Could COVID‐19 Infect the Consumer Prices Index? Blundell, Richard; Griffith, Rachel; Levell, Peter ...
Fiscal studies,
June 2020, 2020-06-00, 20200601, Letnik:
41, Številka:
2
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The spread of COVID‐19 has led to sweeping changes in the way households work, spend their time and shop, resulting in different shopping patterns and rapid price changes in some goods. How will ...changes such as these be reflected in headline inflation measures such as the Consumer Prices Index (CPI)? This paper discusses problems in interpreting the CPI as a measure of how the cost of living is changing during the lockdown.
Abstract
In this paper we examine the possible distributional impacts of new trade barriers associated with the new Trade and Cooperation Agreement governing relations between the UK and EU after ...Brexit. We use a model of labour demand that incorporates input–output links across industries, and that allows for demand substitution by firms and consumers and worker reallocation across industries. We find that workers’ exposure is moderately increasing across the earnings distribution. Exposure is greater for men than for women as they are more likely to work in manufacturing industries that are relatively harder hit by new trade barriers. Looking across areas, we find that exposure to new Brexit trade barriers is uncorrelated with measures of local deprivation and the impacts of the recent Covid-19 pandemic.
Understanding Society, the UK Household Longitudinal Study enables researchers to track individuals as they grow up and form new households, making it invaluable for studying the intergenerational ...persistence of outcomes including income, health and wealth. We discuss the advantages and disadvantages of Understanding Society relative to other datasets, and document patterns of attrition as individuals transition from childhood to adulthood. We then use Understanding Society to document the intergenerational persistence of wealth in the UK. We find that the intergenerational persistence of wealth is greater than for earnings, and that only around half of the intergenerational persistence of wealth can be explained by the intergenerational persistence in earnings and education.
The paper discusses the recent decision of the UK's Office for National Statistics to replace the controversial Carli index with the Jevons index in a new version of the retail price index—RPIJ. In ...doing so we make three contributions to the way that price indices should be selected for measures of consumer price inflation when quantity information is not available (i.e. at the 'elementary' level). Firstly, we introduce a new price bouncing test under the test approach for choosing index numbers. Secondly, we provide empirical evidence on the performance of the Carli and Jevons indices in different contexts under the statistical approach. Thirdly, applying something analogous to the principle of insufficient reason, we argue contrary to received wisdom in the literature, that the economic approach can be used to choose indices at the elementary level, and moreover that it favours the use of the Jevons index. Overall, we conclude that there is a case against the Carli index and that the Jevons index is to be preferred.
Abstract Low-income countries’ share of global exports nearly tripled between 1990 and 2015, largely due to China’s emergence as an exporting powerhouse. Evidence from several European countries and ...the US shows that import competition from China differentially reduced employment and earnings for workers in more trade-exposed industries and regions. We show that manufacturing employment declined most dramatically in countries where import growth was not matched by a commensurate expansion of exports. We also provide new results for the UK which indicate that imports from China contributed to substantial declines in consumer prices alongside job losses in manufacturing. However, while the adverse labour market impacts were concentrated on specific groups of workers and regions, consumer benefits from trade were widely dispersed and of similar magnitude for high and low-income households. We argue that assistance targeted towards displaced workers and depressed areas would better help the losers of globalization than new import tariffs.
House price rises and borrowing to invest Crossley, Thomas F.; Levell, Peter; Low, Hamish
Journal of economic behavior & organization,
07/2024, Letnik:
223
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Household borrowing and spending rise with house prices, particularly for leveraged households, but household spending is not consumption. We propose a borrow-to-invest motive by which house price ...gains affect household spending on residential investment: rational, leveraged households have an incentive to make additional residential investments when house prices rise. Credit constraints then matter through reducing access to leveraged returns and so reducing lifetime resources, rather than through consumption smoothing. We test this motive by comparing responses in different categories of spending across more and less leveraged households. We find strong evidence of the borrow-to-invest motive in UK data.
Regression with an imputed dependent variable Crossley, Thomas F.; Levell, Peter; Poupakis, Stavros
Journal of applied econometrics,
November/December 2022, Letnik:
37, Številka:
7
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Summary
Researchers are often interested in the relationship between two variables, with no single data set containing both. A common strategy is to use proxies for the dependent variable that are ...common to two surveys to impute the dependent variable into the data set containing the independent variable. We show that commonly employed regression or matching‐based imputation procedures lead to inconsistent estimates. We offer a consistent and easily implemented two‐step estimator, “rescaled regression prediction.” We derive the correct asymptotic standard errors for this estimator and demonstrate its relationship to alternative approaches. We illustrate with empirical examples using data from the US Consumer Expenditure Survey (CE) and the Panel Study of Income Dynamics (PSID).
The spread of COVID‐19, and international measures to contain it, are having a major impact on economic activity in the UK. In this paper, we describe how this impact has varied across industries, ...using data on share prices of firms listed on the London Stock Exchange, and how well targeted government support for workers and companies is in light of this.
Anti-smoking policies can in theory make smokers better off, by helping smokers with time-inconsistent preferences commit to giving up or reducing the amount they smoke. We use almost 20 years of ...British individual-level panel data to explore the impact on self-reported psychological well-being of two policy interventions: large increases in tobacco excise taxes and bans on smoking in public places. We use a difference-in-differences approach to compare the effects on well-being for likely smokers and non-smokers. We find robust evidence that increases in tobacco taxes raise the relative well-being of likely smokers. Exploiting regional variation in the timing of the smoking ban across Britain, we find no evidence that it raised smoker well-being. Our findings give some support to the view that tobacco taxes are at least partly justifiable because of the benefits they have for smokers themselves.
We show that there is substantial heterogeneity in women's labor supply elasticities at the micro level and highlight the implications for aggregate behavior. We consider both intertemporal and ...intratemporal choices, and identify intensive and extensive responses in a consistent life-cycle framework, using US CEX data. Heterogeneity is due to observables, such as age, wealth, hours worked, and the wage level, as well as to unobservable tastes for leisure: the median Marshallian elasticity for hours worked is 0.18, with corresponding Hicksian elasticity of 0.54 and Frisch elasticity of 0.87. At the 90th percentile, these values are 0.79, 1.16, and 1.92. Responses at the extensive margin explain about 54% of the total labor supply response for women under 30, although this declines with age. Aggregate elasticities are higher in recessions, and increase with the length of the recession. The heterogeneity at the micro level means that the aggregate labor supply elasticity is not a structural parameter: any aggregate elasticity will depend on the demographic structure of the economy as well as the distribution of wealth and the particular point in the business cycle.
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