Suchergebnisse

AbstractThis issue of the Oxford Review of Economic Policy is the second in the Rebuilding Macroeconomic Theory project. The papers in the first issue proposed specific improvements to the New-Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) framework, in response to the events of the 2008 crisis. This issue goes further. We, as editors, now argue that a new multiple-equilibrium and diverse (MEADE) paradigm is needed for macroeconomics. It will emphasize that economies can have more than one stable outcome, and study why. It will require using both toy models, which enable a quick, first-pass, intuitive understanding of a question, and policy models (aka structural economic models) which develop a detailed empirical understanding of the economy. We argue that the seminal IS/LM, Solow–Swan, Ramsey, Real Business Cycle, Taylor, and Clarida/Galí/Gertler models have all been toys, as is the benchmark NK-DSGE model. In the past the models have adapted as the questions changed, and the NK-DSGE model must now do this since it has failed to capture both the salient aspects of the lead-up to the 2008 crisis and the slow recovery afterwards. The way forward in the MEADE paradigm will be to start with simple models, ideally two-dimensional sketches, that explain mechanisms that can cause multiple equilibria. These mechanisms should then be incorporated into larger DSGE models in a new, multiple-equilibrium synthesis. All of this will need to be informed by closer fidelity to the data, drawing on lessons obtained from detailed work on policy models.

Abstract
Concern about inequality, particularly inequality of income and wealth, has become prominent in public discourse around the world. This article first discusses issues of measurement and goes on to ask why we should care, emphasizing fairness and the market distortions and negative externalities found in unequal societies. It documents that the decline in global inequality in recent decades has been due to falling inequality between, rather than within, countries. The popular picture of rising inequality in OECD countries is more varied and complex than often perceived. Its drivers include aspects of globalization and of technological change as well as changes in the distribution of market power, in financial markets, public policy, and monetary policy. There are two over-arching questions about how governments can address inequality. The first is what should be tackled at the international level and what should be the preserve of national policy. The second is what should be the balance between pre- and post-market interventions. Both have a role but generally the balance has been too skewed towards the latter.

AbstractInequality is important, both for its own sake and for its political, social, and economic implications. However, measuring inequality is not straightforward, as it requires decisions to be made on the variable, population, and distributional characteristics of interest. These decisions will naturally influence the conclusions that are drawn so they must be closely linked to an underlying purpose, which is ultimately defined by a social welfare function. This paper outlines important considerations when making each of these decisions, before surveying recent advances in measuring inequality and suggesting avenues for future work.

This paper describes a sectoral empirical model of money and credit in the UK that can be used for analysing unconventional monetary policies that affect banks' balance sheets. The paper uses the model to assess the impact of QE on the UK economy focussing on the endogenous portfolio response of banks, financial companies and non‐financial companies. The baseline results support the quantitative estimates found by other studies, but suggest the impact of QE is sensitive to the assumption about whether and to what extent QE affects bank lending.

Abstract
This paper argues for the regular testing of people in groups that are more likely to be exposed to SARS-CoV-2, to reduce the spread of COVID-19 and resume economic activity. We call this 'stratified periodic testing'. It is 'stratified' as it is based on at-risk groups, and 'periodic' as everyone in the group is tested at regular intervals. We argue that this is a better use of scarce testing resources than 'universal random testing', as has been recently discussed globally. We find that, under reasonable assumptions and allowing for false negative results 30 per cent of the time, 17 per cent of a subgroup would need to be tested each day to lower the effective reproduction number R from 2.5 to 0.75, under stratified periodic testing. Using the same assumptions the universal random testing rate would need to be 27 per cent (as opposed to 7 per cent as argued by Romer (2020b)). We obtain this rate of testing using a corrected method for calculating the impact of an infectious person on others, and allowing for asymptomatic cases. We also find that the effect of one day's delay between testing positive and self-isolating is similar to having a test that is 30 per cent less accurate.