We estimate world cycles using a new quarterly dataset of output, credit and asset prices assembled using IMF archives and covering a large set of advanced and emerging economies since 1950. World cycles, both real and financial, exist and are generally driven by US shocks. But their impact is modest for most countries. The global financial cycle is also much weaker when looking at credit rather than asset prices. We also challenge the view that syncronization has increased over time. Although this is true for prices (goods and assets), this not true for quantities (output and credit). The world business and credit cycles were as strong during Bretton Woods (1950–1972) as during the Globalization period (1984-2006). For most countries, the way their output co-moves with the rest of the world has changed little over the last 70 years. We discuss the reasons behind these new findings and their policy implications for small open economies.
This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs). We first confirm that aggregate inflows to EMs co-move considerably. We then report three findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global push factors in advanced economies mostly explain the common dynamics, their relative importance varies by type of flow; and (iii) the sensitivity to common dynamics varies significantly across borrower countries, with market structure characteristics (especially the composition of the foreign investor base and the level of liquidity) rather than borrower country’s institutional fundamentals strongly affecting sensitivities. Countries relying more on international funds and global banks are found to be more sensitive to push factors. Our findings suggest that EMs need to closely monitor their lenders and investors to assess their inflow exposures to global push factors.
We test whether foreign demand matters for local house prices in the US using an identification strategy based on the existence of “home bias abroad” in international real estate markets. Following an extreme political crisis event abroad, a proxy for a strong and exogenous shift in foreign demand, we show that house prices rise disproportionately more in neighbourhoods with a high concentration of population originating from the crisis country. This effect is strong, persistent, and robust to the exclusion of major cities. We also show that areas that were already expensive in the late 1990s have experienced the strongest foreign demand shocks and the biggest drop in affordability between 2000 and 2017. Our findings suggest a non-trivial causal effect of foreign demand shocks on local house prices over the last 20 years, especially in neighbourhoods that were already rather unaffordable for the median household.
Credit booms are a focal point for policymakers and scholars of financial crises. Yet our understanding of how the real sector behaves during booms, and why some booms may go bad, is limited. Despite a large and growing body of literature, most of the work has focused on aggregate economic activity, and relatively little is known about which industries benefit and which suffer during these episodes. This note aims to fill this gap by analyzing disaggregated output and employment data in a large sample of advanced and emerging market economies between 1970 and 2014.
We assess the impact of media sentiment on international equity prices using more than 4.5 million Reuters articles published across the globe between 1991 and 2015. News sentiment robustly predicts daily returns in both advanced and emerging markets, even after controlling for known determinants of stock prices. But not all news-sentiment is alike. A local (country-specific) increase in news optimism (pessimism) predicts a small and transitory increase (decrease) in local returns. By contrast, changes in global news sentiment have a larger impact on equity returns around the world, which does not reverse in the short run. We also find evidence that news sentiment affects mainly foreign – rather than local – investors: although local news optimism attracts international equity flows for a few days, global news optimism generates a permanent foreign equity inflow. Our results confirm the value of media content in capturing investor sentiment.
Why did monetary authorities hold large gold reserves under Bretton Woods (1944–1971) when only the US had to? We argue that gold holdings were driven by institutional memory and persistent habits of central bankers. Countries continued to back currency in circulation with gold reserves, following rules of the pre-WWII gold standard. The longer an institution spent in the gold standard (and the older the policymakers), the stronger the correlation between gold reserves and currency. Since dollars and gold were not perfect substitutes, the Bretton Woods system never worked as expected. Even after radical institutional change, history still shapes the decisions of policymakers.
