The Unassuming Economist

New post by Timothy Taylor.

“The Olympic Summer Games were held in Beijing in 2008. Now the Winter Games are being held there in 2022. For the sake of the athletes who will be inhaling and exhaling more frequently and deeply than usual in the next few weeks, how has the air quality changed? Michael Greenstone, Guojun He, and Ken Lee discuss the evidence in “The 2008 Olympics to the 2022 Olympics: China’s Fight to Win its War Against Pollution” (February 2022, Energy Policy Institute at the University of Chicago). They write:

In the years before the 2008 Beijing Summer Olympics, pollution in China had been sharply climbing. The government responded with quick reforms that temporarily reduced pollution during the games. The reforms, however, only managed to slow the climb in the long run. By 2013, pollution in China had reached record levels. The following year, the same year Beijing applied to host the 2022 Olympic Games, Chinese Premier Li Keqiang declared a “war against pollution” and vowed that China would tackle pollution with the same determination it used to tackle poverty. Seven years later, pollution has declined dramatically by about 40 percent. In Beijing, there is half as much pollution compared to both 2008 and 2013 levels. In most areas of China, pollution has fallen to levels not seen in more than two decades.”

Read more here.https://conversableeconomist.wpcomstaging.com/

Source: IMF Working Paper

Abstract:

“This paper provides an overview of the relation between tax policy and gender equality, covering labor, capital and wealth, as well as consumption taxes. It considers implicit and explicit gender biases and corrective taxation. On labor taxes, we (the authors) discuss the well-established findings on female labor supply and present new empirical work on the impact of household taxation. We also analyze the impact of progressivity on pay gaps and labor supply. On capital and wealth taxation, we discuss the implications of lower effective capital income taxation on the personal income tax burden gap across genders. We show that countries with relatively low female shares of capital income and wealth also tend to tax property and inheritances particularly lightly. On consumption taxes, we cover taxes on female hygiene products and excise taxes, which we assess in relation to externalities and differences in consumption patterns across genders.”

One of the most significant stylized facts in the U.S. economy since the 1970s has been the decline in the share of national income accruing to labor. Many recent studies have sought to explain this trend, with most explanations focusing on structural changes such as deindustrialization, globalization, financialization, rising market concentration, and technological change.

In this paper, the authors argue that these forces primarily operate through a bargaining power channel measured by the cost of job loss and that the reduction in labor’s share of income has been driven by lower bargaining power for workers. They examine various parameters for the US between 1960 and 2016 to test this hypothesis and conclude that structural changes such as globalization (Furceri and Loungani, 2018) and weak economic performance in the US have increased inequality over time.

Click here to read the full paper.

On cross-country:

• Housing Returns in Big and Small Cities – New York Fed
• Large investors drive up house prices in Europe’s cities, study finds. Housing is increasingly attractive asset for institutional investors due to near zero interest rates – The Guardian and link to report
• Crypto Kings Are the Real-Estate Industry’s Newest Whales. People who have made fortunes investing in digital currency, or who helped build the vast crypto industry, are the new darlings of the high-end residential property market – Wall Street Journal
• Real estate prices are rising at record speed in US, UK and Australia, as WFH and the pandemic pushed families out of big cities in 2021 – are new homes still a good investment? – South China Morning Post

On the US:    

