Pub Date : 2024-09-12DOI: 10.1016/j.jmoneco.2024.103684
Markus Poschke
Poor countries have low wage employment and high self-employment. This paper shows that they also have high unemployment relative to wage employment, and that self-employment increases with this ratio. To understand the sources of these patterns, I build a search and matching model with choice between job search and self-employment and with learning about matches, and calibrate it to match all transition rates between wage employment, unemployment and self-employment as well as separation hazards by job duration, separately for all 37 countries with available data. Quantitative analysis of the model shows that labor market frictions affect self-employment as much as unemployment. Labor market frictions also reduce aggregate output, not only by raising unemployment, but also by worsening the average quality of both wage employment matches and active self-employment projects.
{"title":"Wage employment, unemployment and self-employment across countries","authors":"Markus Poschke","doi":"10.1016/j.jmoneco.2024.103684","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103684","url":null,"abstract":"Poor countries have low wage employment and high self-employment. This paper shows that they also have high unemployment relative to wage employment, and that self-employment increases with this ratio. To understand the sources of these patterns, I build a search and matching model with choice between job search and self-employment and with learning about matches, and calibrate it to match all transition rates between wage employment, unemployment and self-employment as well as separation hazards by job duration, separately for all 37 countries with available data. Quantitative analysis of the model shows that labor market frictions affect self-employment as much as unemployment. Labor market frictions also reduce aggregate output, not only by raising unemployment, but also by worsening the average quality of both wage employment matches and active self-employment projects.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142269890","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-10DOI: 10.1016/j.jmoneco.2024.103683
Laurent Cavenaile, Murat Alp Celik, Pau Roldan-Blanco, Xu Tian
While firms use both innovation and advertising to boost profits, markups, and market shares, their broader social implications vary substantially. We study their interaction and analyze their implications for competition, industry dynamics, growth, and welfare. We develop an oligopolistic general-equilibrium growth model with firm heterogeneity. Market structure is endogenous, and firms’ production, innovation, and advertising decisions interact strategically. We find advertising reduces static misallocation, but also depresses growth through a substitution effect with R&D. Although advertising is found to be socially useful, taxing it could simultaneously increase dynamic efficiency, contain excessive advertising spending, and raise revenue, while still reducing misallocation.
{"title":"Style over substance? Advertising, innovation, and endogenous market structure","authors":"Laurent Cavenaile, Murat Alp Celik, Pau Roldan-Blanco, Xu Tian","doi":"10.1016/j.jmoneco.2024.103683","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103683","url":null,"abstract":"While firms use both innovation and advertising to boost profits, markups, and market shares, their broader social implications vary substantially. We study their interaction and analyze their implications for competition, industry dynamics, growth, and welfare. We develop an oligopolistic general-equilibrium growth model with firm heterogeneity. Market structure is endogenous, and firms’ production, innovation, and advertising decisions interact strategically. We find advertising reduces static misallocation, but also depresses growth through a substitution effect with R&D. Although advertising is found to be socially useful, taxing it could simultaneously increase dynamic efficiency, contain excessive advertising spending, and raise revenue, while still reducing misallocation.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142263229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-31DOI: 10.1016/j.jmoneco.2024.103676
Pedro Bento
The number of women-owned businesses in the U.S. has soared over the last several decades. In 1982 less than 13 percent of businesses were majority-owned by women. By 2012 this number reached 40 percent. This and other evidence suggests that women have faced significant barriers to running businesses. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for almost 4 percent of observed growth in aggregate output and a 3 percent increase in workers’ consumption-equivalent welfare since 1982. By 2012, lower barriers increased the welfare of female entrepreneurs by a dramatic 116 percent, while lowering the welfare of male entrepreneurs by 5 percent. These impacts are in addition to any gains to workers from declining labor-market barriers.
