The Unassuming Economist

From a paper by Maitreesh Ghatak, and Rishabh Kumar:

“This paper addresses the lack of official data on Indian poverty between 2011-12 and 2022-23, a
period known as the “missing decade”. It critiques two major attempts to estimate poverty during
this time: one using national account growth rates and the other using a private survey. These
methods are criticised for their assumptions and data limitations. The paper proposes a new
method, imputing consumption from official labour force surveys using a wage-based model. The
authors find that poverty reduction was not as dramatic as previously suggested, with about 20%
of Indians living in poverty on the eve of the pandemic. The paper’s analysis aligns with the fact
that India’s structural economic transformation was limited, with agriculture output stagnant and
regional convergence lacking. The paper concludes that while poverty may have gone down, but
its rate of decline has been slow in the decade after 2011-12.”

From a paper by Olumide O. Olaoye, Mulatu Fekadu Zerihun, and Mosab I. Tabash:

“The study finds the structural transformation of the SSA economy will engender sustainable development. Specifically, the study finds that knowledge exerts a positive and statistically significant impact on sustainable development in SSA. Similarly, we found that technology (mobile cellular subscription and fixed telephone line subscription) promotes sustainable development. The results also show that all the economic transformation promotes sustainable development in SSA. Further, we also found that economic development and physical capital are important drivers of sustainable development in SSA. However, trade openness does not contribute to sustainable development in SSA. This might be because the combined scale effect in trade outweighs the combined technology and composition effects in SSA. This suggests the technology component in total trade activities in SSA does not promote sustainable development. The study recommends that governments across SSA should invest more in ICT and mobile cellular infrastructure or create an enabling environment that encourages digitization and the development of financial technology in the manufacturing, mining, construction, agriculture and services sectors to enhance green and quality growth for sustainable development in SSA.”

From a paper by Marta Marson, and Donatella Saccone:

“From a theoretical perspective, the ultimate effect that food price shocks may have on inequality is ambiguous. Food price shocks, indeed, generate both winners and losers and their overall impact on income distribution cannot be predicted a priori but depends on the relative magnitude of different effects. From the empirical perspective, however, the link between international food prices and income distribution is largely understudied. The present paper tries to fill the gap by analyzing a large sample of 126 developing and developed countries observed in the period 1990–2020 and studying how food price shocks are associated with changes in income distribution. The heterogeneity of the effect is investigated by means of interaction terms accounting for the food trade balance of countries and the structure of the agricultural sector, coming to three main conclusions. First, upsurging food prices increase inequality by affecting the relative income of the poorest 50 percent of the population to the advantage of richer people, especially of the richest among the rich. Second, this effect is relevant for developing countries while no clear findings emerge for high-income countries. Third, the disequalizing effect of soaring international food prices is not uniform in developing countries but largely depends on their food trade balance and some structural attributes of their agricultural sector. In this regard, food policy must reduce the domestic transmission of price shocks to poor consumers while strengthening farmers’ productive capacity and ability to cope with the shocks through better access to land, capital and productive resources.”

From a paper by Junyi Xiang, Dongmin Kong, and Fan Zhang:

“Labor cost has rapidly increased in the past decades. However, little is known about its effect on the firm-level robot adoption, and evidence about the consequences of robot adoption on firm production is limited. Based on a novel dataset of robot adoption at the firm-level, we use geographic discontinuity design to identify that labor costs significantly increase robot adoption and further improve product quality. Our findings are robust to alternative specifications and particularly pronounced for foreign firms, and firms with low financial constraints, and general trade, and firms more dependence on unskilled labor, and firms in higher position in the value chain. When adopting robots to substitute labor, firms tend to employ (layoff) skilled (unskilled) labors, which increases expenses on employee training.”

From a paper by Joshua Aizenman:

“A growing share of emerging markets (EMs) uses hybrid versions of inflation targeting that differ from the IT regimes of the OECD countries. Real exchange rate and international reserve changes affect the policy interest rates in commodity countries, aiming to stabilize their real exchange rate in the presence of volatile terms of trade and heightened exposure to capital inflow/outflow shocks. Inflation targeting works well with independent central banks, yet fiscal dominance concerns may hinder the efficacy and independency of central banks. This suggests experimenting with the integration of monetary rules and fiscal rules, possibly linking these rules with the operations of buffers like international reserves and sovereign wealth funds (SWFs). The global financial crisis validated the benefits of countercyclical management of international reserves and SWFs in reducing the volatility of real exchange rates. Macroprudential policies may complement or even substitute buffer policies by reducing a country’s balance sheet exposure to foreign currency debt, mitigating the risk of costly sudden stops and capital flight. A growing share of EMs is experiencing exposure to new financial technologies (fintech), providing cheaper and faster financial services and extending financial coverage to previously under-served populations. Deeper fintech diffusion may redirect financial intermediation from regulated banks to emerging fintech shadow banks, some of which may have a global reach. These developments, and the diffusion of cryptocurrencies promising anonymized payment systems, may hinder the effectiveness of monetary policy and eventually induce greater financial instability. States may encourage the diffusion of efficient financial intermediation in ways that benefit users while restricting the use of anonymized exchange and global monies to reduce the threat of a shrinking tax base and to maintain financial stability.”