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Farm, Ante (2020): Explaining Inflation and Unemployment. (Swedish Institute for Social Research. Working paper 2020,05), Stockholm, 27 S.

Abstract

"This paper explains inflation and unemployment starting from new baseline models of price formation and labor demand. Inflation is always and everywhere a pricing phenomenon. Unemployment is every year determined as a residual, as people in the labor force without employment. Employment is determined by production and labor productivity, while production is determined by spending (as measured by nominal GDP) at prices set by firms." (Author's abstract, IAB-Doku) ((en))

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Faryna, Oleksandr, Tho Pham, Oleksandr Talavera & Andriy Tsapin (2020): Wage Setting and Unemployment: Evidence from Online Job Vacancy Data. (GLO discussion paper / Global Labor Organization 503), Essen, 49 S.

Abstract

"This paper examines the relationship between labour market conditions and wage dynamics by exploiting a unique dataset of 0.8 million online job vacancies. We find a weak trade-off between aggregated national-level wage inflation and unemployment. This link becomes more evident when wage inflation is disaggregated at sectoral and occupational levels. Using exogenous variations in local market unemployment as the main identification strategy, a negative correlation between vacancy-level wage and unemployment is also established. The correlation magnitude, however, is different across regions and skill segments. Our findings suggest the importance of micro data's unique dimensions in examining wage setting \textendash{} unemployment relationship." (Author's abstract, IAB-Doku) ((en))

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Fuest, Clemens (2020): Wie wir unsere Wirtschaft retten. Der Weg aus der Corona-Krise. Berlin: Aufbau-Verlag, 277 S.

Abstract

"Wie lange reichen die Milliarden aus dem Konjunkturpaket der Bundesregierung? Welche Gefahr droht durch die immensen Schulden? Bleibt die Eurozone stabil? Wird der Sozialstaat es schaffen, neue Ungleichheiten zu bekämpfen? Was wird aus dem Klimaschutz? Und wie nutzen wir die Chancen, die diese Krise auch eröffnet? In seinem grundlegenden Buch weist Clemens Fuest, Präsident des ifo Instituts den Weg aus der Krise." (Verlagsangaben, IAB-Doku)

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Gomis-Porqueras, Pedro, Stella Huangfu & Hongfei Sun (2020): The role of search frictions in the long-run relationships between inflation, unemployment and capital. In: European Economic Review, Jg. 123. DOI:10.1016/j.euroecorev.2020.103396

Abstract

"This paper explores the long-run relationships between inflation, unemployment and capital accumulation by proposing a model with search frictions in both goods and labor markets. This framework allows us to identify a negative extensive margin effect of inflation on the number of firms demanding capital and a positive intensive margin effect of inflation on the capital demanded per firm. The two effects together generate a hump-shaped relationship between long-run inflation and aggregate capital. These results are consistent with our empirical evidence from a cross-section of 76 countries, which suggests a non-monotonic relationship between inflation and investment to GDP ratio in the long run. Our calibrated results are also consistent with empirical findings from the U.S. data on the effect of inflation on capital stock, unemployment and the real interest rates." (Author's abstract, IAB-Doku, © 2020 Elsevier) ((en))

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Hahn, Elke (2020): The wage-price pass-through in the euro area: does the growth regime matter? (European Central Bank. Working paper series 2485), Frankfurt am Main, 41 S. DOI:10.2866/340764