This paper assesses the macroeconomic and distributional impact of personal income tax (PIT) reforms in the U.S. drawing on a multi-sector heterogenous agents model in which consumers have non-homothetic preferences and sectors differ in terms of their relative labor and skill intensity. The model is calibrated to key characteristics of the US economy. We find that (i) PIT cuts stimulate growth but the supply side effects are never large enough to offset the revenue loss from lower marginal tax rates; (ii) PIT cuts do “trickle-down” the income distribution: tax cuts stimulate demand for non-tradable services which raise the wages and employment prospects of low-skilled workers even if the tax cut is not directly incident on them; (iii) A revenue neutral tax plan that reduces PIT for middle-income groups, raises the consumption tax, and expands the Earned Income Tax Credit can have modestly positive effects on growth while reducing income polarization; (iv) The growth effects from lower income taxes are concentrated in non-tradable service sectors although the increased demand for tradable goods generate positive spillovers to other countries; (v) Tax cuts targeted to higher income groups have a stronger growth impact than tax cuts for middle income households but significantly worsen income polarization, even after taking into account trickle-down effects and an expansion of the Earned Income Tax Credit.
The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.
This paper assesses the strength of business cycle synchronization between 1950 and 2014 in a sample of 21 countries using a new quarterly dataset based on IMF archival data. Contrary to the common wisdom, we find that the globalization period is not associated with more output synchronization at the global level. The world business cycle was as strong during Bretton Woods (1950-1971) than during the Globalization period (1984-2006). Although globalization did not affect the average level of co-movement, trade and financial integration strongly affect the way countries co-move with the rest of the world. We find that financial integration de-synchronizes national outputs from the world cycle, although the magnitude of this effect depends crucially on the type of shocks hitting the world economy. This de-synchronizing effect has offset the synchronizing impact of other forces, such as increased trade integration.
This paper highlights how changes in the composition of demand affect income dispersion in the short run. We first document how the share of aggregate spending dedicated to labour-intensive goods and services shrinks (expands) during downturns (booms), and argue that this contributes to the observed pro-cyclicality of employment and output in labour-intensive industries. Using a two-sector general equilibrium model, we then assess how this demand composition channel influences the cyclical properties of the income distribution. Consistent with empirical evidence, we find income inequality to be countercyclical due to changes in the level of employment and (to a lesser extent) relative factor prices. The model also shows that wealth redistribution policies can potentially involve a trade-off between equality and output, depending on how they affect the composition of aggregate demand.
The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework. We then examine their determinants by means of probit regressions, looking into the role of institutions, demography, infrastructure, the macroeconomic environment, output structure and trade structure. Two variants of Bayesian Model Averaging are used as robustness checks. The results—including some that indeed speak to the special status of middle-income countries—are then used to derive policy implications, with a particular focus on Asian economies.
This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs). We first confirm that aggregate inflows to EMs co-move considerably. We then report three findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global push factors in advanced economies mostly explain the common dynamics, their relative importance varies by type of flow; and (iii) the sensitivity to common dynamics varies significantly across borrower countries, with market structure characteristics (especially the composition of the foreign investor base and the level of liquidity) rather than borrower country's institutional fundamentals strongly affecting sensitivities. Countries relying more on international funds and global banks are found to be more sensitive to push factors. Our findings suggest that EMs need to closely monitor their lenders and investors to assess their inflow exposures to global push factors. --Abstract.
The rate at which technology is changing our world--not just on a global level like space travel and instant worldwide communications but on the level of what we choose to wear, where we live, and what we eat--is staggeringly fast and getting faster all the time. The rate of change has become so fast that a concept that started off sounding like science fiction has become a widely expected outcome in the near future - a singularity referred to as The Spike. At that point of singularity, the cumulative changes on all fronts will affect the existence of humanity as a species and cause a leap of evolution into a new state of being. On the other side of that divide, intelligence will be freed from the constraints of the flesh; machines will achieve a level of intelligence in excess of our own and boundless in its ultimate potential; engineering will take place at the level of molecular reconstruction, which will allow everything from food to building materials to be assembled as needed from microscopic components rather than grown or manufactured; we'll all become effectively immortal by either digitizing and uploading our minds into organic machines or by transforming our bodies into illness-free, undecaying exemplars of permanent health and vitality. The results of all these changes will be unimaginable social dislocation, a complete restructuring of human society and a great leap forward into a dazzlingly transcendent future that even SF writers have been too timid to imagine. At the Publisher's request, this title is being sold without Digital Rights Management Software (DRM) applied.
