The Unassuming Economist

From a paper by William Ginna:

“This paper presents a non-linear extension of the Phillips Curve by estimating a Local Projections (LP) panel model using data from 14 countries between January 1999 and December 2023. The non-linearity arises from the asymmetric effects of the El Niño–Southern Oscillation (ENSO), which alternates between El Niño and La Niña phases. The findings highlight two key dimensions of this asymmetry: slope and curvature. In terms of slope, the Phillips Curve is significantly steeper during La Niña episodes, with inflation responding more strongly and persistently to unemployment gaps. In terms of curvature, the inflation response under La Niña builds over time, reflecting non-linear propagation dynamics. In contrast, the Phillips Curve is flatter and responses are weaker and less persistent during El Niño phases. These findings underscore the importance of incorporating ENSO variability into macroeconomic models.”

From a paper by Andrea Ariu:

“This paper analyzes the growth of trade in Business Services with a particular focus on Ghana. This country experienced the fastest and most important increase in Business Services exports recorded in recent years. This spectacular growth has led Ghana to export as much as a developed country and improved its economy. The main factor underneath this growth is the improved capacity to export Business Services, which is likely to be accounted by an impressive inflow of foreign companies attracted by the economic and political conditions, together as the establishment of the secretariat of the African Continental Free Trade Area. These results are not specific to Ghana. In other African and non-African countries supply-side determinants show to be the main propellant of Business Services trade growth.”

From a paper by Cameron Haas, Mateo Hoyos, Emiliano Libman, Guilherme K. Martins, and Arslan Razmi:

“After decades of low and stable inflation, recent global events —such as the COVID-19 pandemic and the Russian invasion of Ukraine —triggered a resurgence in inflationary pressures, prompting central banks worldwide to tighten monetary policy. This paper examines whether monetary policy effectively curbs inflation by employing a trilemma-based identification strategy on a panel dataset of 36 developing and 8 developed economies from 1990 to 2017. Using higher-frequency monthly data, we improve on traditional quarterly or annual approaches by more precisely capturing central bank responses. By applying our theory-driven, trilemma-based identification strategy to a sample of developing countries, we bring novel insights to existing literature. Our findings indicate that monetary policy shocks have significant but impermanent effects on inflation. A 100 basis point interest rate hike lowers the price level by 3.7% at its peak after six months, with effects fading within 18 months. Crucially, our results do not exhibit the “price puzzle,” reinforcing the credibility of our identification strategy. Additionally, we find that monetary policy effects are state-dependent, with stronger disinflationary impacts during high-inflation periods and in economies with lower GDP per capita or higher commodity export dependence. These findings highlight the heterogeneity in monetary policy transmission, underscoring the need for tailored policy responses across different economic contexts.”

From a paper by Andrew Filardo, Mr. R. G Gelos, and Thomas McGregor:

“This paper develops a new approach for exploring the effectiveness of foreign currency intervention, focusing on real exchange cycles. Using band spectrum regression methods, it examines the role of macroeconomic fundamentals in determining the equilibrium real exchange rate at short-, medium-, and low frequencies. Next, it assesses the effectiveness of FX intervention depending on the degree of cycle-specific misalignments for 26 advanced- and emerging market economies, covering the period 1990–2018, and using different techniques to mitigate endogeneity concerns. Evidence supports the hypothesis that central banks can lean effectively against short-run cyclical misalignments of the real exchange rate. The effects are present in quarterly data—i.e., at policy-relevant horizons. The effectiveness of intervention rises with the size of the misalignment, and with the duration of one-sided interventions. FX sales appear to be somewhat more effective than FX purchases, and intervention is less effective in more liquid FX markets.”

From a paper by Afees A. Salisu, Rangan Gupta, and Riza Demirer:

“This paper examines the propagation of oil price uncertainty shocks to real equity prices using a large-scale Global Vector Autoregressive (GVAR) model of 26 advanced and emerging stock markets. The GVAR framework allows us to capture the transmission of local and global shocks, while simultaneously accounting for individual-country peculiarities. Utilising a recently developed model-free, robust estimate of oil price uncertainty, we document a statistically significant and negative effect of uncertainty shocks emanating from oil prices on the large majority of global stock markets, with the adverse effect of oil price uncertainty shocks found to be stronger for emerging economies as well as net oil-exporting nations. Interestingly, however, global stock markets exhibit a great deal of heterogeneity in their recovery following oil uncertainty shocks as some experience rapid corrections in stock valuations while others suffer from extended slumps. While the results are sensitive to the oil uncertainty measure utilised, they suggest that country diversification in the face of rising oil market uncertainty can still be beneficial for global investors as global stock markets exhibit a rather heterogeneous pattern in their recovery rates against oil market shocks.”