Abstract

"This paper explores whether the transmission mechanism between wages and prices in the euro area is affected by the growth regime. Since the great financial crisis inflation developments have posed major puzzles to economists as inflation declined by less than was widely expected during the past recessions and rose by less during the subsequent recoveries. This paper analyses whether the wage-price pass-through may have contributed to these inflation puzzles. Applying the Threshold VAR model proposed by Alessandri and Mumtaz (2017) to the analysis of the wage-price pass-through, the paper examines whether the transmission mechanim of different types of shocks differs between recessions and expansions. The results point to differences in the wage-price pass-through between growth regimes for demand shocks but not for wage mark-up shocks. They show a much smaller response of prices relative to wages, i.e. a smaller wage-price pass-through, for demand shocks in recessions than in expansions. This is accounted for by a smaller relative response of profit margins. More generally, the results suggest that the slope of the price Phillips curve flattens in recessions on account of the lower wage-price pass-through, while the wage Phillips curve appears to be broadly stable across growth regimes. Overall, the results contribute to solve or diminish the puzzle of the missing disinflation of the past two recessions suggesting that inflation should be expected to recede by less during recessions than indicated by standard linear models." (Author's abstract, IAB-Doku) ((en))

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Landwehr, Jannik J. (2020): The case for a job guarantee policy in Germany: A political-economic analysis of the potential benefits and obstacles. (Working Paper / Berlin Institute for International Political Economy 2020,150), Berlin, 27 S.

Abstract

"As a bottom-up approach, a Job Guarantee policy can tackle the issue of unemployment on the macroeconomic, socioeconomic, and individual level in a unique way and promote the social inclusion of the unemployed. This paper aims at analysing the potential obstacles - namely inflationary pressure and financing - of a Job Guarantee policy implementation in the case of Germany. A Job Guarantee's impact on inflation depends on excess production capacities of economic sectors as well as collective wage bargaining structures. In this regard, this paper concludes that under a correct policy design inflationary pressure is no major obstacle. Strengthening workers' bargaining power in Germany through a Job Guarantee policy could even contribute to reaching the inflation target and prevent deflation. However, deficiencies of the European institutional setup and the analogous restrictive fiscal mantra at European and national level limit the political scope for financing a Job Guarantee policy. Notwithstanding, a small to medium size Job Guarantee programme - comprising up to all currently unemployed willing to work - is politically and legally feasible." (Author's abstract, IAB-Doku) ((en))

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Lepetit, Antoine (2020): Asymmetric unemployment fluctuations and monetary policy trade-offs. In: Review of Economic Dynamics, Jg. 36, S. 29-45. DOI:10.1016/j.red.2019.07.005

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Sheldon, Hannah (2020): The Beveridge curve and equilibrium unemployment. In: Economics Bulletin, Jg. 40, H. 4, S. 3182-3192.

Abstract

"The Phillips Curve is commonly relied upon to estimate the non-accelerating inflation rate of unemployment (NAIRU). However, the trade-off between inflation and unemployment has become more ambiguous, in part due to the current existence of low inflation and low unemployment. This may render NAIRU estimates less reliable. Thus, in order to gain a more accurate insight into the state of the labor market, I turn to the often-overlooked Beveridge Curve (BC), which depicts the negative relationship between the job vacancy rate (V) and the unemployment rate (U). I contribute to the literature by estimating the BC and the Job Creation Curve (JCC) for the US overall and for each US Census Region (Midwest, Northeast, South, and West) through the use of the Bureau of Labor Statistics' (BLS) Job Openings and Labor Turnover Survey (JOLTS), which covers the period from 2001-2019. Using equilibrium unemployment theory, I am able to identify equilibrium unemployment levels in both the pre- and post-recessionary periods as well as in a scenario where perfect matching efficiency (V=U) is obtained. My findings show that the US and the Midwest had the highest equilibrium unemployment estimates under the prevailing conditions in the post-recessionary period at 5.6%, while the South had the lowest, at 5.2%. Conversely, in a world of perfect matching efficiency (where V = U), the steady-state equilibrium estimates are much lower, ranging from 4.1% to 4.3%." (Author's abstract, IAB-Doku) ((en))

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Vlekke, Marente, Martin Mellens & Siem Jan Koopmans (2020): An assessment of the Phillips curve over time: evidence for the United States and the euro area. (CPB discussion paper / CPB Netherlands Bureau for Economic Policy Analysis 416), The Hague, 74 S. DOI:10.34932/9sxf-1876

