The Unassuming Economist

From a paper by Sergio Julio Chión-Chacón and Kevin Antonio Álvarez García:

“This study empirically investigates the impact of Inflation Targeting (IT) on nominal interest rates over the past 40 years, focusing on 10 advanced and emerging economies. By using a Binary Regime Model embedded within a Backward-Looking Taylor, our findings confirm that IT adoption has significantly contributed to reducing interest rates, with the strongest effects observed in Latin American countries. To reinforce these results, we incorporate Smooth Transition Regression (STR) models, with and without instrumental variables, allowing for a more suitable representation of gradual policy transitions. The STR estimates consistently support our main findings, validating the robustness of the observed impacts. Furthermore, we show that, both before and after IT implementation, central banks display a stronger emphasis on responding to inflation than to the output gap, with this focus intensifying under IT regimes.”

Working papers and conferences:

• Housing Subsidies for Refugees: Experimental Evidence on Life Outcomes and Social Integration in Jordan – NBER
• Housing and Inequality – CEPR
• When land is not enough: Drawing in private investment to increase social rental housing in Spain – Cities
• Measuring Fairness in the U.S. Mortgage Market – Philadelphia Fed
• Constructing Applicants from Loan-Level Data: A Case Study of Mortgage Applications – Philadelphia Fed
• Are First‑Time Home Buyers Facing Desperate Times? – SSRN

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

• Subprime Mortgages Destroyed Them. Who Paid the Price? In “The Killing Fields of East New York,” Stacy Horn profiles one 1990s white-collar crime spree and the wreckage it left behind. – New York Times
• What does Taiwan have to do with US mortgage rates? The weird financial dance between Taiwanese life insurers and US homebuyers – FT
• Asking Rents Mostly Unchanged Year-over-year – Calculated Risk
• Mortgage Applications Increase Marginally in January – NAHB
• CoreLogic: Home Price Growth Ticks Up Slightly in December – CoreLogic
• US Home Price Insights –  February 2025 – CoreLogic

On the US—other developments:    

• Trump Tariffs Risk $29,000 Rise in US Home Building Costs. Canada is the US’s biggest foreign supplier of lumber. Tariffs likely to make it harder for Americans to afford homes – Bloomberg
• Climate Change to Wipe Away $1.5 Trillion in U.S. Home Values, Study Says. Rising home-insurance costs and more homeowners spurning some risky neighborhoods will drive these declines, according to First Street – Wall Street Journal
• That Giant Sucking Sound? It’s Climate Change Devouring Your Home’s Value. – New York Times
• Unaffordability in the West Accelerates Mortgage Buydowns – CoreLogic
• To Rebuild Los Angeles, Fix Zoning. A lot more housing is needed, and not primarily in the areas destroyed by the fires. – The Atlantic
• Are First‑Time Home Buyers Facing Desperate Times? – New York Fed
• Where the housing market shift is happening the fastest right now. Inventory is a key housing metric. Here’s what it’s telling us right now, according to ResiClub’s latest monthly report. – Fast Company
• Fannie and Freddie: Single Family Serious Delinquency Rates Increased in December. Multi-Family Delinquency Rate Declined Slightly in December – Calculated Risk
• Construction Labor Market Softens – NAHB  
• Homeownership Rate for Younger Households Declines – NAHB
• Minnesota’s Multifamily Housing Industry Faces Rising Property Insurance Costs – Minneapolis Fed
• US Housing Market Is Doing Something ‘Very Unusual’ – Newsweek
• Nearly 70% of Single People Struggle to Afford Housing Payments, Compared to 52% of Married People – Redfin
• Will Congress Regulate AI’s Rapid Growth in Real Estate? – CoreLogic   

On Australia and New Zealand:

• [Australia] Australian House Prices Fall Further Led by Sydney and Melbourne. Outlook expected to improve somewhat if rates are reduced. But affordability, slower immigration will keep a lid on gains – Bloomberg
• [New Zealand] Average Wellington house prices plummet nearly 25 percent in latest official valuations – RNZ
• [New Zealand] Economist warns Kiwis not to ‘bet the house’ on housing market – RNZ
• [New Zealand] New Zealand house prices crash – MacroBusiness

