Brookings Papers on Economic Activity最新文献

Contrary to historical episodes, the 2022–2023 tightening of US monetary policy has not yet triggered financial crisis in emerging markets. Why is this time different? To answer this question, we analyze the current situation through the lens of historical evidence. In emerging markets, the financial channel–based transmission of US policy historically led to more adverse outcomes compared to advanced economies, where the trade channel fails to smooth out these negative effects. When the Federal Reserve increases interest rates, global investors tend to shed risky assets in response to the tightening global financial conditions, affecting emerging markets more severely due to their lower credit ratings and higher risk profiles. This time around, the escape from emerging market assets and the increase in risk spreads have been limited. We document that the historical experience of higher risk spreads and capital outflows can be largely explained by the lack of credible monetary policies and dollar-denominated debt. The improvement in monetary policy frameworks combined with reduced levels of dollar-denominated debt have helped emerging markets weather the recent Federal Reserve hikes.

We examine mortality differences between American adults with and without a four-year college degree over the period 1992 to 2021. Mortality patterns, in aggregate and across groups, can provide evidence on how well society is functioning, information that goes beyond aggregate measures of material well-being. From 1992 to 2010, both educational groups saw falling mortality, but with greater improvements for the more educated; from 2010 to 2019, mortality continued to fall for those with a four-year degree while rising for those without; during the COVID-19 pandemic, mortality rose for both groups, but markedly more rapidly for the less educated. In consequence, the mortality gap between the two groups expanded in all three periods, leading to an 8.5-year difference in adult life expectancy by the end of 2021. There have been dramatic changes in patterns of mortality since 1992, but gaps rose consistently in each of thirteen broad classifications of cause of death. We document rising gaps in other measures relevant to well-being—background factors to the rising gap in mortality—including morbidity, social isolation, marriage, family income, and wealth.

We interpret recent inflation experience through the lens of a New Keynesian model with price and wage rigidities and nonlabor inputs in inelastic supply. The model provides a natural interpretation of some features of the recent episode: an initial surge of noncore inflation, followed by a lagged response of core inflation and a further lagged, persistent response of wage inflation. The model also provides a natural way of discussing the role and the strength of wage-price spiral dynamics in price-setting models. The model interprets recent developments as symptoms of underlying supply constraints, which can be triggered by both demand and supply shocks. The immediate manifestation of these constraints is in the relative price of scarce, inelastic nonlabor inputs (including energy). The secondary effects arise because they produce a gap between lowered real wage aspirations of firms—that try to make up for higher nonlabor costs—and increased real wage aspirations of workers—caused by increased labor demand. The gap produces a wage-price spiral, which continues as long as the initial relative scarcity of nonlabor inputs persists, even though input prices are falling. In this view, the fact that nominal wage growth is currently exceeding price inflation can be given a benign interpretation, as a sign of real wages going back to trend and not necessarily as a concern of an ongoing spiral.

Applications for new businesses surprisingly surged during the COVID-19 pandemic, rising the most in industries rooted in pandemic-era changes to work, lifestyle, and business. The unexpected surge in applications raised questions about whether a surge in actual new employer businesses would follow. Evidence now shows increased employer business entry with notable associated job creation; and industries and locations with the largest increase in applications have had accompanying large increases in employer business entry. We also observe a tight connection between the surge in applications and quits—or close proxies for quits—both at the national and the local level. Within major cities, applications, net establishment entry, and our quits proxy each exhibit a "donut pattern," with less growth in city centers than in the surrounding areas, and these patterns are closely related to patterns of work-from-home activity. Reallocation of jobs across firm age, firm size, industry, and geography groupings increased significantly. Relatedly, there is evidence of a pause of the pre-pandemic trend toward greater economic activity being concentrated at large and mature firms, but this development is quite modest in magnitude.

The Russian attack on Ukraine in February 2022 laid bare Germany's dependence on Russian energy imports and ignited a heated debate on the costs of a cutoff from Russian gas. While one side predicted economic collapse, the other side (ours) predicted "substantial but manageable" economic costs due to households and firms adapting to the shock. Using the empirical evidence now at hand, this paper studies the adjustment of the German economy after Russia weaponized gas exports by cutting Germany off from gas supplies in the summer of 2022. We document two key margins of adjustment. First, Germany was able to replace substantial amounts of Russian gas with imports from third countries, underscoring the insurance provided by openness to international trade. Second, the German economy reduced gas consumption by about 20 percent, driven mostly by industry (26 percent) and households (17 percent). The economic costs of demand reduction were manageable with the economy as a whole only experiencing a mild one-quarter contraction in the winter of 2022–2023 and then stagnating. Overall industrial production decoupled from production in energy-intensive sectors (which did see large drops) and declined only slightly. We draw a number of key lessons from this important case study about the insurance offered by access to global markets and the power of substitution, specifically that supply shocks have dramatically smaller costs when elasticities of substitution are very low (but nonzero) compared to a truly zero elasticity.

