The Unassuming Economist

From The Astana Times:

“Making fiscal policy more pro-poor, improving the quality of education, and strengthening climate resilience are critical priorities for policymakers to reduce poverty and inequality in Kazakhstan, according to the Kazakhstan Poverty and Equity Assessment 2024 report, published by the World Bank on Dec. 12.

Kazakhstan’s economy has shown robust growth since 2006, with an average annual rate of 4.7%. This has improved living standards and elevated the country to upper-middle-income status, lifting 5.9 million people out of poverty and reducing the poverty rate from 49.5% to 8.5% over the same period.

Consumption growth, fueled by higher labor incomes, has been the main driver of poverty reduction. However, the report identifies three distinct phases in Kazakhstan’s poverty reduction journey. Between 2006 and 2013, poverty declined rapidly but saw a partial reversal during the 2014-2016 economic downturn, which increased poverty rates. From 2016 to 2021, poverty reduction resumed but at a slower pace.

The middle class has expanded significantly since 2006, increasing 2.5-fold to reach 67% of the population in 2021, compared to 26% in 2006. However, growth stagnated after 2013 as structural transformation and productivity gains slowed. The report underscores the importance of diversifying Kazakhstan’s economy, which remains heavily dependent on commodity exports.”

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From a paper by Robert Holzmann:

“After the global financial crisis and until 2021, the primary objective of central banks in advanced economies was to implement policies aimed at increasing inflation, given that inflation had been too low for too long. Having reached the effective lower bound (ELB) of nominal interest rates, monetary policy had to resort to unconventional monetary policy (UMP) measures, which were not without negative side effects. In response to the rise in inflation in 2021, central banks returned to policy interest rates as their primary monetary policy tool and began to unwind their set of UMP measures. Assuming that inflation has been tamed, will we be able to maintain sufficient distance from the ELB to rely broadly on policy rates? Or will we again be forced to implement UMP with all its side effects and proportionality issues? Part I of the paper outlines the rationale and instruments of UMP: how it was supposed to work and how it actually worked, including its negative side effects. Part II considers alternative monetary policy options in a low inflation environment that prove limited and little convincing. The paper ends by discussing how prolonged use of UMP impacts on central bank profitability and central bank independence, also offering possible remedies.”

From a paper by Ruiqi Tan and Wei Dai:

“In this paper, we use monthly data from 1992 to 2022 and a structural VAR model to investigate the effects of oil supply shocks, aggregate demand shocks, and oil-specific demand shocks in the global crude oil market on the Canadian stock market. Our analysis reveals that these shocks affect the S&P/TSX Composite Index and various sector-specific indices in different ways. Specifically, the response of the Canadian market to oil-specific demand shocks diverges notably from the U.S. market, highlighting Canada’s unique position as an oil-exporting country. In the long run, oil price shocks account for over 10% of the variation in the composite index and as much as 35% in the Energy sector index.”

From a paper by Shrimoyee Ganguly and Rajat Acharyya:

“Interest rate hike as an instrument for inflation-targeting has been adopted quite aggressively in recent times by the Fed Bank of the United States, which has some far-reaching implications for emerging market economies like India. In such a context, this article explores implications of interest rate hike by a large foreign country for wage inequality between skilled and unskilled workers in a domestic economy. We focus on the supply side channel: hike in foreign interest rate affecting wage inequality through its impact on domestic investment, capital formation and consequent changes in the composition of aggregate output. We show that the wage inequality worsens if capital-cost share in a composite traded good is larger than the capital-cost share in a skill-based export-good Z. Domestic policies such as credit expansion by changing the cash-reserve ratio and increase in money supply help mitigate this worsening wage-inequality effect of interest hike abroad. This issue assumes relevance because of rising concerns among the major central banks the world over about the income distributional impacts of monetary policies, whereas most of the recent income inequality trends seem to have been contributed largely by rising skill premiums.”

From a paper by Nasser Khiabani  and Solaleh Tavassoli:

“This study reviews the evolution of national and regional housing models that developed and received much attention in the housing economics literature. From this point of view, first, we focus our attention on the econometric modeling of national housing markets and discuss their limitations in twofold: inferring individual-level relations from aggregate-level data or aggregate shocks, and assuming spatial homogeneity in all regions. These two problems will be addressed precisely in the newly developed regional housing market models by identifying the sources of cross-sectoral dependence, namely, spatial and temporal dependence. Spatial dependence refers to how spatial factors influence economic processes. It is measured through a spatial weighting matrix. Cross-sectional dependence stemming from common factors is attributed to economy-wide shocks that affect all individuals with different intensities coming from different macro shocks, such as interest rates, oil prices, and technology shocks.”