The Unassuming Economist

From a paper by Elena Bárcena-Martín, Natalia Martín-Fuentes, and Salvador Pérez-Moreno:

“This work provides evidence of the heterogeneous effects of the ECB’s monetary policy across income classes. In particular, this investigation focuses on the labor market channel. Based on EU-SILC data, we estimate country-specific structural vector autoregressions (SVAR) models to analyze the impact of the expansionary monetary policy shocks over the 2006–2019 period. The results suggest that monetary easing helped decrease unemployment rates for lower- and middle-income classes, to a larger extent for the former. This differential impact is accounted for a stronger improvement in job finding rates for classes located at the bottom of the income distribution. Conversely, the employment status of the upper class remained largely unaffected. The analysis identifies a positive impact of expansionary monetary policy on real labor income, which seems to have mostly benefitted the upper class. Overall, our results suggest that expansionary monetary policy helped decrease labor income inequality by exerting a stronger positive impact on lower-income households.”

From a paper by Christopher Erceg, Marcin Kolasa, Jesper Linde, and Andrea Pescatori:

“Many countries have used energy subsidies to cushion the effects of high energy prices on
households and firms. After documenting the transmission of oil supply shocks empirically in the United States and the Euro Area, we use a New Keynesian modeling framework to study the conditions under which these policies can curb inflation. We first consider a closed economy model to show that a consumer subsidy may be counterproductive, especially as an inflation-fighting tool, when applied globally or in a segmented market, at least under empirically plausible conditions about wage-setting. We find more scope for energy subsidies to reduce core inflation and stimulate demand if introduced by a small group of countries which collectively do not have much influence on global energy prices. However, the conditions under which consumer energy subsidies reduce inflation are still quite restrictive, and this type of policy may well be counterproductive if the resulting increase in external debt is high enough to trigger sizeable exchange rate depreciation. Such effects are more likely in emerging markets with shallow foreign exchange markets. If the primary goal of using fiscal measures in response to spikes in energy prices is to shield vulnerable households, then targeted transfers are much more efficient as they achieve their goals at lower fiscal cost and transmit less to core inflation.”

From a paper by Silas Xuereb, Matthew Fisher-Post, François Delorme, and Camille Lajoie:

“In this article, we estimate the distribution of all net national income in Canada from 1982 to 2021. We apply distributional national accounts (DINA) methodology to tabulated data from the Longitudinal Administrative Databank, combined with national accounts and survey data. Our descriptive results contribute to a more thorough understanding of income inequality in Canada over the past 40 years. We find that top income shares published by Statistics Canada tend to be underestimated relative to top income shares calculated using DINA, because DINA account for people who do not file taxes and for undistributed capital income that is retained in corporations. In line with previous research, income inequality in Canada increased significantly from 1982 until the mid-2000s. Although labour income drove initial growth in top shares, toward the end of this period capital income contributed most to growth in top shares. Top shares based on tax data were especially underestimated during this period because retained earnings were at their highest. Since the mid-2000s, top shares have decreased slightly and the income share of the bottom 50 percent has increased, although they have not returned to the levels observed in the early 1980s. During the pandemic, post-tax income inequality fell because of the large temporary transfer programs that were introduced. However, pre-tax income inequality increased in 2020, and even more so in 2021 when record levels of corporate profits were reached.”

From a paper by Muhammad Waqas Khan, Mehmet Akif Destek, and Zeeshan Khan:

“In the recent times, the role of artificial intelligence in social, economic, and environmental decision-making is important. Artificial intelligence is considered a source of enabling countries to achieve sustainable development goals. The economic consequences of the introduction of artificial intelligence are mostly overlooked and yet to be explore empirically. This work aims to empirically determine the impact of artificial intelligence on income inequality in the pioneers of the field, i.e., the G7 economies. Also, it aims to explore the role of fiscal intervention in mediating the impact of artificial intelligence on income inequality in these economies. The panel data techniques such as the test for cross sectional dependence and the test for slope heterogeneity are used. Furthermore, CIPS is used to determine the level of integration of the variables in the model. Westerlund test for cointegration and granger causality test by Dumitrescu and Hurlin (2012) are also used in the study. Furthermore, CSARDL technique is used to find out the impact of artificial intelligence along with control variables on income inequality. The results show that artificial intelligence reduces income inequality in the G7 both in the short and the long run. The absolute value of the long-term coefficients is larger than those in the short run. Based on the empirical findings of the work, it is recommended that appropriate fiscal interventions are needed in the short run to sustain the income inequality reduction impact of artificial intelligence. However, in the long run such interventions can be counter-productive but the requisite skills to optimally utilize artificial intelligence should be imparted to individuals.”

