{"title":"Measuring Household Inflation Perceptions and Expectations: The Effect of Guided vs Non-Guided Inflation Questions","authors":"Bernd Hayo , Pierre-Guillaume Méon","doi":"10.1016/j.jmacro.2023.103558","DOIUrl":"https://doi.org/10.1016/j.jmacro.2023.103558","url":null,"abstract":"<div><p>An experiment using a representative survey of the German population shows that letting respondents report a number rather than asking them to choose from a list of predefined ranges lowers the response rate for both perceived past and expected inflation<span> and decreases (increases) reported past (expected) inflation<span>. Income, education, gender, objective and subjective knowledge about monetary policy, and political affiliation affect the effect's size but not its sign. East and West German respondents who were 15 or older when the Berlin Wall fell have reactions different from those who were younger at that time, which supports the ‘impressionable years’ hypothesis based on different inflation experiences.</span></span></p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49901203","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Naïve agents with non-unitary discounting rate in a monetary economy","authors":"Koichi Futagami , Daiki Maeda","doi":"10.1016/j.jmacro.2023.103550","DOIUrl":"10.1016/j.jmacro.2023.103550","url":null,"abstract":"<div><p><span>We incorporate naïve agents with a non-unitary discounting rate into a cash-in-advance (CIA) model. Through this extension, we obtain the following results. First, we show that there exists an equilibrium in which the CIA constraint does not bind when individuals discount their utilities from future consumption lower than their utilities from future leisure time. Notably, this non-binding equilibrium exists even if the nominal interest rate takes a positive value. Second, we demonstrate that increases in the money supply growth rate decrease individuals’ </span>saving rates in equilibrium, where the CIA constraint does not bind. Third, we exhibit that when the equilibrium where the CIA constraint does not bind exists, the welfare level of this equilibrium can be higher than that of the equilibrium in which the CIA constraint binds. Moreover, we deduce that the Friedman rule cannot be optimal in the equilibrium in which the CIA constraint binds and present the result that the optimal level of the optimal nominal interest rate is affected by the difference in the discount rates.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44715601","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"COVID-19 inflation weights in the UK and Germany","authors":"Francesco Grigoli, Evgenia Pugacheva","doi":"10.1016/j.jmacro.2023.103543","DOIUrl":"10.1016/j.jmacro.2023.103543","url":null,"abstract":"<div><p>The COVID-19 pandemic altered consumption patterns significantly in a short period of time. However, official inflation statistics take time to reflect 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 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 lower inflation thereafter. We also show that weights can differ among age groups and in-person vs. 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, including across segments of the population. If shifts in consumption patterns prove persistent, these indexes can help determine the need to introduce new weights and inform monetary policy and the design of support policies for the more vulnerable.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10276500/pdf/","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"10091886","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Francesco G. Caloia , Jante Parlevliet , Mauro Mastrogiacomo
{"title":"Staggered wages, unanticipated shocks and firms’ adjustments","authors":"Francesco G. Caloia , Jante Parlevliet , Mauro Mastrogiacomo","doi":"10.1016/j.jmacro.2023.103521","DOIUrl":"https://doi.org/10.1016/j.jmacro.2023.103521","url":null,"abstract":"<div><p><span><span>This paper empirically investigates the employment and wage effects of contract staggering, i.e., the asynchronous and infrequent way in which wages adjust to changes in the economic environment. Using an identification strategy based on exogenous start dates of collective agreements around the Great Recession, we estimate the effect of increases in base wages on firms’ labor cost adjustments. Our analysis is based on a large employers-employees dataset merged to collective agreements in the Netherlands, a country in which </span>collective bargaining is dominant and contract staggering is relatively pervasive. The main result is that staggered wage setting has no real effect on employment. We find significant employment losses only in sectors covered by contracts with much longer durations than those normally assumed in </span>macroeconomic models<span> featuring staggered wages. Instead, we show that firms adjust labor costs by curbing other pay components such as bonuses and benefits and incidental pay. The overall result supports the idea that wage rigidities are not the main source of employment fluctuations.</span></p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49899597","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Impact of infectious disease pandemics on individual lifetime consumption: An endogenous time preference approach","authors":"Kei Hosoya","doi":"10.1016/j.jmacro.2023.103506","DOIUrl":"10.1016/j.jmacro.2023.103506","url":null,"abstract":"<div><p>This paper considers the impact of the coronavirus disease 2019 (COVID-19) pandemic on long-term individual lifetime consumption profiles. The framework for the analysis is a model that extends Strulik (2021) to include the government sector, where time preference is determined by individual health damage (deficit) distinct from normal aging. Thus, the health damage caused by COVID-19 changes the rate of time preference and consequently affects the Euler equation for consumption. Our theoretical contribution is the consistent incorporation of public health investment into the existing model to understand the effect of government measures against a pandemic. Numerical analysis based on this model is used to estimate changes in health status over time, trends in the rate of time preference, and individual lifetime consumption profiles, taking into account differences in age at the time of the pandemic and the nature of the government responses. Because the long-term negative economic impact would be enormous, we should avoid advocating for “living with COVID-19” without due consideration. The reopening of the economy must be accompanied by a commitment to the containment and elimination of infections with future novel coronaviruses.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9899125/pdf/","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"9469826","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pål Boug, Thomas von Brasch, Ådne Cappelen, Roger Hammersland, Håvard Hungnes, Dag Kolsrud, Julia Skretting, Birger Strøm, Trond C. Vigtel
