Is there hope for the expectations hypothesis?

Most macroeconomic models impose a tight link between expected future short rates and the term structure of interest rates via the expectations hypothesis (EH). While the EH has been systematically rejected in the data, existing work evaluating the EH generally assumes either full-information rational expectations or stationarity of beliefs, or both. As such, these analyses are ill-equipped to refute the EH when these assumptions fail to hold, fueling hopes for a "resurrection" of the EH. We introduce a model of expectations formation which features time-varying means and accommodates deviations from rationality. This model tightly matches the entire joint term structure of expectations for output growth, inflation, and the short-term interest rate from all surveys of professional forecasters in the U.S. We show that deviations from rationality and drifting long-run beliefs consistent with observed measures of expectations, while sizable, do not come close to bridging the gap between the term structure of expectations and the term structure of interest rates. Not only is the EH decisively rejected in the data, but model-implied short-rate expectations generally display, at best, only a weak co-movement with the forward rates of corresponding maturities

A Note on "Understanding Cultural Persistence and Change: A Replication of Giuliano and Nunn (2021)"

This note addresses the questions, concerns, and issues raised in "Understanding cultural persistence and change: a replication of Giuliano and Nunn (2021)." In terms of replicability, all of the tables in Giuliano and Nunn (2021) are correct, and the replication files match the output reported in the tables. In their note, the authors suggest alternative, more-restricted samples (e.g., omitting observations: under five years of age, under 16 years of age, living in rural locations, first or second-generation immigrants, with unmarried spouses, from specific ancestral groups, from the 1930 Census, etc.) and also less-restrictive samples (e.g., including grandchildren in analyses of parent-to-child cultural transmission for households that comprise three generations). We re-explain the logic of our baseline samples and why these samples are the most natural, as well as discuss the issues, complications, and incorrect reasoning associated with the authors' suggested alternatives. We also show, reproducing all relevant tables in full for each alternative raised, that our conclusions do not depend on these decisions

Consumer participation in the credit market during the COVID-19 pandemic and beyond

This paper analyses the consumer's decision to apply for credit and the probability of the credit being accepted in the euro area during a period characterized by the unprecedented concomitance of events and changing borrowing conditions linked to the global COVID-19 pandemic and the Russian invasion of Ukraine. We use data between 2020Q1 and 2023Q2 from the ECB's Consumer Expectations Survey. We find that credit demand is highest when the first lockdown ends and it drops when supportive monetary compensation schemes are implemented. There is evidence that constrained households are significantly less likely to apply for credit. Credit is more likely to be accepted under favourable borrowing conditions and after the approval of national recovery plans. We also find that demographic, economic factors, perceptions and expectations are associated with the demand for credit and the credit grant

Zwischen (Rechts-)Anspruch und Realität: Soziale Selektivität in der Kindertagesförderung

Mit altersgruppenbezogenen Rechtsansprüchen auf Kindertagesförderung wird im deutschen Sozialstaat ein universeller Ansatz verfolgt. Insbesondere Kindern aus sozioökonomisch benachteiligten Familien soll durch die Teil-habe an Kindertagesförderung eine Grundlage für bessere Bildungschancen geschaffen werden. Analysen zeigen jedoch, dass gerade diese Gruppen unterproportional vom Kita-Ausbau profitieren und trotz Betreuungswunsch der Eltern besonders häufig keinen Platz erhalten. Die Kosten stellen vor allem für Familien mit geringem Erwerbseinkommen eine Teilhabehürde dar. Auch fehlen benachteiligten Gruppen oftmals die nötigen Informationen, um ihre Interessen bei der Konkurrenz um knappe Plätze durchzusetzen, zumal es für Kita-Träger wenig Anreize gibt, die Be-darfe dieser Gruppen zu berücksichtigen. Für die Stärkung von Teilhabe kommt es vor allem darauf an, subtil wirkende Mechanismen im Kita-System zu verstehen und auf dieser Basis Lösungsansätze zu entwickeln

The fate of the passbook: Why it vanished in the US but survived in Germany during the stagflation period (1966-1983)

