Vulnerable Growth Adrian, Tobias; Boyarchenko, Nina; Giannone, Domenico
The American economic review,
04/2019, Volume:
109, Issue:
4
Journal Article
Peer reviewed
Open access
We study the conditional distribution of GDP growth as a function of economic and financial conditions. Deteriorating financial conditions are associated with an increase in the conditional ...volatility and a decline in the conditional mean of GDP growth, leading the lower quantiles of GDP growth to vary with financial conditions and the upper quantiles to be stable over time. Upside risks to GDP growth are low in most periods while downside risks increase as financial conditions become tighter. We argue that amplification mechanisms in the financial sector generate the observed growth vulnerability dynamics.
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Structural Change and Global Trade Lewis, Logan T; Monarch, Ryan; Sposi, Michael ...
Journal of the European Economic Association,
02/2022, Volume:
20, Issue:
1
Journal Article
Peer reviewed
Open access
Abstract
Services, which are less traded than goods, rose from 55% of world expenditure in 1970 to 75% in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify ...how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 13 percentage points higher by 2015, about half the boost delivered from declining trade costs. In addition, a world without structural change would have had about 40% greater welfare gains from the trade integration over the past four decades. Absent further reductions in trade costs, ongoing structural change implies that world trade as a share of GDP would eventually decline. Going forward, higher-income countries gain relatively more from reducing services trade costs than from reducing goods trade costs.
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The Rate of Return on Everything, 1870–2015 Jordà, Òscar; Knoll, Katharina; Kuvshinov, Dmitry ...
The Quarterly journal of economics,
08/2019, Volume:
134, Issue:
3
Journal Article
Peer reviewed
Open access
Abstract
What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in the long run? ...Which particular assets have the highest long-run returns? We answer these questions on the basis of a new and comprehensive data set for all major asset classes, including housing. The annual data on total returns for equity, housing, bonds, and bills cover 16 advanced economies from 1870 to 2015, and our new evidence reveals many new findings and puzzles.
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As a result of recent advances in historical national accounting, estimates of GDP per capita are now available for a number of European economies back to the medieval period, including Britain, the ...Netherlands, Italy, and Spain. The approach has also been extended to Asian economies, including India and Japan. So far, however, China, which has been at the center of the Great Divergence debate, has been absent from this approach. This article adds China to the picture, showing that the Great Divergence began earlier than originally suggested by the California School, but later than implied by older Eurocentric writers.
Partisan conflict and policy uncertainty are frequently invoked as factors contributing to slow post-crisis recoveries. Recent events in Europe provide ample evidence that the political aftershocks ...of financial crises can be severe. In this paper we study the political fall-out from systemic financial crises over the past 140years. We construct a new long-run dataset covering 20 advanced economies and more than 800 general elections. Our key finding is that policy uncertainty rises strongly after financial crises as government majorities shrink and polarization rises. After a crisis, voters seem to be particularly attracted to the political rhetoric of the extreme right, which often attributes blame to minorities or foreigners. On average, far-right parties increase their vote share by 30% after a financial crisis. Importantly, we do not observe similar political dynamics in normal recessions or after severe macroeconomic shocks that are not financial in nature.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
A large body of empirical evidence suggests that beliefs systematically deviate from perfect rationality. Much of the evidence implies that economic agents tend to form forecasts that are excessively ...influenced by recent changes. We present a parsimonious quasi-rational model that we call natural expectations, which falls between rational expectations and (naïve) intuitive expectations. (Intuitive expectations are formed by running growth regressions with a limited number of right-hand-side variables, and this leads to excessively extrapolative beliefs in certain classes of environments). Natural expectations overstate the long-run persistence of economic shocks. In other words, agents with natural expectations turn out to form beliefs that don't sufficiently account for the fact that good times (or bad times) won't last forever. We embed natural expectations in a simple dynamic macroeconomic model and compare the simulated properties of the model to the available empirical evidence. The model's predictions match many patterns observed in macroeconomic and financial time series, such as high volatility of asset prices, predictable up-and-down cycles in equity returns, and a negative relationship between current consumption growth and future equity returns.
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Health and income are strongly correlated both within and across countries, yet the extent to which improvements in income have a causal effect on health status remains controversial. We investigate ...whether short-term fluctuations in aggregate income affect infant mortality using an unusually large data set of 1.7 million births in 59 developing countries. We show a large, negative association between per capita GDP and infant mortality. Female infant mortality is more sensitive than male infant mortality to negative economic shocks, suggesting that policies that protect the health status of female infants may be especially important during economic downturns.
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Robert Gordon's The Rise and Fall of American Economic Growth compellingly shows how technical innovation, stimulated by the country's institutions, has radically improved the living standards of the ...citizens of the US. We conduct an empirical investigation of the impact of the capacity of the US state, as proxied by the presence of post offices, on innovation. We show that there is a strong association between the number of post offices in a county and patenting activity. Our evidence suggests that part of story of US innovation is the capacity and reach of the US state.
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The importance of evolutionary forces for comparative economic performance across societies has been the focus of a vibrant literature, highlighting the roles played by the Neolithic Revolution as ...well as the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of human traits. This essay provides an overview of the literature on the macrogenoeconomics of comparative development, underscoring the significance of evolutionary processes and human population diversity in generating differential paths of economic development across societies. Furthermore, it examines the contribution of Nicholas Wade’s recent hypothesis, regarding the evolutionary origins of comparative development, to this important line of research.
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This is a book about the discovery of macroeconomic ideas and concepts long before the term macroeconomics had been coined. The cast of authors varies from doctors and physicians (Sir William Petty ...and Francois Quesnay), to philosophers (David Hume and Adam Smith), to bankers (Richard Cantillon and Henry Thornton) to Prime Ministers of France (John Law and Anne Robert Jacques Turgot). These authors had very rich and varied careers and the book invites readers to imagine specific moments in their careers that influenced both their lives and their writings. Building on these events the contributions of each author are outlined and discussed. Examination of their writings show that by the start of the nineteenth century they had left a rich legacy of macroeconomics ranging from the analysis and measurement of national income, the depiction of the circular flow of income, the debate on the role of money in the economy, the way to model the economy, the importance of labour, land and capital, the role of entrepreneurship, the Central Bank as a lender of last resort, and much more. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780199543229/toc.html
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