The Unassuming Economist

From a paper by Xianbo Zhou, Songliang Han, Yingming Wu, and Guangsu Zhou:

“This paper uses micro survey data from China Household Finance Survey (CHFS) 2011 to 2019 and the staggered DID approach to study the impact of the loose “universal two-child” policy on Chinese household consumption inequality. The results show that the implementation of the policy can significantly reduce the relative consumption deprivation of policy-responsive families, and the effect is more significant for relatively vulnerable households, for example, those located in rural areas or western regions, with “outside-the-system” jobs or low- to middle-income levels. Mechanistic analysis revealed that the differentiated effects of the policy on the consumption of households with different income strata contributed to the reduction in consumption inequality. Furthermore, the policy alleviates consumption inequality through its negative effect on luxury consumption and positive effects on subsistence and development consumption. The mitigating effect of the two-child policy on consumption inequality is robust according to various robustness tests. This study has implications and policy significance for the implementation of China’s current three-child policy and the adjustment of future fertility policies, as well as narrowing the gap between the rich and the poor and achieving the goals of common prosperity and equalization.”

From a paper by Suale Karimu, and Attahir B. Abubakar:

“Sub-Saharan African countries have experienced significant structural change and economic growth in recent decades; however, inequality levels remain high, raising concerns that the growth is not inclusive enough to reduce inequality levels. This study explores the effect of economic growth and structural change on income inequality using a panel dataset of 40 sub-Saharan African countries over the period 2001–2015. The study employs the iterated Generalized Method of Moment (GMM) estimator for analysis. The findings suggest that although increased income levels in the region fuel inequality, the transition of the economies towards the services sector could reduce income inequality. However, the overall contribution of structural change to reducing inequality levels has been minimal suggesting that the growth experiences of the region, especially over the last two decades, may not have been inclusive; hence, the need for enhanced redistributive policies to deepen inclusivity of the growth process.”

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.”