Large shocks, small shocks, and economic fluctuations: outliers in macroeconomic times series

Macroeconomics ; Time-series analysis

Threshold cointegration

Discount ; Federal funds market (United States)

Financial Literacy and Food Security in Extremely Vulnerable Households

Food insecurity is one of the most, if not the most, significant, nutrition-related public health issue confronted in the US. Unfortunately, we know very little about the determinants of food security except that it is not synonymous with poverty. Many households above the poverty line are food insecure; many below are not. We investigate a lack of financial literacy as a potential salient determinant of household-level food security. In light of the recent financial crisis and the burgeoning literature on financial literacy, we know that inadequate financial skills and practices are a significant problem that spans all socioeconomic groups. Using original survey data collected among food pantry clients in North Texas, we assess the causal effect of financial literacy on food security. Our results indicate a strikingly significant effect, both economically and statistically

Decreasing marginal impatience, income distribution and demand for money: Theory and evidence

This Paper develops a dynamic, theoretical model of demand for money under decreasing marginal impatience (DMI).Given certain conditions, the steady state is shown to be saddle-path stable and unique. It is shown that, under DMI, an increase in income inequality increases the aggregate demand for money. Empirical evidence supporting this hypothesis is provided in the context of the U.S. economy.

Trade margins and exchange rate regimes: new evidence from a panel VAR

This paper studies how trade margins respond to output and terms of trade shocks in different exchange rate regimes within a panel of 23 OECD economies over the period 1988-2011. Using a panel VAR model, we confirm the predictions of entry models about the behaviour of export margins over the cycle. In addition, we find remarkable differences depending on the exchange rate regime. We document that fixed exchange rates have a positive effect on the extensive margin of trade in response to external shocks while flexible exchange rates have a pro-trade effect in response to output shocks. Our results imply that as long as extensive margins are a relevant portion of trade and external shocks are a major source of business cycle variability, the stabilization advantage of flexible exchange rates may be lower than previously thought

Natural Disaster Shocks and Macroeconomic Growth in Asia: Evidence for Typhoons and Droughts

Climate-related natural disaster shocks are expected to rise as the earth is getting warmer, which will adversely affect growth prospects globally. Current robust estimates of the effects of typhoons and droughts point to both short- and long-term declines in national incomes compared to predisaster trends and economic effects likely to persist up to 2 decades. Using the typhoon landfalls and damage in Asia, we analyze the wind-damage relationship and find damages to gross domestic product increase by 2.3% for an increase in maximum wind speed. The extreme projected temperature rise in Representative Concentration Pathway (RCP) 8.5 will result in higher damage by more than 50% in 2100. Vulnerable developing Asian economies could expect dampened growth with significant impacts on agriculture and tourism, a concern that may roll back years of development gains and exacerbate inequality. To cope with increasing disaster risks, both short-term adaptation strategies like relocation, government transfers, and other social safety nets, as well as long-term strategies like disaster insurance or similar ex ante mechanisms are needed