On other countries:  

• [Canada] Vancouver: Listings surge as sellers anticipate a housing market revival – National Bank of Canada
• [Canada] Measuring unmet housing need and housing instability in households with roommates and extended family – Statistics Canada
• [Canada] Building new homes in the path of floods and wildfires could cost billions, threaten affordability: report. First-of-its-kind analysis shows significant financial risks from climate change-fuelled disasters unless a small proportion of the new homes needed by 2030 are built out of harm’s way. – Canadian Climate Institute
• [Russia] Moscow Property Rivals London as Rich Russians Bring Cash Home. High-end real estate in the city is seeing a surge in demand as Russians invest back home and turn away from overseas deals because of sanctions. – Bloomberg
• [Spain] La vivienda ya es más cara que nunca: el precio medio superó en 2024 a los años de la burbuja. El importe promedio, con 2.086 euros por metro cuadrado, fue superior al de 2006 y 2007, según la estadística registral, que certifica un nuevo auge del mercado – El Pais
• [Spain] España gasta cuatro veces menos que Europa en vivienda social. El país invirtió de media 34 euros por habitante en asistencia habitacional entre 2007 y 2021, lejos de los 160 euros de la media europea – El Pais
• [Spain] Nuevas previsiones para el sector inmobiliario español: el ciclo alcista se afianza en 2025 – CaixaBank
• [United Kingdom] Peace, permanence and affordable prices: six ways to solve Britain’s housing crisis – The Guardian

From a paper by Emrehan Aktuğ and Abolfazl Rezghi:

“Using a large cross-country dataset covering over 150 countries and more than 10 macroeconomic variables, this study examines the consistency of IMF World Economic Outlook (WEO) forecasts with the full information rational expectations (FIRE) hypothesis. Similar to Consensus Economics forecasts, WEO forecasts exhibit an overreaction to news. Our analysis reveals that this overreaction is asymmetric, with more measured response to bad news, bringing forecasts closer to the FIRE benchmark. Moreover, forecasts align more closely with FIRE hypothesis during economic downturns or when a country is part of an IMF program. Overreaction becomes more pronounced for macroeconomic variables with low persistence and for forecasts over longer horizons, consistent with recent theoretical models. We also develop a model to explain how state-dependent nature of attentiveness may drive this asymmetric overreaction.”

From a paper by Emiliano Brancaccio, Fabiana De Cristofaro, and Raffaele Giammetti:

“The so-called ‘IMF-OECD consensus’ suggests that labour market deregulations increase employment and reduce unemployment. This paper presents a meta-analysis of research on this topic based on MAER-NET guidelines. We examine the relation between Employment Protection Legislation indexes on one hand, and employment and unemployment on the other. Among 53 academic papers published between 1990 and 2019, only 28 per cent support the consensus view, while the remaining 72 per cent report results that are ambiguous (21 per cent) or contrary to the consensus (51 per cent). The decline in support for the consensus view is particularly evident in the last decade. Our results are independent of the citations of papers examined, the impact factor of journals and the techniques used. A FAT-PET meta-regression model confirms these outcomes.”

From a paper by Marek A. Dąbrowski, Jakub Janus, and Krystian Mucha:

“In this paper, we propose a novel approach to classifying inflation-targeting (IT) economies based on fractionally integrated processes. Motivated by the rising prevalence and diversity of IT strategies, we leverage variation in the persistence of inflation rate series to identify four de facto IT strategies, or ‘shades’ of IT. Moving from negative orders of fractional integration, indicating anti-persistent behaviour, to more persistent long-memory processes, often associated with less credible policy frameworks, we classify countries into average IT, strict IT, flexible IT, and uncommitted IT categories. This framework sheds light on the differences between declarative and actual monetary policy strategies across 36 advanced and emerging market economies. Notably, we demonstrate that while most economies fall into the flexible IT category, extreme cases, including the uncommitted IT category, occur with marked frequency. Furthermore, we link our IT classification to institutional features of national monetary frameworks using ordinal probit models. The results suggest that differences across IT categories are related to variations in the maturity and stability of IT frameworks, with less pronounced connections to central bank independence and transparency.”