The Unassuming Economist

From a paper by Guilherme Klein Martins:

“This paper provides evidence that austerity shocks have long-run negative effects on GDP. Our baseline results show that contractionary fiscal shocks larger than 3% of GDP generate a negative effect of more than 5.5% on GDP even after 15 years. Evidence is also found linking austerity to smaller capital stock and total hours worked in the long-run. The results are robust to different fiscal shock datasets, the exclusion of particular shocks, and the use of cleaner controls. The paper also engages with the emerging discussion regarding fiscal multipliers heterogeneity, presenting evidence that the effects of exogenous fiscal measures are nonlinear on the shock size. The results also contribute to the broader discussion on the long-run effects of demand by suggesting that such shocks might permanently affect the economy.”

From a paper by Jelena Momčilović and Mirjana Miletić:

“In this paper we showed how labour market factors are included in the macroeconomic model which the National Bank of Serbia uses for the medium-term inflation projection, thus enabling an insight into labour market trends, as well as an analysis of the link with other macroeconomic indicators, notably their effect on inflation. The estimates obtained by applying the Kalman filter indicate that NAIRU is still below the unemployment rate, suggesting a positive unemployment gap and showing that the labour market in Serbia is not exerting any major pressures on inflation. The paper also presents the results of testing the relevance of the hysteresis effect in the unemployment rate for Serbia. The hysteresis effect was confirmed by applying the unit root test and estimating the statistical significance of the stochastic trend in the NAIRU series.”

From a paper by Sara El Aboudi, Youssef Jouali, Mounir El Bakkouchi and Abdellah Echaoui:

“In this study, we analyze the cross-impact of inflation, exchange rates and economic growth on income inequality in Morocco between 2000 and 2022, based on the GINI index as a measure of inequality. Its main objective is to understand how these macroeconomic variables influence income disparities. Our methodology is based on a VAR model to capture dynamic interactions between variables. To validate the robustness of the model, Granger causality tests and specification tests, including tests of homoscedasticity and autocorrelation of residuals, were used. The result is that inflation has a significant positive impact on income inequality, and exchange rate fluctuations directly influence inequality. Furthermore, economic growth helps to reduce inequality, although this effect depends on the distribution of the benefits of this growth. This study contributes to the existing literature by providing empirical evidence of the importance of macroeconomic stability and educational and fiscal policies in reducing income inequality.”

From a paper by Alihan Serdengeçti:

“The impact of financial liberalisation on income distribution has attracted increasing attention. However, the debate on whether financial liberalisation is a gain or a loss is still ongoing. Especially in the 1990s, following the collapse of the Bretton Woods system, financial liberalisation became a globally widespread concept. While this concept constituted the basis of neoliberal policies, it emerged as a saviour solution in periods when state policies were dominant. Financial liberalisation means the implementation of policies and reforms that emphasise the liberalisation of the international financial system and the liberalisation of capital flows. In this period, processes such as liberalisation of capital flows, development of financial markets, deregulation of the banking sector and increased international financial integration have come to the fore. In this context, examining the impact of financial liberalisation on income distribution has become an important issue among economists and researchers. Moreover, among the countries where financial liberalisation policies have been implemented, some of them have achieved positive results, while in others they have led to costly crises. In this framework, the aim of this study is to examine the impact of financial liberalisation on G-7 countries during the 2008 crisis period. This is because the potential effects of financial liberalisation on developed countries during crisis periods are desired to be observed. In the study, the relationship between financial liberalisation and income distribution was analysed by panel data analysis method using data from 2003-2013. According to the results of the analysis, it is observed that financial liberalisation has a positive effect on income distribution in developed countries.”

From a paper by Michael Christl, Silvia De Poli, and Viginta Ivaškaite-Tamošiune:

“This paper examines the extent to which fiscal policy protected household incomes in the second year of the COVID-19 pandemic in EU countries. Using microsimulation techniques and detailed Eurostat data, we analyse this impact separately for employees and the selfemployed. We show that while on average income protection was similar for employees and the self-employed at the EU level, the heterogeneity both between and within countries was much higher for self-employed households in 2021. For employees, both monetary compensation schemes and unemployment benefits played a similar role in absorbing the income shock, whereas for the self-employed it was mainly monetary compensation schemes and much less so unemployment benefits that stabilised their income. Overall, we find that monetary compensation schemes, together with automatic stabilisers, absorbed a substantial part (67%) of the market income shock in 2021, albeit with a reduced cushioning effect compared to the previous year (74%). Monetary compensation schemes alone account for almost a third of this cushioning effect in 2021. Our paper underlines the importance of targeted policies to ensure comprehensive support for vulnerable households amid ongoing economic uncertainties.”