Joy and Pain provides an intimate look into the manner in which the carceral state makes Black life precarious. Framing the carceral state as extending beyond the physical walls of a prison and into the daily lived experiences of Black life, the book focuses on housing, education, health care, the nonprofit sector, and juvenile detention facilities. However, Black existence is not defined only by precarity, and thus the book also describes the social visions of Black life that are immersed in radical freedom"--
The New York Times bestselling memoir by Damien Echols of the West Memphis Three, who was falsely convicted of three murders and spent nearly eighteen years on Death Row. In 1993, teenagers Damien Echols, Jason Baldwin, and Jessie Misskelley, Jr.—who have come to be known as the West Memphis Three—were arrested for the murders of three eight-year-old boys in Arkansas. The ensuing trial was marked by tampered evidence, false testimony, and public hysteria. Baldwin and Misskelley were sentenced to life in prison; while eighteen-year-old Echols, deemed the “ringleader,” was sentenced to death. Over the next two decades, the WM3 became known worldwide as a symbol of wrongful conviction and imprisonment, with thousands of supporters and many notable celebrities who called for a new trial. In a shocking turn of events, all three men were released in August 2011. Now Echols shares his story in full—from abuse by prison guards and wardens, to portraits of fellow inmates and deplorable living conditions, to the incredible reserves of patience, spirituality, and perseverance that kept him alive and sane while incarcerated for nearly two decades. In these pages, Echols reveals himself a brilliant writer, infusing his narrative with tragedy and irony in equal measure: he describes the terrors he experienced every day and his outrage toward the American justice system, and offers a firsthand account of living on Death Row in heartbreaking, agonizing detail. Life After Death is destined to be a riveting, explosive classic of prison literature.
Amanda is a brilliant violinist, a mathematical genius, and a rebel, impatient for the adult status her society only grants at age thirty, but determined to have a real adventure first, she has repeatedly gotten into trouble and found herself in the courtroom of Magistrate Mohammed Abdel-Malik, the sole resurrectee from among those who were frozen in the early 21st century, the man whose mind was the seed for Aleph, the Al that rules this utopia."--Jacket.
The true story of the wrongful conviction of the infamous West Memphis Three, Life After Death is a powerful and unflinching first-person account of life on death row. In 1993 three teenagers, Damien Echols, Jason Baldwin and Jessie Miskelley Jr, were arrested and charged with the murders of three eight-year-old boys in West Memphis, Arkansas. The ensuing trial was rife with inconsistencies, false testimony and superstition. Echols was accused of, among other things, practising witchcraft and satanic rituals - a result of the 'satanic panic' prevalent in the media at the time. Baldwin and Miskelley were sentenced to life in prison. Echols, deemed the ringleader, was sentenced to death. He was eighteen years old. In a shocking reversal of events, all three were suddenly released in August 2011. This is Damien Echols' story in full: from abuses by prison guards and wardens, to descriptions of inmates and deplorable living conditions, to the incredible reserves of patience, spirituality, and perseverance that kept him alive and sane for nearly two decades. Echols also writes about his complicated and painful childhood. Like Dead Man Walking, Life After Death is destined to be a classic. West of Memphis, a documentary produced by Peter Jackson (director of the Lord of the Rings trilogy) and Fran Walsh, details the campaign to have their sentences overturned. The West Memphis Three are also the subject of Paradise Lost, a three-part documentary series produced by HBO. 'Damien Echols suffered a shocking miscarriage of justice. A nightmare few could endure. An innocent man on death row for more than eighteen years, abused by the very system we all fund. His story will appal, fascinate, and render you feeble with tears and laughter.' Johnny Depp 'This is a stunning piece of work. Such hope while faced with injustice. Damien teaches us how to live.' Eddie Vedder 'Wrongfully imprisoned by willfully ignorant cops, prosecutors and judge, Damien Echols draws on all his wits and his unique view of humanity to survive eighteen years on death row. My admiration for him, and the strength of his spirit, increases with every page.' Peter Jackson, Academy Award-winning director, producer and screenwriter 'Even for this remarkable young man, every day was a struggle, and his survival, his sanity, is won on every page. This is a deeply moving book, almost Dickensian in its moral scope: religion, hypocrisy, evil in office, with virtue and good fellowship finally triumphant.' Weekend Australian 'Exceptional memoir by the most famous of the West Memphis Three...bare facts alone would make for an interesting story. However, Echols is at heart a poet and mystic, and he has written not just a quickie one-off book to capitalize on a lurid news story, but rather a work of art that occasionally bears a resemblance to the work of Jean Genet...Essential reading.' Kirkus Reviews 'A shocking account of a travesty of justice written by an author without peer...This is the kind of book that deserves to be devoured, digested and savoured for good.' Dominion Post
