The Unassuming Economist

From a paper by Michał Brzozowski and Joanna Siwińska-Gorzelak:

“This article examines the impact of robotization on the short-term correlation between employment and output. We estimate the Okun’s Law relationship utilizing panel data from 35 OECD countries for the period from 1996 to 2020. Our empirical evidence, backed up by a battery of robustness tests, consistently shows that automation contributes to job-preserving recessions by mitigating increases in unemployment during economic contractions. This challenges common assumptions regarding the detrimental impact of automation on employment. Additionally, we do not find support for the notion that automation causes jobless recoveries.”

From a paper by Karen Dynan and Douglas Elmendorf:

“This paper simulates economic developments as if the discretionary fiscal stimulus enacted in the
past two recessions had not occurred and additional automatic fiscal stabilizers had been deployed
instead. For the calibration of key economic relationships most consistent with the empirical
literature, we find that more sustained fiscal stimulus would have pushed unemployment down
more rapidly following the Great Recession and that more limited stimulus would have caused
inflation to increase much less following the COVID recession. We caution, though, that our
estimates are uncertain given the large number of assumptions embedded in the calculations. Under
different assumptions about the supply side of the economy when resource utilization is high, the
stimulus enacted in early 2021 was not a significant cause of the observed runup in inflation that
followed, and substituting an automatic stabilizer would have made little difference to inflation.”

From a paper by William Gale, Ian Berlin, and Sam Thorpe:

“How should the U.S. respond to its unsustainable fiscal outlook? How and when a country should fiscally consolidate depends on its existing circumstances, policies, and institutions. We review the experiences of other countries that attempted consolidations and highlight lessons applicable to the U.S. We find that (a) the U.S. does not face a short-term crisis, so it can employ gradual adjustments, which may minimize short-term harm, (b) consolidation should occur in a strong economy with monetary accommodation, and (c) tax increases (spending cuts) could plausibly play a larger (smaller) role in US consolidations than in European adjustments.”

From a paper by Michalis Nikiforos, Vlassis Missos, Christos Pierros, and Nikolaos Rodousakis:

“This paper investigates the structural transformation of the Greek economy over the past fifteen
years, focusing on the increasing dominance of the Accommodation and Food Service Activities
(AFSA) sector in the aftermath of austerity and structural reforms. Despite promises of productivity
gains through labor market and product market reforms, the Greek economy has experienced a sharp
decline in labor productivity and a significant reallocation of employment towards low-productivity
sectors, especially AFSA, reminiscent of a Lewis-type dual sector economy. Using a simple Panel-VAR
model we find that declining aggregate demand and real wages were key drivers of this productivity
collapse. Our findings support theories of technological change that emphasize output growth and
the cost of labor as fundamental determinants of productivity growth.”

From a paper by Oleg Gurshev and Lucas van der Velde

“We examine the contribution of supply and demand shocks to income inequality in a panel setting. Leveraging the newly created Global Repository of Income Dynamics, we study the relationship between unanticipated supply and demand shocks and income inequality, distinguishing between domestic and international (US) shocks. Our results show that shocks originating in the United States, on average, increase income dispersion in other developed countries: demand shocks tend to produce stronger reactions than supply shocks. We explore different transmission channels: trade, financial and expectations. The trade channel appears particularly relevant for supply shocks. Comparing these external shocks with domestic counterparts, we find that domestic demand shocks exhibit similar dynamics, while domestic supply shocks are associated with declines in income inequality.”