The Unassuming Economist

From a paper by Marko Senekovič, and Jani Bekő:

“There is a lack of research concerning the influence of economic inequality on the size of fiscal multipliers. To address this, we apply a VAR methodological framework to assess the magnitude of fiscal multipliers for 47 economies, using a new quarterly dataset spanning the period from 1995 to 2021. We then gauge the impact of the battery of income and wealth inequality measures on the size of government consumption multipliers. To ensure the robustness of the results, a yearly panel data sample was also tested. The key findings of our empirical exercise can be outlined as follows. First, the estimated government consumption multipliers exhibit a generally positive trajectory throughout the forecast horizon in approximately 66% of the countries analysed, while in 19% of the sample, they remain largely negative, and in the remaining 15% of cases, they display a mixed pattern, being positive only during certain periods. Second, in 53% of the countries examined, the fiscal multiplier exceeds the threshold of one at least once during the forecast period, suggesting a greater output effect of fiscal expansion in these countries. Third, the more pronounced the income and wealth inequality in a country, the higher the value of the fiscal multiplier. This research outcome supports the proposition that higher economic inequality, especially income inequality, will generate greater government spending effects.”

From a paper by Mischa Stratenwerth:

“This dissertation explores how the political stability of the macroeconomic policy regime underpinning the export-led German growth model has been maintained, despite the model’s uneven distributive outcomes. It combines document analysis and interviews to map the positions of trade unions and business organizations across fiscal, monetary, and eurozone policy debates – covering both relative winners and losers of the growth model. Expanding on emerging Gramsci-inspired conceptualizations of growth model politics, the study focuses on investigating coalitional patterns among producer groups and on the actor-specific mechanisms that secure their support, consent, or compliance. In doing so, it enriches the literature on growth model politics by offering an empirically grounded and conceptually nuanced perspective that complements and challenges broad-brush structuralist, functionalist, and culturalist explanations of the reproduction of growth frameworks. Overall, the in-depth research largely confirms expectations of a dominant growth coalition forming around key business interest groups, but paints a complex picture with regard to the positioning of non-core groups within these dynamic coalitional configurations. Findings indicate that the persistent reproduction of the export-oriented policy framework cannot be fully explained by interest alignment or ideational convergence, but additionally relies on a broader set of cohesion-sustaining mechanisms – ranging from compensation and depoliticalization to coercive enforcement, ignorance, and exclusion – that contribute to obscure distributive conflicts, encourage passive acquiescence, and contain dissent.”

From a paper by Hui Zhou, and De-Xin Zhang:

“Previous studies have focused on size metrics when exploring the economic consequences of financial development. However, the size of financial markets does not necessarily relate to their level of development. On the basis of cross-country panel data, we explore the impact of a new measure of financial development – stock market concentration – on income inequality. We find that concentrated stock markets dominated by a small number of large cap firms exacerbate income inequality. This impact strengthens with stock market activity, but foreign direct investment and financial inclusion mitigate this impact. The effect of stock market concentration on income inequality is more pronounced in countries with poor governance and stock market-based financial systems. Further research shows that stock market concentration remains significantly positively related to income inequality after controlling for the stability of large enterprises. Mechanism tests suggest that concentrated stock markets exacerbate income inequality by discouraging entrepreneurship and new businesses.”

From a paper by Angela Okeke, Constantinos Alexiou, and Joseph Nellis:

“We explore the long-term distributional consequences of fiscal adjustment episodes and the dynamic consequences of fiscal consolidation for countries with large sized consolidations vis-a-vis countries with small sized consolidations. In this direction, panel ARDL and impulse response functions using local projections are adopted for a panel of 16 OECD countries covering the period 1980 to 2019 based on a newly updated fiscal adjustment dataset, compiled by Gustavo Adler et al. (2024). The evidence suggests that adverse income disparities which tend to arise upon implementation of fiscal adjustments are dynamic and persist through the long run. While baseline results for the Gini suggest that long-term inequality levels hold at approximately the same as peak levels (by the 7th period), inequality measured by the bottom 40 income share appear to exhibit peak levels at the 14th period, suggesting a more persistent impact. Disaggregating impact by adjustment size, evidence is also offered for small-sized adjustment and large-sized adjustment countries showing that small-sized adjustments lead to gradual but prolonged inequality effects, while large-sized adjustments generate steeper but shorter-lived inequality increases.”

From a paper by Michael Lloyd:

“In April 2023, Jake Sullivan, in a speech to the Brookings Institute, formally announced the replacement of what had become known since the1990s as the Washington Consensus with a New Washington Consensus. This paper defines and briefly describes the original Washington Consensus. It goes on to describe and discuss in detail the New Washington Consensus and its implications. Finally, the paper outlines the potential Trump approach to this specific Biden legacy, whether or not acknowledged. The broad geoeconomic and geopolitical implications of the unwinding of what is likely to transpire are explored briefly in the context of the Trump Presidency.”