The Unassuming Economist

From a paper by Jan Acedański and Marek A. Dąbrowski:

“This paper provides novel insights into the Feldstein-Horioka puzzle. The famous finding of Feldstein and Horioka (1980) is that despite perfect international capital mobility, domestic saving does not flow among countries to equalise yields but instead is tightly related to domestic investment. We observe that the link between empirical results and their theoretical foundations rarely goes beyond the saving-investment identity, and the research is dominated by empirical approaches coupled with advanced econometric techniques. This paper harnesses open economy macroeconomic models to demonstrate that the saving-retention coefficient informs about the relative importance of shocks rather than the degree of international capital mobility. Using the Monte Carlo experiments and the open economy RBC model, we show that the dominance of spending and foreign shocks moves the distribution of the estimated coefficient towards zero, whereas the prevalence of investment (productivity) shocks shifts the distribution towards one. On the empirical side, we proxy shocks to saving with debt and current account surprises constructed from the IMF’s forecasts and employ them to instrument the saving ratio. Using the CCE estimator, we uncover that, in line with the theoretical framework, the saving-retention coefficient is significantly lower in the instrumental variable regressions than in the regressions without instruments. Finally, we replicate the puzzling finding that investment-saving correlations are higher in advanced economies than in emerging market economies only in a few regressions without instrumentation and demonstrate that the difference disappears when the endogeneity of the saving rate is adequately remedied.”

From a paper by Jaison R. Abel, and Richard Deitz:

“We develop a measure of chronic joblessness among prime-age men and women in the United Statestermed the detachment rate-that identifies those who have been out of the labor force for more than a year. We show that the detachment rate more than doubled for men since the early 1980s and rose by a quarter for women since 2000, though it is consistently considerably higher for women than men. We then explore the economic geography of labor market detachment to help explain its rise. Results show that the detachment rate increased more in places with weak local economies, particularly those that experienced a loss of routine production and administrative support jobs due to globalization and technological change. The loss of production jobs affected both men and women and was particularly consequential in the 1990s and the first decade of the 2000s, while the loss of administrative support jobs mostly affected women and was particularly severe in the 1980s and 1990s. Moreover, we find the rise in detachment was concentrated among older prime-age individuals and those without a college degree, and occurred less in places with high human capital.”

From a paper by Jordan Rosenblum, Lane Kenworthy, and Mikael Nygård:

“We explore the link between the distribution of power and income inequality in rich capitalist democracies since 1960. We advance understanding of the impact of government ideology, a key indicator of the distribution of power, in two ways. First, previous research has tended to focus on government ideology at the country level. We make use of party manifesto data to introduce a novel global ideology measure that captures a global shift rightward since 1980, often referred to as the rise of neoliberalism. Second, for country-level party ideology, we use party manifesto data to capture changes over time. We find that this time-varying operationalization of party ideology is more strongly linked to income inequality than the standard expert-survey operationalization that assumes party ideology remains constant. In line with theoretical expectations derived from prior research, our findings show that a more rightward distribution of power at both the country and the global level is associated with increased income inequality within countries.”

From Torsten Sløk:

“The Consumer Price Index is 22% higher than in January 2020, see chart below.

This means that the prices of all goods and services that consumers spend money on are up, on average, 22%.

For example, since January 2020, the price of cereal is 30% higher, household electricity is 32% higher, and car insurance is 52% higher.

The bottom line is that the Fed’s preferred measure of inflation, namely year-over-year inflation, may be back near 2%, but the living costs for households are still dramatically higher than four years ago.

From UNDP:

“The African Union Commission and the United Nations Development Programme, represented by the Regional Bureau for Africa, signed a Memorandum of Understanding (MoU) to provide a framework for cooperation and facilitate development activities. The MoU will foster the principle of ‘One Framework, Two Agendas’ within the existing coordination and planning mechanisms across the continent – including the Africa Regional Collaborative Platform, planning mechanisms of AU Member States for national and local authorities, and UN sustainable development cooperation frameworks in the Member States.  

H.E. Dr. Monique Nsanzabaganwa, Deputy Chairperson of the African Union Commission (AUC) noted the MOU is a critical milestone enabling the AU, UNDP, and other UN entities to drive Africa towards collective progress. “We, therefore, look forward to UNDP pushing the sustainable development envelope within the framework of this MOU and enhancing synergies to ensure the integration of the two Agendas into subnational, national, regional and continental plans,” she added.

The three-year Memorandum details UNDP and AUC’s commitment to cooperating in areas of common interest by advancing bold Moonshots for inclusive growth, integration, and empowerment. With only six years left to meet the SDG targets, Africa is aligning its agenda with accelerated pathways. The renewed partnership between AUC and UNDP is a significant step towards aligning resources, expertise, and strategies to accelerate Africa’s development agenda. It will proceed within the AU-UN Framework to implement Agenda 2063 priorities and the UN’s Agenda 2030 for Sustainable Development at the national and regional levels.

Ms. Ahunna Eziakonwa UN Assistant Secretary General and UNDP Regional Director for Africa said AUC and UNDP have transformed the Regional Collaborative Platform from simple information exchange sessions into a more structured, deliberate, and results-oriented partnership. 

“Over the past four years, UNDP has co-created initiatives and programmes with the African Union that exceed $100 million across our collaborative areas. We are proud to partner with Africa’s premier continental body to collectively realize the Africa we want and the continent that the world needs. Through efforts like the African Young Women Leaders Programme, the Africa Facility to Support Inclusive Transitions (AFSIT), and our support for the African Continental Free Trade Area (AfCFTA), we are proud to advance inclusive growth, regional integration, and empowerment.” She added.

Under the Memorandum, AUC and UNDP commit to harmonised mechanisms for domesticating, awareness creation, monitoring, reporting and delivering the Second Ten Year Implementation Plan (STYIP) of Agenda 2063 alongside the SDGs in support of all Stakeholders, including but not limited to Member States, development partners, private sector, Regional Economic Communities, citizens of African Union Member States, and civil society. AUC and UNDP also pledge to consult and keep each other informed of matters of common interest and review the progress of partnership implementation through various initiatives.”