In his article, Sebastian Knake challenges the general assumption that traditional savings accounts in the US disappeared naturally as a result of the combination of interest rate regulation and extraordinarily high market interest rates during the stagflation period. By comparing the US experience with simultaneous developments in West Germany, he finds that the opportunity costs of owning a regular passbook were comparable in both countries. In contrast to the US case, however, the passbook remained a cornerstone of household saving in Germany. Drawing upon research in several bank archives in the US and Germany, Knake explains these divergent developments in terms of fundamental differences in how banks and their customers communicated over prices. In the US, a peculiar combination of regulative rules forced banks, and especially savings institutions, to aggressively promote new types of bank accounts that were introduced by federal regulation authorities, thereby increasing nominal interest rate expectations. In Germany, by contrast, banks confined information about advantageous investment opportunities to the smallest possible share of the customer base. These divergent communication strategies reflect a difference in the balance of power in the bank-customer relationship. German customers depended on their primary-and in most cases only-bank relationship to acquire information on alternative investments, while US customers could draw on several relationships with banks and savings institutions to obtain the relevant information. Thus, the fate of the passbook was sealed by the ability or inability of banks to keep their customers in the dark about the real opportunity costs of passbook saving

Community-based vigilante violence in sub-Saharan Africa: The role of corporate social responsibility in Nigeria's oil producing communities

Nigeria's oil-producing region is experiencing a surge in community-based vigilante violence, potentially escalating conflict dynamics and increasing fear of injury. The reason it matters is that neighborhood vigilante groups are more likely to participate in criminal, political, and ethnic plotting and are not always controllable. This prompted us to look into whether GMoU cluster interventions by MOCs could lower the heat map of fatalities from vigilante violence in Nigeria's Niger Delta. The results of logit regression and propensity score matching demonstrate that the MOCs' limited CSR efforts to protect the area have been successful in creating, formalizing, equipping, and managing vigilante groups. The results also show that the CSR initiatives have reduced vigilante violence within and between host communities, as well as violence against their residents. This implies that raising awareness of CSR with the goal of strengthening vigilante control will strengthen the local security apparatus, discourage resurgence in the various rural areas, safeguard the workers and equipment of oil firms, and provide a favorable business environment in the area

Motivated Procrastination

Procrastination is often attributed to time-inconsistent preferences but may also arise when individuals derive anticipatory utility from holding optimistic beliefs about their future effort costs. This study provides a rigorous empirical test for this notion of 'motivated procrastination'. In a longitudinal experiment over four weeks, individuals must complete a cumbersome task of unknown length. We find that exogenous variation in scope for motivated reasoning results in optimistic beliefs among workers, which causally increase the deferral of work to the future. The roots for biased beliefs stem from motivated memory, such that procrastination may persist even if uncertainty is eventually resolved

Die EU-Operation Eunavfor Aspides: Geoökonomie und Geopolitik stehen (noch) in einem Missverhältnis

Die Mitgliedstaaten der Europäischen Union (EU) haben am 16. Januar 2024 beschlossen, im Rahmen der Gemeinsamen Sicherheits- und Verteidigungspolitik (GSVP) einen Beitrag zur Sicherstellung der Freiheit der Schifffahrt im Roten Meer zu leisten. Seit November 2023 greifen dort jemenitische Rebellen westliche Schiffe an. Sie wollen damit ein Ende der israelischen Kampfhandlungen im Gaza-Streifen erzwingen. Deutschland beteiligt sich mit der Fregatte Hessen an der EU-Operation Aspides - dem bislang gefährlichsten GSVP-Einsatz. Das Mandat der Operation zielt darauf ab, handelspolitische Interessen durchzusetzen. Die geopolitischen Gründe, die Anlass für die Huthi-Angriffe sind, bearbeitet Aspides explizit nicht

The legacy of coercive cotton cultivation in colonial Mozambique

We examine the long-term impact of forced labour on individual risk behaviour and economic decisions. For that, we focus on a policy of coercive cotton cultivation enforced in colonial Mozambique between 1926 and 1961. We combine archival sources about the boundaries of historical cotton concessions with survey data collected specifically for this study. By employing a regression discontinuity design to compare individuals living in areas inside and outside the historical cotton concessions, we document significant disparities in risk aversion and agricultural patterns between communities. Our findings reveal that individuals living in regions unsuitable for producing cotton but still subjected to the coercive cotton regime have higher risk aversion, are more likely to be farmers, and have more agricultural production destined to be commercialized. These results are mostly driven by women, who felt the brunt of the forced labour regime. As a novel contribution, this paper highlights the long-lasting consequences of colonial agricultural policies on risk and economic behaviour, offering insights into the challenges faced by post-colonial societies in overcoming historical legacies