Central banks often have inflation targets at the centre of their monetary policy regimes. This column presents survey data from 613 leading economists to explore their views on these inflation targets and wider policies within their countries of residence. The results suggest that maintaining the prevailing inflation target (for central banks that have one) has more support than changing it does. But more respondents are pessimistic about central banks’ ability to meet these targets, particularly in the euro area.
By now, it should be clear that presenteeism (going into work when sick) contributes significantly to the transmission of diseases. This column summarises current evidence on sick-pay mandates in the US and the spread of flu-like illnesses and COVID-19. Over the last ten years, states that introduced sick-pay mandates saw a decrease in seasonal flu activity by up to 30% in the first years compared to states that didn’t introduce such mandates. Introducing sick-pay mandates did not result in significant employment or wages decreases. Mandating COVID-19-related emergency sick leave also significantly reduced COVID-19 infection rates in states previously without sick-pay mandates, especially affecting low-income and service-sector employees.
Shifts into and out of the informal sector are important margins of labour market adjustment to economic shocks, particularly in developing countries. This column develops a structural equilibrium model of trade and informality to study the effects of trade openness on unemployment, welfare, productivity, and wage inequality. Higher trade openness leads to strong positive effects on aggregate welfare and productivity, decreases in overall wage inequality, and moderate increases in unemployment. Modelling the informal and non-tradable sectors is crucial to reaching a comprehensive understanding of the effects of trade in developing countries.
Sanctions are imposed on a target country to exert political and economic pressure. But there is little evidence on how exporting firms regard trade with the sanctioned country. This column uses detailed monthly customs data from French firms to investigate the extensive margin of trade in episodes of sanctions-use against Iran, Russia, Cuba, and Myanmar. It finds the impact of sanctions is heterogeneous along firm dimensions and advises caution in the use of a policy tool with imprecise and unpredictable results.
Following the Covid-19 outbreak, in-person instruction in US schools was dramatically reduced in favour of hybrid and online teaching modes. School reopening is now a contentious issue, with the desire to limit community spread of the virus having to be weighed against the benefits to children of in-person teaching. This column uses regional data from Michigan and Washington to study the effects of different instructional modes on Covid-19 case rates. It shows that in-person teaching correlates with higher case growth in the community only when the pre-existing Covid-19 case rates are moderate or high.
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