our findings are consistently robust across alternative specifications, datasets, and estimation strategies. The evidence suggests that climate change will significantly shape the trajectory of future global inequality and poses serious challenges for sustainable development under business as usual emission scenarios.”

From a paper by Thuy Dao, Haithem Awijen, Rizwan Ahmed, and Hachmi Ben Ameur:

“This study examines the influence of technological innovation and geopolitical risk on energy security by analysing energy diversification indices—the Adjusted Herfindahl-Hirschman Index (HHI) and Country Diversification Index (CDI)—across 117 nations from 2002 to 2021. Utilising Pooled OLS, Feasible Generalised Least Squares (FGLS), and Multilevel Regression models, we evaluate the impact of patent-driven innovation and geopolitical volatility on energy diversification, political risk, and covariance effects. Our study concentrates on significant geopolitical events, such as the Iraq War, the Annexation of Crimea, and the 2014 Oil Price Collapse. Findings indicate that technological innovation consistently improves diversification and covariance dimensions, however, its impact on risk is contingent upon specific events. Conversely, geopolitical risk exhibits inconsistent statistical significance, indicating a more intricate, indirect influence on energy security outcomes. These findings provide practical recommendations for policymakers aiming to integrate an innovation-focused energy strategy with resilience to geopolitical disruptions.”