The Unassuming Economist

From a paper by Dong-Hyeon Kim, Peiyao Liu, Shu-Chin Lin:

“Rising income and wealth inequality have renewed interest in their determinants, positioning the financial sector as a central focus of the ongoing debate. Nevertheless, controversy persists regarding the relationship between financial development and economic inequality. While much of the empirical literature focuses on income inequality, wealth inequality has received comparatively less attention. Given the extreme concentration of wealth and its influence on economic opportunity and political power, this paper explores whether it is excessive or insufficient financial development that contributes to the widening disparities in wealth distribution. Using a cross-country panel data framework, the study finds that financial development exacerbates wealth inequality by increasing wealth concentration at the top and diminishing wealth shares in the bottom 50% up to a certain threshold. Beyond this point, financial development results in a reduction of top wealth shares and an increase in the wealth shares of the bottom 50%, thereby narrowing wealth inequality. A similar pattern is observed for income inequality. Pathway analyses indicate that these effects are partially mediated through entrepreneurship. Insufficient financial development adversely impacts both wealth and income distribution.”

From a paper by Liesel A. Ritchie, Susan L. Cutter, Nnenia Campbell, Melanie Gall:

“In the United States, segments of the population were suddenly and unexpectedly thrown into need during the COVID-19 pandemic and began to use food banks and other non-profit organizations providing food services. Here we examine the meaning of what we call the “new vulnerable.” The pandemic became a test of the entire food system, and clearly exposed the need for a re-examination of preparedness in the short run, and vulnerability and resilience in the long term. We explore whether the demographics associated with the drivers of vulnerability (e.g., ageism, racism, ethnocentrism) have changed. The lived experiences of vulnerable groups are defined by a form of epistemic and structural injustice—the dismissal of the knowledge of their own lives and needs that socially marginalized groups experience.”

From a paper by Sergio Julio Chión-Chacón and Kevin Antonio Álvarez García:

“This study empirically investigates the impact of Inflation Targeting (IT) on nominal interest rates over the past 40 years, focusing on 10 advanced and emerging economies. By using a Binary Regime Model embedded within a Backward-Looking Taylor, our findings confirm that IT adoption has significantly contributed to reducing interest rates, with the strongest effects observed in Latin American countries. To reinforce these results, we incorporate Smooth Transition Regression (STR) models, with and without instrumental variables, allowing for a more suitable representation of gradual policy transitions. The STR estimates consistently support our main findings, validating the robustness of the observed impacts. Furthermore, we show that, both before and after IT implementation, central banks display a stronger emphasis on responding to inflation than to the output gap, with this focus intensifying under IT regimes.”

From a paper by Emiliano Brancaccio, Fabiana De Cristofaro, and Raffaele Giammetti:

“The so-called ‘IMF-OECD consensus’ suggests that labour market deregulations increase employment and reduce unemployment. This paper presents a meta-analysis of research on this topic based on MAER-NET guidelines. We examine the relation between Employment Protection Legislation indexes on one hand, and employment and unemployment on the other. Among 53 academic papers published between 1990 and 2019, only 28 per cent support the consensus view, while the remaining 72 per cent report results that are ambiguous (21 per cent) or contrary to the consensus (51 per cent). The decline in support for the consensus view is particularly evident in the last decade. Our results are independent of the citations of papers examined, the impact factor of journals and the techniques used. A FAT-PET meta-regression model confirms these outcomes.”

From a paper by Marek A. Dąbrowski, Jakub Janus, and Krystian Mucha:

“In this paper, we propose a novel approach to classifying inflation-targeting (IT) economies based on fractionally integrated processes. Motivated by the rising prevalence and diversity of IT strategies, we leverage variation in the persistence of inflation rate series to identify four de facto IT strategies, or ‘shades’ of IT. Moving from negative orders of fractional integration, indicating anti-persistent behaviour, to more persistent long-memory processes, often associated with less credible policy frameworks, we classify countries into average IT, strict IT, flexible IT, and uncommitted IT categories. This framework sheds light on the differences between declarative and actual monetary policy strategies across 36 advanced and emerging market economies. Notably, we demonstrate that while most economies fall into the flexible IT category, extreme cases, including the uncommitted IT category, occur with marked frequency. Furthermore, we link our IT classification to institutional features of national monetary frameworks using ordinal probit models. The results suggest that differences across IT categories are related to variations in the maturity and stability of IT frameworks, with less pronounced connections to central bank independence and transparency.”