On cross-country:

• House prices and rents went up in Q3 2024 – Eurostat
• House prices up by 2.6% in the euro area – Eurostat

Working papers and conferences:

• Drivers and Effects of Residence and Citizenship by Investment – IMF
• Was China’s Housing Boom a Bubble? – St Louis Fed
• Chinese Housing Market Sentiment Index: A Generative AI Approach and An Application to Monetary Policy Transmission – IMF
• House Prices and Systemic Events Over the Last Six Centuries – SSRN
• House Relistings and Economic Cycles – SSRN
• Wealth and Risk Attitude: Evidence from a House Price Hike Natural Experiment – SSRN
• House Price Markups and Mortgage Defaults – SSRN

On the US—developments on house prices, rent, permits and mortgage:    

• Zillow predicts 2025’s hottest real estate markets – Axios
• The Best Markets for First-Time Homebuyers in 2025 Revealed – Realtor.com
• U.S. Mortgage Rates Climb to Highest Since July. More expensive mortgages are a drag on a full-fledged housing recovery, economists say – Wall Street Journal
• Residential Construction Loan Volumes Decline Over the Third Quarter – NAHB
• The U.S. Has More Fancy Apartments Than It Is Able to Fill. Real-estate developers have built a glut of high-end properties instead of badly needed affordable housing – Wall Street Journal
• 83% of Outstanding Mortgage Debt Has a Sub-6% Rate – Realtor.com
• Housing market shift: 9 states where housing inventory is giving buyers more power. 9 states are back above pre-pandemic housing inventory levels, according to ResiClub’s monthly housing inventory report. – Fast Company
• America’s Housing Crisis: A Federal Policy Agenda for Expanding Supply and Affordability – George Bush Presidential Center
• 2nd Look at Local Housing Markets in December. Likely Sales up Year-over-year for 3rd Consecutive Month – Calculated Risk
• Part 1: Current State of the Housing Market; Overview for mid-January 2025 – Calculated Risk
• Part 2: Current State of the Housing Market; Overview for mid-January 2025 – Calculated Risk
• Residential Construction Inputs Price Growth Slows in 2024 – NAHB
• Single-Family Permits Up in November 2024 – NAHB
• Housing Inflation Moderates Amid Higher Energy Costs – NAHB
• Mortgage Applications Increase in Latest MBA Weekly Survey – MBA
• Home Price Growth Reaccelerates in Fourth Quarter – Fannie Mae

On the US—other developments:    

• ‘I Don’t Think There’s Much Left’: L.A. Fires Force Thousands to Look for Temporary Housing. Displaced Los Angeles residents face tough search for temporary and longer-term accommodations – Wall Street Journal
• Wildfires Will Deepen Housing Shortage in Los Angeles. With so many people displaced and looking for rentals, the region’s housing options could grow even scarcer and more expensive. – New York Times
• Their homes torched amid a housing crisis, L.A. residents wonder where to go. With thousands of houses destroyed by fire, the most populous county in the United States must confront the fraught logistics of rebuilding. – Washington Post
• Wealthy Homeowners and Their Insurers Turn to Hired Help to Fight L.A. Wildfires. As fires become more frequent and expensive, some insurers pay for private firefighting crews – Wall Street Journal
• LA fire victims fear new housing crisis – BBC
• Economic Toll of Los Angeles Fires Goes Far Beyond Destroyed Homes. The ongoing disaster will affect residents’ health, local industries, public budgets and the cost of housing for years to come. – New York Times
• The country needs to build homes and community like Jimmy Carter – Brookings
• Update: The Housing Bubble and Mortgage Debt as a Percent of GDP – Calculated Risk
• Housing Sentiment Finishes 2024 Higher Despite December Dip. Mortgage Rate Optimism Primary Driver of Year-over-Year Improvement – Fannie Mae
• Questioning the Housing Crisis: Recap and Wrap-Up – Cato Institute
• Three-Quarters of Americans View Homeownership as Part of the American Dream – Realtor.com
• How is climate change impacting home insurance markets? – Brookings
• Surprising Illinois City Becomes the Hottest Housing Market for the First Time – Realtor.com 
• Biden-⁠Harris Administration Takes Final Actions to Build More Housing and Bolster Renter Protections – White House
• First-Time Homeownership Became Less Affordable Across Most of the United States in Recent Years – Kansas City Fed

On Australia and New Zealand:

• [Australia] Why housing economists got it wrong on Perth, Melbourne prices – Financial Review
• [Australia] There’s an easy solution to housing affordability. But voters hate it – The Sydney Morning Herald
• [Australia] Middle-income Australians experiencing rental stress with a third of pay spent on housing, report shows. Rent has increased by 36% nationally since Covid, CoreLogic finds, which equates to an extra $171 a week on average – The Guardian

On other countries:  

• [Monaco] Monaco’s Residential Property Market Analysis 2024 – Global Property Guide
• [Netherlands] The Netherland’s Residential Property Market Analysis 2025 – Global Property Guide
• [Peru] Peru’s Residential Property Market Analysis 2025 – Global Property Guide
• [Serbia] Serbia’s Residential Property Market Analysis 2025 – Global Property Guide
• [Spain] Spain to Try to Limit Real Estate Purchases by Non-EU Residents – Bloomberg
• [Spain] Spain plans 100% tax for homes bought by non-EU residents – BBC and Bloomberg
• [Spain] El apetito de los extranjeros por comprar una vivienda en España tras la pandemia. La demanda extranjera es un pilar fundamental para explicar la fortaleza de la demanda de vivienda en el ciclo expansivo actual.– CaixaBank
• [Spain] Spain Property Firms Slam Sanchez Bid to Slug Foreigners on Tax. Plan to tax overseas home purchases seen as grandstanding. Spanish premier faces pressure to act following protests – Bloomberg
• [United Arab Emirates] Dubai’s World Beating Property Rally Shows Signs of Strain. New residents pushed property prices 20% higher in 2024. Rise in home prices is expected to slow in the coming year – Bloomberg
• [United Arab Emirates] UAE’s Residential Property Market Analysis 2025 – Global Property Guide
• [United Kingdom] The decline in remote working hits Britain’s housing market. A return to the office means a return to town – The Economist