The Unassuming Economist

From an IMF blog by Paula Beltran Saavedra, Nicolas Fernandez-Arias, Chanpheng Fizzarotti, Alberto Musso:

“For most Group of Twenty economies, growth is poised to weaken over the next five years and remain well below what was typical in the two decades before the pandemic.

That’s one of the biggest shared challenges for the group, which accounts for about 85 percent of global gross domestic product. Growth is more robust across the African Union, which joined the G20 last year, but booming populations mean those economies also must create jobs for millions of young people entering the labor market.

For both groups, as well as the European Union, lifting growth is essential to improving outcomes for people, and there’s a common solution: implementing priority reforms can significantly boost prospects for growth over the next five years, or medium term, as our new report to the G20 outlines. Our analysis also indicates that payoffs from structural reforms are greatest when they are carefully sequenced and reflect social consensus.

Various challenges underscore why it’s time to invest in growth-enhancing reforms. Subdued productivity growth, reinforced in some countries by adverse demographic trends, holds back potential growth, as Chapter 3 of the April 2024 World Economic Outlook details. Sustainable growth also is imperiled by elevated public debt, and increased geoeconomic fragmentation and protectionism.

As the Chart of the Week shows, the biggest priority across countries in these groups is reforming fiscal policy frameworks to aid lasting consolidation of government budgets.”

Continue reading here.

From a paper by Malihe Ashena:

“Considering the vital role of money demand in monetary and economic policies and its importance in economic stability, it is necessary to know the factors affecting it. Focusing on the increasing role of new technologies and financial developments, this paper examines the effect of financial development and the expansion of information and communication technology (ICT) on the demand for money in developing countries. This study uses principal component analysis (PCA) to calculate the ICT index. The research model is estimated using annual data obtained from the World Bank and International Monetary Fund during 2002-2021 for a selected group of developing countries. The long-run relationship between the variables has been investigated in a Panel-ARDL model. The research results show that ICT and financial development both have a negative and significant impact on money demand. These results point to the development of ICT infrastructure and financial resources to control money demand. In other words, increasing access to financial instruments and widespread use of ICT technologies has reduced the need to hold cash. These results indicate that structural changes in the economy of developing countries, caused by financial and technological growth, lead to changes in monetary behaviors. Therefore, policymakers should adopt strategies that can help adapting these developments and better manage money demand.”

From a new paper by Ruoyu Chen, Guoqing Wang, Nabiha Jamil, and Najaf Iqbal:

“We exploit the recent inclusion of green bonds to the “Eligible Collateral Assets” (ECAs) for the “Medium-term Loan Facility” (MLF) by the People’s Bank of China (PBOC) as a quasi-natural experiment and analyze its impact on the credit spreads between green and non-green bonds. We use the daily bond market data and employ the difference-in-differences (DID) model for analysis. Adding green bonds to the pool of ECAs by the PBOC significantly reduces the credit spreads (the required return on green bonds was higher earlier). The policy has a more prominent effect on the bonds issued by high-rated and local banks, as well as the ones situated in the Green Finance Reform Innovation Pilot Zones (GFRIPZ). The results of the parallel trend test indicate that the policy effect has a short-term lag, but overall, it shows a trend of continuous enhancement during the sample period.”

On cross-country:

• Global Rent Price Index: 1, 5 & 10 Year Changes by Country – Global Property Guide
• How the EU should tackle the housing crisis. – Social Europe

Working papers and conferences:

• Housing and Macroprudential Policy – University of Oxford
• Nonpayment and Eviction in the Rental Housing Market – NBER
• The Incidence of Rent Subsidies: Evidence on Rents, Housing Choices and Supply – CESifo
• The role of housing market and credit on household consumption dynamics: Evidence from the OECD countries – Journal of Economic Behavior & Organization
• Finding Home When Disaster Strikes: Dust Bowl Migration and Housing in Los Angeles – SSRN
• Bargaining Outcomes of Housing Investors Across Diverse Neighborhoods – SSRN

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

• Single-Family Permits Higher in September 2024 – NAHB
• Part 2: Current State of the Housing Market; Overview for mid-November 2024 – Calculated Risk
• Lawler: Early Read on Existing Home Sales in October. First Year-over-year gain in Existing Home Sales since August 2021 – Calculated Risk
• Powell May Be Waiting Until 2026 for Housing Inflation to Cool. Cleveland Fed model suggests CPI metric will stay elevated. Optics of high inflation make it hard to cut rates: economist – Bloomberg
• October 2024 Hottest Housing Markets – Realtor.com
• Examining Recent Patterns in Residential Building Permits – St. Louis Fed
• Builder Confidence Moves Higher as Election Uncertainty is Lifted – NAHB 
• 3rd Look at Local Housing Markets in October. First Year-over-year Sales Gain Since August 2021 – Calculated Risk
• Residential Mortgages Experience Unchanged Lending Conditions, Weaker Demand in Third Quarter – NAHB
• Housing Starts Decreased to 1.311 million Annual Rate in October – Calculated Risk  
• US single-family housing starts tumble in October – Reuters
• Higher Mortgage Interest Rates Slow Housing Production in October – NAHB
• Gains for Townhouse Construction – NAHB
• The upcoming housing battle that could roil mortgage costs even more. The first Trump administration tried to remove two mortgage giants, Fannie Mae and Freddie Mac, from government control. The second one might finish the job. – Washington Post
• California Home Sales Up 9.5% SA YoY in October. Look for First Year-over-year National Existing Home Sales Gain Since August 2021 – Calculated Risk
• Growth for Single-Family Built-for-Rent Construction – NAHB
• New-Construction Activity Continues To Cool in October – Realtor.com
• Low-Rise Multifamily and Housing Supply: A Case Study of Seattle – AEI 
• Mortgage rates are up. That’s a big problem for Trump. High housing costs have become part of the economic “vibes” that people see on a regular basis. – Washington Post
• Flat Conditions for Custom Home Building – NAHB
• Economic Developments – November 2024. Weaker Home Sales Expected as Interest Rates Rise – Fannie Mae