Over half of the US population receives health insurance through an employer with premium contributions creating a flat "head tax" per worker, independent of their earnings. This paper develops and calibrates a stylized model of the labor market to explore how this uniquely American approach to financing health insurance contributes to labor market inequality. We consider a partial-equilibrium counterfactual in which employer-provided health insurance is instead financed by a statutory payroll tax on firms. We find that, under this counterfactual financing, in 2019 the college wage premium would have been 11 percent lower, noncollege annual earnings would have been $1,700 (3 percent) higher, and noncollege employment would have been nearly 500,000 higher. These calibrated labor market effects of switching from head tax to payroll tax financing are in the same ballpark as estimates of the impact of other leading drivers of labor market inequality, including changes in outsourcing, robot adoption, rising trade, unionization, and the real minimum wage. We also consider a separate partial-equilibrium counterfactual in which the current head tax financing is maintained, but 2019 US health care spending as a share of GDP is reduced to the Canadian share; here, we estimate that the 2019 college wage premium would have been 5 percent lower and noncollege annual earnings would have been 5 percent higher. These findings suggest that health care costs and the financing of health insurance warrant greater attention in both public policy and research on US labor market inequality.

Governments deployed credit policies on a historically unprecedented scale in response to the COVID-19 pandemic. We estimate the effective size of credit policies for seven large advanced economies in terms of the incremental resources provided to firms and households—a measure that allows aggregation across credit support, forbearance, and traditional fiscal policies but that does not appear in traditional government statistics. These estimates are used to reassess the absolute and relative size of different governments' policy interventions and to evaluate whether taking credit policies into account can help explain the cross section of macroeconomic outcomes. Incremental resources increase from an average 14.5 percent of 2020 GDP when only fiscal policies are considered to 22 percent of 2020 GDP when credit policies are also taken into account. Incorporating credit policies also reduces the cross-country variation in the total size of policy interventions. With regard to fiscal cost, fair value estimates for these credit support programs average 37 percent of principal, with wide variation depending on program features. We also discuss several related measurement issues, the financial regulatory changes that accommodated these programs, the pros and cons of the different types of credit policies, and how in principle budgetary costs should be calculated versus how governments account for credit policies in practice.

Labor force participation and average hours of work both fell sharply at the beginning of the COVID-19 pandemic. Neither had fully recovered by the end of 2022. The drop in participation between December 2019 and December 2022 implies a loss of 3 million people from the labor force; the decline in average hours over the same period translates to the equivalent of 2.6 million fewer workers. Demographic and other trend factors that predated the pandemic explain most of the participation shortfall. Taken together, COVID-19-related health effects and the persistent (though shrinking) effects of the fear of contracting COVID-19 more than explain the rest. In contrast, pre-pandemic factors account for little of the shortfall in hours. COVID-19-related health effects account for perhaps 40 percent of that decline, but we are unable to explain the majority of the hours shortfall. We speculate that the lower level of hours in the post-pandemic period may reflect a shift in the desired balance between work and other aspects of workers' lives.

The Inflation Reduction Act (IRA) represents the largest US federal response to climate change to date. We highlight the key climate provisions and assess the act's potential economic impacts. Substantially higher investments in clean energy and electric vehicles imply that fiscal costs may be larger than projected. However, even at the high end, IRA provisions remain cost-effective. The IRA has large impacts on power sector investments and electricity prices, lowering retail electricity rates and resulting in negative prices in some wholesale markets. We find small quantitative macroeconomic effects, including a small decline in headline inflation, but macroeconomic conditions—particularly higher interest rates and materials costs—may have substantial negative effects on clean energy investment. We show that the subsidy approach in the IRA has expansionary supply-side effects relative to a carbon tax but, in a representative-agent dynamic model, is preferable to a carbon tax only in the presence of a strong learning-by-doing externality. We also discuss the economics of the industrial policy aspects of the act as well as the distributional impacts and the possible incidence of the different tax credits in the IRA.

I present a perspective on where the Indian economy stands right now. I acknowledge the contradictions that have arisen given the divergent growth path of urban, formal or (stock-market) listed India relative to rural, informal or unlisted India. I also focus on the country's immense opportunities in expanding the digital footprint of finance to last-mile borrowers. I present novel facts on the rising industrial concentration, drawing out its historical evolution, the channels that have caused it to rise recently, and its implications for product price markups and inflation. I recommend that to restore industrial balance, India increase overall competition by reducing import tariffs and reduce the pricing power of its largest conglomerates. I also propose that to restore macroeconomic balance, India reduce fiscal deficit and public sector borrowing requirements as well as rein in inflation, address gaps in skills and education, and restore female labor force participation.