Evgenia Pugacheva's Books

Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?

By: Natalija Novta,Evgenia Pugacheva

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Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?

By: Natalija Novta,Evgenia Pugacheva

We examine the extent to which declining manufacturing employment may have contributed to increasing inequality in advanced economies. This contribution is typically small, except in the United States. We explore two possible explanations: the high initial manufacturing wage premium and the high level of income inequality. The manufacturing wage premium declined between the 1980s and the 2000s in the United States, but it does not explain the contemporaneous rise in inequality. Instead, high income inequality played a large role. This is because manufacturing job loss typically implies a move to the service sector, for which the worker is not skilled at first and accepts a low-skill wage. On average, the associated wage cut increases with the overall level of income inequality in the country, conditional on moving down in the wage distribution. Based on a stylized scenario, we calculate that the movement of workers to low-skill service sector jobs can account for about a quarter of the increase in inequality between the 1980s and the 2000s in the United States. Had the U.S. income distribution been more equal, only about one tenth of the actual increase in inequality could have been attributed to the loss of manufacturing jobs, according to our simulations.

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International Monetary Fund

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ISBN 10

1498320457

ISBN 13

9781498320450

Wage-Price Spirals: What is the Historical Evidence?

By: Jorge Alvarez,Mr. John C Bluedorn,Mr. Niels-Jakob H Hansen,Youyou Huang,Evgenia Pugacheva,Alexandre Sollaci

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Wage-Price Spirals: What is the Historical Evidence?

By: Jorge Alvarez,Mr. John C Bluedorn,Mr. Niels-Jakob H Hansen,Youyou Huang,Evgenia Pugacheva,Alexandre Sollaci

How often have wage-price spirals occurred, and what has happened in their aftermath? We investigate this by creating a database of past wage-price spirals among a wide set of advanced economies going back to the 1960s. We define a wage-price spiral as an episode where at least three out of four consecutive quarters saw accelerating consumer prices and rising nominal wages. Perhaps surprisingly, only a small minority of such episodes were followed by sustained acceleration in wages and prices. Instead, inflation and nominal wage growth tended to stabilize, leaving real wage growth broadly unchanged. A decomposition of wage dynamics using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels that are consistent with observed inflation and labor market tightness. When focusing on episodes that mimic the recent pattern of falling real wages and tightening labor markets, declining inflation and nominal wage growth increases tended to follow – thus allowing real wages to catch up. We conclude that an acceleration of nominal wages should not necessarily be seen as a sign that a wage-price spiral is taking hold.

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International Monetary Fund

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ISBN 13

9798400224294

Sectoral Shocks and Spillovers: An Application to COVID-19

By: Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

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Sectoral Shocks and Spillovers: An Application to COVID-19

By: Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

This paper examines the role of sectoral spillovers in propagating sectoral shocks in the broader economy, both in the past and during the COVID-19 pandemic. In particular, we study how shocks that occur within a sector itself and spillovers from shocks to other sectors affect sectoral activity, for a large sample of countries from 1995 to 2014. We find that both supply and demand shocks—measured as changes in, respectively, productivity and government purchases at the sector level—have large spillover effects on sector-level gross value added and on a sector’s share of the economy. We then use these historical estimates, together with the network structure of global production, to quantify the spillovers from the economic shock associated with the pandemic. We find spillover effects to be sizeable, making up a significant fraction of the overall decline in activity in 2020.Our results have implications for the design of policies with a sectoral dimension.

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International Monetary Fund

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ISBN 10

1513587390

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9781513587394

The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact?

By: Mr.Sebastian Acevedo Mejia,Mr.Mico Mrkaic,Natalija Novta,Evgenia Pugacheva,Petia Topalova

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The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact?

By: Mr.Sebastian Acevedo Mejia,Mr.Mico Mrkaic,Natalija Novta,Evgenia Pugacheva,Petia Topalova

Global temperatures have increased at an unprecedented pace in the past 40 years. This paper finds that increases in temperature have uneven macroeconomic effects, with adverse consequences concentrated in countries with hot climates, such as most low-income countries. In these countries, a rise in temperature lowers per capita output, in both the short and medium term, through a wide array of channels: reduced agricultural output, suppressed productivity of workers exposed to heat, slower investment, and poorer health. In an unmitigated climate change scenario, and under very conservative assumptions, model simulations suggest the projected rise in temperature would imply a loss of around 9 percent of output for a representative low-income country by 2100.

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International Monetary Fund

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ISBN 10

1484364236

ISBN 13

9781484364239

The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

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The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

Over the past three decades, the price of machinery and equipment fell dramatically relative to other prices in advanced and emerging market and developing economies. Using cross-country and sectoral data, we show that the decline in the relative price of tangible tradable capital goods provided a significant impetus to the capital deepening that took place during the same time period. The broad-based decline in the relative price of machinery and equipment, in turn, was driven by the faster productivity growth in the capital goods producing sectors relative to the rest of the economy, and deeper trade integration, which induced domestic producers to lower prices and increase their efficiency. Our findings suggest an additional channel through which rising trade tensions and sluggish productivity could threaten real investment growth going forward.

