The Unassuming Economist

From the IMF’s latest report on Peru:

From a paper by Giulia Giupponi, Camille Landais, and Alice Lapeyre in the Journal of Economic Perspectives:

“What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on the two sides of the pond gave diametrically opposed answers during the COVID-19 crisis. In the United States, the focus was on insuring workers by increasing the generosity of unemployment insurance. In Europe, instead, policies were concentrated on saving jobs, with the expansion of short-time work programs to subsidize labor hoarding. Who got it right? In this article, we show that far from being substitutes, unemployment insurance and short-time work exhibit strong complementarities. They provide insurance to different types of workers and against different types of shocks. Short-time work can be effective at reducing socially costly layoffs against large temporary shocks, but it is less effective against more persistent shocks that require reallocation across firms and sectors. We conclude that short-time work is an important addition to the labor market policy-toolkit during recessions, to be used alongside unemployment insurance.”

Source: World Bank Blogs

A recent blog by the World Bank discusses the pertinent issue of effectively measuring primarily female-run enterprises in developing and developed nations across the world. Through a compilation of resources such as the report, Women, Business and the Law, 2022 and endeavors in the We-Data project which collects data on women’s access to various business-related resources, the blog attempts to provide a broad picture of the status quo. It explores some regulatory barriers (e.g., laws prohibiting married women from being signatories to commercial contracts or accessing capital independently), operational hurdles, and data-related challenges that countries face while capturing this segment of businesses.

Read on to know more.

Watch: World Bank’s 9th South Asia Economic Policy Network conference on Social Norms and Gender Equality (May 11th and 12th, 2022)

Source: Project Syndicate

“The explosive growth of Bitcoin and other cryptocurrencies has opened up a new front in the broader climate crisis by threatening to offset the progress made in recent years toward decarbonization. For the technology to gain wider adoption over the long term, its proponents will have to get serious about reducing its energy usage“, writes Marion Laboure of Harvard University.

The extensive power requirements in the cryptocurrency mining process, especially of those currencies limited in supply like Bitcoin, have generated a global debate on the sustainability of the process. While China banned the mining of cryptocurrency in September 2021 amidst an already debilitating energy crisis, other countries like El Salvador have adopted other methods like establishing a crypto mining city near a volcano to power the process using geothermal energy. Clearly, the world is divided on the matter. This article explores the issue in greater detail, charts out the environment-revenue trade-off before economies, and explores potential solutions.

Read on to know more.

From the Institute for New Economic Thinking (by Arjun Jayadev):

“Axel Leijonhufvud showed economists a promising path forward. They should have taken it. Leijonhufvud passed away on May 5, 2022

C an we theorize the economy as an entity that is growing, evolving, never in equilibrium? An economy passes through periods of intense instability and groping towards an uncertain future as a matter of course? How might one begin?

 “The pretense that we know the future probabilistically as a given set of probability distributions of every damn thing is, I think, a pretty dangerous delusion, but it’s also a comforting one to some people.”

The year was 1967. Young Axel Leijonhufvud sat in front of a pile of papers, full of unfinished notes, half-worked through arguments and intellectual dead-ends that he had been at for nearly four years. Two years into a tenure track position in the economics department at the University of California Los Angeles, he seemed unable to fashion a coherent dissertation from the morass of ideas in the sprawl. This year was his last chance to do so if he wanted to remain in academic employment.

The Swedish émigré had rather immodestly and perhaps unwisely decided that his doctoral work should be on some of the deepest problems of macroeconomics: why was it that the capitalist economy sometimes fails calamitously, and why was it that the Great Depression (still very much in the public memory in the 1960s) had been so very different from ordinary recessions? In trying to understand that defining period of the 1930s he had undertaken a wide range of reading of earlier economists, including a closer reading of the ur-text of the discipline –the General Theory of Employment, Interest and Money by John Maynard Keynes.”

Continue reading here.