The Unassuming Economist

From paper by Eliphas Ndou & Nombulelo Gumata:

“This paper estimates various inflation threshold and structural VAR models to investigate the passthrough of oil prices to consumer price inflation in South Africa when inflation is in the 3–6 percent inflation target band compared to when it is above 6 percent. The paper uses monthly data from 2001M1 to 2022M12. We find that the oil price passthrough to inflation is about three times lower when inflation is within the 3–6 percent target band compared to when it is above the 6 percent. Thus, under the inflation targeting framework, the 3–6 percent inflation target band has induced a structural change in the oil price and inflation relationship in South Africa. In addition, a one percentage point oil price inflation shock raises inflation by 0.11 percentage points when inflation is below 4.5 percent compared to 0.43 percentage points above this threshold. These findings imply that the oil price passthrough coefficient in the Bank forecasting model should be half the size when inflation is within 3-6 percent compared to when inflation isabove 6 percent”

From a paper by François Langot, Jocelyn Maillard, Selma Malmberg, Fabien Tripier, and Jean-Olivier Hairault:

“This paper evaluates different fiscal consolidation policies using a Heterogeneous-Agent New-
Keynesian (HANK) model. Three key results emerge. First, the effectiveness of fiscal consolidation
improves markedly when implemented through a fiscal rule rather than resulting from
a series of discretionary decisions: for the same level of expenditure cuts, the reduction in the
debt-to-GDP ratio is larger, and the uncertainty surrounding debt forecasts is lower. Second, it
is more efficient to use household transfers as an instrument than public consumption. Third, a
significant reduction in the debt-to-GDP ratio can be achieved without penalizing GDP growth
or exacerbating inequalities if the government drastically reduces social insurance-based transfers
while increasing social assistance transfers. These results are based on an original stochastic
debt-sustainability analysis using a HANK model, which provides: (i) the projected path of the
future debt-to-GDP ratio for a given policy, conditional on a particular business cycle episode,
and (ii) the full distribution of future debt-to-GDP ratios, thereby highlighting the policy’s
benefits in reducing the risk of a public debt increase under adverse economic conditions. Evaluations
are based on the French economy, which has committed to lowering it in order to comply
with the European Treaty.”

On prices, rent, and mortgage:    

• Using Income Changes to Forecast Home Prices by County – Home Economics
• Expert Panel Expects Moderating Home Price Growth through 2026 – Fannie Mae
• Mortgage Rates Ease to 6.84% – Realtor.com
• Buyer-Friendly Housing Market Gets a Boost With a Dip in Mortgage Rates – Realtor.com
• Housing Isn’t Expensive for Everyone. Do you have a ZIRP-era mortgage or not? – Bloomberg
• Congress Considers a Crackdown on Those Spammy Calls From Mortgage Lenders. Legislation would curb ‘trigger leads,’ whereby credit bureaus sell your mortgage application information to competing lenders – Wall Street Journal 
• Trump has a plan to remake the housing-finance system. It’s baffling to many lawmakers and experts. The question of what to do with Fannie and Freddie, the two dominant mortgage financiers, has bedeviled policymakers for decades. – Politico

On sales, permits, starts, and supply:    

• More Home Listings Are Paving the Way to a Buyer-Friendly Market – Realtor.com
• 32 housing markets where tight inventory still favors sellers. Among the nation’s 200 largest metro area housing markets, 32 markets at the end of May 2025 still had at least 50% less active inventory than in May 2019. – Fast Company
• New Real-Estate Math: Half a Million More Sellers Than Buyers. New listings haven’t been enough to jolt the housing market out of its slumber – Wall Street Journal
• Permit Activity Weakens in April 2025 – NAHB
• 3rd Look at Local Housing Markets in May – Calculated Risk
• Builder Sentiment at Third Lowest Reading Since 2012 – NAHB
• Housing Market Index and Single Family Starts – Calculated Risk
• Housing Starts Decreased to 1.256 million Annual Rate in May – Calculated Risk
• Sharp Drop in Multifamily Production Brings Overall Housing Starts Down – NAHB
• US single-family housing starts rise in May; permits slump – Reuters
• US housing construction falls to 5-year low as tariffs weigh on sector. Signs of property market weakness come hours ahead of Federal Reserve’s decision on interest rates – FT
• Single-Family Home Construction Stays Muted in May as Builders Grapple With Rates and Tariffs – Realtor.com
• There Are Nearly 15 Million Vacant Homes in America—Here’s Where Most of Them Are – Realtor.com
•  Buyer-Friendly Housing Market Grows as Home Prices Hold Steady – Realtor.com
• Housing’s Woes Are a Leading Indicator – Wall Street Journal
• Housing Starts Weaken Amid Gloomy Builder Sentiment – Wall Street Journal
• The housing market slump is getting worse – Axios

On other developments:    

• Household Real Estate Asset Value Falls to Start the Year – NAHB
• Here’s how Trump’s ‘big beautiful bill’ would impact housing – CNN
• Why did those apartments for the poor cost D.C. more than $1 million each? – Washington Post
• The affordability gap: Is home ownership still within reach in today’s economy? – JP Morgan Chase
• Home Flipping Profits Drop in First Quarter – ATTOM
• The 10 states where homeownership will most be out of reach in 5 years. These 10 states are projected to have the largest gaps between income and homeowners in five years – Quartz
• Can You Guess the Hidden Costs of Homeownership? – New York Times

From a paper by Luca Bettarelli, Davide Furceri, Prakash Loungani, Jonathan Ostry and Loredana Pisano:

“In this paper, we first test the validity of the Environmental Kuznets Curve (EKC) hypothesis, using a large sample of approximately 190 advanced and developing countries, over a period of 34 years (1989-2022). We find that (CO 2 ) emissions respond positively to increasing income per capita, up to a turning point of approximately US$25,000. In a departure from the previous literature, we allow the relationship between economic development and emissions to depend on the stringency of environmental regulation.”

From a paper by Surjit S. Bhalla, Karan Bhasin, and Prakash Loungani:

“There seems to be a consensus that the inflation targeting framework adopted in India in 2016 has been successful in taming inflation. A comprehensive analysis of inflation targeting should be based on the impact on inflation dynamics, expectations and implications for growth. We illustrate the strong downward time-trend in India’s inflation dynamics coinciding with the inflation targeting regime. Trend inflation levels in India and other emerging market economies also suggest a downward trajectory regardless of the adoption of inflation targeting. Thefore, it is difficult to conclusively establish that adoption of inflation targeting in India led to a moderation in inflation or anchoring of inflation expectations. On expectations, there is some evidence of anchored household expectations, however, this anchoring predates the formal adoption of inflation targeting. Long-term expectations in India have remained firmly anchored since early 2000s. In terms of growth, the high real interest rates policy followed during the initial years of inflation targeting to establish credibility of IT regime adversely affected India’s growth dynamics.”