The Unassuming Economist

From a paper by Paolo Di Lorenzo, and Eric Anthony Lacey:

“This paper provides an overview of issues related to fiscal consolidation drawing on the literature; it distills some lessons from fiscal consolidation episodes using a new database covering 196 countries from 2000 to 2023. The paper discusses the motives, timing, design, and political economy of fiscal consolidation, as well as its macroeconomic and social impacts. We find that fiscal consolidation is often necessary and successful in restoring fiscal sustainability by stopping debt accumulation, but less successful in lowering debt levels; moreover, it can also entail significant costs and trade-offs in terms of growth, poverty, and inequality. Composition also matters, as expenditure-based consolidations tend to be more successful than revenue-based consolidations and less likely to cause a deterioration in poverty rates or inequality. However, revenue gains usually play an important role starting in the second year of consolidation. Overall, the paper suggests that successful fiscal consolidation requires careful consideration of the economic context, the composition of adjustment, complementary economic policies, and communication and credibility of the strategy. The best way to implement fiscal adjustment is to establish a consolidation strategy in normal/non-crisis times} to ensure that governments do not have to rely on abrupt, pro-cyclical adjustments that may exhaust all buffers in the aftermath of a shock.”

From a paper by Munseob Lee, Claudia Macaluso, and Felipe Schwartzman:

“Our paper addresses the heterogeneous effects of monetary policy on households of different races. The cyclical volatility of real income differs significantly for households of different races and income levels, reflecting differential exposure to fluctuations in employment and consumer prices. All Black households are disproportionately affected by employment fluctuations, whereas price volatility is only particularly pronounced for Black households with income above the national median. The latter face 40 percent higher price volatility than both poorer households of the same race and white households of similar income. To evaluate the effects of policy, we propose a New Keynesian framework with heterogeneous exposure to employment and price volatility. We find that an accommodative monetary stance generates asymmetric outcomes within race groups. Low-income households experience unemployment stabilization benefits, while high income ones incur real income volatility costs. Differences are especially large among Black households. Reducing the volatility of unemployment by 1 percentage point engenders a 1.17 percentage point reduction in overall income volatility for poorer Black households, but an increase of 0.6 percentage points in income volatility for richer Black households.”

From a paper by Won Joong Kim, Juyoung Ko, Won Soon Kwon, and Chunyan Piao:

“Different crises, such as the GFC, COVID-19 pandemic, and RU-UA war, lead to the common economic consequences: fluctuations in global inflation. In a globalized world, global inflation matters because it also affects the national economy. Although the literature provides determinants of inflation at national and regional levels, no studies have measured global inflation and analyzed its sources of fluctuations during the GFC, COVID-19, and RU-UA war periods. To fill this void, we measure monthly global inflation and estimate its dynamics using a time-varying parameter structural vector autoregression model with stochastic volatility. The results from global data show that global inflation during crisis periods is greatly affected by the monetary and the oil price shocks. Finally, the application to the EMU member countries implies that high EMU inflation rates in recent years were dominantly caused by excessive expansionary monetary policy in the EMU system.”

From a dissertation paper by Sebastian Stephan Leue:

“The three economic drivers of globalization are the free flow of labor, goods, and capital. Together they have shaped three waves of globalization over the last 200 years. This dissertation encompasses all three waves of globalization between 1877 and 2020, and it investigates its three main economic drivers: International migration, trade, and investment. Every chapter brings forward new insights to each of the three drivers separately. Chapters 1 and 2 provide novel and causal solutions to open questions to our fundamental understanding of migration and international trade, by exploiting two natural experiments over the long run. Chapter 1 contributes to the fundamental understanding of the causal effect of income on migration in the context of economic development. Chapter 2 revisits the distance puzzle in international trade. Chapter 3 examines the role of politics in Chinese exports of critical medical goods during the COVID-19 pandemic. Finally, Chapter 4 evaluates the economic impact of the annual meeting of the World Economic Forum in Davos, Switzerland. This dissertation further aims to provide new perspectives to all three economic drivers through causal empirical research. It introduces four spatially and temporally granular datasets that provide the foundation of novel insights to the globalization nexus through quasi-experimental methods.”