The Unassuming Economist

From a paper by Robert Gmeiner:

“Monetary expansion can lead to inflation. Using economy-wide measures, such as the all item CPI or the GDP deflator, these effects can be quantified, but this leaves open the question of which prices are inflating more, and thus whether monetary expansion is more harmful to the rich or poor, depending on their respective consumption patterns. This paper constructs quarterly consumer price indices specific to each income quintile in the United States from 1990 to 2022. Using transfer function autoregressive moving average models with exogenous regressors (ARMAX), significant inflationary effects of monetary expansion CPIs for the lowest income quintile are observed that are independent of changes in the CPI for higher income quintiles. More generally, households that are likely to spend a higher proportion of income on goods with inelastic demand experience higher inflation rates. These effects, which are robust to specification, are caused by monetary expansion from Federal Reserve purchases of government debt, but not other assets.”

From a paper by Alkis Blanz, Ulrich Eydam, Maik Heinemann, Matthias Kalkuhl:

“Since market-based climate policies such as carbon pricing affect the cost of using fossil resources, rule-based climate policy adjustments in response to fossil energy price shocks may promote macroeconomic stabilization. This raises the question of whether climate policy should adapt to short-term fluctuations in fossil energy prices. We examine this question by employing a dynamic stochastic general equilibrium (DSGE) model calibrated for the German economy. Our results indicate that the macroeconomic and welfare impacts of rule-based carbon pricing adjustments depend on the share of recycled revenue. If revenue is fully absorbed, lowering emissions prices can stabilize the economy in response to rising energy prices. Conversely, if revenue is at least partially recycled, maintaining a stable carbon price will improve overall welfare. With a stable carbon price, revenue recycling acts as insurance against fluctuating energy prices. This result remains robust across several robustness checks.”

From a paper by Luciano Vereda, Helder Ferreira de Mendonça, and George Morcerf:

“Our study advances the modeling of forecast revisions by accounting for the nuanced impact of informational shocks across different time horizons. Specifically, we introduce modifications to the error structure of regression models used to detect biases in macroeconomic forecasts. Drawing on consensus forecasts of inflation and output growth from the central banks of Brazil, Chile, and Mexico, our approach offers a nuanced understanding of bias estimation uncertainty, leading to a more robust rejection of the null hypothesis of no biases. By elucidating the differential effects of informational shocks on forecast accuracy across time periods, our findings not only contribute to the refinement of forecasting methodologies but also have implications for policymakers and economic analysts striving for more accurate and reliable predictions in dynamic economic environments.”

From a paper by Pierre-Richard Agénor:

“This chapter provides an overview of the literature on middle-income traps, and draws policy lessons for African countries that have successfully crossed to middle-income status in recent years. The first part examines the descriptive and statistical evidence on these traps. The second discusses the various arguments that have been put forward to explain their existence and persistence. These arguments include diminishing returns to physical capital, exhaustion of cheap labor and imitation gains, insufficient quality of human capital, inadequate contract enforcement and intellectual property protection, distorted incentives and misallocation of talent, lack of access to advanced infrastructure, and lack of access to finance, especially in the form of venture capital. The third and fourth parts draw together the lessons that can be learnt from countries that have successfully transitioned from middle-to high-income status, and discuss how these lessons can help to prevent today’s middle-income countries in Africa from falling into a trap.”

From the Astana Times:

“The global economy remains slow, creating major challenges for reducing poverty and inequality. According to the IMF’s latest World Economic Outlook update, global growth is expected to be 3.2 percent this year and 3.3 percent in 2025, which is much lower than the pre-pandemic average of 3.8 percent.

Economic stagnation often leads to fewer job opportunities and low wage growth, worsening long-term unemployment and reducing the share of income that goes to workers. The pandemic has made inequality worse, with widespread job losses and income gaps causing a 0.5-point rise in the global Gini index in 2020.

In response to these challenges, governments need to focus on inclusive growth to create strong and resilient economies. Inclusive growth ensures that economic prosperity benefits everyone, especially the most vulnerable. It aims to create decent jobs, expand opportunities for all, and promote fairer wealth distribution.

Kazakhstan is at a crucial point in its development, working to shift toward a more inclusive and sustainable growth model. As part of its commitment to the United Nations 2030 Agenda, the country is focused on achieving the Sustainable Development Goals (SDGs) to improve the well-being and prosperity of its people. Over the past three decades, Kazakhstan has used its natural resources to achieve significant economic progress, becoming a key player among oil-producing nations.

However, the benefits of growth have not been equally distributed. The Gini coefficient, which measures income inequality, saw a notable decline from 0.366 in 2000 to 0.267 in 2009. Yet, the years following 2010 revealed a gradual rise in inequality, with the coefficient fluctuating between 0.278 and 0.291. Between 2013 and 2023, the Gini index increased by 5.1%, reflecting challenges in achieving equitable growth.

Data from the World Inequality Database highlight disparities in wealth distribution. The wealthiest 1% of Kazakhstan’s population controls 29.2% of the nation’s assets, while the bottom 50% holds a mere 4.6%. 

In response to these challenges, President Kassym-Jomart Tokayev introduced a new economic course in 2023. This ambitious strategy aims to achieve sustainable economic growth rates of 6–7% and double the size of the national economy to $450 billion by 2029. At the heart of these reforms lies the principle of inclusivity, with a strong focus on equitable wealth distribution to ensure that “every citizen tangibly benefits from the fruits of consistent economic progress.””

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