{"title":"Fiscal policy, macroeconomic performance and industry structure in a small open economy","authors":"Pål Boug, Thomas von Brasch, Ådne Cappelen, Roger Hammersland, Håvard Hungnes, Dag Kolsrud, Julia Skretting, Birger Strøm, Trond C. Vigtel","doi":"10.1016/j.jmacro.2023.103524","DOIUrl":"10.1016/j.jmacro.2023.103524","url":null,"abstract":"<div><p>We analyse how fiscal policy affects both the macroeconomy and the industry structure, using a multi-sector macroeconomic model of the Norwegian economy with an inflation targeting monetary policy. Our simulations show that the magnitude of the government spending and labour tax cut multipliers, whether monetary policy is active or passive, is comparable to what is found in the literature. A novel finding from our simulations is that the industry structure is substantially affected by an expansionary fiscal policy, as value added in the non-traded goods sector increases at the expense of value added in the traded goods sector. Moreover, expansionary fiscal policy reduces the mark-ups in the traded goods sector, while the mark-ups are roughly unchanged in the non-traded goods sector. The contraction of activity in the traded goods sector increases when monetary tightening accompanies the fiscal stimulus. Hence, we find that such a policy mix is likely to produce significant de-industrialization in a small open economy with inflation targeting.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49399313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Can variable elasticity of substitution explain changes in labor shares?","authors":"Alessandro Bellocchi, Giuseppe Travaglini","doi":"10.1016/j.jmacro.2023.103518","DOIUrl":"10.1016/j.jmacro.2023.103518","url":null,"abstract":"<div><p><span><span>In CES production functions, the magnitude of the </span>elasticity of substitution between capital and labor (</span><span><math><mi>σ</mi></math></span>) is crucial to explain the evolution of the labor share. The decline in labor share observed worldwide can be explained by capital accumulation if <span><math><mrow><mi>σ</mi><mo>></mo><mn>1</mn></mrow></math></span>. However, empirical evidence on the value of <span><math><mi>σ</mi></math></span> is mixed. To shed light on this issue, we employ a Variable Elasticity of Substitution (VES) production function where <span><math><mi>σ</mi></math></span> is an <em>endogenous</em><span> driver of the labor share. Using macro data for six advanced OECD economies from 1980 to 2020 we provide estimates of </span><span><math><mi>σ</mi></math></span> under <span><em>imperfect competition</em></span>. We test the prediction of the model by means of simulations. Mainly, we find that capital deepening, markup and technological change explain a significant part of the observed decline in labor shares. The results suggest <em>complementarity</em> between labor and capital in all the countries except the United States.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42834193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis","authors":"Mei-Ying Hu , You-Xun Lu , Ching-chong Lai","doi":"10.1016/j.jmacro.2023.103519","DOIUrl":"10.1016/j.jmacro.2023.103519","url":null,"abstract":"<div><p>Due to the lags in commercialization, the effective life of a patent is generally less than its statutory term. We introduce commercialization lags into the Schumpeterian growth model and explore the effects of patent term extensions on pharmaceutical R&D and social welfare. Our results show that extending patent terms stimulates the consumption of homogeneous goods but generates an ambiguous effect on the consumption of pharmaceuticals. When patent extensions have an inverted-U effect on social welfare, the optimal patent extension increases with the length of commercialization lags but decreases with the input intensity of commercialization lags. Finally, we calibrate the model and find that increasing patent breadth reduces the optimal patent extension.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44666509","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Taxes and firm investment","authors":"K. Peren Arin , Kevin Devereux , Mieszko Mazur","doi":"10.1016/j.jmacro.2023.103517","DOIUrl":"https://doi.org/10.1016/j.jmacro.2023.103517","url":null,"abstract":"<div><p>We investigate the firm-level investment response to unanticipated narrative shocks to average personal and corporate tax<span> rates using a universal micro dataset of publicly-traded U.S. firms for the post-1976 period. Using local projections, we show that: (i) corporate tax shocks have significant effects on investment while personal tax shocks do not; (ii) corporate income tax<span> responses are negative overall, and this result is driven by smaller firms who face larger borrowing constraints, especially when the accompanying monetary policy<span> is contractionary or output gap is slack; (iii) there is some evidence of positive personal income tax responses during monetary contractions by dividend-paying firms, which is consistent with the recent literature.</span></span></span></p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49899596","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Human capital heterogeneity of the unemployed and jobless recoveries","authors":"Nic Pusateri","doi":"10.1016/j.jmacro.2023.103505","DOIUrl":"10.1016/j.jmacro.2023.103505","url":null,"abstract":"<div><p>The jobless recovery enigma remains largely unsolved. As a special case of broader unemployment, the term “jobless recovery” describes an economic recovery where output recovers—and even expands—yet employment growth remains anemic. While the effects of these prolonged recoveries are significant—from increased crime to a lifetime reduction in wages—they are not well understood. Building on the insights of labor market matching models that incorporate heterogeneity among workers, this paper sheds light on jobless recoveries, developing a first-of-its-kind index of human capital heterogeneity for the unemployed, and testing that index using of a Structural Vector Autoregression. I demonstrate that the extent to which unemployed human capital is heterogeneous and specific, rather than homogeneous and general, plays a key and under-appreciated role in the labor market; increases in human capital heterogeneity can account for between one-quarter to three-quarters of the joblessness of the past three recoveries in the pre-COVID era.</p></div>","PeriodicalId":47863,"journal":{"name":"Journal of Macroeconomics","volume":null,"pages":null},"PeriodicalIF":1.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48728443","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}