{"title":"Female entrepreneurship in the U.S. 1982–2012: Implications for welfare and aggregate output","authors":"Pedro Bento","doi":"10.1016/j.jmoneco.2024.103676","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103676","url":null,"abstract":"The number of women-owned businesses in the U.S. has soared over the last several decades. In 1982 less than 13 percent of businesses were majority-owned by women. By 2012 this number reached 40 percent. This and other evidence suggests that women have faced significant barriers to running businesses. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for almost 4 percent of observed growth in aggregate output and a 3 percent increase in workers’ consumption-equivalent welfare since 1982. By 2012, lower barriers increased the welfare of female entrepreneurs by a dramatic 116 percent, while lowering the welfare of male entrepreneurs by 5 percent. These impacts are in addition to any gains to workers from declining labor-market barriers.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177706","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-30DOI: 10.1016/j.jmoneco.2024.103661
Joseph Vavra
{"title":"Price discounts and cheapflation during the post-pandemic inflation surge: A comment","authors":"Joseph Vavra","doi":"10.1016/j.jmoneco.2024.103661","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103661","url":null,"abstract":"","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177707","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-28DOI: 10.1016/j.jmoneco.2024.103675
Daeha Cho, Jung Hyun Kim, Kwang Hwan Kim, Suk Joon Kim
We study the optimal inflation target in an open economy with a zero lower bound (ZLB) on nominal interest rates calibrated to the Euro area. When uncovered interest rate parity (UIP) holds, the optimal inflation target is smaller than in a closed economy. The key to this result is that real interest rates at the ZLB increase less as trade openness increases. This less pronounced increase in real interest rates in an open economy mitigates the contraction in aggregate demand, thus reducing the cost of ZLB. Additionally, the optimal inflation target in a monetary union is lower than in a flexible exchange rate regime: forming a monetary union results in a decrease in the optimal inflation rate by 0.24%, thereby increasing per-period welfare by 0.07%. When departures from UIP are significant, the optimal inflation target may be higher than in a closed economy, and the desirability of a monetary union increases further.
{"title":"Optimal trend inflation in an open economy","authors":"Daeha Cho, Jung Hyun Kim, Kwang Hwan Kim, Suk Joon Kim","doi":"10.1016/j.jmoneco.2024.103675","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103675","url":null,"abstract":"We study the optimal inflation target in an open economy with a zero lower bound (ZLB) on nominal interest rates calibrated to the Euro area. When uncovered interest rate parity (UIP) holds, the optimal inflation target is smaller than in a closed economy. The key to this result is that real interest rates at the ZLB increase less as trade openness increases. This less pronounced increase in real interest rates in an open economy mitigates the contraction in aggregate demand, thus reducing the cost of ZLB. Additionally, the optimal inflation target in a monetary union is lower than in a flexible exchange rate regime: forming a monetary union results in a decrease in the optimal inflation rate by 0.24%, thereby increasing per-period welfare by 0.07%. When departures from UIP are significant, the optimal inflation target may be higher than in a closed economy, and the desirability of a monetary union increases further.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177712","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-28DOI: 10.1016/j.jmoneco.2024.103674
Robert J. Shiller
{"title":"Comments on Alberto Binetti, Francesco Nuzzi, and Stefanie Stantcheva “people's understanding of inflation”","authors":"Robert J. Shiller","doi":"10.1016/j.jmoneco.2024.103674","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103674","url":null,"abstract":"","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142263189","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-28DOI: 10.1016/j.jmoneco.2024.103673
European macroeconomies remain under-researched. There are compelling reasons for this to change. European issues pose significant economic challenges, are theoretically intriguing, and provide ample data for empirical studies. In this call to action, we outline a research program focused on monetary policy questions relevant for Europe.
