The Unassuming Economist

On cross-country:

• Some Economics of Place Effects – Conversable Economist
• A Convenient Representation of the Wealth Distribution and More Evidence on Homeownership and Wealth Inequality in Euro Area Countries – IZA

On the US:   

• Fannie Mae, Freddie Mac to Back Home Loans of Nearly $1 Million. The maximum size of home-mortgage loans eligible for government backing will jump to $970,800 next year in high-cost markets – Wall Street Journal
• US lifts upper limit on government-backed home mortgages to almost $1m. Value of mortgages for purchase by Fannie Mae and Freddie Mac rises 18% after ‘exceptionally fast’ price increase – FT
• Supply-Chain Woes Snarl Attempts to Tame House Prices.Rising costs of construction materials, labor shortages complicate efforts to cool some of the world’s hottest property markets – Wall Street Journal
• The Housing Gang Is Getting Back Together for Another Bust. Fan and Fred will buy mortgages up to $1 million, repeating the mistakes that led to the 2008 crash. – Wall Street Journal
• Renters strike back as cities cap price hikes by landlords.The revival of rent control policies long derided by economists, including one of President Joe Biden’s top advisers, comes as officials scramble to contain rising prices across a range of goods and services. – Politico
• Racial Discrimination and Housing Outcomes in the United States Rental Market – NBER
• Have More People Moved During the Pandemic? – Harvard Joint Center for Housing Studies
• An Economy That Works for All: Fostering Low-Income Homeownership – New York Fed
• Individual and Local Effects of Unemployment on Mortgage Defaults – Philadelphia Fed
• Austin’s Texas-Size Luxury Housing Boom. The capital city has one of the hottest high-end real-estate markets in the country, with entry-level list prices for the top 5% of the market hitting $2.34 million in 2021, a rise of nearly 33% over 2020 prices – Wall Street Journal
• Individual and Local Effects of Unemployment on Mortgage Defaults – Philadelphia Fed

On China

• China Home Sales Slump Deepens as Easing Shows Little Effect – Bloomberg
• China Evergrande’s electric-vehicle unit gets US$200 million from returning undeveloped land.The Hong Kong-listed carmaker says the money will be used to fund construction projects and pay wages. Its cash-strapped parent, China Evergrande, is hoping to transform its business focus from property development to car manufacturing – South China Morning Post
• China property bond fears remain as house prices fall. Evergrande’s missed payments have led to a reckoning across the country’s real estate industry – FT
• Even in tech hub Shenzhen, China’s property market succumbs to chills – Reuters

On other countries:  

• [Canada] Want to solve the housing crisis? Address super-charged demand – The Conversation  
• [Czech Republic] Czech central bank gets tougher in mortgage lending rules amid property boom – Reuters
• [Germany] German banks vulnerable to housing bubble; should build buffers: Bundesbank – Reuters
• [Germany] Price rises in German housing market to ease but affordability worsen – Reuters
• [Hong Kong] Hong Kong home prices ease for 2nd month after record high – Reuters
• [Ireland] Irish house prices undervalued? Shows how misleading stats can be. European Commission report saying houses undervalued relies on outmoded statistics – The Irish Times
• [United Kingdom] Surge in stamp duty refunds on second-home surcharge. Property stock levels decline during the pandemic, say agents – FT
• [United Kingdom] The big picture: the decline and fall of a utopian social housing scheme – The Guardian
• [United Kingdom] London Housing Market Poised to Lag Behind U.K. Regions in 2022 – Bloomberg

Max Walter, the executive director of Centre for Development Alternatives (a Uganda based independent think tank) writes for the Brookings Institution about the revival of industrial policy for pushing growth in Africa. Governments across the continent are using industrial policy tools to push for industrialization through agro-processing, labour-intensive light manufacturing, natural resource extraction and value addition, some knowledge-intensive manufacturing, and “industries without smokestacks” such as high-value agriculture and tradable services.

The article explores reasons which may have driven this revival and then moves on to explain some notable examples. From Uganda’s National Development Plan (2020) which focuses on the use of several industrial policy tools for bolstering supply chains of cocoa production, to Morocco and South Africa’s policies to upgrade automobile manufacturing industries- examples are aplenty.

The article also delves into the importance of failures of such policies for evidence-based strategic policymaking.

Click here to read the full column.

Economists Christian Gayer and Andreas Reuter of the European Commission (EC) and Fiona Morice of the French National Institute of Statistics and Economic Studies write about the EC’s new index of uncertainty in a recent column for the VoxEU blog.

For the lack of a better indicator, economists have often resorted to measuring uncertainty using proxies like deviation of agents’ views on economic outlooks or forecast errors. However, this new index aims to study the evolution of uncertainty in response to the Covid-19 pandemic and related stringent restrictions based on the EU-wide Programme of Business and Consumer Surveys. It also compares the indicator to survey-based indicators of economic confidence, as well as to other existing uncertainty gauges, and offers a glimpse of the rich set of geographical, sectoral, and sub-sectoral breakdowns of the new data.

The column dives deeper into the levels of analysis possible using disaggregated data on various parameters that it presents, such as at the industrial and sub-sectoral level, for consumers grouped by several socio-economic categories etc., and then discusses some key insights.

Click here to read the full blog.

From the IMF’s latest report on Mongolia:

Discussions about welfare and development often revolve around the usage of income thresholds to analyze changes in living standards and the well-being of individuals. While many studies emphasize the growing gap between those falling under the upper and lower tails of the income distribution table, it is the middle that is often dismissed in such development stories, and perhaps wrongfully so.

In a recent column for the Brookings Institution (2021), economists Kimberly Blair Bloch and Luis F. Lopez-Calva bring this issue into the spotlight and discuss considering median, rather than the mean income, as an insightful estimate of the “middle”. Their findings highlight three major points- (a) the mean and median incomes have risen steadily over the years in all countries (2002-2019); (b) median income has grown more rapidly than mean income in all countries; (c) and, the ratio of mean to median income has fallen in all countries.

Thus, they observe that income distributions in all countries are gradually tending towards a more normal distribution than a positively skewed one, which has the very important policy implication that the “middle” class can simply not be ignored by policymakers any longer.

Click here to read the full article.