The Unassuming Economist

From a paper by Jonatan Svanlund:

“In this chapter, we will study how the shift from a fixed exchange rate regime to a floating exchange rate regime and an independent Riksbank working toward an explicit inflation target took place in Sweden in the early and mid-1990s. Until the beginning of the 1990s, the overriding view among economists and politicians but also in the business community and partly in the trade unions was that a fixed exchange rate was the norm around which economic policy should be based. But in November 1992 it was impossible to maintain the exchange rate and the fixed exchange rate was abandoned, and the shift from the deeply rooted idea of a fixed exchange rate to the new system took place during a very short period. A central theme of the chapter will be the importance of ideas and their role in changing economic regulations and institutional conditions. The central role the Riksbank itself played in reformulating its policy will, therefore, be under scrutiny. The chapter concludes by discussing how the current regime can be seen in relation to general economic developments from 1993 to 2023.”

From a paper by Monsoï Kenneth Colombiano Kponou:

“This article examines the effect of gender role perceptions on the quality of women’s participation in the labor market across six Sahelian countries: Burkina Faso, Chad, Mali, Mauritania, Niger and Senegal. Using data from the demographic and health survey (DHS) to ensure comparability, the perception of gender roles was measured through a composite index. The study analyzed its effect on two employment outcomes: (i) employment sector, and (iii) remuneration mode. The findings indicate that gender roles significantly influence women’s labor market participation, specifically increasing the likelihood of women doing vulnerable jobs. Our results highlight the importance of strengthening policies that support girls’ education. Additionally, there is a need to restructure jobs to address the unique constraints faced by different groups of economic agents, including tailored incentives to promote work-life balance, especially for women.”

From a paper by Zixiang Qi, Bicong Wang, and Yaxin Wang:

“According to the increasing marginal tendency towards tax avoidance, we develop a macro theoretical model and derive an optimal path of economic growth using only dimensionless parameters, which illustrates an inverted U-shaped effect of income inequality on economic growth in the long run. Specifically, economic growth initially moves upwards and subsequently downwards as the Gini coefficient increases. Moreover, this study presents empirical evidence via dynamic GMM estimates based on instrumental variables and PMG estimates relying on cointegration analyses, consistent with the implications of our theoretical model.”

From a paper by Robert Holzmann:

“After the global financial crisis and until 2021, the primary objective of central banks in advanced economies was to implement policies aimed at increasing inflation, given that inflation had been too low for too long. Having reached the effective lower bound (ELB) of nominal interest rates, monetary policy had to resort to unconventional monetary policy (UMP) measures, which were not without negative side effects. In response to the rise in inflation in 2021, central banks returned to policy interest rates as their primary monetary policy tool and began to unwind their set of UMP measures. Assuming that inflation has been tamed, will we be able to maintain sufficient distance from the ELB to rely broadly on policy rates? Or will we again be forced to implement UMP with all its side effects and proportionality issues? Part I of the paper outlines the rationale and instruments of UMP: how it was supposed to work and how it actually worked, including its negative side effects. Part II considers alternative monetary policy options in a low inflation environment that prove limited and little convincing. The paper ends by discussing how prolonged use of UMP impacts on central bank profitability and central bank independence, also offering possible remedies.”

From a paper by Shrimoyee Ganguly and Rajat Acharyya:

“Interest rate hike as an instrument for inflation-targeting has been adopted quite aggressively in recent times by the Fed Bank of the United States, which has some far-reaching implications for emerging market economies like India. In such a context, this article explores implications of interest rate hike by a large foreign country for wage inequality between skilled and unskilled workers in a domestic economy. We focus on the supply side channel: hike in foreign interest rate affecting wage inequality through its impact on domestic investment, capital formation and consequent changes in the composition of aggregate output. We show that the wage inequality worsens if capital-cost share in a composite traded good is larger than the capital-cost share in a skill-based export-good Z. Domestic policies such as credit expansion by changing the cash-reserve ratio and increase in money supply help mitigate this worsening wage-inequality effect of interest hike abroad. This issue assumes relevance because of rising concerns among the major central banks the world over about the income distributional impacts of monetary policies, whereas most of the recent income inequality trends seem to have been contributed largely by rising skill premiums.”