The Unassuming Economist

From a paper by Michael Christl, Silvia De Poli, and Viginta Ivaškaite-Tamošiune:

“This paper examines the extent to which fiscal policy protected household incomes in the second year of the COVID-19 pandemic in EU countries. Using microsimulation techniques and detailed Eurostat data, we analyse this impact separately for employees and the selfemployed. We show that while on average income protection was similar for employees and the self-employed at the EU level, the heterogeneity both between and within countries was much higher for self-employed households in 2021. For employees, both monetary compensation schemes and unemployment benefits played a similar role in absorbing the income shock, whereas for the self-employed it was mainly monetary compensation schemes and much less so unemployment benefits that stabilised their income. Overall, we find that monetary compensation schemes, together with automatic stabilisers, absorbed a substantial part (67%) of the market income shock in 2021, albeit with a reduced cushioning effect compared to the previous year (74%). Monetary compensation schemes alone account for almost a third of this cushioning effect in 2021. Our paper underlines the importance of targeted policies to ensure comprehensive support for vulnerable households amid ongoing economic uncertainties.”

From a new paper by Nicholas Apergis and Hany Fahmy:

“This paper explores the link between geopolitical risks and energy prices crash risk. Studying energy price crashes is important given the sharp fall in oil prices in 2008 and 2014. The analysis focuses on three energy markets: natural gas, oil, and coal, while it employs two measures: the negative coefficient of skewness and the down-to-up volatility, to construct proxies for crash risks. The period of examination is January 2000 to December 2023, whereas that for coal is January 2010 to December 2023. The study employs a modified version of the smooth transition autoregressive model. The results show that, within the modelling framework, coal and oil crash risks are driven by the cyclical behavior of geopolitical acts, whereas natural gas crash risks by geopolitical threats. Causality tests confirm the prediction that geopolitical tensions cause crash risks in energy markets. The results also confirm that the “Economic Activity Channel” is only valid for energy markets driven by geopolitical threats. Energy market regulators should be concerned about crash risks, given that the energy supply shows cyclical boom and bust cycles in prices and production. Crash risks could also potentially cause a fall in investments required to enhance energy efficiency.”

From a paper by Meshach Jesse Aziakpono:

“As economies develop, they undergo large scale structural change – the reallocation of economic activities across three broad sectors of agriculture, manufacturing and services that accompany economic development. A fundamental attribute of structural change is the structural heterogeneity within and across countries, giving rise to cross-country variation in structural change patterns. Beyond the systematic variation in structural composition, structural transformation also induces a wide range of complementary processes and changes in technological progress, consumer behaviour, urbanisation, demographic transition, female labour participation, living standards, welfare redistribution, and even socio-political institutions. Although structural transformation has been extensively investigated in several industrialised economies and remains a pertinent policy issue amongst developing economies, empirical insights into these processes within developing economies remain unclear. The collection of four stand-alone essays in this dissertation examines the drivers and inclusive growth effects of African structural change patterns towards providing a deeper conceptual understanding of policy implications.

The first essay reconsiders the stylised facts of structural change within the context of Africa. Specifically, the study summarizes broad trends and patterns in the data to understand the empirical regularities in the composition of value-added and employment shares, relative labour productivity levels and growth rates, and capital intensity levels using descriptive statistics of 20 (38) African economies from 1960 to 2018 (1970-2017). The study found considerable sectoral differences, emphasising structural disequilibrium in Africa’s economic growth pattern. The following empirical insights were derived from the analyses. First, any talk of premature de-industrialisation in Africa is premature, as the manufacturing sector is still expanding, albeit more slowly than expected. Second, the service sector in Africa is equally or even more productive than the manufacturing sector, which is even more evident in the bottom-income quantile economies in Africa than in the top-income quantile. Third, the agriculture sector has overtaken the manufacturing sector as the fastest-growing sector, an empirical regularity common to emerging and industrialised economies. Fourth, while capital utilisation in agriculture has remained a paltry sum, capital utilisation in the service sector has surpassed that of the industrial sector over the last decade.”

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From a paper by Behnaz Minooei Fard and Willi Semmler:

“In some academic and policy circles, carbon pricing, generally in the form of Cap & Trade or carbon taxes (see Metcalf and Stock (2020)), is often seen as a key strategy for tackling climate change and its associated risks. Others support directed technical change and direct investments in cleaner energy sources (see Acemoglu et al. (2012) and Aghion et al. (2022)). One can design theoretical and model-guided strategies and efficient or optimal paths to decarbonization of the economy. Politically, however, one of the most important issues is that significant behavioral constraints exist in actual policymaking. This paper provides an overview and survey of the strengths and weaknesses of either side of the decarbonization strategy and the role of behavioral drivers toward a low-carbon economy, assessed from the macro and microeconomic perspectives.”

From a book chapter by Mark Hibben (ed.), Bessma Momani (ed.):

“The International Monetary Fund (IMF) is a pivotal multilateral institution in global economic governance tasked with ensuring monetary stability and preventing financial crises through promoting balanced trade, economic growth, and poverty reduction. IMF research and expertise also play a powerful normative role in shaping the contours of economic policy choices of its 190 member states. Fallout of the 2008 Global Financial Crisis and the Covid-19 pandemic reveal that the IMF sits at a critical moment in its history. On one hand, reaction to these crises has produced an IMF that is more flexible, open to critique and reform, and arguably thus better equipped to meet its global economic governance mandates effectively. However, power within the IMF remains concentrated among advanced economies, hindering trust that the institution treats all its members in an even-handed manner. Resurgent geopolitical tensions, the rise of populist nationalism, and economic imbalances further strain the IMF’s ability to uphold liberal internationalism. Drawing from leading IMF scholars, IMF staff and management, and CSO representatives, the Handbook on the IMF engages with these challenges from a diversity of perspectives and proposes policy recommendations that the IMF should implement to successfully meet the increasingly complex landscape of 21st-century global economic governance.”