On the US—other developments:    

• Five Innovations that Could Upend the Housing Market. Don’t overlook technology’s role in shaping housing demand–and supply. Here are five technologies that will make a difference. – Home Economics
• America’s Homes Are Piggy Banks That Few People Can Afford to Raid. Only a minority of mainly older homeowners are in a position to take advantage of the historic run-up in house prices – Wall Street Journal
• What Trump’s Win Could Mean for Housing – Time
• To Save More Water, American Homes Need Smaller Pipes. Most of the plumbing pipes in the United States are oversize, wasting water in a time of increasing drought. – New York Times
• An Affordable Housing Project Faced a Huge Backlash. It Won Anyway. A developer wanted to replace parking garages with affordable apartments in Manhattan, but some residents on the Upper West Side resisted. Here’s why the housing won. – New York Times
• Homeownership’s Promise and Pitfalls in Transferring Wealth Across Generations. The “Great Wealth Transfer” is set to lock-in extreme class stratification absent housing policy reform. – Inequality.org
• Zillow’s real-time affordability tool helps shoppers quickly find homes within their budget – Zillow 
• To Get the Housing Market Moving, Raise Property Taxes. A recent paper compares California and Texas to suggest a novel approach to improving homeownership for young families. It’s an idea that can’t be ignored. – Bloomberg
• Will Doug Burgum Be Donald Trump’s Housing Czar? Plus: Democrats’ housing-lite postelection recriminations and yet another ballot box defeat for pro–rent control forces in California. – Reason
• Two Apartment Buildings Were Planned. Only One Went Up. What Happened? – New York Times
• Families Need Affordable Housing, but New York Residents Use Red Tape To Block Development. With the help of New York’s environmental review law, local NIMBYs halted an approved housing project, adding to delays and costs in a city facing a housing shortage. – Reason 
• Families Must Spend 38% of Their Income on House Payments – NAHB

On China:

• Amid property crisis, China must shift from ‘availability’ to ‘quality’, premier urges. Latest comments show how China’s leadership aims to ‘leverage technology’ and embrace modern advancements to fuel urbanisation drive and boost economy – South China Morning Post

On Australia and New Zealand:

• [Australia] Clare O’Neil on Labor’s plan to fix the housing crisis – The Guardian
• [Australia] The Sydney suburbs where home buyers pay top dollar for tiny blocks – The Guardian
• [Australia] ‘Basically impossible’: Housing affordability is the worst on record – The Sydney Morning Herald

On other countries:  

• [Canada] Canadian housing starts rise 8% in October – Reuters
• [Germany] Germany’s Residential Property Market Analysis 2024 – Global Property Guide
• [India] Top Indian Cities Post 23% Jump in House Prices, Consultant Says – Bloomberg
• [Ireland] Irish house prices continue to rise at annual rate of 10%. Latest figures indicate prices in Dublin rose at annual rate of 10.8% in year to September, now up 154.5% since early 2012 – The Irish Times
• [Poland] Poland’s Residential Property Market Analysis 2024 – Global Property Guide
• [Singapore] Singapore Home Sales Reach 11-Month High as Demand Returns – Bloomberg
• [Spain] The Spanish real estate market in 2024-2025: in expansive mode – CaixaBank
• [Sweden] Sweden’s Residential Real Estate Market Analysis 2024 – Global Property Guide
• [Taiwan] Taiwan’s Residential Real Estate Market Analysis 2024 – Global Property Guide
• [United Kingdom] Houses in national parks in England and Wales sell for 25% more, study finds. Nationwide says New Forest is most expensive national park with an average property price of £576,000 – The Guardian
• [United Kingdom] New housing developments forcing people to rely on cars. Major new study shows car dependency of new homes has increased in every region of England outside of London over the last 15 years – New Economics Foundation
• [United Kingdom] Asking prices for UK homes show big November dip but 2025 set for gains, Rightmove says – Reuters
• [United Kingdom] UK Rental Inflation Picks Up for First Time in Seven Months. Double-digit rise in rents in London in fresh blow for tenants. Housing costs are still exerting a cost-of-living squeeze – Bloomberg

From a paper by Pande Nyoman Laksmi Kusumawati, J. Paul Elhorst and Jakob de Haan:

“In the last decade, inclusive growth, a broader concept of economic growth came into vogue among international organizations and countries’ policy makers. This paper reviews recent studies on inclusive growth addressing the following issues: which indicators have been considered, how they have been combined, and to which extent can existing research on inclusive growth provide a better understanding of the economic development process in an emerging economy like Indonesia. Many studies use one index and a single-equation approach to measure the determinants of inclusive growth. This paper suggests an alternative approach for future research that can shed more light on (the drivers of) (the different components of) inclusive growth, i.e. using a simultaneous equations model or a structural equation modelling approach. We can, thereby, provide better analyses and policy recommendations to achieve inclusive growth.”