Abstract

"We assess the stability of the coefficient on the unemployment gap in various linear dynamic Phillips curve models. We allow the coefficient on the unemployment gap and the other variables in our model to be time-varying, so that we can monitor the importance of the Phillips curve over time. We compare the effects of different measures for inflation and inflation expectations on our estimation results. In our analysis, we use state space methods and adopt a practical approach to Bayesian estimation with feasible testing and diagnostic checking procedures. Empirical results are presented for the United States and the five largest euro area economies. Our main conclusion is that in the United States the Phillips curve for headline inflation has remained empirically relevant over the years while there are periods when its impact has been low. For measures of core inflation we find a declining Phillips curve. In the euro area the strength of the relationship differs per country and over time, but has overall been weak and volatile in the past three decades. For both the United States and the euro area countries, we find little evidence of the “anchored expectations"-hypothesis." (Author's abstract, IAB-Doku) ((en))

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Weber, Christoph S. (2020): The unemployment effect of central bank transparency. In: Empirical economics, Jg. 59, H. 6, S. 2947-2975. DOI:10.1007/s00181-019-01741-1

Abstract

"Most central banks have increased their transparency in the recent past. The question is whether higher transparency comes at some cost. Firstly, the article shows in a theoretical model that transparency does not necessarily lead to higher unemployment. Secondly, the paper analyses the main theoretical results of other authors that transparency leads to higher wages and unemployment (volatility). The empirical results show no evidence for these conjectures. In fact, the analyses show that transparency can reduce the detrimental effect that central bank independence has on employment. Furthermore, the estimations confirm that transparency does not lead to higher unemployment volatility." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

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Weisfeld, Hans, Irineu E. de Carvalho Filho, Fabio Comelli, Rahul Giri, Klaus-Peter Hellwig, Chengyu Huang, Fei Liu, Sandra V. Lizarazo Ruiz, Alexis Mayer Cirkel & Andrea F. Presbitero (2020): Predicting Macroeconomic and Macrofinancial Stress in Low-Income Countries. (IMF working paper 2020,289), Washington, DC, 63 S.

Abstract

"In recent years, Fund staff has prepared cross-country analyses of macroeconomic vulnerabilities in low-income countries, focusing on the risk of sharp declines in economic growth and of debt distress. We discuss routes to broadening this focus by adding several macroeconomic and macrofinancial vulnerability concepts. The associated early warning systems draw on advances in predictive modeling." (Author's abstract, IAB-Doku) ((en))

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el Herradi, Mehdi, Jakob de Haan & Aurélien Leroy (2020): Inflation and the Income Share of the Rich: Evidence for 12 OECD Countries. (CESifo working paper 8203), München, 31 S.

Abstract

"This paper examines the distributional implications of inflation on top income shares in 12 advanced economies using data over the period 1920-2016. We use Local Projections to analyze how top income shares respond to an inflation shock, and panel regressions in which all variables are defined as five-year averages to examine the impact of inflation on the position of the top-one-percent in the long run. Our findings suggest that inflation reduces the share of national income held by the top one percent. Furthermore, we find that inflation shocks and long-run inflation have similar effects on top income shares." (Author's abstract, IAB-Doku) ((en))

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Álvarez, Luis J. & Mónica Correa-López (2020): Inflation expectations in euro area Phillips curves. In: Economics Letters, Jg. 195. DOI:10.1016/j.econlet.2020.109449

Abstract

"We analyze the information content of alternative inflation expectations measures, including those from consumers, firms, experts and financial markets, in the context of open economy Phillips curves. We adopt a thick modeling approach with rolling regressions and we assess the results of an out-of sample conditional forecasting exercise by means of meta regressions. The information content varies substantially across inflation expectations measures. In particular, we find that those from consumers and firms are better at predicting inflation if compared to those from experts and, especially, those from financial markets." (Author's abstract, IAB-Doku, © 2020 Elsevier) ((en))

