Economica最新文献

This paper contributes to the literature by quantifying the effects of supply shortages on inflation in 19 European economies. In contrast to many other papers, it focuses on factual country-specific shortages in materials and equipment reported by enterprises in the business surveys conducted by the European Commission rather than supply chain tensions that are measured only globally or for some major economies. We apply the local projections method in a panel framework, and estimate the responses of nine measures of consumer and producer inflation to supply shortages. We find that supply shortages are inflationary for all considered measures of inflation, and a larger effect can be observed for the inflation of prices of goods rather than services. The peak of impulse responses can be observed 4–6 quarters after a shock, while the effect usually dies out after 8–12 quarters. After a year, a one-standard-deviation shock in supply shortages is followed by annual inflation being higher by 0.7–3.4 percentage points, depending on the inflation measure. Interestingly, the inflationary effects of supply shortages seem to be related mainly to periods of intense global supply tensions.

In the aftermath of the Great Recession, hiring credits have become popular worldwide. The empirical literature shows positive but moderate effects of such interventions on employment. However, an in-depth analysis of the characteristics of the beneficiary firms and their wage-setting policies is still lacking. By using a linked employer–employee dataset, this paper presents a firm-level analysis of a three-year employer-borne payroll tax cut for permanent hirings introduced in Italy in 2015. After estimating firm and worker fixed effects through the standard AKM model, we show that the take-up of hiring credits is significantly higher for firms that pay lower wages, are less productive, employ workers with lower mean abilities, and have a lower retention rate. This result is robust to several specifications and stratifications of the sample, and provides a further and different perspective from which to question the use of active labour market policies based on employer-borne payroll tax cuts.

The objective of the Federal Reserve (the Fed), namely, its dovish stance, is often blamed for the so-called Great Inflation. A popular proxy for the Fed's dovish stance is constructed using the inflation coefficients in estimated Taylor rules. However, for a welfare-optimizing central bank, the estimated Taylor coefficients are not sufficient for inferring its underlying preference. We quantify the Fed's objective—the targeting rule—relying on a conditional estimator that is free of the classical simultaneity problem. We discover that the Fed's targeting rule remained stable during the pre- and post-Volcker periods—the opposite of what is implied through a Taylor rule estimation.

This paper evaluates the effects of the Hungarian disability employment quota, which requires firms over a size threshold to employ individuals with disabilities or pay a non-compliance tax. In 2010, the tax was raised from very low levels to 170% of the minimum wage cost associated with meeting the quota. We employ a regression discontinuity design on firm-level data to estimate the effects of the policy and provide a lower-bound estimate to account for the potential bias resulting from firms bunching below the threshold. Firms respond to the quota by hiring 0.24–0.29 additional workers with disabilities, with a lower bound estimate of 0.12–0.17. However, about two-thirds of the quota is not fulfilled, which is puzzling as the tax is higher than the minimum wage cost of a worker with disabilities. Our model shows that high hiring costs associated with employing individuals with disabilities might be an important factor behind this anomaly. We test this hypothesis by showing that the effect is weaker in regions with a low share of individuals with disabilities, implying that without adequate policies targeting the removal of supply-side barriers to the employment of people with disabilities, even strong demand-side financial incentives cannot achieve their goals.

Digitalization has an impact on many vested businesses, decreasing marginal costs and increasing informed customers, among other things. However, measuring the impact of digitalization remains difficult. Betting markets provide a clean setting to estimate the price impact of digitalization, as products are homogeneous and it is easy to measure pricing behaviour. Consistent with mixed strategy models under imperfect information, we show that between 2000 and 2023, transaction costs for gamblers dropped by over 60%, although transaction-cost dispersion persists. Furthermore, we also find that betting markets became more informationally efficient over this period, with a significant decrease in the favourite–longshot bias.

Using firm-level data from the manufacturing sector in China, I document that zombie firms are larger and less productive, and receive higher subsidy rates on average. The difference in subsidy rates between zombies and non-zombies reflects both the selection criteria of zombies and the underlying joint distribution of subsidy rate and productivity. I develop a model with heterogeneous firms to quantify the impact of zombies on aggregate productivity. Quantitative exercises show that while both policies—reducing subsidy dispersion and facilitating zombie exits—effectively reduce the zombie rate, the former yields greater productivity gains.

In the post-pandemic period, there was substantial cross-country heterogeneity in energy prices faced by consumers, due to variation in countries' energy mixes, as well as variation in government energy subsidy policies. The main contribution of this paper is to exploit this country-level variation to show that countries with higher domestic energy prices faced higher subsequent core inflation. Core inflation rises gradually after an energy shock, for a little over a year, before falling back to the pre-shock rate of inflation. We argue that in the aftermath of large energy price shocks, core inflation is not a reliable measure of underlying or persistent inflation, and should be adjusted for the predicted, country-specific, energy cost pass-through. Focusing more narrowly on services inflation rather than core inflation does not solve the problem, as services inflation responds similarly, in both magnitude and duration, to energy price shocks.

Governments have increasing access to individual information, but they exploit little of it when setting taxes. This paper shows how to reveal inequality aversion from observed tax policy choices of such governments. First, I map governments' priorities into concerns for vertical and horizontal equity. While vertical equity underlies inequality aversion, horizontal equity introduces a restriction against tax discrimination. This restriction affects the measurement of inequality aversion. Second, I apply the model to a hypothetical gender tax using Norwegian tax return data. The main result is that inequality aversion is overestimated when horizontal equity is ignored.

The natural rate of interest ($��{�r�}^{�\ast �}�$) has recently been in decline, yet little is known about its historical variation. This paper estimates $��{�r�}^{�\ast �}�$ over more than three centuries for the United Kingdom, between 1700 and 2019. Results suggest that the longer-run equilibrium interest rate rose persistently during much of the 18th and 19th centuries, and only began to decline around the turn of the 20th. Historical decompositions suggest that structural changes in productivity, demography, and risk are largely responsible for this reduction. I argue that secular stagnation is unique to contemporary history, insofar as $��{�r�}^{�\ast �}�$ ascended across much of the Late Modern Era.

This paper analyses whether monetary union membership reduces the duration of high inflation episodes (HIEs). The study uses survival models estimated on a sample of 190 countries over the period 1950M01 to 2022M12. The results show that despite the often-cited issue of the heterogeneity of member countries, monetary unions significantly reduce the duration of HIEs, but not deflation episodes. This result remains robust to a battery of tests and is valid for both developed and developing countries. Furthermore, the results show that giving up monetary sovereignty in favour of an independent common central bank is more effective in terms of price stability than adopting inflation targeting. However, for countries seeking to preserve their monetary sovereignty, inflation targeting remains the best option for reducing the duration of HIEs. This performance of monetary unions in terms of price stability appears to be linked to the greater de facto independence of their central banks, the adoption of supranational fiscal rules, and the incentives to preserve the durability of the currency area. However, estimates show that the capacity of a monetary union to limit HIEs among its members diminishes as it expands to include new countries.