The Unassuming Economist

From a paper by Edward L. Glaeser, Leonardo D’Amico, Joseph Gyourko, William Kerr, and Giacomo A.M. Ponzetto:

“We document a Kuznets curve for construction productivity in 20th-century America. Homes built per construction worker remained stagnant between 1900 and 1940, boomed after World War II, and then plummeted after 1970. The productivity boom from 1940 to 1970 shows that nothing makes technological progress inherently impossible in construction. What stopped it? We present a model in which local land-use controls limit the size of building projects. This constraint reduces the equilibrium size of construction companies, reducing both scale economies and incentives to invest in innovation. Our model shows that, in a competitive industry, such inefficient reductions in firm size and technology investment are a distinctive consequence of restrictive project regulation, while classic regulatory barriers to entry increase firm size. The model is consistent with an extensive series of key facts about the nature of the construction sector. The post-1970 productivity decline coincides with increases in our best proxies for land-use regulation. The size of development projects is small today and has declined over time. The size of construction firms is also quite small, especially relative to other goods-producing firms, and smaller builders are less productive. Areas with stricter land use regulation have particularly small and unproductive construction establishments. Patenting activity in construction stagnated and diverged from other sectors. A back-of-the-envelope calculation indicates that, if half of the observed link between establishment size and productivity is causal, America’s residential construction firms would be approximately 60 percent more productive if their size distribution matched that of manufacturing.”

From a paper by Isah Wada:

“Human economic activities, aimed at rapid growth, contribute significantly to greenhouse gas emissions, thereby accelerating climate change and raising concerns about sustainability, particularly in the context of the United Nations Sustainable Development Goals (UNSDGs). The study’s objectives align with UNSDG Goal 15, which seeks to minimise the impact of human activities on the environment and halt further environmental degradation. This study explores the structural shifts in greenhouse gas emissions in Japan by examining the relationship between total greenhouse gases, natural resource rents, real income, and population from 1970 to 2018. Utilising the novel autoregressive distributed lag (ARDL) model and dynamic quantile ARDL techniques, the analysis reveals an annual equilibrium convergence rate of approximately 34%–36%. The multivariate VECM causality system identifies significant long-run causal relationships, indicating the influence of these covariates on maintaining a stable equilibrium. In the short run, one-way causality is observed from resource rents, per capita income, and squared per capita income to total emissions. Long-term findings suggest that reductions in natural resource rents, per capita GDP, and population growth contribute to improved atmospheric quality. The results support the Environmental Kuznets Curve (EKC) hypothesis, confirming the existence of an ‘inverted U-curve’ for Japan. Furthermore, the robust quantile ARDL aligns these findings with the net probabilistic effects in both short- and long-term scenarios. By applying innovative accounting decomposition frameworks, the study shows that changes in greenhouse gas emissions, resource rents, and population growth consistently lead to reduced emissions in Japan. Overall, these findings provide empirical support for Japan’s goal of achieving net carbon neutrality by 2050 and underscore the importance of adhering to transformative policy measures.”

From funds for NGOs:

“The International Monetary Fund (IMF) is a pivotal institution in the global economic landscape, established in 1944 with the primary goal of fostering international monetary cooperation and ensuring financial stability. With its headquarters in Washington, D.C., the IMF comprises 190 member countries, each contributing to a pool of financial resources that can be accessed by nations in need. The organization plays a crucial role in monitoring the global economy, providing policy advice, and offering financial assistance to countries facing economic challenges.

Its mission is not only to stabilize economies but also to promote sustainable growth and reduce poverty worldwide. The IMF’s influence extends beyond mere financial transactions; it serves as a forum for dialogue among its member countries, facilitating discussions on economic policies and strategies. By analyzing global economic trends and providing data-driven insights, the IMF helps nations navigate complex economic landscapes.

Its work is particularly vital in an increasingly interconnected world where economic crises can have far-reaching implications. As such, the IMF stands as a guardian of global economic stability, striving to create an environment conducive to growth and prosperity for all nations.

Promoting Economic Growth through Policy Advice and Technical Assistance

One of the IMF’s core functions is to provide policy advice and technical assistance to its member countries. This support is tailored to the specific needs of each nation, taking into account its unique economic circumstances and challenges. The IMF’s expertise in macroeconomic policy, fiscal management, and monetary policy allows it to offer valuable recommendations that can help countries achieve sustainable economic growth.

By engaging with governments and policymakers, the IMF fosters an environment where sound economic policies can flourish. Technical assistance from the IMF often includes training programs, workshops, and on-the-ground support aimed at strengthening institutional capacities. For instance, the organization may assist a country in developing its tax administration system or enhancing its public financial management practices.

Such initiatives not only improve the efficiency of government operations but also bolster transparency and accountability. By equipping countries with the necessary tools and knowledge, the IMF empowers them to implement effective policies that drive economic growth and development.

(…)

“In recent years, the IMF has increasingly recognized the importance of sustainable development and inclusive growth as integral components of its mission.”

Continue reading here.

We at this website have long encouraged the IMF’s embrace of inclusive growth as a goal. See the blog on inclusive growth and the IMF.

From a paper by Priyanka Banerji and Mohammed B. Shettima:

“The most demanding sector in today’s era is the energy sector. India is now the third highest consumer of crude oil in the world, after the USA and China, with 4.6% share of world total according to Worldometer. Thus, when there is an increase in the oil prices, the Indian economy suffers relentlessly. This paper seeks to carry out a study on the volatility of oil price and the real exchange rate and its effects on Indian rupee and the US dollar. The study will make use of the Garch analysis model to analyse and predict the volatility of the two variables (crude oil prices and exchange rate). Empirical findings points out an asymmetrical relationship between crude oil prices and dollar exchange rate. Recommendations are made to the Indian Government to provide effective energy security source by establishing strategic crude oil storage facilities so as to reduce importation of crude oil.”

From a paper by Moritz Uhl:

“Reoccurring instability keeps forcing central banks repeatedly to intervene in financial markets, since the 2007-2008 crisis most notably with massive asset purchases, whose popularisation was spearheaded by the Bank of Japan. This paper exploits the world’s first implementation of quantitative easing in the vicinity of zero interest rates in Japan from 1999 through 2006 to evaluate their distributional impact by means of the synthetic control method. Comparing the actual and counterfactual development demonstrates that unconventional monetary policy increased the top 10 percent to bottom 50 percent income ratio by more than 28 percent. This exercise also detects a rise of more than 7 percent for the Gini coefficient which is beneath the corresponding value of 12.5 percent for the share of the top income decile. These results, together with evidence from capital and labour income trends as well as data on household ownership of financial assets, suggest that inequality widened via heightening asset prices converting into gains for richer income groups. Conditional upon structural features of an economy a negative distributional side effect of central banking’s new tools may turn out to be of severe magnitude.”