This paper assesses the macroeconomic and distributional impact of personal income tax (PIT) reforms in the U.S. drawing on a multi-sector heterogenous agents model in which consumers have non-homothetic preferences and sectors differ in terms of their relative labor and skill intensity. The model is calibrated to key characteristics of the US economy. We find that (i) PIT cuts stimulate growth but the supply side effects are never large enough to offset the revenue loss from lower marginal tax rates; (ii) PIT cuts do “trickle-down” the income distribution: tax cuts stimulate demand for non-tradable services which raise the wages and employment prospects of low-skilled workers even if the tax cut is not directly incident on them; (iii) A revenue neutral tax plan that reduces PIT for middle-income groups, raises the consumption tax, and expands the Earned Income Tax Credit can have modestly positive effects on growth while reducing income polarization; (iv) The growth effects from lower income taxes are concentrated in non-tradable service sectors although the increased demand for tradable goods generate positive spillovers to other countries; (v) Tax cuts targeted to higher income groups have a stronger growth impact than tax cuts for middle income households but significantly worsen income polarization, even after taking into account trickle-down effects and an expansion of the Earned Income Tax Credit.
This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs). We first confirm that aggregate inflows to EMs co-move considerably. We then report three findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global push factors in advanced economies mostly explain the common dynamics, their relative importance varies by type of flow; and (iii) the sensitivity to common dynamics varies significantly across borrower countries, with market structure characteristics (especially the composition of the foreign investor base and the level of liquidity) rather than borrower country’s institutional fundamentals strongly affecting sensitivities. Countries relying more on international funds and global banks are found to be more sensitive to push factors. Our findings suggest that EMs need to closely monitor their lenders and investors to assess their inflow exposures to global push factors.
Why did monetary authorities hold large gold reserves under Bretton Woods (1944–1971) when only the US had to? We argue that gold holdings were driven by institutional memory and persistent habits of central bankers. Countries continued to back currency in circulation with gold reserves, following rules of the pre-WWII gold standard. The longer an institution spent in the gold standard (and the older the policymakers), the stronger the correlation between gold reserves and currency. Since dollars and gold were not perfect substitutes, the Bretton Woods system never worked as expected. Even after radical institutional change, history still shapes the decisions of policymakers.
This paper assesses the strength of business cycle synchronization between 1950 and 2014 in a sample of 21 countries using a new quarterly dataset based on IMF archival data. Contrary to the common wisdom, we find that the globalization period is not associated with more output synchronization at the global level. The world business cycle was as strong during Bretton Woods (1950-1971) than during the Globalization period (1984-2006). Although globalization did not affect the average level of co-movement, trade and financial integration strongly affect the way countries co-move with the rest of the world. We find that financial integration de-synchronizes national outputs from the world cycle, although the magnitude of this effect depends crucially on the type of shocks hitting the world economy. This de-synchronizing effect has offset the synchronizing impact of other forces, such as increased trade integration.
We assess the impact of media sentiment on international equity prices using more than 4.5 million Reuters articles published across the globe between 1991 and 2015. News sentiment robustly predicts daily returns in both advanced and emerging markets, even after controlling for known determinants of stock prices. But not all news-sentiment is alike. A local (country-specific) increase in news optimism (pessimism) predicts a small and transitory increase (decrease) in local returns. By contrast, changes in global news sentiment have a larger impact on equity returns around the world, which does not reverse in the short run. We also find evidence that news sentiment affects mainly foreign – rather than local – investors: although local news optimism attracts international equity flows for a few days, global news optimism generates a permanent foreign equity inflow. Our results confirm the value of media content in capturing investor sentiment.
