Found 1720 article(s) in category 'Q1: Economic Growth'

Jeffrey Frankel Says More…

Jeffrey Frankel Says More... Jeffrey Frankel, September 2019, Opinion, “Welcome to Say More, a weekly newsletter that brings Project Syndicate’s renowned contributors closer to readers. Each issue invites a selected contributor to expand on topics covered in their commentaries, address new ones, and share recommendations, offering readers exclusive insights into the ideas, interests, and personalities of the world’s leading thinkers. This week, Project Syndicate catches up with Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University’s Kennedy School of Government.Link

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Financial Market Risk Perceptions and the Macroeconomy

Financial Market Risk Perceptions and the Macroeconomy. Emil Siriwardane, Adi Sunderam, , Paper, “In this appendix, we provide details about the data construction for all variables used in the main text. We then present a battery of tests and additional analysis demonstrating the robustness of the relationship between the real rate and PVSt. In addition, we show that roughly 90% of the covariation between the real rate and PVSt stems from the fact that the real rate forecasts future returns on the vol-sorted portfolio. We also relate PVS to objective and subjective measures of expected risk for aggregate macroeconomic variables and the aggregate stock market, showing that PVS is related to expected risk, and that this connection is most evident for subjective measures of risk that reflect both public and private firms.  Moreover, we offer complementary VAR and local projection evidence that shocks to risk perceptions, as measured by PVSt, lead to a boom in the real economy. We also document that periods of high risk perceptions coincide with investor outflows from high-volatility mutual funds. Finally, we provide proofs for the propositions contained in the model section of the main text.Link

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On Secular Stagnation in the Industrialized World

On Secular Stagnation in the Industrialized World. Lawrence Summers, August 2019, Paper, “We argue that the economy of the industrialized world taken as a whole is currently – and for the foreseeable future will remain – highly prone to secular stagnation. But for extraordinary fiscal policies, real interest rates would have fallen much more and be far below their current slightly negative level, current and prospective inflation would be further short of the two percent target levels and past and future economic recoveries would be even more sluggish. We start by arguing that, contrary to current practice, neutral real interest rates are best estimated for the bloc of all industrial economies given capital mobility between them and relatively limited fluctuations in their aggregated current account. We show, using standard econometric procedures and looking at direct market indicators of prospective real rates, that neutral real interest rates have declined by at least 300 basis points over the last generation. We argue that these secular movements are in larger part a reflection of changes in saving and investment propensities rather than the safety and liquidity properties of Treasury instruments. We highlight the observation that levels of government debt, the extent of pay-as-you-go old age pensions and the insurance value of government healthcare programs have all ceteris paribus operated to raise neutral real rates. Using estimates drawn from the literature, as well as two general equilibrium models emphasizing respectively life-cycle heterogeneity and individual uncertainty, we suggest that the “private sector neutral real rate” may have declined by as much as 700 basis points since the 1970s.Link

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Innis Lecture – Rethinking Economic Development

Innis Lecture – Rethinking Economic Development. Nathan Nunn, August 28, 2019, Paper, “I provide a summary, reflection, and assessment of the current state of economic development in both the policy and academic worlds. In terms of development policy, currently, the primary focus is on policy interventions, namely, foreign aid, aimed at fixing the ‘deficiencies’ of developing countries. Academic research also has a similar focus, except with an emphasis in rigorous evaluation of interventions to estimate causal effects. A standard set of versatile quantitative tools is used, e.g., experimental and quasi-experimental methods, which can be easily applied in a range of settings to estimate the causal effects of policies, which are typically presumed to be similar across contexts. In this article, I take a step back and ask whether the current practices are the best that we can do. Are foreign aid and policy interventions the best options we have for poverty alleviation? What else can be done? Is our current research strategy, characterized by rigorous but a lack of context-specific analysis, the best method of analysis? Is there a role for other research methods, for a deeper understanding of the local context and for more collaboration with local scholars?Link

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Whither Central Banking?

Whither Central Banking? Lawrence Summers, August 23, 2019, Opinion, “In an environment of secular stagnation in the developed economies, central bankers’ ingenuity in loosening monetary policy is exactly what is not needed. What is needed are admissions of impotence, in order to spur efforts by governments to promote demand through fiscal policies and other means.Link

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Larry Summers Says Central Bankers Confront a ‘Black Hole’ for Policy

Larry Summers Says Central Bankers Confront a ‘Black Hole’ for Policy. Lawrence Summers, August 22, 2019, Video, “Harvard University economist Lawrence Summers warned central bankers that they are staring at “black hole monetary economics” where small changes in interest rates and even more aggressive strategies do little to solve demand shortfalls.Link

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Respect for Improvements and Comparative Statics in Matching Markets

Respect for Improvements and Comparative Statics in Matching Markets. Scott Duke Kominers, August 21, 2019, Paper, “One of the oldest results in the theory of two-sided matching is the entry comparative static, which shows that under the Gale–Shapley deferred acceptance algorithm, adding a new agent to one side of the market makes all the agents on the other side weakly better off. Here, we give a new proof of the entry comparative static, by way of a well-known property of deferred acceptance called respect for improvements. Our argument extends to yield comparative static results in more general settings, such as the matching with slot-specific preferences framework.Link

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The Wise Company: How Companies Create Continuous Innovation

The Wise Company: How Companies Create Continuous Innovation. Hirotaka Takeuchi, 2019, Book, “High-velocity change is the fundamental challenge facing companies today. Few companies, however, are prepared to continuously innovate-because they focus on the short-term and do not emphasize the wisdom needed to make sure that their interests are aligned with those of society. Practical wisdom is the bases of continuous innovation, where companies ceaselessly and repeatedly creating new knowledge, disseminating it throughout the organization, and converting knowledge to action over time. In The Wise Company, legendary management experts Ikujiro Nonaka and Hirotaka Takeuchi highlight how various companies have confronted the challenge of rapid change to create new products and new ways of doing business that benefit employees, consumers, and society.Link

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Trump Is Losing the Trade War With China

Trump Is Losing the Trade War With China. Jason Furman, August 19, 2019, Opinion, “President Trump’s China strategy is failing. His tougher approach has yielded no meaningful Chinese concessions but is increasingly damaging the U.S. economy. Today China is more integrated with the rest of the world while the U.S. is more isolated. To combat China’s unfair, statist economic practices effectively, the U.S. must change its approach, enlisting allies and international institutions to advance a more focused set of demands.Link

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The Value of Intermediation in the Stock Market

The Value of Intermediation in the Stock Market. Marco Di Maggio, Mark Egan, August 2019, Paper, “Brokers continue to play a critical role in intermediating institutional stock market transactions. More than half of all institutional investor order flow is still executed by high-touch (non-electronic) brokers. Despite the continued importance of brokers, we have limited information on what drives investors’ choices among them. We develop and estimate an empirical model of broker choice that allows us to quantitatively examine each investor’s responsiveness to execution costs and access to research and order flow information. Studying over 300 million institutional trades, we find that investor demand is relatively inelastic with respect to commissions and that investors are willing to pay a premium for access to top research analysts and order-flow information. There is substantial heterogeneity across investors. Relative to other investors, hedge funds tend to be more price insensitive, place less value on sell-side research, and place more value on order-flow information. Furthermore, using trader-level data, we find that investors are more likely to trade with traders who are located physically closer and are less likely to trade with traders that have misbehaved in the past. Lastly, we use our empirical model to investigate the unbundling of equity research and execution services related to the MiFID II regulations. While under-reporting for the average firm is relatively small (4%), we find that the bundling of execution and research allows some institutional investors to under-report management fees by up to 15%.Link

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