• How the Fed’s Policy Shift Is Rippling Through the Housing Market. The central bank had been the biggest buyer of mortgage bonds, but now it is stepping back and borrowing costs are rising – Wall Street Journal
• Wonking Out: Are We in Another Housing Bubble? – New York Times
• Why, and Where, are Housing Prices Rising? – Econofact
• The Simple Reason Why So Many Can’t Afford Housing – Barron’s
• It’s Harder to Find a Home Than Love When Housing Markets Are This Hot. Bidding wars, low inventory and huge price hikes have turned homebuying into an ordeal for many house hunters over the past two years. – Bloomberg
• Would Housing Cost Less If It Were Easier to Build New Homes? Surprisingly, Not Much. A new study suggests that supply and demand are only part of a complex problem – Kellogg Insight
• New York’s ideas for zoning reform offer many paths to tackling the housing crisis – Brookings
• Newly Built Homes Make Up Record Share of U.S. Housing Supply – Bloomberg
• Rents are up 40 percent in some cities, forcing millions to find another place to live – Washington Post
• Wall Street’s $85 Billion Housing Bet Intensifies U.S. Land Boom. Investors are snapping up lots to build an empire of suburban rental homes. – Bloomberg
• What Financial Resources Have Renters Tapped During the Pandemic? – Harvard Joint Center for Housing Studies
• Report: Owning more affordable than renting in most housing markets – Washington Post
• December Rental Data: Rents Surged by 10.1% in 2021 – Realtor.com
• The Record-Breaking Rental Market – Harvard Joint Center for Housing Studies
• ‘It’s anguish, it’s pain, it’s agony’ – here’s what it’s like to shop for a home in today’s tight housing market – CNBC 
• Measuring America’s Affordability Problem: Comparing Alternative Measurements of Affordable Housing – Housing Policy Debate
• When Will Be a Good Time to Buy a House? There won’t be a perfect moment anytime soon—but that shouldn’t stop you if you’re ready. – The Atlantic
• AEI housing market indicators, January 2022 – AEI 
• Where to build in a state on fire? California housing projects face growing challenges – The Guardian
• Regulation and the Housing Affordability Crisis. Government regulations account for nearly 25% of the price of building a single-family home. – Wall Street Journal
• Why Are Residential Property Tax Rates Regressive? – Federal Reserve Bank of Philadelphia
• Q4 Homeownership Rate Reflects Slight Growth, Demographic Disparities – Realtor.com
• Exploring Climate Change in U.S. Housing Policy – Housing Policy Debate  
• The Role of 421-a during a Decade of Market Rate and Affordable Housing Development – NYU Furman Center

On China

• Beijing has shortcut to prop up real estate – Reuters
• Understanding the Resurgence of the SOEs in China: Evidence from the Real Estate Sector – NBER
• China Home Sales Slump Deepened in January in Blow to Economy – Bloomberg

On other countries:  

• [Australia] Regional house prices surge as Melburnians flood coastal and tree-change hotspots – The Sydney Morning Herald
• [Australia] Australia Home Prices Edge Up, Further Sign of Cooling Boom – Bloomberg
• [Brazil] The financialisation of housing by numbers: Brazilian real estate developers since the Lulist era – Housing Studies
• [Canada] This is what a rate hike will cost homeowners – Globe and Mail
• [Canada] Bank of Canada ‘no hike’ leaves housing fire burning, say market watchers – Reuters
• [Canada] Housing Market in a ‘Speculative Fever,’ Canada Regulator Says – Bloomberg
• [Israel] New plan aims to entice cities to construct housing with NIS 60 million bait. To resolve housing crisis, government will reward 12 high-demand municipalities with cash for each apartment approved; project could add 30,000 new units in the next three years – The Times of Israel
• [Netherlands] Sentiment in the Housing Market – University of Groningen
• [Singapore] Singapore House Prices Surge Most in Decade as Curbs Test Market – Bloomberg
• [Spain] Housing prices in Spain: convergence or decoupling? – Central Bank of Spain
• [Spain] Spain’s new “right to housing” law enshrines rent control nationwide – Quartz
• [Switzerland] Swiss banks criticise steps to cool runaway property market – Reuters
• [United Kingdom] Demand Is Surging for Flats Outside London. Price increases for apartments have been relatively modest compared to other types of property, according to Zoopla. – Bloomberg 
• [United Kingdom] The plight of the UK’s first-time buyers. The immediate pressures of the pandemic may have eased, but prospective homeowners must now contend with record prices and a looming cost of living crisis – FT
• [United Kingdom] Failure to help struggling households will cost Tories dear. Rising housing and energy costs plus higher taxes mean ministers have to come up with something – The Guardian
• [United Kingdom] UK homeowners secure £800bn windfall with house price rise. Average property values increased more than 10 per cent last year, according to new analysis – FT
• [United Kingdom] UK house prices show strongest start to year since 2005. Property price index rises by annual rate of 11.2% in January surpassing economists’ expectations – FT
• [United Kingdom] Mortgage lenders cut 10-year fixed rates ahead of Bank rate decision. Borrowers seeking long-term fixed-rate loans amid rising rates and inflation – FT

New NBER Working paper by Nicholas Bloom, Takafumi Kawakubo, Charlotte Meng, Paul Mizen, Rebecca Riley, Tatsuro Senga & John Van Reenen.

“We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices.”

Read more here.