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Ball, Laurence & Sandeep Mazumder (2019): A Phillips curve for the euro area. (European Central Bank. Working paper series 2354), Frankfurt am Main, 27 S. DOI:10.2866/364747

Abstract

"This paper asks whether a textbook Phillips curve can explain the behavior of core inflation in the euro area. A critical feature of the analysis is that we measure core inflation with the weighted median of industry inflation rates, which is less volatile than the common measure of inflation excluding food and energy prices. We find that fluctuations in core inflation since the creation of the euro are well explained by three factors: expected inflation (as measured by surveys of forecasters); the output gap (as measured by the OECD); and the pass-through of movements in headline inflation. Our specification resolves the puzzle of a “missing disinflation” after the Great Recession, and it diminishes the puzzle of a “missing inflation” during the recent economic recovery." (Author's abstract, IAB-Doku) ((en))

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Bayrak, Riza & Halim Tatli (2019): The determinants of youth unemployment: A panel data analysis of OECD countries. In: European Journal of Comparative Economics, Jg. 15, H. 2, S. 231-248. DOI:10.25428/1824-2979/201802-231-248

Abstract

"The aim of this study was to determine some of the key factors affecting youth employment from 2000-2015. Youth unemployment rate (YU) was the dependent variable while consumer price index (INF), domestic gross savings (GS), labor productivity (LP) and economic growth rate (GR) were the independent variables. Data from 31 OECD countries were obtained from World Bank (WB) and OECD databases. Panel Data Analysis was used to analyze the data. The results show that growth, inflation, and savings affect youth unemployment negatively while labor productivity affects youth employment positively. It is therefore concluded that growth, inflation, savings and labor productivity are among the key determinants of youth unemployment." (Author's abstract, IAB-Doku) ((en))

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Bobeica, Elena, Matteo Ciccarelli & Isabel Vansteenkiste (2019): The link between labor cost and price inflation in the euro area. (European Central Bank. Working paper series 2235), Frankfurt am Main, 64 S. DOI:10.2866/894414

Abstract

"This paper documents, for the first time in a systematic manner, the link between labor cost and price inflation in the euro area. Using country and sector quarterly data over the period 1985Q1-2018Q1 we find a strong link between labor cost and price inflation in the four major economies of the euro area and across the three main sectors. The dynamic interaction between prices and wages is time-varying and depends on the state of the economy and on the shocks hitting the economy. Our results show that it is more likely that labor costs are passed on to price inflation with demand shocks than with supply shocks. However, the pass-through is systematically lower in periods of low inflation as compared to periods of high inflation. These results confirm that, under circumstances of predominantly demand shocks, labor cost increases will be passed on to prices. Coming from a period of low inflation, however, this pass-through could be moderate at least until inflation stably reaches a sustained path." (Author's abstract, IAB-Doku) ((en))

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Buch, Claudia M. & Regina T. Riphahn (Hrsg.) (2019): Evaluierung von Finanzmarktreformen. Lehren aus den Politikfeldern Arbeitsmarkt, Gesundheit und Familie. (Leopoldina-Forum 01), Halle (Saale), 173 S.