We estimate world cycles using a new quarterly dataset of output, credit and asset prices assembled using IMF archives and covering a large set of advanced and emerging economies since 1950. World cycles, both real and financial, exist and are generally driven by US shocks. But their impact is modest for most countries. The global financial cycle is also much weaker when looking at credit rather than asset prices. We also challenge the view that syncronization has increased over time. Although this is true for prices (goods and assets), this not true for quantities (output and credit). The world business and credit cycles were as strong during Bretton Woods (1950–1972) as during the Globalization period (1984-2006). For most countries, the way their output co-moves with the rest of the world has changed little over the last 70 years. We discuss the reasons behind these new findings and their policy implications for small open economies.
The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework. We then examine their determinants by means of probit regressions, looking into the role of institutions, demography, infrastructure, the macroeconomic environment, output structure and trade structure. Two variants of Bayesian Model Averaging are used as robustness checks. The results—including some that indeed speak to the special status of middle-income countries—are then used to derive policy implications, with a particular focus on Asian economies.
The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.
This paper highlights how changes in the composition of demand affect income dispersion in the short run. We first document how the share of aggregate spending dedicated to labour-intensive goods and services shrinks (expands) during downturns (booms), and argue that this contributes to the observed pro-cyclicality of employment and output in labour-intensive industries. Using a two-sector general equilibrium model, we then assess how this demand composition channel influences the cyclical properties of the income distribution. Consistent with empirical evidence, we find income inequality to be countercyclical due to changes in the level of employment and (to a lesser extent) relative factor prices. The model also shows that wealth redistribution policies can potentially involve a trade-off between equality and output, depending on how they affect the composition of aggregate demand.
We test whether foreign demand matters for local house prices in the US using an identification strategy based on the existence of “home bias abroad” in international real estate markets. Following an extreme political crisis event abroad, a proxy for a strong and exogenous shift in foreign demand, we show that house prices rise disproportionately more in neighbourhoods with a high concentration of population originating from the crisis country. This effect is strong, persistent, and robust to the exclusion of major cities. We also show that areas that were already expensive in the late 1990s have experienced the strongest foreign demand shocks and the biggest drop in affordability between 2000 and 2017. Our findings suggest a non-trivial causal effect of foreign demand shocks on local house prices over the last 20 years, especially in neighbourhoods that were already rather unaffordable for the median household.
Credit booms are a focal point for policymakers and scholars of financial crises. Yet our understanding of how the real sector behaves during booms, and why some booms may go bad, is limited. Despite a large and growing body of literature, most of the work has focused on aggregate economic activity, and relatively little is known about which industries benefit and which suffer during these episodes. This note aims to fill this gap by analyzing disaggregated output and employment data in a large sample of advanced and emerging market economies between 1970 and 2014.
On the top shelf in his aunt's dressing room, Damien Freeman discovered a collection of family memorabilia that told a story he had always assumed to be perfectly unexceptional. The Aunt's Mirrors reveals an unexpected story of how an immigrant family from Poland made a new life - whilst continuing an old one - in 19th century Beechworth, Grafton, Rylstone and Sydney through the shared sense of meaningfulness that permeated the lives of seven generations of this Australian Jewish family.
Compiling all the information available on the topic, this ready reference covers all important aspects of iron oxides. Following a preliminary overview chapter discussing iron oxide minerals along with their unique structures and properties, the text goes on to deal with the formation and transformation of iron oxides, covering geological, synthetic, and biological formation, as well as various physicochemical aspects. Subsequent chapters are devoted to characterization techniques, with a special focus on X-ray-based methods, magnetic measurements, and electron microscopy alongside such traditional methods as IR/Raman and Mossbauer spectroscopy. The final section mainly concerns exciting new applications of magnetic iron oxides, for example in medicine as microswimmers or as water filtration systems, while more conventional uses as pigments or in biology for magnetoreception illustrate the full potential. A must-read for anyone working in the field.
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