SEPTEMBER 15 2015

Martin Wolf, FT: Monetary policy in a low-rate world. The first concerns what to do now. Above, I assumed that rates will have risen substantially, before the next recession. Yet this is far more likely if the economy is allowed to build up a substantial head of steam. Premature rises in interest rates might trigger a sharper slowdown than people expect and put central banks in the worst possible situation: tackling recession when rates remain extremely low. For this reason, as Fed governor Lael Brainard argues, “the costs to the economy of greater-than-expected strength in demand are likely to be lower than the costs of significant unexpected weakness”. The riskier policy is tightening policy too soon, not too late (Vi är många som inte har tillgång till ledande internationella tidningar, inte ens på jobbet, här ett tips: Kopiera titeln och sök i Google, klicka länken och ofta kan artikeln läsas utanför ”paywall”).

Robert J. Samuelson, Washington Post: Are aging and the economic slowdown linked? An aging United States reduces the economy’s growth — big time. That’s the startling conclusion of a new academic study, and if it withstands scholarly scrutiny, it could transform our national political and economic debate. We’ve known for decades, of course, that the retirement of the huge baby-boom generation — coupled with low birthrates — would make the United States an older society. But the study goes a giant step further, claiming that the very fact that the United States is an aging society weakens economic growth. “The fraction of the United States population age 60 or over will increase by 21 percent between 2010 and 2020,” says the study.

George J. Borjas, Joan Monras, Harvard: The Labor Market Consequences of Refugee Supply Shocks. This paper revisits four historical refugee shocks to document their labor market impact. We use a common empirical approach, derived from factor demand theory, and publicly available data to measure the impact of these shocks. Despite the differences in the political forces that motivated the various flows, and in economic conditions across receiving countries, the evidence reveals a common thread that confirms key insights of the canonical model of a competitive labor market: Exogenous supply shocks adversely affect the labor market opportunities of competing natives in the receiving countries, and often have a favorable impact on complementary workers. In short, refugee flows can have large distributional consequences.

Neil Irwin, NYT: The Economic Expansion Is Helping the Middle Class, Finally. For years, the standard knock on this economic expansion has been twofold: Growth has been slow, and big businesses and wealthy investors have been its major beneficiaries, rather than middle-class wage earners. And it has been a fair criticism. At least until recently. The most decisive evidence of improving fortunes is found in new census data released Tuesday showing that median household income rose a whopping 5.2 percent in 2015, to around $56,500. According to that data, incomes rose for black families, white families, Hispanic families and Asian-American families. It rose for young people and in households headed by middle-aged adults and older people. In short, the improvement was across the board to a remarkable degree.

Peter Cohen, Robert Hahn, Jonathan Hall, Steven Levitt, Robert Metcalfe, NBER: Using Big Data to Estimate Consumer Surplus: The Case of Uber. Estimating consumer surplus is challenging because it requires identification of the entire demand curve. We rely on Uber’s “surge” pricing algorithm and the richness of its individual level data to first estimate demand elasticities at several points along the demand curve. We then use these elasticity estimates to estimate consumer surplus. Using almost 50 million individual-level observations and a regression discontinuity design, we estimate that in 2015 the UberX service generated about $2.9 billion in consumer surplus in the four U.S. cities included in our analysis. For each dollar spent by consumers, about $1.60 of consumer surplus is generated. Back-of-the-envelope calculations suggest that the overall consumer surplus generated by the UberX service in the United States in 2015 was $6.8 billion.

Robert H. Frank, The Atlantic: Why Luck Matters More Than You Might Think. I have discovered that chance plays a far larger role in life outcomes than most people realize. And yet, the luckiest among us appear especially unlikely to appreciate our good fortune. People in higher income brackets are much more likely than those with lower incomes to say that individuals get rich primarily because they work hard. Other surveys bear this out: Wealthy people overwhelmingly attribute their own success to hard work rather than to factors like luck or being in the right place at the right time. When people see themselves as self-made, they tend to be less generous and public-spirited.

Stijn Baert, Simon Amez, IZA: No Better Moment to Score a Goal than Just Before Half Time? A Soccer Myth Statistically Tested. We test the soccer myth suggesting that a particularly good moment to score a goal is just before half time. To this end, rich data on 1,179 games played in the UEFA Champions League and UEFA Europa League are analysed. In contrast to the myth, we find that, conditional on the goal difference and other game characteristics at half time, the final goal difference at the advantage of the home team is 0.520 goals lower in case of a goal just before half time by this team. We show that this finding relates to this team's lower probability of scoring a goal during the second half.