Economics
Combined nowcasts can improve GDP estimates – paper
Paper compares performance of nowcast models in estimating GDP from 2016–2015
Dudley warns Trump tax plan leaves US finances ‘unsustainable’
New York Fed chief says policymakers may have to tighten rates harder to offset stimulus
Policymakers should increase credit to ‘single-bank firms’ – paper
Researchers examine “unique natural experiment” of 2012 change to ECB’s QE policies
BIS paper explores effects of global factors on inflation
Authors find impact of global factors is mainly temporary, but the effects appear more significant for countries without long-established inflation targets
Higher inflation in Norway supports tighter outlook
Norges Bank brings forward its first planned rate hike to late 2018
Fall in hours worked can flatten Phillips curve, Italian paper says
Changes to “intensive margin of labour utilisation” may make inflation less responsive to employment
Macroeconomics suffers from blind spot, says Borio
Misallocated resources can explain a large part of recent productivity slowdowns, but thinking in aggregate terms obscures this, says BIS economist
Cyclical price analysis needs major improvements – ECB paper
Researchers say DSGE models’ handling of housing prices is subject to errors
Book notes: The End of Theory, by Richard Bookstaber
Bookstaber provides an entertaining introduction to agent-based modelling – a potential new front for economics
BIS paper asks what makes emerging market banks profitable
Both bank-specific and economy-wide factors affect banks’ profitability, authors find
Veteran economists weigh in on ‘rebuilding’ macro theory
Economists including Olivier Blanchard, Andy Haldane and Simon Wren-Lewis tackle the question of how – and whether – to save the DSGE model
Older workforce will reduce Danish growth, central bank says
Reforms to expand labour supply are needed to offset negative effects of demography
Eurozone countries’ manufacturing sectors are diverging, Italian paper finds
Manufacturing profits rise relative to non-tradables in Germany and Spain, but fall in France and Italy
Public debt in EU countries harms growth, ECB paper argues
Researchers find public debt crowds out investment but private debt is used efficiently
Fed paper studies inequality in three dimensions
Authors find examining three dimensions simultaneously gives new insights
Economists are misinterpreting ‘Triffin dilemma’, says BIS paper
Michael Bordo and Robert McCauley argue there was nothing certain about the collapse of Bretton Woods, but Triffin’s successful prediction led others to mistakenly reapply his theory
Fed paper sets out model of financial panics
Mark Gertler, Nobuhiro Kiyotaki and Andrea Prestipino examine banking panics in a DSGE model
Google’s Hal Varian on how technology is changing economics
Google’s chief economist talks to Christopher Jeffery about how big data and machine learning are facilitating changes in economic thinking; discusses the impact technical breakthroughs may have for central banks
Paper looks at EU attempt to increase capital supply to SMEs
Measure introduced in CRR has benefited medium but not small businesses, researchers say
Google chief economist Hal Varian offers machine-learning insights
Varian says use of single-factor equilibrium models needs to give way to dynamic state approaches; he urges central banks to experiment, even though this will result in some failures
Demography, tech reduce US natural unemployment rate – paper
Baby boomers remain active longer, and older workers record lower levels of unemployment
Early asset purchases much more successful – BIS paper
Authors find effectiveness falls over time as the shock wears off, questioning the value of long-running quantitative easing
India needs radical reforms, says academic
State ownership has gone too far but the state needs stronger capabilities in other areas, argues Vijay Joshi