Macroeconomic policy

Jean-Charles Bricongne, Alessandro Turrini, 21 August 2019

The increased post-Global Crisis monitoring of house prices still lacks an effective measure for cross-country comparisons. This column outlines the creation of an integrated database covering advanced and emerging economies on the price per square metre of housing. The model shows that price-to-income ratios vary substantially at the extremes, but that the majority economies converge around the median level. Country rankings based on housing prices in euros versus PPP also vary significantly.

Jan Mischke, Hans‐Helmut Kotz, Jacques Bughin, 26 July 2019

Since the 1980s, labour compensation relative to aggregate output has been on an inexorable downward trend across major developed economies. This column deploys a simple accounting technology to tease out the driving factors behind this, focusing on the US. The findings highlight the key role of under-appreciated factors, including supercycles and boom-bust effects and rising depreciation. The analysis suggests that while the effect of some factors may dampen or reverse, others will likely continue at an uncertain pace.

Eiji Ogawa, Makoto Muto, 26 July 2019

Given the US dollar’s historical prominence in international currency systems, it can be argued that a large part of its present-day importance is due to inertia. This column analyses the determinants of the utility of four international currencies, focusing on the liquidity premium. It shows that while inertia does have a strong effect on a currency’s utility, a liquidity shortage can also reduce the utility of an international currency.

Agnès Bénassy-Quéré, Olivier Blanchard, Laurence Boone, Gilbert Cette, Chiara Criscuolo, Anne Epaulard, Sébastien Jean, Margaret Kyle, Philippe Martin, Xavier Ragot, Alexandra Roulet, David Thesmar, 24 July 2019

In September 2016, the European Council invited all euro area members to set up a National Productivity Board to focus on productivity and competitiveness. This column summarises the main findings of the first report of the Conseil National de Productivité, which analyses the causes of the French productivity slowdown that are common to other OECD countries and those that are specific to France. It also proposes a definition of competitiveness that should be useful for euro area macroeconomic policy debates and explains why current account imbalances in the euro area are both a sign of deficient adjustment mechanisms and a cause of concern.

Lars Peter Hansen, Thomas Sargent, 22 July 2019

False pretences of knowledge about complicated economic situations have become all too common in public policy debates. This column argues that policymakers should take into account what they don’t know in their decision making. It describes a tractable approach for acknowledging, characterising, and responding to different forms of uncertainty, by using theories and statistical methods available at any particular moment.

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