The Unassuming Economist

From a paper by Joan Crespo & Jesús Peiró-Palomino:

“This article studies the dynamics of innovation in the US Core-Based Statistical Areas over a long period (1860–2019), with the production of patents used as a proxy for innovation. The results show that innovation has always been highly concentrated, albeit with alternating periods of greater and lesser concentration. Despite the relative stability of the distribution of innovation, cities have experienced notable movements inside the distribution, which are the result of progressive long-run tendencies. Moreover, a remarkable change in the innovation landscape is found due to cities in the Northwest and Midwest gradually losing ground to cities in the South and the West. Finally, the technological specialization of cities changes rapidly, and the technological life cycle phase conditions cities’ mobility within the innovation distribution. Specialization in growing technologies helps cities to improve their relative position in the distribution, while the opposite is the case for cities that specialize in mature technologies.”

From a paper by Johnson Worlanyo Ahiadorme:

“The question of the implication of the macroeconomic policy environment for welfare may be an empirical one, and the answer may well differ amongst economies. In this paper, we evaluate the role of monetary policy toward inclusive growth. The evidence from a large sample of countries shows that in both the short and long terms, low inflation and stable economic growth are associated with lower income inequality, improved well-being of the poor and greater inclusion. Both short-term and long-run effects are statistically significant and show that monetary policy that aims at low inflation and stable economic growth is most likely to improve permanently growth inclusiveness and the conditions of the poor. However, in advanced economies where inflation rates are considerably lower, disinflation hurts the poor and equity, ignites greater unemployment cost, and worsens growth inclusiveness. In any case, price and output stability is necessary for greater growth inclusiveness. Thus, the twin objectives of macroeconomic stability and inclusive growth offer no trade-offs.”

From a paper by Christophe Martial Mbassi, Cyrille Michel Samba, Thérèse Elomo Zogo:

“This paper contributes to the ongoing discussion about “ecological macroeconomics”. Specifically, we explore the effects of monetary policy, namely inflation targeting (IT), on energy consumption in a global sample of 145 countries between 1980 and 2017. We use various standard panel data approaches such as fixed effects (within) estimator, and two-step system GMM among others, followed by propensity score matching to address the self-selection bias inherent in IT adoption. Our results show that IT significantly increases energy consumption, and this effect goes through the macroeconomic volatility and FDI channels. Moreover, improvements in the institutional framework mitigate the effect of IT. The results also highlight the importance of central bank experience given that, over time, IT significantly reduces energy consumption. Finally, we find that the effect of IT on renewable energy consumption is not robust. Overall, our results point out the need to have environmental considerations in designing macroeconomic policies to foster the ecological transition.”

From a paper by Dong Jin Lee, Joon-Ho Hahm, and C yn-Young Park:

“This paper investigates the relationship between monetary policy and economic inequalities in
the Republic of Korea. We consider both domestic and external monetary conditions in the analysis, allowing us to examine their varied impacts on income and wealth inequalities. Using data from the Household Income and Expenditure Survey and the Korean Labor and Income Panel Study, we find that an expansionary domestic monetary policy shock tends to reduce income inequality, while its effect on net wealth inequality is negligible. Conversely, an expansionary external liquidity shock, as indicated by unanticipated net capital inflows, tends to reduce income inequality but exacerbates net asset inequality. These findings suggest that both domestic monetary policy and external liquidity shocks affect economic inequalities, but through different channels.”

From a paper by João Tovar Jalles, Carola Pessino, and Ana Cristina Calderon:

“Widening income disparities, higher corruption, and increased informality in many emerging market and developing economies (EMDEs)—all with pressing and mounting fiscal problems—have rekindled interest in the empirical analysis of the key factors determining the occurrence of fiscal consolidations. Using discrete choice models, this paper examines the drivers of fiscal consolidation episodes in a sample of 148 EMDEs between 1980 and 2019, with a focus on Latin American and Caribbean countries. Inequality does not seem to drive consolidations—which are more likely during good economic times—while more informality increases the probability of their occurrence and corruption decreases it. In turn, when examining the drivers of successful consolidations, larger income inequality acts as a boost, while informality is a hinderance. In fact, while the size of the public investment multiplier in Latin America and the Caribbean is larger than in other regions, when informality is high, the multiplier effect is reduced to a much lower and insignificant magnitude. Results are robust to several sensitivity and robustness tests.”