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Itskhoki, Oleg; Mukhin, Dmitry - 2023

We develop a general policy analysis framework for an open economy that features nominal rigidities and financial frictions giving rise to endogenous PPP and UIP deviations. The efficient allocation can be implemented with monetary policy closing the output gap and FX interventions eliminating...

Persistent link: https://www.econbiz.de/10014444401

Strategic responses to algorithmic recommendations : evidence from hotel pricing

García, Daniel; Tolvanen, Juha; Wagner, Alexander K. - 2023

We study the interaction between algorithmic advice and human decisions using high-resolution hotel-room pricing data. We document that price setting frictions, arising from adjustment costs of human decision makers, induce a conflict of interest with the algorithmic advisor. A model of advice...

Persistent link: https://www.econbiz.de/10014444885

Carbon taxes and tariffs, financial frictions, and international spillovers

Carattini, Stefano; Kim, Giseong; Melkadze, Givi; … - 2023

Ambitious climate policy, coupled with financial frictions, has the potential to create macrofinancial stability risk. Such stability risk may expand beyond the economy implementing climate policy, potentially catching other countries off guard. International spillovers may occur because of...

Persistent link: https://www.econbiz.de/10014444903

Group identity and belief formation : a decomposition of political polarization

Bauer, Kevin; Chen, Yan; Hett, Florian; Kosfeld, Michael - 2023

, avoidance of outgroup information sources, and a belief-updating process that places greater (less) weight on prior (new …) information. We further find that an intervention reducing the salience of information sources decreases outgroup information … policymakers could reduce the salience of group and partisan identity associated with a policy to decrease outgroup information …

Persistent link: https://www.econbiz.de/10014447732

Complexity and hyperbolic discounting

Enke, Benjamin; Graeber, Thomas Wilhelm; Oprea, Ryan - 2023

A large literature shows that people discount financial rewards hyperbolically instead of exponentially. While discounting of money has been questioned as a measure of time preferences, it continues to be highly relevant in empirical practice and predicts a wide range of real-world behaviors,...

Persistent link: https://www.econbiz.de/10014447758

Redistribution with unequal life expectancy

Köhne, Sebastian - 2023

This paper introduces life expectancy inequality into a tractable Mirrleesian life-cycle model and characterizes the optimal income tax policy using theory and calibration. A positive association between life expectancy and income counteracts the well-known static pattern of declining marginal...

Persistent link: https://www.econbiz.de/10014382962

Embedded discounting

Sneum, Daniel Møller; Soysal, Emilie Rosenlund; Nesje, … - 2023

The appraisal of public investments is subject to formal guidelines which often require input prices, such as forecasted energy prices. Using Danish guidelines as a case study, we explore the discounting assumptions in these input prices and find rates ranging from 2.97% to 17.5%, markedly...

Persistent link: https://www.econbiz.de/10014383298

Mental models of the stock market

Andre, Peter; Schirmer, Philipp; Wohlfart, Johannes - 2023

Investors' return expectations are pivotal in stock markets, but the reasoning behind these expectations remains a black box for economists. This paper sheds light on economic agents' mental models - their subjective understanding - of the stock market, drawing on surveys with the US general...

Persistent link: https://www.econbiz.de/10014383579

Banks' portfolio of government debt and sovereign risk

Afonso, António; Alves, José; Monteiro, Sofia - 2023

We analyze domestic, foreign, and central banks holdings of public debt for 31 countries for the period of 1989-2022, applying panel regressions and quantile analysis. We conclude that an increase in sovereign risk raises the share of domestic banks' portfolio of public debt and reduces the...

Persistent link: https://www.econbiz.de/10014383613

Mind the knowledge gap! : the origins of declining business dynamism in a macro agent-based model

Delli Gatti, Domenico; Terranova, Roberta; Turco, Enrico - 2023

In this paper we replicate most of the stylized facts characterizing the decline in business dynamism in the USA highlighted by Akcigit and Ates (2021) and provide an explanation of their emergence by means of a macroeconomic agent-based model populated by two types of firms: innovators who...

Persistent link: https://www.econbiz.de/10014383652