Abstract

"Die Finanzkrise wurde als Immobilien-, Schulden- und Eurokrise in vielen Facetten diskutiert. Sie hat zu hohen Kosten für viele Gesellschaften geführt. Allein in Deutschland betrugen die krisenbedingten Zahlungen zur Stützung der Banken 70 bis 80 Milliarden Euro. Vor diesem Hintergrund ist es wichtig, dass die Wissenschaft verstärkt vertrauenswürdige Informationen und transparente Bewertungen über die Wirkungen der seit der Krise beschlossenen Regulierungen der Finanzmärkte in die öffentliche Meinungsbildung und demokratische Entscheidungsfindung einbringt. In Bezug auf die Wirkung von Regulierungen der Finanzmärkte besteht ein besonderes Transparenz- und Informationsdefizit, wie u.a. der Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung feststellte. Unter der deutschen Präsidentschaft der G20 im vergangenen Jahr wurde daher ein Rahmenwerk beschlossen, mit dem die Reformen der Finanzmärkte evaluiert werden können. Wenn wir davon ausgehen, dass Forschung zu Ursachen und Folgen der Finanzkrise hilfreiches Wissen für die Gesellschaft bereitstellt, müssen wir gerade mit Blick auf die Regulierung der Finanzmärkte fragen, warum wissenschaftliche Evaluierung dort bislang wenig stattfindet und kaum politische Wirkungen erzielt. Beispiele für wissenschaftliche Evaluierung von politischen Interventionen finden sich in der Arbeitsmarkt-, Familien- oder Gesundheitspolitik. Expertinnen und Experten aus diesen Feldern diskutieren in diesem Band, was wir aus diesen Erfahrungen lernen können. Dabei geht es weniger um wissenschaftliche Methoden als um die Frage, wie gute Evaluierungen gelingen können, welche Voraussetzungen dafür im politischen Prozess und der Wissenschaft nötig sind - und wie ein besserer Dialog zwischen beiden Seiten gestaltet werden kann." (Autorenreferat, IAB-Doku)

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Colciago, Andrea, Anna Samarina & Jakob de Haan (2019): Central bank policies and income and wealth inequality. A survey. In: Journal of Economic Surveys, Jg. 33, H. 4, S. 1199-1231. DOI:10.1111/joes.12314

Abstract

"This paper reviews recent research on the relationship between central bank policies and inequality. A new paradigm which integrates sticky-prices, incomplete markets, and heterogeneity among households is emerging, which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. The new paradigm features multiple distributional channels of monetary policy. Most empirical studies, however, analyze each potential channel of redistribution in isolation. Our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut. To better understand policy effects on inequality, future research should focus on the estimation of General Equilibrium models with heterogeneous agents." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Döpke, Jörg, Ulrich Fritsche & Karsten Müller (2019): Has macroeconomic forecasting changed after the Great Recession? Panel-based evidence on forecast accuracy and forecaster behavior from Germany. In: Journal of macroeconomics, Jg. 62. DOI:10.1016/j.jmacro.2019.103135

Abstract

We analyze the forecast accuracy for the periods before and after the Great Recession using a panel of annual data for 17 growth and inflation forecasts from 14 German institutions. We find only small differences in the quantitative accuracy measures between the two periods. The qualitative measures of forecast accuracy have slightly worsened and forecasters’ behavior has changed after the crisis. Errors in predicting directional change, however, have changed significantly between the two periods under investigation. Tests for the efficiency of the forecasts over the entire sample indicate that growth and inflation forecasts are inefficient. We find a changed correlation between forecast errors of inflation and growth after the crisis, which might hint at a changed forecaster behavior. The estimated loss functions before and after the crisis support this interpretation, suggesting a stronger incentive to avoid overestimation of growth and underestimation of inflation after the crisis. Estimating loss functions for a 10-year rolling window also reveal shifts in the level and direction of loss asymmetry. (Author's Abstract, IAB-Doku)

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Hu, Tai-Wei & Neil Wallace (2019): The Phillips Curve In A Matching Model. In: International Economic Review, Jg. 60, H. 4, S. 1469-1487. DOI:10.1111/iere.12393

Abstract

"Following ideas in Hume, monetary shocks are embedded in the Lagos-Wright model in a new way: There are only nominal shocks accomplished by individual transfers that are sufficiently noisy so that realizations of those transfers do not permit the agents to deduce much about the aggregate realization. Assuming that the distribution of aggregate shocks is almost degenerate, aggregate output increases with the growth rate of the stock of money—our definition of the Phillips curve. This almost degeneracy assumption is far from being necessary; under some mild conditions, the Phillips curve result holds for a large class of distributions." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))