Race is usually treated as a fixed, exogenous characteristic in academic studies and policy discussions, but a growing body of evidence calls this assumption into question. This column presents evidence from historical US census data that more than 19% of black males ‘passed’ as white, around 10% of whom later ‘reverse-passed’ to being black. Passing was associated with geographic relocation and with better political-economic and social opportunities for whites relative to blacks, providing prima facie evidence that passing was endogenous.
Rising prices have long been a concern of monetary policymakers due to wealth effects on spending. This column presents evidence that local demand effects from house price increases result in significant local price inflation. Households living in locations with rapidly increasing real estate prices will also face rapidly increasing costs of goods purchased in local stores.
Among different youth employment programmes, summer employment programmes have received relatively little attention. This column looks at the effects of the New York City’s summer youth employment programme – the largest programme of this kind in the US – on a number of outcomes. Whereas the programme did not raise later earning or college enrolment, it decreased the probability of incarceration and mortality. This is a new, often neglected, large benefit from a youth employment programme.
The European Central Bank has just launched full-fledged quantitative easing. This column argues that the ECB’s watershed decision highlights both the strengths and the persistent vulnerabilities of the Eurozone. The limited-risk-sharing provision flags the need for greater fiscal union; and governments should use the respite that QE provides to launch much-needed structural reforms.
There is no consensus among economists about the size of the multiplier of government purchases. It is not clear either how multipliers vary with the state of the economy. This column presents new evidence on this issue using large historical data set from the US. The findings suggest that there is no evidence that fiscal multipliers differ by the amount of unemployment or the degree of monetary accommodation.
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