{"title":"A research program on monetary policy for Europe","authors":"","doi":"10.1016/j.jmoneco.2024.103673","DOIUrl":"10.1016/j.jmoneco.2024.103673","url":null,"abstract":"<div><p>European macroeconomies remain under-researched. There are compelling reasons for this to change. European issues pose significant economic challenges, are theoretically intriguing, and provide ample data for empirical studies. In this call to action, we outline a research program focused on monetary policy questions relevant for Europe.</p></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177708","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-26DOI: 10.1016/j.jmoneco.2024.103671
Filippo Pallotti, Gonzalo Paz-Pardo, Jiri Slacalek, Oreste Tristani, Giovanni L. Violante
We measure the heterogeneous first-order welfare effects of the recent inflation surge across households in the euro area. A simple framework illustrating the numerous transmission channels of surprise inflation to household welfare guides our empirical exercise. By combining micro data and aggregate time series, we conclude that: (i) country-level average welfare costs – expressed as a share of triennial income – were sizable and heterogeneous: around 3% in France and Spain, 7% in Germany, and 9% in Italy; (ii) this inflation episode resembles an age-dependent tax, with the retirees losing up to 14%, and roughly half of the 25–44 year-old winning; (iii) losses were quite uniform across consumption quantiles because rigid rents served as a hedge for the poor; (iv) nominal net positions were the key driver of heterogeneity across-households; (v) the rise in energy prices generated vast variation in individual-level inflation rates, but unconventional fiscal policies helped shield households. The counterpart of this household-sector loss is a significant gain for the government.
{"title":"Who bears the costs of inflation? Euro area households and the 2021–2023 shock","authors":"Filippo Pallotti, Gonzalo Paz-Pardo, Jiri Slacalek, Oreste Tristani, Giovanni L. Violante","doi":"10.1016/j.jmoneco.2024.103671","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103671","url":null,"abstract":"We measure the heterogeneous first-order welfare effects of the recent inflation surge across households in the euro area. A simple framework illustrating the numerous transmission channels of surprise inflation to household welfare guides our empirical exercise. By combining micro data and aggregate time series, we conclude that: (i) country-level average welfare costs – expressed as a share of triennial income – were sizable and heterogeneous: around 3% in France and Spain, 7% in Germany, and 9% in Italy; (ii) this inflation episode resembles an age-dependent tax, with the retirees losing up to 14%, and roughly half of the 25–44 year-old winning; (iii) losses were quite uniform across consumption quantiles because rigid rents served as a hedge for the poor; (iv) nominal net positions were the key driver of heterogeneity across-households; (v) the rise in energy prices generated vast variation in individual-level inflation rates, but unconventional fiscal policies helped shield households. The counterpart of this household-sector loss is a significant gain for the government.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-24DOI: 10.1016/j.jmoneco.2024.103672
Katharine G. Abraham
{"title":"Discussion of “Phillips meets Beveridge,” by Regis Barnichon and Adam Shapiro","authors":"Katharine G. Abraham","doi":"10.1016/j.jmoneco.2024.103672","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103672","url":null,"abstract":"","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177710","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-21DOI: 10.1016/j.jmoneco.2024.103663
Carlos Esquivel
I study how, in the presence of default risk, the Dutch disease amplifies an inefficiency in the sectoral allocation of capital. In a sovereign default model with commodities and production of traded and non-traded goods, default incentives increase when more capital is allocated to non-traded production. Households do not internalize this, giving rise to an inefficiently large non-traded sector. Commodity windfalls amplify this inefficiency through the classic Dutch disease mechanism. I characterize state-contingent subsidies that implement the efficient allocation and compare them to a simpler subsidy rule that ameliorates the externality. Evidence from spreads, natural-resource rents, and sectoral investment data support the main findings of the model.
{"title":"Sovereign risk and Dutch disease","authors":"Carlos Esquivel","doi":"10.1016/j.jmoneco.2024.103663","DOIUrl":"https://doi.org/10.1016/j.jmoneco.2024.103663","url":null,"abstract":"I study how, in the presence of default risk, the Dutch disease amplifies an inefficiency in the sectoral allocation of capital. In a sovereign default model with commodities and production of traded and non-traded goods, default incentives increase when more capital is allocated to non-traded production. Households do not internalize this, giving rise to an inefficiently large non-traded sector. Commodity windfalls amplify this inefficiency through the classic Dutch disease mechanism. I characterize state-contingent subsidies that implement the efficient allocation and compare them to a simpler subsidy rule that ameliorates the externality. Evidence from spreads, natural-resource rents, and sectoral investment data support the main findings of the model.","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":null,"pages":null},"PeriodicalIF":4.1,"publicationDate":"2024-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177711","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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