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International Monetary Fund

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ISBN 10

149832343X

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9781498323437

The Macroeconomic Costs of Conflict

By: Natalija Novta,Evgenia Pugacheva

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The Macroeconomic Costs of Conflict

By: Natalija Novta,Evgenia Pugacheva

Macroeconomic costs of conflict are generally very large, with GDP per capita about 28 percent lower ten years after conflict onset. This is overwhelmingly driven by private consumption, which falls by 25 percent ten years after conflict onset. Conflict is also associated with dramatic declines in official trade, with exports (imports) estimated to be 58 (34) percent lower ten years after conflict onset. The onset of conflict often also induces significant refugee outflows to neighboring non-advanced countries in the short run, and relatively small but very persistent refugee outflows to advanced countries over the long run. Finally, we stress that conflict should be defined in terms of the number of people killed relative to the total population. The traditional definition of conflict—based on the absolute number of deaths—skews the sample toward low-intensity conflicts in large countries, thereby understating the negative effects of conflict from a macroeconomic perspective.

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International Monetary Fund

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ISBN 10

1513547755

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9781513547756

Updating Inflation Weights in the UK and Germany During COVID-19

By: Mr. Francesco Grigoli,Evgenia Pugacheva

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Updating Inflation Weights in the UK and Germany During COVID-19

By: Mr. Francesco Grigoli,Evgenia Pugacheva

The COVID-19 pandemic altered consumption patterns significantly in a short period of time. However, official inflation statistics take time to reflect these changes in the weights of the CPI consumption basket. Using credit card data for the UK and Germany, we document how consumption patterns changed and we quantify the resulting inflation bias. We find that consumers experienced a higher level of inflation at the beginning of the pandemic than what a fixed-weight inflation (or the official-weight) index suggests and a lower inflation thereafter. We also show that weights can differ among age groups as well as between in-person and online spenders. These differences affect the purchasing power of the population heterogeneously. We conclude that CPI inflation indexes based on frequently updated weights can provide useful inputs to assess changes in the cost of living and, if shifts in consumption patterns prove persistent, determine the need to introduce new official weights and inform monetary policy.

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ISBN 13

9798400220470

After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage

By: Mr. Philip Barrett,Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

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After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage

By: Mr. Philip Barrett,Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

The COVID-19 pandemic has led to a severe global recession with differential impacts within and across countries. This paper examines the possible persistent effects (scarring) of the pandemic on the economy and the channels through which they may occur. History suggests that deep recessions often leave long-lived scars, particularly to productivity. Importantly, financial instabilities—typically associated with worse scarring—have been largely avoided in the current crisis so far. While medium-term output losses are anticipated to be lower than after the global financial crisis, they are still expected to be substantial. The degree of expected scarring varies across countries, depending on the structure of economies and the size of the policy response. Emerging market and developing economies are expected to suffer more scarring than advanced economies.

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1513587900

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9781513587905

Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation

By: Mr.Sebastian Acevedo Mejia,Claudio Baccianti,Mr.Mico Mrkaic,Natalija Novta,Evgenia Pugacheva,Petia Topalova

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Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation

By: Mr.Sebastian Acevedo Mejia,Claudio Baccianti,Mr.Mico Mrkaic,Natalija Novta,Evgenia Pugacheva,Petia Topalova

We explore the extent to which macroeconomic policies, structural policies, and institutions can mitigate the negative relationship between temperature shocks and output in countries with warm climates. Empirical evidence and simulations of a dynamic general equilibrium model reveal that good policies can help countries cope with negative weather shocks to some extent. However, none of the adaptive policies we consider can fully eliminate the large aggregate output losses that countries with hot climates experience due to rising temperatures. Only curbing greenhouse gas emissions—which would mitigate further global warming—could limit the adverse macroeconomic consequences of weather shocks in a long-lasting way.

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ISBN 10

1513511572

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9781513511573

Sectoral Shocks and Spillovers: An Application to COVID-19

By: Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

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Sectoral Shocks and Spillovers: An Application to COVID-19

By: Mr. Sonali Das,Giacomo Magistretti,Evgenia Pugacheva,Mr. Philippe Wingender

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1513587390

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9781513587394

The Macroeconomic Costs of Conflict

By: Natalija Novta,Evgenia Pugacheva

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The Macroeconomic Costs of Conflict

By: Natalija Novta,Evgenia Pugacheva

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ISBN 10

1513547755

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9781513547756

The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

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The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

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ISBN 10

149832343X

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9781498323437

Impact of COVID-19 on Attitudes to Climate Change and Support for Climate Policies

By: Mr. Adil Mohommad,Evgenia Pugacheva

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Impact of COVID-19 on Attitudes to Climate Change and Support for Climate Policies

By: Mr. Adil Mohommad,Evgenia Pugacheva

This paper inquires into how individual attitudes to climate issues and support for climate policies have evolved in the context of the pandemic. Using data from a unique survey of 14,500 individuals across 16 major economies, this study shows that the experience of the COVID-19 pandemic increased concern for climate change and public support for green recovery policies. This suggests that the global health crisis has opened up more space for policy makers in key large economies to implement bolder climate policies. The study also finds that support for climate policies decreases when a person has experienced income and/or job loss during the pandemic. Protecting incomes and livelihoods in the near-term is thus important also from a climate policy perspective.

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