The Unassuming Economist

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

“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.”

From a paper by Óscar Peláez-Herreros:

“The paper develops a decomposition of the Okun coefficient that allows us to know what part of its value is due to the direct effect of real GDP growth on the unemployment rate and what other part is due to the indirect effects through variations in: production per hour, hours worked per employed person, participation rate, and population. The procedure applies to the 38 OECD states with annual data from 1995 to 2019. The results show large differences between states in the Okun coefficients and in their component factors. However, there are also groups of countries that share dynamics. The advantage of the proposed technique is that it identifies the factors that cause differences and helps to adopt macroeconomic policies more appropriate to each case.”

From a paper by Moayad Al Rasasi, and  Hussain Alramadan:

“This paper analyzes the symmetric and asymmetric effects of global food prices on domestic consumer prices in Saudi Arabia based on monthly data ranging from January 1990 to November 2023. The domestic consumer price data for Saudi Arabia were obtained from the International Financial Statistics of the International Monetary Fund, whereas the global food prices were downloaded from the Food and Agriculture Organization of the United Nations. Unlike in previous studies that focused on this topic in Saudi Arabia, this paper accounts for nonlinearity in the analysis. First, on the basis of the linear autoregressive distributed lag model, the empirical results show that increasing global food prices by 1% pushes domestic prices higher by 0.56%. Moreover, with respect to nonlinearity, the estimated results based on the nonlinear autoregressive distributed lag model reveal that the impact of increasing global food prices is greater and more significant than the insignificant effect of falling global food prices. In other words, a rise in global food prices by 1.0% leads to a substantial increase in domestic prices by approximately 0.47%. However, falling global food prices do not substantially impact domestic prices.”

From a paper by Raúl Ramos Lobo, Esteve Sanromà, and Runhan Ye:

“Reducing unemployment is still a priority for many governments. The objective of this paper is to analyse whether labour market reforms have succeeded in lowering the level of output growth required to reduce unemployment. With this aim, we estimate time-varying thresholds based on a first-difference version of Okun’s law for 25 countries and, then we analyse whether 32 labour reforms have contributed to reducing thresholds. The results show a high heterogeneity of thresholds among countries, but also that thresholds have shown a clear decreasing trend, mainly due to the evolution of the labour force and productivity in these countries. We also find that in 21 of the 32 considered labour market reforms, they have been effective in reducing the value of the threshold. Both results are clearly relevant from a policy perspective.”

From a paper by Loek Groot and Chintani Sooriyamudali:

“This paper estimates the global Kuznets curve (2005-2020) by plotting global mean income against global inequality, while exploring COVID-19’s impact on inequality. Using PPP adjusted GDP per capita and Gini index data from 122 countries (94% global GDP, 88% population), global income is simulated assuming lognormality. The paper finds that, at the pandemic outbreak, the world was on the downward part of the Kuznets curve. Compared to within-country inequality, between country inequality contributes significantly to global inequality. While the pandemic may temporarily decelerate the decline of global inequality, the long-term impact will be determined by the level of international cooperation in the global response to the pandemic.”