Francesco Lippi
How important is the oil market for the global economy? Although oil shocks are often viewed as responsible for the poor performance of many countries in the 1970s, these shocks have played a relatively minor role in leading macroeconomic models. Because oil represents a relatively small share of overall production costs, conventional models imply that oil shocks have a limited impact on aggregate output.
This conclusion has recently been challenged by Gabaix (2011), Acemoglu et al. (2012), and Baqaee and Farhi (2019). These authors argue that shocks to sectors with a small factor share that are highly complementary to other inputs can have a large impact on aggregate output. Baqaee and Farhi (2019) emphasise the perils of using linearisation methods to analyse macroeconomic models with strong complementarities and use the impact of oil shocks in the 1970s as a leading example of these perils.
Ravi Kanbur, Joseph Stiglitz
The societal concern over increasing inequality in income and wealth should be addressed in the first place by a precise accounting of the forces at play, so that policymakers can be correctly informed in their decision-making process. To this end, in this column we present novel evidence exploiting rich microdata from Norwegian registers on the relationship between rates of return on wealth, growth rates of income, and inequality. In other words, the interaction between income from financial and human capital is under analysis, as advocated by Kanbur and Stiglitz (2015): “
We need to focus on the interaction between income from physical and financial capital and income from human capital in determining snapshot inequality”.
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The European Central Bank (ECB) is the central bank of the 19 European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
Miranda Xafa
Like the rest of the world, the Greek economy has entered into another deep economic recession in 2020. While the economy appeared to be on a modest recovery from its ‘great depression’ of 2010-2016, it was hit by a new major international economic shock due to the Covid-19 pandemic.
Greece appears to have experienced a very deep recession in 2020 and even under optimistic assumptions, a full recovery will take some time beyond 2021. In addition, the recession and the cost of the measures to mitigate it have already led to a further sharp rise of Greece’s already exorbitantly high public debt.